CHAMPIONSHIP AUTO RACING TEAMS INC, 424B3, 1998-03-11

CHAMPIONSHIP AUTO RACING TEAMS INC
424B3, 1998-03-11
RACING, INCLUDING TRACK OPERATION

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<PAGE> 1
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-43141

PROSPECTUS

4,700,000 SHARES

[CART LOGO]
CHAMPIONSHIP AUTO RACING TEAMS, INC.
COMMON STOCK
------------------------

Of the 4,700,000 shares of Common Stock, par value $.01 per share (the
"Common Stock") offered hereby (the "Offering"), 4,333,334 shares are being sold
by Championship Auto Racing Teams, Inc. (the "Company") and 366,666 shares are
being sold by certain stockholders (the "Selling Stockholders"). The Common
Stock has been approved for listing on The New York Stock Exchange under the
symbol "OPW."

Prior to the Offering, there has been no public market for the Common
Stock. See "Underwriting" for a discussion of the factors considered in
determining the initial public offering price. It is expected that following the
completion of the Offering, the current stockholders of the Company will own
approximately 68% of the outstanding Common Stock. See "Risk Factors--Control of
the Company." Of the net proceeds from the Offering, $10.0 million will be used
to acquire the Indy Lights Championship and $9.5 million will be used to pay
certain obligations to franchise race teams, all of which are current
stockholders of the Company. See "Use of Proceeds." Up to 6.5% of the Common
Stock offered in the Offering is being reserved for sale to certain employees,
directors and business associates of, and certain other persons designated by,
the Company, at the initial public offering price. See "Underwriting."

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

SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY POTENTIAL INVESTORS.

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

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT (1) COMPANY (2) STOCKHOLDERS
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Per Share........................... $16.00 $1.12 $14.88 $14.88
Total(3)............................ $75,200,000 $5,264,000 $64,480,010 $5,455,990
</TABLE>

- ---------------
(1) The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting."

(2) Before deducting expenses payable by the Company, estimated at $1,150,000.

(3) The Company has granted the Underwriters a 30-day option to purchase up to
705,000 additional shares of Common Stock on the same terms and conditions
as set forth above, solely to cover over-allotments, if any. If the option
is exercised in full, the total Price to Public, Underwriting Discount and
Proceeds to Company will be $86,480,000, $6,053,600 and $74,970,410,
respectively. See "Underwriting."
------------------------

The shares of Common Stock are offered by the several Underwriters, subject
to prior sale when, as and if issued to and accepted by the Underwriters. The
Underwriters reserve the right to reject orders in whole or in part. It is
expected that delivery of the shares of Common Stock will be made against
payment therefor in New York, New York on or about March 13, 1998.
------------------------
JEFFERIES & COMPANY, INC. A.G. EDWARDS & SONS, INC.
March 10, 1998
<PAGE> 2

[PICTURE OF SPINNING CART WHEEL AND CART LOGO]

Prior to the Offering, the Company has not been subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The Company intends to furnish its stockholders with annual reports
containing audited consolidated financial statements reported on by independent
public accountants following the end of each fiscal year and such interim
reports as it may determine to be necessary or desirable.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK. SUCH
TRANSACTIONS MAY INCLUDE STABILIZATION, THE PURCHASE OF COMMON STOCK TO COVER
SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "UNDERWRITING."

This Prospectus includes references to certain registered trademarks,
servicemarks and logos, including FedEx, PPG, MCI, Indianapolis 500 and others,
all of which are owned by the respective corporations.
<PAGE> 3

[CAPTIONS TO PHOTOS]

FONTANA, CALIFORNIA -- SUPERSPEEDWAY
CLOSE COMPETITION
MARK BLUNDELL AND FRIENDS
STAR POWER -- TEAM OWNERS CARL HAAS AND PAUL NEWMAN
1997 PPG CUP CHAMPION ALEX ZANARDI
MCI CART CHAMP CAR
SURFERS PARADISE, AUSTRALIA -- STREET COURSE
RIO DE JANEIRO, BRAZIL -- OVAL TRACK
MICHAEL ANDRETTI WITH RACE FANS
TROPHY PRESENTATION
LAGUNA SECA, CALIFORNIA -- ROAD COURSE
THE THRILL OF VICTORY
SPEED! ON THE TRACK AND IN THE PITS
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements, including the notes thereto,
appearing elsewhere in this Prospectus. References in this Prospectus to the
"Company" shall mean Championship Auto Racing Teams, Inc., its predecessor and
its subsidiaries, and references to "CART" shall mean the Company's subsidiary,
CART, Inc., its predecessors and its and their subsidiaries, unless the context
otherwise requires. Unless otherwise noted herein, the information contained in
this Prospectus gives effect to (i) the Reorganization (as defined herein)and
the proposed acquisition of American Racing Series, Inc. and BP Automotive,
Inc., as described herein (the "Indy Lights Acquisition"), (ii) the restatement
of the financial statements of the Company, as described in Note 11 to the
consolidated financial statements and (iii) assumes the Underwriters'
over-allotment option will not be exercised.

THE COMPANY

Championship Auto Racing Teams, Inc. owns, operates and sanctions the
premier open-wheel motorsports series in North America, the FedEx Championship
Series, formerly known as the PPG CART World Series (the "CART Championship"),
and is responsible for organizing, marketing and staging each of the races in
the CART Championship. With speeds of up to 240 miles per hour, and an average
margin of victory during the 1997 race season of less than four seconds, CART
open-wheel racing is the fastest form of closed-circuit auto racing available to
motorsports audiences, providing intense excitement and competition.

The drivers and racing teams participating in CART racing events are among
the most recognized names in motorsports, with marquee drivers including Michael
Andretti, Bobby Rahal, Al Unser Jr., Jimmy Vasser and Alex Zanardi. The
excitement and competition of CART racing also attracts well-known racing
legends, business leaders and sports and entertainment personalities as team
owners, including Chip Ganassi, Carl Haas, David Letterman, Bruce McCaw, Joe
Montana, Paul Newman, U.E. "Pat" Patrick, Walter Payton and Roger Penske. For a
complete list of CART drivers and teams, see "Business." Major sponsors of the
1998 CART Championship include Federal Express and PPG Industries as the
co-title sponsors, MCI, Budweiser, Mercedes-Benz, Honda, Craftsman and other
Fortune 500 companies.

Open-wheel racing in the United States traces its history to 1904, and is
the oldest continually scheduled motorsports competition in the world. The 1997
CART Championship included 17 races staged in four countries -- the United
States, Canada, Australia and Brazil. Two additional races have been added for
1998, one in Motegi, Japan and one in Houston, Texas. CART races are conducted
on four different types of tracks: superspeedways, ovals, temporary street
courses and permanent road courses, requiring teams and drivers to employ a
variety of skills to master different courses to compete for the CART
Championship. Each race weekend in the CART Championship is an "event" offering
spectators the opportunity to enjoy a CART race as well as a full weekend of
entertainment, including additional races, practice and qualifying rounds for
all racing events, and automotive and general entertainment demonstrations and
displays. Race weekends provide corporate sponsors and other businesses the
opportunity to entertain their customers and employees through hospitality areas
and other activities.

Motorsports is among the most popular and fastest growing spectator sports
in the United States and, after soccer, it is the most watched sport worldwide.
CART's races were televised in more than 185 countries in 1997 with aggregate
television audiences in excess of 1 billion viewers. Total attendance at major
auto racing series' events in North America and CART racing events increased
significantly from 12.4 million and 1.8 million, respectively, in 1991 to 16.8
million and 2.5 million, respectively, in 1997. CART believes the demographic
profile of its growing spectator base has considerable appeal to track owners,
sponsors, television networks and advertisers. The mean annual family income of
CART spectators has been estimated to be $52,700, compared to $38,400 for an
average United States household.

The Company derives its revenues from four primary sources: sanction fees
paid by track promoters, corporate sponsorship fees, television revenues and
licensing royalties. The Company's revenues have increased during the last four
years from $25.2 million in 1994 to $41.8 million in 1997. Based upon current
promoter and sponsorship agreements, the Company expects that sanction fee
revenues will increase from $24.2 million to $30.1 million and that sponsorship
revenues will increase from $7.2 million to $12.1 million from 1997 to 1998.

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<PAGE> 5

GROWTH STRATEGY

The Company's growth strategy is to increase revenues and net income by
expanding the worldwide audience for CART racing. The Company intends to
capitalize on its position as the premier open-wheel racing series in North
America and the thrill and excitement of CART racing to increase CART's brand
awareness. The Company believes that these factors will provide it with
opportunities for increased sanction fees, corporate sponsorship fees,
television revenues and royalties. To implement its strategy, the Company
intends to:

- Increase Market Penetration in the United States. The Company will
continue to develop its race schedule in key markets in the United States
and will sanction a new race in Houston, Texas during the 1998 season.
Because CART races are conducted on superspeedways, ovals, temporary street
courses and permanent road courses, the Company believes it has great
flexibility in selecting future race venues.

- Expand International Audience. The Company believes that the world
market for motorsports is predisposed to CART's style of exciting,
competitive, open-wheel racing. The CART Championship will span four
continents in 1998, with events in the United States, Canada, Australia,
Brazil and Japan. The Company typically receives higher sanction fees from
the promoters of international race events. Management continues to explore
additional opportunities to export its high-value, American racing product
throughout the world and to include more international-based sponsors for
the Company and its race teams.

- Expand Media Exposure. The Company plans to expand CART's exposure
and fan awareness by developing additional television and radio coverage.
During the 1998 race season, the Company expects to continue its
magazine-style program, "Inside CART," which premiered in the United States
on the Fox Sports Network in late 1997. Internationally, CART will continue
to build on the media distribution base established over recent years in
conjunction with its various distribution partners, with a particular
emphasis on expanding primary network coverage within individual countries.

- Increase CART's Licensing Opportunities. The Company will continue
to seek out opportunities to bring the CART brand to a broader market.
Through CART Licensed Products, LP ("CART Licensed Products"), an
affiliated limited partnership in which the Company owns a 55% interest,
CART provides "one stop shopping" for potential licensees for the
servicemarks and trademarks of CART, as well as for participating race
teams, drivers and tracks. This integrated approach allows licensees and
retailers to work with a single licensing entity rather than negotiating in
the fragmented licensing environment found in other sports. See
"Business -- CART Licensed Products."

- Acquire and Develop Related Businesses and Properties. The Company
will selectively pursue opportunities to acquire and apply the CART brand
name to other race-related businesses and properties. The Company expects
to vertically integrate certain support-racing series to develop future
racing talent in the United States. The Company is also seeking
opportunities to acquire and develop race experience products such as
simulation or virtual reality products, indoor kart racing centers and race
schools, which will provide potential and existing race fans with an
affordable and accessible opportunity to experience the sport. As the first
step in this strategy, the Company is acquiring American Racing Series,
Inc. ("ARS"), which operates the PPG Dayton Indy Lights Championship ("Indy
Lights") and certain assets of BP Automotive, Inc. ("BP"), which provides
certain equipment to the participants of Indy Lights. This transaction will
close concurrently with the Offering.

RECENT DEVELOPMENTS

CO-TITLE SPONSORSHIP FROM FEDERAL EXPRESS

Beginning with the 1998 race season, Federal Express has become the
co-title sponsor of the CART Championship, which has been officially designated
the "FedEx Championship Series." Under the sponsorship agreement, Federal
Express has acquired a comprehensive range of marketing benefits as well as
opportunities to supply services to CART, its teams and its race promoters. A
significant feature of this sponsorship arrangement is the combination of the
marketing rights of both CART and its race promoters to provide an exclusive
sponsorship involvement through the entire CART Championship. PPG Industries,
4
<PAGE> 6

CART's long-time title sponsor, will continue to be involved as a co-title
sponsor of the series and the name sponsor of the CART Championship winner's
trophy -- the "PPG Cup." PPG will also continue with its successful pace car
program at each CART race event.

THE INDY LIGHTS ACQUISITION

In December 1997, the Company entered into a binding letter of intent to
acquire all of the outstanding shares of common stock of ARS and certain assets
of BP for $10.0 million in cash, and options to purchase 100,000 shares of
Common Stock at the initial public offering price (the "Indy Lights
Acquisition"). ARS operates Indy Lights and BP provides certain equipment to the
participants of Indy Lights. Indy Lights, the Official Development Series of the
CART Championship, was founded in 1986 as a series to develop future CART teams,
drivers, engineers and crew members. Indy Lights was designed to emphasize
driver and team talent, while reducing any advantage gained through large
monetary expenditures for equipment and technology. By restricting competition
to a single chassis design, powered by identical, sealed engines and running a
single brand of tires, Indy Lights offers a series in which costs can be
carefully controlled and creates a level playing field for drivers, team
managers and engineers. Indy Lights races are sanctioned by CART and 13 of the
14 races in the 1998 Indy Lights series will be held in conjunction with CART
events. The Indy Lights Acquisition will close concurrently with the Offering
and will be funded with a portion of the proceeds from the Offering. See "Use of
Proceeds" and "Business -- PPG Dayton Indy Lights Championship."

THE REORGANIZATION

The Company was formed in December 1997 to serve as a holding company for
CART and its subsidiaries. CART previously issued 25.5 shares of its common
stock to racing teams who met certain participation requirements. Each
outstanding share of common stock of CART was acquired by the Company in
exchange for 400,000 shares of Common Stock (the "Reorganization"). The
Reorganization was completed in anticipation of, and to facilitate, the
Offering. As part of the Reorganization and pursuant to a three-year agreement
among each of the Company's current stockholders, effective January 1, 1998, the
payment of certain items to franchise members including reimbursement of travel
expenses on a per race basis, directors fees and other race-related payments
will be discontinued. Such payments aggregated approximately $8,976,000,
$8,527,000 and $19,413,000 in 1995, 1996 and 1997, respectively. See
"Business -- Franchise System and Race Teams."

In March 1998, one race team that participated in all of the 1997 races
elected to rescind its purchase of 66,666 shares of Common Stock of the Company
and received a return of its $150,000 investment. The race team elected to
rescind its purchase because of its concerns regarding the tax effects of the
compensation income related to the purchase of the shares, the restrictions
against sale of the Common Stock and its immediate needs for funds. The race
team, Project Indy, has indicated to the Company that it intends to participate
in all 1998 races.

5
<PAGE> 7

THE OFFERING

Common Stock offered by the
Company............................. 4,333,334 shares

Common Stock offered by the Selling
Stockholders...................... 366,666 shares

Common Stock outstanding after the
Offering(1)......................... 14,466,666 shares

Use of Proceeds..................... $10.0 million of the net proceeds from
the Offering will be used to fund the
cash portion of the Indy Lights
Acquisition; $9.5 million will be used
to pay certain obligations to franchise
race teams; and the balance will be
used for working capital and other
general corporate purposes, including
funding future acquisitions and
developing racing related businesses
and properties. See "Use of Proceeds."
The Company will not receive any
proceeds from the sale of Common Stock
by the Selling Stockholders.

New York Stock Exchange Symbol...... "OPW"
- ---------------

(1) Excludes 1,088,050 shares issuable upon exercise of stock options to be
granted under the Company's 1997 Stock Option Plan concurrently with the
Offering (the "Stock Option Plan") and 100,000 shares issuable upon exercise
of stock options to be granted in connection with the Indy Lights
Acquisition. See "Management -- Stock Option Plans."

6
<PAGE> 8

SUMMARY CONSOLIDATED FINANCIAL DATA

The following summary consolidated financial data as of and for the years
ended December 31, 1995, 1996 and 1997 (as restated) are derived from the
Company's Consolidated Financial Statements. The unaudited pro forma financial
information gives effect to (i) the Indy Lights Acquisition, (ii) the
Reorganization, and (iii) the Offering, as if each of these events had occurred
on January 1, 1997. The summary consolidated financial data below should be read
in conjunction with "Selected Consolidated Financial Data," the Company's
Consolidated Financial Statements and related notes thereto, the Unaudited Pro
Forma Condensed Consolidated Financial Information and related notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," contained elsewhere in this Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
HISTORICAL
------------------------------------ PRO FORMA
1995 1996 1997(1) 1997(1)
------- ------- -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA AND NUMBER OF
RACES)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Sanction fees........................................... $18,708 $21,078 $ 24,248 $24,248
Sponsorship revenue..................................... 4,780 5,501 7,221 9,589
Television revenue...................................... 3,177 4,139 4,991 4,991
U.S. 500(2)............................................. -- 7,054 -- --
Other revenue........................................... 3,312 3,682 5,360 8,430
------- ------- -------- -------
Total revenues..................................... 29,977 41,454 41,820 47,258
Total expenses(2)(3)(4)(5)................................ 29,196 41,971 62,767 47,661
Income (loss) before income taxes......................... 781 (517) (20,947) (403)
Net income (loss)......................................... 985 (338) (17,524) (4,180)
Net income (loss) per share(6)............................ $ .10 $ (.04) $ (1.72) $ (.29)
Weighted average common shares outstanding(6)............. 10,200 9,400 10,200 14,533
OTHER DATA:
Number of CART races...................................... 16 16 17 n/a
Total CART attendance..................................... 2,260 2,366 2,491 n/a
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
1997
----------------------
PRO
ACTUAL(1) FORMA(1)
--------- ---------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................. $ 1,164 $45,394
Working capital (deficit)................................. (5,325) 48,180
Total assets.............................................. 12,348 66,884
Total long-term debt (including current portion).......... 444 444
Total stockholders' equity (deficit)...................... (3,045) 60,285
</TABLE>

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

(1) The 1997 historical and pro forma consolidated financial data have been
restated to reflect an increase in compensation expense from $1,483,000 to
$12,200,000, related to the issuance of Common Stock to race teams in
December 1997, as described in Note 11 to the consolidated financial
statements.

(2) In 1996, the Company staged and acted as promoter of the inaugural U.S. 500.
Revenues attributable to the U.S. 500 included sponsorship fees, television,
admissions, program sales and other revenues associated with promoting the
event. Expenses included, among others, the race purse, track rental,
promotional and advertising costs and other expenses necessary to promote
the event. Such expenses for the year ended December 31, 1996 (including
purse awards) amounted to $8,246,000. The Company no longer acts as the
promoter of the U.S. 500, but does continue to sanction the event.

(3) Total expenses for the years ended December 31, 1995, 1996 and 1997 include
certain payments to franchise race teams, including reimbursement of travel
expenses, director fees, purse awards and other race related payments.
Effective January 1, 1998, the Company and the existing franchise race teams
entered into an agreement whereby reimbursements for travel expenses,
directors fees and race-related payments will be discontinued. Such
agreement expires in December 2000. The pro forma statement of income data
for the year ended December 31, 1997 excludes reimbursements of $19,413,000,
which will be discontinued as a result of such agreement. Because each
franchise race team is also a stockholder of the Company, and as such, has
an interest in the success of the Offering, the agreement constitutes a
related party transaction. Management does not intend to resume making such
payments to franchise race teams in the foreseeable future. The Company does
not believe that revenues will be materially impacted as a result of the
Company's potential inability to retain existing race teams due to the
elimination of such payments. See "Risk Factors -- Elimination of Certain
Payments in Connection with the Reorganization."

(4) Total expenses for 1997 include $4,817,000 of additional administrative and
indirect expenses primarily attributable to increases in advertising,
marketing and market research incurred in connection with the implementation
of the Company's growth strategy.

(5) Total expenses for the historical and pro forma year ended December 31, 1997
include compensation expense of $12,200,000 (as restated) related to the
issuance of Common Stock to franchise members below its fair value on the
date the Common Stock became eligible for purchase. This compensation
expense reduced pro forma earnings per share by $0.80 (as restated). See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

(6) Includes 1,399,998 shares of Common Stock, consisting of 1,200,000 shares
issued to new franchise race teams and 199,998 shares issued to other race
competitors on December 19, 1997. See "Business -- Franchise System and Race
Teams."

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<PAGE> 9

RISK FACTORS

Prospective Purchasers of the Common Stock should consider carefully the
risk factors set forth below, as well as the other information contained in this
Prospectus.

LOSSES FROM OPERATIONS

The historical financial data for the Company reflect net losses of
$338,000 and $17.5 million (as restated) for the years ended December 31, 1996
and 1997, respectively, with total revenues of $41.5 million and $41.8 million,
respectively. During 1997, the Company made payments to franchise members,
including reimbursement of travel expenses, director fees, and other
race-related payments totaling $19.4 million, which will be eliminated in the
future pursuant to an agreement entered into between the Company and the
existing franchise members. See "-- Elimination of Certain Payments in
Connection with the Reorganization," below. The Company's ability to expand its
business would be adversely affected by a continued lack of profitability. There
can be no assurance that any improvement in the profitability of the Company
will occur.

COMPETITION

Auto racing consists of several distinct categories, each with its own
organizing body and racing events. Internationally, the most recognized form of
auto racing is open-wheel racing, utilizing aerodynamically designed chassis and
technologically advanced equipment. The most established international
open-wheel racing series are Formula One, the CART Championship, Formula 3000
and Indy Lights. In addition to these established open-wheel series, the Indy
Racing League (the "IRL"), a new United States-based oval-racing series that
includes the Indianapolis 500, was formed in 1995. The largest auto racing
category in the United States, in terms of attendance and media exposure, is
stock car racing. Stock car racing utilizes equipment similar in appearance to
standard passenger automobiles and races are typically staged on oval courses.
The most prominent organizing body in stock car racing is the National
Association of Stock Car Auto Racing, Inc. ("NASCAR"). The National Hot Rod
Association ("NHRA") is the most prominent organizing body in drag racing. Drag
racing typically involves short sprint races on a straight-line drag strip.
Other, less prominent, racing segments include various types of sports car
racing and club racing.

The Company's racing events compete for television viewership, attendance
and sponsorship funding with other racing events sanctioned by various other
racing bodies and with other sports, entertainment and recreational events, such
as football, basketball and baseball. The competition with other racing bodies
such as Formula One, NASCAR, the IRL, the United States Auto Club ("USAC"), the
NHRA, the Sports Car Club of America ("SCCA"), Professional SportsCar Racing
("PSCR"), the Automobile Racing Club of America ("ARCA") and others is intense.
Racing events sanctioned by other organizations often are held on the same dates
as CART events, at separate tracks, and compete for attendance as well as
television viewership. In addition, CART competes with other racing bodies to
sanction racing events at various motorsports facilities. In consideration of
the intense competition in the sports and entertainment industry, there can be
no assurance that the Company will maintain or improve its market position. See
"Auto Racing Industry Overview" and "Business -- Competition."

RELIANCE ON PARTICIPATION BY TEAMS

The future success of the Company is dependent upon the continued
participation of racing teams, including team owners, drivers, engineers,
mechanics and other team members, in CART-sanctioned race events. The teams
currently participating in CART events derive substantially all of their funding
for race operations from such team's sponsors. Generally, the team sponsors
measure advertising exposure, including attendance at the events and television
viewership, to determine future sponsorship commitments. Decreased attendance
and television viewership could adversely affect the level of funding by some
team sponsors. If sponsorship revenues are not available to teams, such teams
may not have the necessary funding to participate in CART events. The
termination of participation by teams currently competing in all CART events
could have an adverse effect on the Company's business and financial condition.
See "Business -- Franchise System and Race Teams."

Historically, the number of race teams that have discontinued participation
in CART events has generally been equal to or less than the number of new race
teams entering the CART Championship. The Company is not aware of any race team
that intends to discontinue its participation in the CART Championship. The
Company is aware that Tasman

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<PAGE> 10

Motorsports Group, a racing team which fielded two race cars in each of the
events in the 1997 CART Championship, will field only one full-season race car
and a partial-season entrant for the second car in the 1998 CART Championship.
However, the Company has received entry forms from Team Green, Inc. and Forsythe
Racing, Inc. stating that each team will field two cars in the 1998 CART
Championship, rather than the single entry each fielded in the 1997 CART
Championship. There can be no assurance that race teams will not discontinue
participation in future CART events.

INDUSTRY SPONSORSHIPS

The motorsports industry generates significant revenue each year from the
sponsorship, promotion and advertising of various companies and their products.
If sponsorship, promotion and advertising revenues are not available to the
Company and the racing teams in the future, the Company's financial condition
would be adversely affected. The revenue generated from such sponsorship,
promotion and advertising substantially depends upon the level of advertising
expenditures by sponsors or prospective sponsors, which in turn depends in part
on the financial condition of such companies, the availability and cost of
alternative promotional outlets and their perception of the benefits of using
CART, its events or race teams as an advertising medium. The advertising and
promotional value to sponsors is significantly impacted by television viewership
of, and spectator attendance at, CART events.

RELIANCE ON PARTICIPATION BY SUPPLIERS

The Company's racing events are dependent upon the continued participation
of suppliers of engines, tires and chassis to teams competing in CART events.
The engines and tires for CART race cars are designed specifically for CART
racing, and the Company believes that the costs to some industry suppliers are
greater than the revenues generated from the sale or lease of such products to
the teams. Without the continued supply of engines, chassis and tires, the
Company believes that its financial condition could be adversely affected. See
"Business."

RELIANCE ON EVENT PROMOTERS

The Company derives a substantial portion of its total revenues from
sanction fees which are paid by each promoter to the Company. In the event that
several promoters incur financial losses or restrictions that prohibit future
events from taking place, or should such promoters elect not to promote CART
events in the future, the Company believes that its financial condition could be
adversely affected.

TOBACCO AND ALCOHOL ADVERTISING AND SPONSORSHIP

Advertising by companies in the tobacco and alcohol industries is generally
subject to greater governmental regulation than advertising by other sponsors.
Although the Company does not derive significant advertising revenue from the
tobacco and alcohol industries, many of the teams participating in
CART-sanctioned events derive a substantial portion of their operating revenues
from such industry sponsors. In addition, many of the race events that are
sanctioned by CART are sponsored in part by companies in the tobacco and/or
alcohol industries, with such sponsorship fees paid to the track promoters.

In settlement of outstanding litigation with various state attorneys
general in the United States, the tobacco industry has proposed to agree to
implementation of certain governmental regulations which would prohibit
advertisement of tobacco products at sports events, including motorsports. The
proposed settlement must be approved by the United States Congress and signed by
the President prior to implementation, and could change substantially prior to
such approval. The Company cannot predict whether the settlement discussed above
will be approved or the timing of any future restrictions on advertising
impacting the tobacco industry. The Company believes that a prohibition on
tobacco advertising will have an immediate effect on some of the teams
participating in CART events (specifically including the seven 1998 race teams
who the Company expects will derive substantially all of their funding from
tobacco industry sponsors), as well as those United States race promoters who
derive a portion of their revenues from tobacco advertising and sponsorship. If
the settlement is approved, the race teams will be required to seek other
sponsorship and their failure to secure substitute sponsorship could adversely
affect their ability to continue participation in CART events. Regardless of the
outcome of the proposed settlement in the United States, any future limitations
on tobacco advertising may have an adverse effect on race venues and may limit
the Company's ability to expand its race schedule into other countries. See
"Auto Racing Industry Overview" and "Business -- Drivers and Corporate
Sponsors."

9
<PAGE> 11

THE INDY RACING LEAGUE

In 1995, the IRL was formed as a rival open-wheel racing league to compete
directly with CART and the CART Championship. The IRL was founded by affiliates
of the Indianapolis Motor Speedway ("IMS").

Since the creation of the IRL and rule changes instituted by the IRL and
USAC, which governed the Indianapolis 500, almost all of the CART teams and
drivers have not competed at the Indianapolis 500, believing that the rule
changes were adverse to the teams participating in CART events. The 1996 rule
changes included, among others, reservation of 25 of the 33 starting positions
in the Indianapolis 500 for those competing in other IRL events. Additional rule
changes for 1997 included substantial changes to equipment specifications such
that the cars competing in CART-sanctioned events could not compete at the
Indianapolis 500. The reservation of starting positions was eliminated by the
IRL for 1998.

The Indianapolis 500 is a major racing event in the United States and draws
substantial television viewership. For these reasons, many companies that
sponsored race teams historically regarded an involvement at the Indianapolis
500 as being an extremely important part of their sponsorship. Considerable sums
have been spent by corporations to sponsor race teams participating at the
Indianapolis 500 and on advertising and promotion in support of such
sponsorship. Through the date of this Prospectus, the Company does not believe
that it or its teams have lost significant sponsors due to non-participation by
CART teams and drivers at the Indianapolis 500.

The Company is unable to predict what effect, if any, the IRL or the
continued non-participation by CART teams at the Indianapolis 500 will have on
the Company's future results. See "Auto Racing Industry Overview" and
"Business -- Competition."

LIMITATIONS ON ABILITY TO EXPAND THE RACE SCHEDULE

The 1998 CART Championship schedule includes 19 races, with one race in
Japan, one race in Australia and one race in Brazil, in addition to the 16 races
that will be staged in North America. The first race of the 1998 season will be
held on March 15, with the season-ending race to be run on November 1. Although
the Company intends to explore opportunities to further extend the racing
season, continued expansion of the number of races staged each year will require
additional personnel and resolution of logistical issues such as transportation
and availability of equipment. The Company's ability to expand the race schedule
will also be limited by the availability of funding and equipment to teams for
participation in additional events and by the teams' willingness to participate
in an expanded schedule. See "Business -- Racing Events."

MANAGING THE COMPANY'S GROWTH

The Company's ability to effectively manage future growth and to
successfully implement its growth strategy in connection with acquiring and
developing race related businesses and properties will require it to
successfully integrate the operations of such businesses and properties with the
Company's operations, to further enhance its operational, financial and
management systems, and to successfully hire, train, retain and motivate
additional employees. The failure of the Company to manage its growth on an
effective basis could have a material adverse effect on the Company's business
and financial condition. See "Business -- Growth Strategy."

LIABILITY FOR PERSONAL INJURIES

Racing events can be dangerous to participants and spectators. CART
requires all race participants (excluding the general public) to execute a
general release and waiver of liability prior to participating in racing events
sanctioned by CART and requires each track promoter to indemnify CART against
any liability for personal injuries sustained at such promoter's racing event.
In addition, CART requires each event promoter to carry a minimum of $10.0
million in liability insurance, with CART as a named insured, and CART maintains
a $15.0 million umbrella insurance policy. Nevertheless, there can be no
assurance that the release and waivers will be fully enforced in a court of law,
that the promoter will have liquid assets to satisfy any indemnification
requirement, or that such insurance will be adequate or available at all times
at reasonable premiums and in all circumstances. The Company's financial
condition and results of operations would be adversely affected to the extent
claims and associated expenses exceed insurance and indemnification recoveries
or are otherwise not covered by insurance. See "Business -- Legal Proceedings."

10
<PAGE> 12

CONTROL OF THE COMPANY

Upon completion of the Offering, current stockholders of the Company will
own approximately 68% (approximately 64% if the Underwriters' over-allotment
option is exercised in full) of the Company's Common Stock. As a result, the
current stockholders, as a group, will continue to control the outcome of
substantially all issues submitted to the Company's stockholders, including the
election of directors, and will be able to effect a change of control, merger or
combination without the approval of minority stockholders. See "Principal and
Selling Stockholders" and "Business -- Franchise System and Race Teams."

CONFLICTS OF INTEREST

Each of the current stockholders is the owner of a race team that
participates in the CART Championship, and each of the current directors is
affiliated with a race team that participates in the CART Championship, which
will result in an inherent conflict of interest with regard to certain matters
to be considered by the stockholders or directors. In addition, certain
stockholders and directors control, or are affiliated with persons who control,
racing venues which stage CART and other racing events and therefore a conflict
of interest may arise with respect to determining the location and dates of CART
events and the amount of sanction fees paid. Nevertheless, under Delaware law,
the officers and directors owe a fiduciary duty to the Company's stockholders.
See "Certain Relationships and Related Transactions."

BROAD DISCRETION REGARDING PROCEEDS OF THE OFFERING

A substantial portion of the net proceeds of this Offering has been
allocated to working capital and general corporate purposes. Accordingly,
management will have broad discretion as to the application of the Offering
proceeds. Pending the Company's use of such proceeds for general corporate
purposes, including possible acquisition and/or development of racing-related
businesses and properties, such proceeds will be placed in short-term,
interest-bearing, investment grade investments. It is possible that the return
on such investments could be less than the return that would be realized if the
Company immediately used such funds in its business.

DILUTION

Purchasers of the shares of Common Stock offered hereby will experience an
immediate and substantial dilution of $12.69 per share in net tangible book
value from the initial public offering price. See "Dilution." In December 1997,
the Company issued 1,200,000 shares and 199,998 shares of its Common Stock for a
purchase price of $1.13 per share and $2.25 per share, respectively, to race
teams. Of this amount, an aggregate of 400,000 shares were issued to Patrick
Racing Inc., a race team owned by U. E. Patrick, a director of the Company. Any
future issuances of shares of Common Stock at a discount will have a dilutive
effect to the purchasers of the shares of Common Stock offered hereby. See
"Business -- Franchise System and Race Teams."

DEPENDENCE ON KEY PERSONNEL

The Company's success depends to a large extent upon the availability and
performance of certain key employees, including Messrs. Andrew Craig, President
and Chief Executive Officer, and Randy K. Dzierzawski, Executive Vice President
and Chief Financial Officer, the loss of whose services could have a material
adverse effect on the Company. In an effort to minimize this risk, the Company
has entered into employment agreements with certain key employees, including
Messrs. Craig and Dzierzawski. See "Management."

ELIMINATION OF CERTAIN PAYMENTS IN CONNECTION WITH THE REORGANIZATION

In connection with the Reorganization, CART has discontinued certain
significant payments to the race teams participating in CART events. The
discontinuation of payments may have an adverse effect on CART's ability to
retain existing race teams or attract new race teams. Since CART regularly needs
to attract new race teams, this change could have a negative impact on CART's
operations. However, the Company does not believe that revenues will be
materially impacted as a result of the Company's potential inability to retain
existing race teams due to the discontinuation of such payments. See
"Business -- Franchise System and Race Teams."

11
<PAGE> 13

Effective January 1, 1998, the Company and the existing franchise members
entered into an agreement whereby reimbursements for travel expenses, directors
fees and race-related payments will be discontinued. Such agreement expires in
December 2000. Because each franchise member is also a stockholder of the
Company, and as such, has an interest in the success of the Offering, the
agreement constitutes a related party transaction. Although management does not
intend to resume making such payments to franchise members in the foreseeable
future, the agreement permits similar payments in extraordinary circumstances.

SEASONALITY AND FLUCTUATION OF QUARTERLY RESULTS

The Company derives a substantial portion of its total revenues from
sanction fees and sponsorship revenues paid primarily during the racing season.
As a result, the Company's operations have been, and are expected to remain,
highly seasonal. Historically, revenues are higher in the second and third
quarters of the year due to the number of races staged in those quarters. The
scheduling of any race in the CART Championship can significantly affect the
Company's quarterly results of operations when compared to a previous quarter if
such race is scheduled during different quarters from year to year. The 1998
racing season will extend into the month of November, compared to the 1997
racing season, when the last race was staged in September. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Seasonality and Quarterly Results."

ABSENCE OF PUBLIC MARKET AND DETERMINATION OF OFFERING PRICE

Prior to the Offering, there has been no public market for the Common Stock
and there can be no assurance that an active trading market will develop
subsequent to the Offering. The offering price was determined by negotiations
between the Company, the Selling Stockholders and representatives of the
Underwriters and may not be indicative of the market price of the Common Stock
after the Offering. See "Underwriting" for the factors considered in determining
the initial public offering price. There can be no assurance that the market
price of the Common Stock prevailing at any time after the Offering will equal
or exceed the initial public offering price. In addition, the stock market has,
from time to time, experienced extreme price and volume fluctuations, which
could adversely affect the market price of the Common Stock without regard to
the financial performance or prospects of the Company. The market price of the
Common Stock may fluctuate substantially in response to variations in the
Company's results of operations, announcements by the Company or other
developments affecting the Company, as well as by general economic trends and
other external factors. See "Description of Capital Stock" and "Underwriting."

SHARES ELIGIBLE FOR FUTURE SALE

Sales of significant amounts of the Common Stock in the public market after
this Offering could adversely affect the market price of the Company's Common
Stock. After the Offering, 14,466,666 shares of Common Stock (15,171,666 shares
if the Underwriters' over-allotment option is exercised in full) will be
outstanding. In addition to the 4,700,000 shares of Common Stock offered hereby
which will be freely transferable after the Offering (5,405,000 shares if the
Underwriters' over-allotment option is exercised in full), a total of 8,480,000
shares of Common Stock have been held by non-affiliates for more than one year
but less than two years, or by affiliates for more than one year and, therefore,
will be eligible for sale pursuant to Rule 144, beginning 90 days after the date
of this Prospectus, subject to the volume limitations of Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), the Underwriters'
lock-up and an agreement among stockholders. The approximately 1,286,666
remaining shares have been held for less than one year and are not yet eligible
for sale in the public market. In addition to the 14,466,666 shares of Common
Stock to be outstanding after the Offering, the Company has reserved 2,000,000
and 100,000 shares of Common Stock for issuance pursuant to the Stock Option
Plan and the Director Option Plan, respectively, which shares will be registered
under the Securities Act, and will be freely transferable upon issuance.

No prediction can be made as to the effect that resale of shares of Common
Stock, or the availability of shares of Common Stock for resale, will have on
the market price of the Common Stock prevailing from time to time. The resale of
substantial amounts of Common Stock, or the perception that such resales may
occur, could adversely affect prevailing market prices of the Common Stock. The
Company's officers, directors and current stockholders have agreed not to sell
their shares (approximately 9,766,666 shares) for a period of 180 days from the
date of this Prospectus without the prior written consent of the representatives
of the Underwriters. In addition, each of the current stockholders has signed an

12
<PAGE> 14

agreement with the Company which restricts its ability to sell any shares of
Common Stock for a period of one year from the date of this Prospectus. See
"Shares Eligible for Future Sale" and "Underwriting."

ANTI-TAKEOVER PROVISIONS

The General Corporation Law of the State of Delaware contains certain
provisions which may delay or prevent an attempt by a third party to acquire
control of the Company. In addition, certain provisions of the Company's
Certificate of Incorporation and Bylaws authorize the issuance of preferred
stock, and establish advance notice requirements for director nominations and
actions to be taken at stockholder meetings. These provisions could discourage
or impede a tender offer, proxy contest or other similar transaction involving
control of the Company, which transaction might be viewed favorably by
stockholders. In addition, the severance provisions of employment agreements
with certain members of management could impede an attempted change of control
of the Company. The Company has adopted a Stockholder Rights Plan which may have
the effect of impeding a hostile attempt to acquire control of the Company. See
"Description of Capital Stock -- Delaware Law" and "Certain Charter and By-Law
Provisions."

ABILITY TO ISSUE PREFERRED STOCK

The Company may issue preferred stock in the future without stockholder
approval and upon such terms and conditions, and having such rights, privileges
and preferences, as the Board of Directors may determine. The rights of the
holders of Common Stock will be subject and subordinate to, and may be adversely
affected by, the rights of the holders of any preferred stock that may be issued
in the future. The issuance of preferred stock could have the effect of making
it more difficult for a third party to acquire, or discouraging a third party
from acquiring, a majority of the outstanding voting stock of the Company. The
Company has no outstanding preferred stock and no present plans to issue any
shares of preferred stock. See "Description of Capital Stock -- Preferred
Stock."

DIVIDEND POLICY

The Company does not anticipate declaring and paying cash dividends on its
Common Stock after consummation of the Offering at any time in the foreseeable
future. See "Dividend Policy."

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements and information contained in this Prospectus,
particularly those under the headings "Business," "Risk Factors," and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," concerning future, proposed and anticipated activities of the
Company, certain trends with respect to the Company's revenues, operating
results on a pro forma basis, capital resources and liquidity or with respect to
the Company's competitive position or the motorsports industry in general, and
other statements contained in this Prospectus regarding matters that are not
historical facts are forward-looking statements. Such statements, by their very
nature, include risks and uncertainties, many of which are beyond the Company's
control. Accordingly, actual results may differ, perhaps materially, from those
expressed in or implied by such forward-looking statements. Factors that could
cause actual results to differ materially include those discussed herein under
"Risk Factors." The safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 do not apply to this Offering or other initial public
offerings.

13
<PAGE> 15

USE OF PROCEEDS

The net proceeds to the Company from the Offering are estimated to be $63.3
million ($73.8 million if the Underwriters' over-allotment option is exercised
in full) after deducting the underwriting discount and estimated offering
expenses payable by the Company.

The Company intends to use $10.0 million of the net proceeds from the
Offering to purchase the common stock of ARS which operates the Indy Lights
Championship, the Official Development Series for CART, and certain of the
assets of BP, which supplies certain equipment to the participants in the Indy
Lights Championship. See "Business -- PPG Dayton Indy Lights Championship." In
addition, $9.5 million will be used to pay accrued point awards to franchise
race teams. The payments to franchise race teams satisfy accrued point awards
earned for competition during the 1997 race season, and do not represent
repayments to such franchise race teams. The remaining net proceeds from the
Offering will be used for working capital and general corporate purposes,
including the expansion of the Company's business through the acquisition or
development of racing-related businesses and properties. The Company currently
has no agreements with respect to any acquisitions other than the Indy Lights
Acquisition, but it regularly engages in discussions relating to potential
acquisitions. No assurance can be given that the Company will be able to acquire
racing-related businesses in the near future.

Pending application of the net proceeds of this Offering as described
above, the Company will invest such proceeds in short-term, interest-bearing,
investment grade securities. The Company will not receive any proceeds from the
sale of shares of Common Stock to be sold by the Selling Stockholders.

14
<PAGE> 16

CAPITALIZATION

The following table sets forth the cash and cash equivalents and the
consolidated capitalization of the Company as of December 31, 1997 and on a pro
forma basis. This table should be read in conjunction with the Consolidated
Financial Statements and related notes thereto, "Management's Discussion and
Analysis of Results of Operations" and the Unaudited Pro Forma Condensed
Consolidated Financial Information and related notes thereto, included elsewhere
in this Prospectus.

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
-----------------------------
PRO
ACTUAL(1) FORMA(1)(2)
------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................... $ 1,164 $ 45,244
======== ========
Long-term debt (including current portion).................. $ 444 $ 444
Stockholders' equity (deficit):
Preferred Stock, $.01 par value, 5,000,000 shares
authorized; none issued and outstanding................ -- --
Common Stock, $.01 par value, 50,000,000 shares
authorized; 10,199,998 issued and outstanding, as of
December 31, 1997; and 14,466,666 issued and
outstanding, as adjusted(3)............................ 102 145
Additional paid-in-capital................................ 15,975 79,112
Accumulated deficit....................................... (19,122) (19,122)
-------- --------
Total stockholders' equity (deficit)................. (3,045) 60,135
-------- --------
Total capitalization........................................ $ (2,601) $ 60,579
======== ========
</TABLE>

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

(1) The 1997 actual and pro forma financial data have been restated to reflect
an increase in compensation expense from $1,483,000 to $12,200,000, related
to the issuance of Common Stock to race teams in December 1997, as described
in Note 11 to the consolidated financial statements.

(2) Gives effect to (i) the Indy Lights Acquisition, (ii) the rescission of the
sale of 66,666 shares of Common Stock, and (iii) the Offering and the
application of the net proceeds therefrom, including the payment of accrued
point awards. See "Business -- PPG Dayton Indy Lights Championship" and
"-- Franchise System and Race Teams."

(3) Excludes 1,088,050 shares issuable upon exercise of stock options to be
granted under the Company's 1997 Stock Option Plan concurrently with the
Offering and 100,000 shares issuable upon exercise of stock options to be
granted in connection with the Indy Lights Acquisition. See
"Management -- Stock Option Plans."

DIVIDEND POLICY

The Company intends to retain future earnings for the operation and
expansion of its business. The Company does not anticipate paying any cash
dividends in the foreseeable future. Any decision by the Board of Directors
concerning the payment of dividends on the Common Stock in the future will be
dependent upon the Company's results of operations, financial condition, cash
requirements, capital expenditure requirements and other factors deemed relevant
by the Board of Directors.

15
<PAGE> 17

DILUTION

The Company's net tangible book value at December 31, 1997 was $(7,869,000)
or $(0.77) per share (as restated). Net tangible book value per share represents
the Company's total tangible assets less its total liabilities, divided by the
number of shares of Common Stock outstanding. After giving effect to the sale of
the Common Stock offered hereby (after deducting underwriting discounts and
commissions and estimated offering expenses), and adjusting for the rescission
of the sale of 66,666 shares of Common Stock, the Company's pro forma net
tangible book value at December 31, 1997 would have been approximately
$47,852,000 or $3.31 per share. This represents an immediate increase in net
tangible book value per share of $4.08 to existing stockholders and an immediate
dilution of $12.69 per share to the investors purchasing shares of Common Stock
at the initial public offering price. The following table illustrates this
dilution in net tangible book value to new investors:

<TABLE>
<S> <C> <C>
Assumed price to public..................................... $16.00
Net tangible book value before Offering................... $(0.77)
Increase attributable to new investors.................... 4.08
------
Pro forma net tangible book value after Offering............ 3.31
------
Dilution to new investors................................... $12.69
======
</TABLE>

If the Underwriters exercise their right to purchase an additional 705,000
shares of Common Stock in the aggregate to cover over-allotments, the net
tangible book value per share after the Offering would be $3.85, which would
result in dilution to new investors of $12.15 per share.

The above table excludes 1,088,050 shares of Common Stock issuable upon
exercise of options to be granted under the Company's Stock Option Plan and
100,000 shares of Common Stock issuable upon exercise of options to be granted
in connection with the Indy Lights Acquisition, all of which are subject to
vesting schedules. See "Management -- Stock Option Plans" and "Business -- PPG
Dayton Indy Lights Championship."

The following table sets forth the number of shares of Common Stock
purchased from the Company, the effective cash contributions made and the
average price per share paid by existing stockholders and by purchasers of the
Common Stock offered hereby:

<TABLE>
<CAPTION>
TOTAL
SHARES PURCHASED CONSIDERATION PAID
--------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT NUMBER PERCENT PER SHARE
---------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing Stockholders................ 10,133,332 70% $ 2,560,000 4% $ 0.25
New Investors........................ 4,333,334 30 69,333,344 96 16.00
---------- ----- ----------- -----
Total.............................. 14,466,666 100% $71,893,344 100%
========== ===== =========== =====
</TABLE>

16
<PAGE> 18

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data as of and for the years
ended December 31, 1993, 1994, 1995, 1996 and 1997 (as restated) are derived
from the Company's Consolidated Financial Statements, audited by Deloitte &
Touche LLP, independent auditors. The pro forma financial information gives
effect to (i) the Indy Lights Acquisition, (ii) the Reorganization, and (iii)
the Offering and the application of the net proceeds therefrom, as if each of
these events had occurred on January 1, 1997. The selected consolidated
financial data below should be read in conjunction with the Company's
Consolidated Financial Statements and related notes thereto, the Unaudited Pro
Forma Financial Information and related notes thereto contained elsewhere in
this Prospectus and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
HISTORICAL
------------------------------------------------ PRO FORMA
1993 1994 1995 1996 1997(1) 1997(1)
------- ------- ------- ------- -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Revenues:
Sanction fees........................................ $15,239 $16,299 $18,708 $21,078 $ 24,248 $24,248
U.S. 500(2).......................................... -- -- -- 7,054 -- --
Sponsorship revenue.................................. 3,664 4,104 4,780 5,501 7,221 9,589
Television revenue................................... 9,391 2,343 3,177 4,139 4,991 4,991
Engine leases, rebuilds and wheel sales.............. -- -- -- -- -- 2,926
Other revenue........................................ 2,132 2,441 3,312 3,682 5,360 5,504
------- ------- ------- ------- -------- -------
Total revenues................................... 30,426 25,187 29,977 41,454 41,820 47,258
Expenses:
Race and franchise fund payments(3).................. 17,425 18,305 18,446 17,198 28,939 12,681
U.S. 500(2).......................................... -- -- -- 8,246 -- --
Race expenses(3)..................................... 8,530 2,621 4,612 6,055 6,970 5,292
Costs of engine rebuilds and wheel sales............. -- -- -- -- -- 888
Administrative and indirect expenses(3)(4)........... 3,992 3,977 5,832 8,620 14,341 15,929
Compensation expense(5).............................. 204 -- -- 1,167 12,200 12,200
Depreciation and amortization........................ -- 202 306 685 549 903
Minority interest.................................... -- -- -- -- (232) (232)
------- ------- ------- ------- -------- -------
Total expenses................................... 30,151 25,105 29,196 41,971 62,767 47,661
------- ------- ------- ------- -------- -------
Income (loss) before income taxes...................... 275 82 781 (517) (20,947) (403)
Income tax expense (benefit)........................... 3 (344) (204) (179) (3,423) 3,777
------- ------- ------- ------- -------- -------
Net income (loss)...................................... $ 272 $ 426 $ 985 $ (338) $(17,524) $(4,180)
======= ======= ======= ======= ======== =======
Net income (loss) per share(6)......................... $ .02 $ .04 $ .10 $ (.04) $ (1.72) $ (.29)
======= ======= ======= ======= ======== =======
Weighted average common shares outstanding(6).......... 11,000 10,200 10,200 9,400 10,200 14,533
======= ======= ======= ======= ======== =======
</TABLE>

17
<PAGE> 19

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
----------------------------------------------------------
HISTORICAL
---------------------------------------------- PRO FORMA
1993 1994 1995 1996 1997(1) 1997(1)
------- ------- ------- ------ ------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.............................. $ 327 $ 1,393 $ 2,046 $ 630 $ 1,164 $45,394
Working capital (deficit).............................. (378) (209) (1,182) (524) (5,325) 48,180
Total assets........................................... 1,378 2,974 5,613 6,600 12,348 66,884
Long-term debt (including current portion)............. -- -- -- 574 444 444
Total stockholders' equity (deficit)................... (2,101) (1,875) (1,250) (151) (3,045) 60,285
</TABLE>

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

(2) In 1996, the Company staged and acted as promoter of the inaugural U.S. 500.
Revenues attributable to the U.S. 500 included sponsorship fees, television,
admissions, program sales and other revenues associated with promoting the
event. Expenses included, among others, the race purse, track rental,
promotional and advertising costs and other expenses necessary to promote
the event. The Company no longer acts as the promoter of the U.S. 500, but
does continue to sanction the event.

(3) Expenses for the years ended December 31, 1994, 1995, 1996 and 1997 include
certain payments to franchise race teams, including reimbursement of travel
expenses, director fees, purse awards and other race related payments.
Effective January 1, 1998, the Company and the existing franchise race teams
entered into an agreement whereby reimbursements for travel expenses,
directors fees and race-related payments will be eliminated. Such agreement
expires in December 2000. The pro forma statement of income data for the
year ended December 31, 1997 excludes reimbursements of $19,413,000, which
will be discontinued as a result of such agreement. Because each franchise
race team is also a stockholder of the Company, and as such, has an interest
in the success of the Offering, the agreement constitutes a related party
transaction. Management does not intend to resume making such payments to
franchise race teams in the foreseeable future. The Company does not believe
that revenues will be materially impacted as a result of the Company's
potential inability to retain existing race teams due to the discontinuation
of such payments.

(4) Administrative and indirect expenses for 1997 include $4,817,000 primarily
attributable to increases in advertising, marketing and market research
incurred in connection with the implementation of the Company's growth
strategy.

18
<PAGE> 20

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the
Consolidated Financial Statements and related notes thereto and "Selected
Consolidated Financial Data" included elsewhere in this Prospectus.

GENERAL

In December 1997, as part of the Reorganization, each of the current
stockholders exchanged their shares of stock in CART for shares of Common Stock
of the Company. Prior to the Reorganization, the franchise race teams received
reimbursement of travel expenses, directors fees and franchise payments in an
aggregate amount equal to $9.0 million, $8.5 million and $19.4 million for the
years ended December 31, 1995, 1996 and 1997, respectively. These payments were
discontinued after January 1, 1998 pursuant to contractual commitments, which
were entered into on December 19, 1997 and expire in December 2000. Because each
franchise race team is also a stockholder of the Company, and as such, has an
interest in the success of the Offering, the agreement constitutes a related
party transaction. Management does not intend to resume making such payments to
franchise race teams in the foreseeable future.

Set forth below are selected income and expense items and the relationship
of such income and expense items to total revenues for the years ended December
31, 1995, 1996 and 1997.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1995 1996 1997(1)
--------------- --------------- ----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Sanction fees.................................. $18,708 62.4% $21,078 50.8% $ 24,248 58.0%
U.S. 500(2).................................... -- -- 7,054 17.0 -- --
Sponsorship revenue............................ 4,780 15.9 5,501 13.3 7,221 17.3
Television revenue............................. 3,177 10.6 4,139 10.0 4,991 11.9
Other revenue.................................. 3,312 11.1 3,682 8.9 5,360 12.8
------- ----- ------- ----- -------- -----
Total Revenues............................ $29,977 100.0% $41,454 100.0% $ 41,820 100.0%
======= ===== ======= ===== ======== =====
Expenses:
Race and franchise fund payments(3)............ $18,446 61.5% $17,198 41.5% $ 28,939 69.2%
U.S. 500(2).................................... -- -- 8,246 19.9 -- --
Race expenses(3)............................... 4,612 15.4 6,055 14.6 6,970 16.7
Compensation expense........................... -- -- 1,167 2.8 12,200 29.2
Administrative and other indirect
expenses(3)................................. 5,832 19.5 8,620 20.8 14,341 34.3
Depreciation and amortization.................. 306 1.0 685 1.6 549 1.3
Minority interest in loss of subsidiaries...... -- -- -- -- (232) (0.6)
------- ----- ------- ----- -------- -----
Total Expenses............................ $29,196 97.4% $41,971 101.2% $ 62,767 150.1%
======= ===== ======= ===== ======== =====
Net Income (Loss)................................ $ 985 3.3% $ (338) (0.8)% $(17,524) (41.9)%
======= ===== ======= ===== ======== =====
</TABLE>

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

(1) The 1997 financial information has been restated to reflect an increase in
compensation expense from $1,483,000 to $12,200,000, related to the issuance
of Common Stock to race teams in December 1997, as described in Note 11 to
the consolidated financial statements.

(2) CART's promotion of the U.S. 500 was a one-time event, and although CART
continues to sanction the event, it no longer acts as the promoter.

(3) Includes certain payments that were discontinued after January 1, 1998, as
discussed above.

REVENUES

The Company classifies its revenues to include sanction fees, the U.S. 500,
sponsorship revenue, television revenue and other revenue, as discussed below:

Sanction Fees. The Company derives its sanction fee revenue from the
promoter at each venue on the CART Championship schedule in accordance with
negotiated contracts pursuant to which CART agrees to stage a CART
19
<PAGE> 21

Championship race at such venue in return for the payment of a sanction fee (a
"Promoter Agreement"). The terms of each contract vary by location and type of
facility and have terms expiring from 1998 to 2002. Sanction fee revenue is
recorded upon completion of each event. The entire sanction fee is collected in
advance of the relevant event. Currently contracted sanction fees range from
$850,000 to $4.1 million during the remaining terms of the agreements, excluding
option periods.

U.S. 500. In 1996, due to the reservation of starting positions at the
Indianapolis 500 for IRL competitors, CART promoted and sanctioned the inaugural
U.S. 500 at Michigan International Speedway on May 26. Because the event was
promoted by CART, CART did not receive sanction fee revenue from the event but
did receive revenue from admissions, hospitality, television, sponsorship and
licensing. CART's promotion of the U.S. 500 was a one-time event, and though
CART continues to sanction the event, it does not anticipate acting as the
promoter of the U.S. 500 in the future.

Sponsorship Revenue. The Company receives corporate sponsorship revenue in
accordance with negotiated contracts. CART currently has corporate sponsor
contracts with 15 major manufacturing and consumer products companies. The
remaining terms of these contracts range from one to three years. An official
corporate sponsor receives status and recognition rights, event rights and
product category exclusivity with respect to CART as the sanctioning body.

Television Revenue. The Company's television revenue is derived from
negotiated contracts with ESPN, ESPN International, Fittipaldi USA (Brazil),
Gold Coast Motor Events Co. (Australia) and Molstar (Canada) ("broadcast
partners"). A guaranteed rights fee is paid to CART by each broadcast partner.
In addition, pursuant to the agreement with ESPN/ESPN International (the "ESPN
Contract"), CART receives 50% of the net profits generated from the CART race
broadcasts under the ESPN Contract which exceed the minimum guaranteed rights
fee. A provision of the ESPN Contract requires that at least 50% of the CART
events are broadcast on a major broadcasting network in the United States. In
1996 and 1997, all CART races were broadcast on either ABC or ESPN. In addition,
CART races are re-aired on ESPN and ESPN2. ESPN2 also broadcasts CART qualifying
sessions and pre-race shows.

Other Revenue. Other revenue includes membership and entry fees,
contingency awards money, royalties and other miscellaneous revenue items.
Membership and entry fees are payable on an annual basis by CART and Indy Lights
competitors. In addition, competitors are charged fees for credentials for all
team participants and driver license fees for all drivers competing in the
series. Contingency awards money is payable to competitors in the CART
Championship upon satisfaction of specific criteria. Royalty revenue is received
by the Company for the use of the CART servicemarks and trademarks on licensed
merchandise that is sold both at tracks and at off-track sites.

EXPENSES

The Company classifies its expenses to include race and franchise fund
payments, expenses related to promoting the U.S. 500, race expenses and
administrative and indirect expenses, as discussed below. For a discussion of
certain expenses discontinued in connection with the Reorganization, see
"Business -- Franchise System and Race Teams."

Race and Franchise Fund Payments. The Company pays the racing teams for
their on-track performance. Race and franchise fund payments include the
following for each event: a fixed franchise expense to each franchise
competitor, the event purse which is paid based on finishing position, and
contingency award payments. The Company also pays awards to the teams based on
their cumulative performance for the season out of the year-end point fund.
After the Reorganization, franchise fund payments will be discontinued.

U.S. 500. In addition to the race purse, expenses for the U.S. 500 in 1996
included sales costs related to the sale of sponsorships, track rental expenses,
compensation expenses related to contract staff, promotional and advertising
costs and administrative expenses incurred solely with respect to the U.S. 500
event.

Race Expenses. The Company is responsible for officiating and
administering each event in the CART Championship. Costs primarily include
officiating fees, travel, per diem and lodging expenses for the following
officiating groups: safety, technical inspection, race officiating and rules
compliance, medical services, timing and scoring audit, registration and race
administration. Prior to the Reorganization, each franchise race team was paid a
travel fee to attend and participate in each event, and after January 1, 1998,
such payments were discontinued. Overseas event organizers are responsible for
costs related to cargo, air passenger travel and lodging for CART staff and race
participants.

Administrative and Indirect Expenses. All operating costs not directly
incurred for a specific event, primarily wages, Board of Directors fees and
other administrative expenses, are recorded as administrative and indirect
expenses.

20
<PAGE> 22

RESULTS OF OPERATIONS

Year Ended December 31, 1997 Compared to Year Ended December 31, 1996

Revenues. Total revenues for 1997 were $41.8 million, an increase of
$366,000 from 1996. This increase was due to higher sanction fees and
sponsorship, television and other revenue as described below, partially offset
by a reduction in revenue of $7.1 million due to the fact that the Company did
not promote the U.S. 500 in 1997.

Sanction fees for 1997 were $24.2 million, an increase of $3.2 million, or
15%, from 1996. Of this increase, $1.9 million was attributable to the addition
of new events in Madison, Illinois near St. Louis and Fontana, California near
Los Angeles. The balance of the increase resulted from annual sanction fee
escalations for certain other events of $1.3 million.

Sponsorship revenue for 1997 was $7.2 million, an increase of $1.7 million,
or 31%, from 1996. This increase was primarily attributable to a new sponsorship
agreement entered into with MCI.

Television revenue for 1997 was $5.0 million, an increase of $852,000, or
21%, from 1996. This increase was due to the increase of approximately $500,000
in the ESPN rights fee, and an increase of $400,000 in rights fees from
Fittipaldi USA, the Company's Brazilian television partner.

Other revenue for 1997 was $5.4 million, an increase of $1.7 million, or
46%, from 1996. This increase was primarily attributable to $934,000 of
additional revenue from a CART-sanctioned support series as well as the sale of
commercial time for Inside CART and video footage sales of $379,000, partially
offset by a reduction in Canadian rights fees of $44,000.

Expenses. Total expenses for 1997 were $62.8 million, an increase of $20.8
million, or 50%, from 1996. This increase was due to higher race and franchise
fund payments, race expenses, compensation expense and administrative and
indirect expenses as described below, partially offset by a reduction in
expenses of $8.2 million because the Company did not act as the promoter of the
U.S. 500 in 1997.

Race and franchise fund payments for 1997 were $28.9 million, an increase
of $11.7 million, or 68%, from 1996. This increase was attributable to a
one-time increase of $9.5 million in the year-end point fund in 1997, increases
in purse distributions for the additional events in Madison, Illinois and
Fontana, California of $1.8 million and additional payments related to team
travel expenses of $266,000.

Race expenses for 1997 were $7.0 million, an increase of $915,000, or 15%,
from 1996. This increase was the result of the addition of the events in
Madison, Illinois and Fontana, California.

Compensation expense for 1997 was $12.2 million, an increase of $11.0
million, or 945%, from 1996. This non-cash compensation expense relates to the
issuance of the Company's stock to race teams at below fair market value.

Administrative and indirect expenses for 1997 were $14.3 million, an
increase of $5.7 million, or 66%, from 1996. Of this increase, $3.5 million was
attributable to increases in advertising, marketing and market research incurred
in connection with implementation of the Company's growth strategy. $1.3 million
reflects costs associated with the implementation of the sponsorship agreement
entered into with MCI, and $1.0 million relates to CART Licensed Products, L.P.,
a new partnership formed to enhance CART's licensed product sales.

Loss Before Income Taxes. Loss before income taxes for 1997 was $20.9
million, compared to loss before income taxes of $517,000 for 1996.

Income Tax Benefit. Income tax benefit for 1997 was $3.4 million, compared
to an income tax benefit of $179,000 for 1996.

Net Loss. Net loss for 1997 was $17.5 million compared to a net loss of
$338,000 in 1996.

Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

Revenues. Total revenues for 1996 were $41.5 million, an increase of $11.5
million, or 38%, from 1995. This increase was the result of higher sanction
fees, revenue received from the promotion of the U.S. 500 and increases in
sponsorship, television and other revenue as described below.

Sanction fees for 1996 were $21.1 million, an increase of $2.4 million, or
13%, from 1995. This increase was primarily attributable to $3.0 million of
additional revenues from the addition of a new race in Rio de Janeiro, Brazil
and $921,000 from annual sanction fee escalations for certain other events,
partially offset by a reduction of $1.5 million related to the elimination of
the Phoenix and New Hampshire events for 1996.

21
<PAGE> 23

U.S. 500 revenues for 1996 were $7.1 million. These revenues resulted from
the Company's promotion of the inaugural U.S. 500 and were primarily comprised
of ticket sales of $3.0 million, sponsorship revenue of $2.4 million,
hospitality revenue of $417,000, television revenue of $450,000 and other
revenue of $767,000. The Company did not act as the promoter of the U.S. 500
prior to 1996, and, therefore, no revenues were received for the comparable
prior period.

Sponsorship revenue for 1996 was $5.5 million, an increase of $721,000, or
15%, from 1995. This increase was primarily the result of new sponsorship
agreements entered into with Toyota Truck and Honda Motorcycle and revenue from
PPG's sponsorship of the CART Championship internet website.

Television revenue for 1996 was $4.1 million, an increase of $962,000, or
30%, from 1995 due to increased revenue received from ESPN over the minimum
guarantee.

Other revenue for 1996 was $3.7 million, an increase of $370,000, or 11%,
from 1995. This increase in revenue resulted from $237,000 from the
CART-sanctioned support series, Indy Lights, additional interest from
investments of $95,000, and additional licensing revenues of $52,000 related to
radio rights.

Expenses. Total expenses for 1996 were $42.0 million, an increase of
$12.8 million, or 44%, from 1995. This increase was due to higher race, non-cash
compensation, administrative and indirect expenses and the Company's promotion
of the U.S. 500 as described below, partially offset by slightly lower race and
franchise fund payments.

Race and franchise fund payments for 1996 were $17.2 million, a decrease of
$1.2 million, or 7%, from 1995. The Company had a reduction in franchise fund
payments in 1996 because the Company did not make a franchise fund payment
related to the U.S. 500 and because race payments related to the U.S. 500 are
included in U.S. 500 expenses below.

U.S. 500 expenses for 1996 were $8.2 million. These expenses were comprised
primarily of track rental of $1.2 million, cost of sales related to sponsorships
of $547,000, labor costs to promote and officiate the event of $571,000 and
advertising and promotions to publicize the event of $1.7 million, as well as
associated race payments which are not included in the race and franchise fund
payments described above of $3.4 million. The expenses incurred in 1996 were
related to the Company's promotion of the inaugural U.S. 500 in that year, and,
therefore, no expenses related to the U.S. 500 were incurred for the comparable
prior period or any period subsequent to 1996.

Race expenses for 1996 were $6.1 million, an increase of $1.4 million, or
31%, from 1995. This increase was primarily attributable to a one-time research
and development cost of $604,000, a restructuring of officials fees of $191,000,
the addition of spring training for the race teams of $77,000, and the write-off
of equipment of $158,000.

Compensation expense for 1996 was $1.2 million. This non-cash compensation
expense relates to the issuance of the Company's stock to new franchise race
teams at below fair market value. Non-cash compensation expenses related to
stock purchases by eligible franchise race teams which were not incurred in the
prior year.

Administrative and indirect expenses for 1996 were $8.6 million, an
increase of $2.8 million, or 48%, from 1995. This increase was primarily the
result of professional fee expenses incurred in litigation of $1.7 million, an
increase in interest expense related to the acquisition of a new medical coach
of $50,000 and other costs associated with the continued growth of the Company.

Loss Before Income Taxes. Loss before income taxes for 1996 was $517,000,
compared to income before income taxes of $781,000 for 1995.

Income Tax Benefit. Income tax benefit for 1996 was $179,000, a decrease
of $25,000 from 1995.

Net Loss. Net loss for 1996 was $338,000 compared to net income of
$985,000 for 1995.

Year Ended December 31, 1995 Compared to Year Ended December 31, 1994

Revenues. Total revenues for 1995 were $30.0 million, an increase of $4.8
million, or 19%, from 1994. This increase was due to higher sanction fees,
sponsorship, television and other revenue as described below.

Sanction fees for 1995 were $18.7 million, an increase of $2.4 million, or
15%, from 1994. Of this increase, $1.2 million was attributable to the addition
of a new race in Miami, Florida, and $1.2 million was the result of annual
sanction fee escalations for certain other race events.

22
<PAGE> 24

Sponsorship revenue for 1995 was $4.8 million, an increase of $676,000, or
16%, from 1994. This increase was primarily the result of new sponsorship
agreements entered into with Budweiser, Mercedes Benz, Craftsman, IBM and
Domaine Chandon.

Television revenue for 1995 was $3.2 million, an increase of $834,000, or
36%, from 1994 due to an increase in net revenues from ESPN of $625,000, an
increase in Canadian and Australian television revenue of $160,000, and an
increase from Fittipaldi USA, the Company's Brazilian television partner, of
$50,000.

Other revenue for 1995 was $3.3 million, an increase of $871,000, or 36%,
from 1994. This additional revenue was partially the result of increases in
revenue from CART-sanctioned support series of $427,000, royalty revenues of
$342,000, increased race entry fees of $232,000, and consulting fees of $100,000
from the development of an on-track physical damage program, partially offset by
a reduction in membership fees of $280,000.

Expenses. Total expenses for the year-ended 1995 were $29.2 million, an
increase of $4.1 million, or 16%, from 1994. This increase was due to higher
race and franchise fund payments, race expenses and administrative and indirect
expenses.

Race and franchise fund payments for 1995 were $18.4 million, an increase
of $141,000, or 1%, from 1994. This increase was attributable to the additional
race held in Miami, Florida.

Race expenses for 1995 were $4.6 million, an increase of $2.0 million, or
76%, from 1994. This increase was due to expenses of $1.7 million related to a
travel reimbursement plan implemented in 1995 and the addition of a race in
Miami, Florida.

Administrative and indirect expenses for 1995 were $5.8 million, an
increase of $1.9 million, or 47%, from 1994 due to a relocation of the Company's
headquarters and the continued growth of the Company.

Income Before Income Taxes. Income before income taxes for 1995 was
$781,000, an increase of $699,000 from 1994 due to the factors described above.

Income Tax Benefit. Income tax benefit for 1995 was $204,000, a decrease
of $140,000 from 1994.

Net Income. Net income for 1995 was $985,000, an increase of $559,000 from
1994 as a result of the factors described above.

23
<PAGE> 25

SEASONALITY AND QUARTERLY RESULTS

The Company derives a substantial portion of its total revenues during the
CART Championship season. As a result, the Company's business has been, and is
expected to remain, seasonal, based upon the CART Championship schedule. The
Company's quarterly results vary relative to the number of races held during the
quarter. In addition, the mix between the type of race (street course,
superspeedway, etc.) and the sanction fees attributed to those races will affect
quarterly results. The following table sets forth certain unaudited quarterly
financial data of the Company for each of the four quarters of 1995, 1996 and
1997. The information for each of these quarters is prepared on the same basis
as the financial statements of the Company and related notes thereto included
elsewhere in this Prospectus and include, in the opinion of management, all
adjustments (consisting of normal recurring adjustments) necessary to fairly
present the data for such periods. The tables should be read in conjunction with
"Selected Consolidated Financial Data," the financial statements of the Company
and the related notes thereto and the other financial information included
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
QUARTERS ENDED
-----------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-------- ------- ------------ -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Total revenues
1995...................................................... $ 5,995 $ 9,427 $12,721 $ 1,834
1996(1)................................................... 10,623 17,580 11,647 1,604
1997...................................................... 5,569 18,564 15,770 1,917
Income (loss) before taxes
1995...................................................... $ 1,159 $ (662) $ 1,166 $ (882)
1996...................................................... 3,542 (948) (163) (2,948)
1997(2)................................................... 1,272 (1,695) (17,659) (2,865)
Number of races
1995...................................................... 2 6 8 0
1996...................................................... 3 6 7 0
1997...................................................... 1 8 8 0
</TABLE>

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

(1) Includes revenues of $7.1 million related to the Company's promotion of the
U.S. 500 in the quarter ended June 30. The Company will continue to sanction
this event, but does not anticipate promoting the event in the future.

(2) The results for the quarter ended September 30, 1997 have been restated to
reflect an increase in compensation expense from $1,483,000 to $12,200,000,
related to the issuance of Common Stock to race teams in December 1997, as
described in Note 11 to the consolidated financial statements.

The revenues from any race in the CART Championship can significantly
affect the Company's results of operations for a particular quarter.
Consequently, changes in race schedules from year to year, with races held in
different quarters, will result in fluctuations in quarterly results and affect
comparability.

LIQUIDITY AND CAPITAL RESOURCES

The Company has relied on cash flow from operations, supplemented by bank
borrowings, to finance working capital, investments and capital expenditures.

The Company's bank borrowing with a commercial bank consists of a fixed
rate installment note incurred in connection with the acquisition of a mobile
medical unit that is transported to each North American race. The note bears
interest at the rate of 8.25% per annum and matures on May 1, 2001. The note is
secured by the Company's mobile medical unit. Interest is payable monthly. As of
December 31, 1997, the current portion of this note was $130,000 and the
long-term portion was $314,000.

The Company also has a $1.5 million revolving line of credit with a
commercial bank. As of December 31, 1997, there was no outstanding balance under
the line of credit. The line of credit contains no covenants or restrictions.
Advances on the line of credit are payable on demand and bear interest at the
bank's prime rate. The line is secured by the Company's deposits with the bank.

24
<PAGE> 26

In December 1997, the Company sold 1,399,998 shares of its Common Stock for
aggregate proceeds of $1,800,000, of which 1,200,000 shares were sold to three
race teams for $1.13 per share and 199,998 shares were sold to three race teams
for $2.25 per share. In March 1998, the Company rescinded the sale of 66,666
shares of Common Stock it issued in December 1997 for an aggregate price of
$150,000. In January 1997, the Company redeemed 400,000 shares of Common Stock
for $210,000 ($0.53 per share). In January and February 1997, the Company sold
1,200,000 shares of its Common Stock for aggregate proceeds of $840,000 ($0.70
per share).

The Company's cash balance on December 31, 1997 was $1.2 million, a net
increase of $534,000 from December 31, 1996. This increase was primarily the
result of net cash provided by operations of $1,458,000 and net financing
activities of $125,000, which was offset by net cash used in investing
activities of $1,049,000. The Company's cash balance on December 31, 1996 was
$630,000 compared to $2.0 million at December 31, 1995, a net decrease of $1.4
million. The decrease was primarily the result of net cash used in operations of
$627,000 and investing activities of $1.0 million, offset by cash provided by
financing activities of $212,000.

The Company anticipates capital expenditures of approximately $1.7 million
during the next 12 months, including capital expenditures expected by Indy
Lights. The Company believes that the proceeds of the Offering, cash flow from
operations and available borrowings under its bank facilities will be sufficient
to fund these anticipated capital expenditures and other cash needs.

YEAR 2000 COMPLIANCE

The Company does not expect the cost of converting its computer systems to
year 2000 compliance will be material to its financial condition. The Company
believes that it will be able to achieve year 2000 compliance by the end of
1999, and does not currently anticipate any disruption in its operations as the
result of any failure by the Company to be in compliance. The Company does not
currently have any information concerning the year 2000 compliance status of its
suppliers and customers.

RECENT ACCOUNTING PRONOUNCEMENTS

In February 1997, Statement of Financial Accounting Standards ("SFAS") No.
128, "Earnings per Share" was issued by the Financial Accounting Standards Board
("FASB"). SFAS No. 128 establishes standards for computing and presenting
earnings per share ("EPS") and applies to all entities with publicly-held common
shares or potential common shares. SFAS No. 128 replaces the presentation of
primary EPS and fully-diluted EPS with a presentation of basic EPS and diluted
EPS, respectively. Basic EPS excludes dilution and is computed by dividing
earnings available to common shareholders by the weighted-average number of
common shares outstanding for the period. Similar to fully diluted EPS, diluted
EPS reflects the potential dilution of securities that could share in the
earnings.

In June 1997, SFAS No. 131, "Disclosures about Segments of an Enterprise
and related Information" was issued by the FASB. SFAS No. 131 establishes
standards for the way that public business enterprises report financial and
descriptive information about its reporting operating segments. The Company has
not determined the impact on the Company's financial statement disclosure. SFAS
No. 131 is effective for the Company's financial statements for the year ending
December 31, 1998.

25
<PAGE> 27

AUTO RACING INDUSTRY OVERVIEW

Auto racing consists of several distinct categories, each with its own
organizing body and racing events. Internationally, the most recognized form of
auto racing is open-wheel racing, utilizing an aerodynamically designed chassis
and technologically advanced equipment. The most established international
open-wheel racing series are Formula One, the CART Championship, Formula 3000
and Indy Lights. In addition to these established open-wheel series, the Indy
Racing League (the "IRL"), a new United States-based oval-racing series that
includes the Indianapolis 500, was formed in 1995. The largest auto racing
category in the United States, in terms of attendance and media exposure, is
stock car racing. Stock car racing utilizes equipment similar in appearance to
standard passenger automobiles and races are typically staged on oval courses.
The most prominent organizing body in stock car racing is NASCAR. Drag racing
typically involves short sprint races on a straight-line drag strip. The
National Hot Rod Association ("NHRA") is the most prominent organizing body in
drag racing. Other, less prominent, racing segments include various types of
sports car racing and club racing.

Motorsports events are generally heavily promoted, with a number of
supporting events surrounding the main race event. Examples of supporting events
include qualifying trials, secondary racing events, driver autograph sessions,
automobile and product expositions, catered parties and other related events
which are all designed to maximize the spectators' entertainment experience. The
primary participants in motorsports are spectators, corporate sponsors, track
owners, drivers, team owners and sanctioning bodies.

Spectators. Motorsports is among the fastest growing spectator sports in
the United States and, after soccer, it is the most watched sport worldwide.
Total attendance at all motorsports events in the United States in 1997 exceeded
16.8 million people. During 1997, approximately 2.5 million people attended CART
events. CART races were also televised in more than 185 countries in 1997, with
aggregate television audiences in excess of 1 billion viewers.

Corporate Sponsors. Drawn to motorsports by the large number of spectators
and television audiences and their attractive demographics, corporate sponsors
are active in all phases of the industry. The Company believes that the
demographic profile of its growing spectator base has considerable appeal to
sponsors, track owners, television networks and advertisers. The mean annual
family income of CART spectators has been estimated to be $52,700, compared to
$38,400 for an average United States household. The Company believes that the
spectators are loyal to motorsports and to its corporate sponsors. In addition
to sponsoring the various racing series, corporate sponsors support drivers and
teams by funding certain costs of their operations, and race promoters and track
owners by sponsoring and promoting specific events. In return, corporate
sponsors receive advertising exposure on television and radio, through
newspapers, printed materials, advertising and promotional and hospitality
benefits at the track over the race weekend. Companies negotiate sponsorship
arrangements based on factors including a series' or event's audience size or
spectator demographics and a team's racing success.

Race Promoters. Race promoters, which include track owners, government
organizations and other groups and individuals, pay a fee to have an event
sanctioned at their race venue and are responsible for the local marketing and
promotion of the event. Their revenue sources generally include admissions,
sponsorships, corporate hospitality (suites, chalets and tents for race viewing
and other amenities), advertising and concessions and souvenir sales.

Drivers. A majority of drivers contract independently with team owners,
while select drivers own their own teams. Principally, these drivers receive
income from contracts with team owners, sponsorship fees and prize money.
Successful drivers may also receive income from personal endorsement fees and
souvenir sales. The personality and success of a driver can be an important
marketing advantage for team owners, because it can help attract corporate
sponsorships and generate sales for licensed merchandise.

Team Owners. In most instances, team owners underwrite the financial risk
of placing their teams in competition. They contract with drivers, acquire
racing vehicles and support equipment, employ pit crews and mechanics and
syndicate sponsorship of their teams. Team owners generally receive income
primarily from sponsorships and a percentage of the prize money.

Sanctioning Bodies. Sanctioning bodies sanction events at various race
venues in exchange for fees from race promoters and track owners, and are
responsible for all aspects of race management necessary to "manufacture" the
race event. Sanctioning bodies are responsible for presenting racing cars,
drivers, and teams and providing race officials to ensure fair competition, as
well as providing the race and series' purses and other prize payments.

26
<PAGE> 28

The Federation Internationale de l'Automobile (the "FIA"), based in Paris,
France, is the worldwide governing body for auto racing, with "national sporting
authority" members in more than 100 countries. The FIA's United States national
sporting authority is the Automobile Competition Committee of the United States,
which in turn is made up of seven member sanctioning organizations: CART,
NASCAR, United States Auto Club ("USAC"), Professional SportsCar Racing
("PSCR"), NHRA, Sports Car Club of America ("SCCA") and the IRL.

Some of the most widely recognized auto racing series are:

- CART. The CART Championship is the premier open-wheel motorsports
series in North America. CART events are staged on four different types of
tracks -- superspeedways, ovals, temporary street courses and permanent
road courses, requiring teams and drivers to employ a variety of skills to
master different courses to compete for the CART Championship. The CART
Championship is sanctioned by CART and will include 19 races in the 1998
season.

- Formula One. The FIA sanctions the Formula One World Championship
events consisting of open-wheel races on road courses in Europe, South
America, Canada, Australia and Japan. The Formula One World Championship
was founded in 1950. The 1998 Formula One calendar includes 15 events in 13
different countries. Currently, there are no events in the Formula One
World Championship that are staged in the United States.

- IRL. In 1995, the IRL was formed as a rival United States open-wheel
racing series, competing directly with CART. The IRL's events are staged
solely on oval courses. The IRL's first season of racing commenced in 1996
and consisted of five races, including the Indianapolis 500. The 1998
season will consist of 11 races, including the Indianapolis 500. The IRL
was sanctioned by USAC during 1996, but during 1997, the IRL elected to
sanction its own events.

- NASCAR. Professional stock car racing developed in the Southeastern
United States in the 1930s, and NASCAR has been influential in the growth
and development of the sport. NASCAR is the most recognized sanctioning
body of professional stock car racing in North America, supervising the
Winston Cup and Busch Grand National stock car race series. The 1998
Winston Cup and Busch Grand National race series includes 33 and 31 races,
respectively, all of which will be held in the United States, with two
exhibition events in Japan.

- Other Sanctioning Bodies. Sports car races are held on road courses
and temporary street circuits throughout the United States and are
sanctioned by SCCA and PSCR. Drag racing is sanctioned in the United States
by NHRA. ARCA sanctions stock car races that are less prominent than those
sanctioned by NASCAR.

27
<PAGE> 29

BUSINESS

THE COMPANY

The Company owns, operates and sanctions the premier open-wheel motorsports
series in North America, the CART Championship, and is responsible for
organizing, marketing and staging each of the races in the CART Championship.
With speeds of up to 240 miles per hour, and an average margin of victory during
the 1997 race season of less than four seconds, CART open-wheel racing is the
fastest form of closed-circuit auto racing available to motorsports audiences,
providing intense excitement and competition.

The drivers and racing teams participating in CART racing events are among
the most recognized names in motorsports, with marquee drivers including Michael
Andretti, Bobby Rahal, Al Unser Jr., Jimmy Vasser and Alex Zanardi. The
excitement and competition of CART racing also attracts well-known racing
legends, business leaders and sports and entertainment personalities as team
owners including Chip Ganassi, Carl Haas, David Letterman, Bruce McCaw, Joe
Montana, Paul Newman, U.E. "Pat" Patrick, Walter Payton and Roger Penske. For a
complete list of CART drivers and teams, see "-- Drivers and Corporate
Sponsors," below. Major sponsors of the 1998 CART Championship include Federal
Express and PPG Industries as the co-title sponsors, MCI, Budweiser,
Mercedes-Benz, Honda, Craftsman and other Fortune 500 companies.

The Company derives its revenues from four primary sources: sanction fees
paid by track promoters, corporate sponsorship fees, television revenues and
licensing royalties. The Company's revenues have increased during the last four
years from $25.2 million in 1994 to $41.8 million in 1997. Based upon current
promoter and sponsorship agreements, The Company expects that sanction fee
revenues will increase from $24.2 million to $30.1 million and that sponsorship
revenues will increase from $7.2 million to $12.1 million from 1997 to 1998.

In December 1997, the Company was incorporated in Delaware in contemplation
of the Reorganization. The Company's principal executive office is located at
755 West Big Beaver Road, Suite 800, Troy, Michigan 48084, and its telephone
number is (248)362-8800.

28
<PAGE> 30

GROWTH STRATEGY

- Increase Market Penetration in the United States. The Company will
continue to develop its race schedule in key markets in the United States
and will stage a race in Houston, Texas during the 1998 season. Because
CART races are conducted on superspeedways, ovals, temporary street courses
and permanent road courses, the Company believes it has great flexibility
in selecting future race venues.

- Increase CART's Licensing Opportunities. The Company will continue
to seek out opportunities to bring the CART brand to a broader market.
Through CART Licensed Products, an affiliated limited partnership in which
the Company owns a 55% interest, CART provides "one stop shopping" for
potential licensees for the servicemarks and trademarks of CART, as well as
for participating race teams, drivers and tracks. This integrated approach
allows licensees and retailers to work with a single licensing entity
rather than negotiating with the fragmented licensing environment found in
other sports.

- Acquire and Develop Related Businesses and Properties. The Company
will selectively pursue opportunities to acquire and apply the CART brand
name to other race-related businesses and properties. The Company expects
to vertically integrate certain support-racing series to develop future
racing talent in the United States. The Company is also seeking
opportunities to acquire and develop race experience products such as
simulation or virtual reality products, indoor kart racing centers and race
schools, which will provide potential and existing race fans with an
affordable and accessible opportunity to experience the sport. As the first
step in this strategy, the Company is acquiring ARS, which operates Indy
Lights, and BP, which provides certain equipment to the participants of
Indy Lights. This transaction will close concurrently with the Offering.

THE CART ADVANTAGE

The CART Championship. CART was founded in 1978 by a group of team owners
dedicated to the future of open-wheel motorsports. This group has evolved into
today's CART Championship competitors. In 1997, 17 teams entered 27 cars to
compete for the title of PPG CART World Series Champion. Purse money and CART
Championship points are awarded to teams based on their finishing position in
each race. The CART Champion is determined by the cumulative points received
over the course of the season. The current champion is Alex Zanardi of Italy.
Past CART champions include such well known drivers as Mario Andretti, Michael
Andretti, Emerson Fittipaldi, Nigel Mansell, Rick Mears, Bobby Rahal, Johnny
Rutherford, Danny Sullivan, Al Unser, Jr., Al Unser, Sr., Jimmy Vasser and
Jacques Villeneuve.

The Races. Winning the CART Championship requires race teams and their
drivers to master superspeedways, high-intensity one-mile ovals, permanent road
courses and temporary road courses. High-tech race cars with state-of-the-art
engines from Mercedes-Benz, Honda, Ford and Toyota reach speeds of up to 240
miles per hour. The Company

29
<PAGE> 31

believes that the CART Championship offers the fastest and most competitive
racing of any closed-circuit motorsport series, with an average margin of
victory during 1997 of less than four seconds.

The World-Wide Appeal. The sport of auto racing is second only to soccer
in its worldwide popularity. CART has capitalized on auto racing's broad,
worldwide appeal and now races in Australia, Brazil and Canada, in addition to
the United States. For 1998, a race in Japan has been added to the CART
schedule. Adding to CART's worldwide appeal is the diversity of its drivers. In
1997, 19 of the 31 drivers who competed in at least one CART race event were
born outside of the United States. In total, these drivers represented 10
different countries.

The Fans. The primary means for a fan to interface with the CART
Championship is through direct attendance at events or by television viewership.
CART spectators are demographically attractive to sponsors and advertisers in
that they are generally young males with education and income levels above the
national average. This demographic group is hard to reach by traditional
methods, making sponsorship of CART's teams or events an attractive advertising
and promotional investment. CART's television audience, while closer to the
national average for household income, encompasses an above average proportion
of males in the 25 to 54 age group, an attractive demographic for advertisers
since this age group tends to watch less television than the average American.
In the United States, CART's television ratings have declined in recent years
and mirror the overall decline in television ratings for sports events in the
United States. On a worldwide basis, CART's television audience was in excess of
1 billion viewers during 1997.

CART HISTORY

CART-style, open-wheel racing stands as the longest continually scheduled
major motorsports championship in the world, dating back to the early 1900s. The
first American automobile race took place in 1895, and the American Automobile
Association ("AAA") began sanctioning major races in 1904. The AAA sanctioned
races through the 1955 season at which time USAC became the official sanctioning
body.

In the 1970s, race team owners became increasingly concerned about
escalating costs, lack of promotional activities and concentration solely on the
Indianapolis 500. As a result, in November 1978, a group of 18 of the 21 team
owners left USAC to form CART and the CART Championship. The group included U.E.
"Pat" Patrick, Roger Penske and other teams owners who desired greater
participation in the rule-making and administrative processes concerning
open-wheel racing in the United States. In its 1979 inaugural season, CART
staged 13 races. PPG Industries became the title sponsor of the CART
Championship late in that inaugural year, and Rick Mears was crowned the first
champion of the CART Championship.

Since Mears' victory in the inaugural season, CART has had many other
memorable champions including Al Unser, Sr., Johnny Rutherford, Mario Andretti,
Danny Sullivan, Emerson Fittipaldi, Al Unser, Jr., Michael Andretti, Bobby
Rahal, Nigel Mansell, Jacques Villeneuve, Jimmy Vasser and Alex Zanardi.

Competitive, close racing is the hallmark of CART. In 1991, there were six
different winners in the first six races, and the 1993 season yielded six
different race winners and 13 different podium finishers. The 1994 through 1997
race seasons were equally competitive. In 1997, there were eight different
winners, including first-time victories in the CART Championship for Mark
Blundell, Mauricio Gugelmin and Greg Moore.

Due to starting position reservations and changes to equipment
specifications, CART teams have generally not competed in the Indianapolis 500
since 1995. The reservation of starting positions for IRL competitors was
removed after the 1997 Indianapolis 500. The Company will continue to evaluate
opportunities for an accommodation with the Indianapolis Motor Speedway ("IMS"),
but there can be no assurance that a resolution will be reached or of the timing
of any such resolution. The Company is unable to predict what effect, if any,
the continued non-participation by CART teams at the Indianapolis 500 will have
on the Company's future results.

Since 1995, CART has added domestic races in Homestead, Florida, Madison,
Illinois, and Fontana, California. These races serve the important Miami, St.
Louis and Los Angeles markets, respectively. Internationally, a race in Rio de
Janeiro, Brazil was added to CART's schedule in 1996. The Company has scheduled
new races in Houston, Texas and Motegi, Japan for 1998.

Today, the CART Championship is the premier open-wheel racing series in
North America and has successfully expanded its core domestic audience and
exported its product to international race venues and television markets.

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<PAGE> 32

CART's race cars, which can attain speeds of up to 240 miles per hour, are the
fastest closed-circuit race cars in the United States, and its events, staged on
four types of tracks, require different skills and disciplines from the drivers
and teams.

FRANCHISE SYSTEM AND RACE TEAMS

Since 1984, CART has been operated as a "franchise system." A franchise was
available for each competing car, with any one owner limited to a maximum of two
franchise memberships. The number of franchises awarded has varied, but has
never exceeded 25. To become a franchise member, a race team must have competed
in all events for the prior race year and be one of the 24 highest placed teams,
based on points received from competition. Prior to the Reorganization, each
franchise member received the right to purchase one share of common stock of
CART.

The participation of race teams is critical to the ongoing success of the
Company and the CART Championship. The Company believes that the franchise
system, which is the only race governing system that offers teams direct input
into race scheduling, rules and all other racing activities, is a significant
factor in encouraging entities who are interested in auto racing to participate
in CART-sanctioned events.

CART, which became a wholly-owned subsidiary of the Company following the
Reorganization, is managed by a board of directors composed of race team
participants (the "CART franchise board"). Prior to the Reorganization, each
franchise owner was entitled to designate a member to the CART franchise board
and to receive certain benefits, including reimbursement of travel expenses on a
per race basis, directors fees and other race-related expenses. The franchise
and the one share of stock were not transferable without the approval of the
CART franchise board and were subject to redemption by CART at the price set by
the CART franchise board for the year in which the redemption occurred. In
certain instances, a race team sold its franchise and share of stock to an
incoming franchisee at the price set by the CART franchise board. In other
instances, the franchise and stock were redeemed by CART on the same basis. For
the 1997 season, each new race team that purchased a franchise and a share of
common stock paid $400,000.

At the end of the 1997 race season, there were 22 franchises, each of
which, prior to the Reorganization, owned one share of stock in CART. Upon
completion of the Reorganization, each share of CART stock was converted into
400,000 shares of Common Stock. The three new race teams who met the franchise
purchase criteria in September 1997 became franchise owners in December 1997,
and were issued one share of stock in CART, which was subsequently converted
into 400,000 shares of Common Stock of the Company. In addition, three race
teams who competed in all of the CART races during the 1997 season, but did not
earn enough points to be a franchise owner, purchased an aggregate of 199,998
shares of Common Stock upon the Reorganization. In March 1998, one such race
team rescinded its purchase of an aggregate of 66,666 shares of Common Stock.

Subsequent to the Reorganization, the franchise system will continue
without any additional equity ownership in the Company or CART. Rather, the 24
race teams which have met participation requirements and have the highest total
of points from the prior season will each be permitted to designate a member to
the CART franchise board, which will manage and oversee all racing-related
activities and make all decisions with respect to specifications for engines and
chassis, race and venue participation, rules and related matters.

The stockholders of the Company have received payments in equal amounts
based on their ownership of franchises and race participation for the fiscal
year ended December 31, 1995, 1996 and 1997 in the aggregate amounts of $9.0
million, $8.5 million and $19.4 million, respectively. These franchise payments
will be discontinued after January 1, 1998 pursuant to contractual commitments
which expire in December 2000. Because each franchise member is also a
stockholder of the Company, and as such, has an interest in the success of the
Offering, the agreement constitutes a related party transaction. Management does
not intend to resume making such payments to franchise members in the
foreseeable future.

In addition, all of the stockholders of the Company have competed for the
purse money distributions for each race event and year-end points distributions
and contingency awards. These amounts have been paid by CART to various teams
based solely upon their performance in the CART events and have been paid to
race teams regardless of whether or

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<PAGE> 33

not they were franchise or share owners. The amounts paid to each of the current
stockholders and their predecessors during the past four years were as follows:

<TABLE>
<CAPTION>
STOCKHOLDERS 1994 1995 1996 1997
------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
All American Racers, Inc..................... $ -- $ -- $ 265,250 $ 240,250
Arciero-Wells Racing, Ltd., LLC.............. 95,950 133,000 173,250 275,000
Bettenhausen Motorsports, Inc................ 272,725 246,125 367,300 275,450
Davis Racing, Inc............................ -- -- -- 146,900
Della Penna Motorsports, Inc................. -- -- 28,650 125,000
Forsythe-Green Racing, Inc................... 362,050 -- -- --
Forsythe Racing, Inc......................... -- 461,100 489,175 541,000
Hogan/Penske Racing, Inc..................... -- -- 229,750 --
Hogan Racing, L.L.C.......................... -- -- -- 178,500
Newman/Haas Racing........................... 635,000 1,169,600 1,695,850 729,000
PacWest Racing Group......................... 366,600 621,150 700,100 1,283,000
Patrick Racing, Inc.......................... -- 522,070 503,400 984,000
Payton/Coyne Racing, Inc..................... 153,725 267,900 366,050 251,250
Penske Racing, Inc........................... 3,941,600 1,319,751 1,004,500 895,500
Rahal/Hogan Racing, Inc...................... 412,875 929,150 -- --
Chip Ganassi Racing Teams, Inc............... 797,050 634,500 3,823,175 2,564,750
Tasman Motorsports Group..................... -- 275,400 762,975 399,000
Team Green, Inc.............................. -- 1,667,050 -- 216,900
Team Rahal, Inc.............................. -- -- 1,115,875 582,000
Derrick Walker Racing, Inc................... 750,900 850,250 424,400 1,013,250
</TABLE>

PPG DAYTON INDY LIGHTS CHAMPIONSHIP

The Indy Lights Championship was formed in 1986 by racing team owner U.E.
"Pat" Patrick as a series in which team owners could discover and develop the
next generation of CART talent. Indy Lights was designed to emphasize driver and
team talent, while reducing any advantage gained through large monetary
expenditures for equipment and technology. By restricting competition to a
single chassis design, powered by identical, sealed engines and running a single
brand of tires, Indy Lights offers a series in which costs can be carefully
controlled and creates a level playing field for drivers, team managers and
engineers.

The Indy Lights Championship is designated as the "Official Development
Series of the CART Championship," and is sanctioned by CART. During the 1997
season, seven different drivers, representing five different race teams and four
different countries, won races, making 1997 one of the most competitive seasons
in the series' history. During 1997, the series had 21 full-season entrants,
with a total of 36 drivers competing in at least one race in the Indy Lights
Championship. Graduates from the Indy Lights Championship who now compete in the
CART Championship include drivers Paul Tracy, Bryan Herta, Greg Moore, Andre
Ribeiro, Adrian Fernandez and Gualter Salles, as well as Steve Horne's Tasman
Motorsports Group. In 1997, CART team owners Steve Horne (Tasman Motorsports
Group), Gerald Forsythe (Players' Forsythe Racing), Bruce McCaw (PacWest Racing)
and Barry Green (Team KOOL Green) each competed in the Indy Lights Championship
to train a talent pool of mechanics, engineers and other team personnel. At the
conclusion of the 1997 season, CART team owner and driver, Bobby Rahal,
announced that Team Rahal will compete in the Indy Lights Championship for the
1998 race season.

Similar to the CART Championship, the Indy Lights Championship races are
run on four different types of tracks. Each of the race events is sanctioned by
CART and, at certain venues, CART receives a sanction fee from the promoter for
staging the Indy Lights event. CART's management believes that the Indy Lights
Championship can create significant revenue growth for CART through packaged
sponsorships, extending CART's efforts to integrate category sponsorship and
additional sanction fees for "stand alone" Indy Lights events, both in the
United States and overseas. With the growth and popularity of the series, the
Company believes that Indy Lights will play a significant role in its future
revenue growth.

In December 1997, the Company entered into a binding letter of intent to
acquire all of the outstanding shares of ARS and certain assets of BP for a
total purchase price of $10.0 million, of which $7.0 million is payable in cash
at closing

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<PAGE> 34

and $3.0 million, which will be escrowed and payable equally over three years
subject to ARS meeting certain performance criteria. In addition, the
shareholders of ARS and BP will be granted options to purchase 100,000 shares of
the Company's common stock at the initial public offering price which vest one
year from closing if certain performance criteria are met for 1998. At the time
of the Offering, the shareholders of ARS and BP will be granted the right to
purchase 67,000 of the shares being sold in the Offering at the initial public
offering price. ARS operates Indy Lights and BP provides certain equipment to
the participants of Indy Lights. The Indy Lights Acquisition will close
concurrently with the Offering and a portion of the proceeds from the Offering
will be used to fund the cash portion of the Indy Lights Acquisition.

SANCTION FEES

For each race in the CART Championship, the promoter enters into a
multi-year sanction agreement which provides for payment of a sanction fee to
CART. For the year ended December 31, 1997, the Company received sanction fees
of approximately $24.2 million, an average of $1.4 million per event,
representing approximately 58% of the Company's total revenues. For the year
ended December 31, 1996, the Company received sanction fees of approximately
$21.1 million and averaging $1.3 million per event, representing approximately
51% of the Company's total revenues. Based upon current promoter agreements, the
Company projects it will receive sanction fee revenue of $30.1 million in 1998,
an average of $1.6 million per event.

As the CART Championship has expanded internationally, the Company's
average sanction fee has increased as international events typically have higher
sanction fees than events in North America. During 1997, sanction fees at
international events averaged $2.8 million per event, compared to $1.2 million
for events in North America. As the terms of existing promoter agreements
expire, the Company believes that it will be positioned to negotiate increased
sanction fees at many of the current race venues to stage future races. Further,
CART believes that the popularity of the CART Championship will provide
additional domestic and international race venues willing to pay sanction fees
higher than the Company's current average sanction fee.

RACING EVENTS

When staging a CART event, the Company provides all aspects of race
management necessary to "manufacture" the race event, including the required
expertise and personnel. Such race management services are provided to track
promoters in exchange for a sanction fee. CART stages events at four different
types of tracks, including superspeedways, ovals, temporary street courses and
permanent road courses. Superspeedways are banked ovals of two miles or more in
distance, on which CART cars can attain speeds of up to 240 miles per hour. Oval
tracks are closed circuits, less than two miles in distance, which are often
"banked" at varying angles. Temporary street courses are typically built on
closed-off downtown streets of major cities, but can also be built on airport
runways or similar facilities which have a primary purpose other than as a
motorsports venue. Permanent road courses are raceways built solely for
motorsports racing and are designed with varying turns, straight-aways and
elevation changes to simulate driving on a road.

As competition, support and interest in the CART Championship have
increased, CART has increased the number of events staged per race season. The
1979 CART Championship was comprised of 13 race events. In 1997, CART ran 17
races -- 13 in the United States, two in Canada and one each in Australia and
Brazil. These races included two superspeedway races, five oval races, six
temporary street course races and four permanent road course races. The 1998
CART Championship will be comprised of 19 races in five different countries and
will include two new race venues for CART participants. A race event will be run
through the streets of Houston, marking CART's first race in Texas, and CART
will also add its first race in Asia, a 500-kilometer oval race in Motegi,
Japan.

In 1997, the Indy Lights Championship was comprised of 13 races. Of the 13
races, 11 were held in conjunction with CART events, and two races were "stand
alone" events. In 1998, the Indy Lights Championship will include 14 races, one
of which will be a stand alone event.

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<PAGE> 35

The following table sets forth the locations and venues for the 1997 and
1998 CART Championship and the 1997 and 1998 Indy Lights Championship, as well
as the CART event dates of the 1997 and 1998 seasons, whether there was an Indy
Light race as part of the event weekend and a description of the racing circuit:

<TABLE>
<CAPTION>
1998
EVENT DATE INDY
-------------- LIGHTS
LOCATION 1998 1997 RACE TRACK DESCRIPTION
-------- ----- ----- ------ -----------------
<S> <C> <C> <C> <C>
Homestead, Florida................................... 3/15 3/2 Yes 1.5 mile oval
Metro-Dade Homestead Motorsports Complex
Motegi, Japan (1).................................... 3/28 -- No 1.5 mile oval
Twin Ring
Long Beach, California............................... 4/5 4/13 Yes 1.6 mile temporary street course
Long Beach
Nazareth, Pennsylvania............................... 4/26 4/27 Yes 1.0 mile tri-oval
Nazareth Speedway
Rio de Janeiro, Brazil............................... 5/10 5/11 No 1.8 mile oval
Emerson Fittipaldi Speedway at
Nelson Piquet International Raceway
Madison, Illinois.................................... 5/23 5/24 Yes 1.3 mile banked oval
Gateway International Raceway
West Allis, Wisconsin................................ 5/31 6/1 Yes 1.0 mile oval
The Milwaukee Mile
Detroit, Michigan.................................... 6/7 6/8 Yes 2.1 mile temporary street course
The Raceway on Belle Isle
Portland, Oregon..................................... 6/21 6/22 Yes 2.0 mile permanent road course
Portland International Raceway
Cleveland, Ohio...................................... 7/12 7/13 Yes 2.4 mile temporary street course
Burke Lakefront Airport
Toronto, Ontario, Canada............................. 7/19 7/20 Yes 1.8 mile temporary street course
Toronto
Brooklyn, Michigan................................... 7/26 7/27 Yes 2.0 mile tri-oval superspeedway
Michigan International Speedway
Lexington, Ohio...................................... 8/9 8/10 No 2.3 mile permanent road course
Mid-Ohio Sports Car Course
Elkhart, Wisconsin................................... 8/16 8/17 No 4.0 mile permanent road course
Road America
Vancouver, British Columbia, Canada.................. 9/6 8/31 Yes 1.7 mile temporary street course
Vancouver
Monterey, California................................. 9/13 9/7 Yes 2.2 mile permanent road course
Laguna Seca Raceway
Houston, Texas (1)................................... 10/4 -- No 1.7 mile temporary street course
Houston
Gold Coast, Queensland, Australia.................... 10/18 4/6 No 2.8 mile temporary street course
Surfers Paradise, Queensland
Fontana, California.................................. 11/1 9/28 Yes 2.0 mile banked oval superspeedway
California Speedway
Trois-Rivieres, Quebec, Canada (2)................... -- -- Yes 2.1 mile temporary street course
Trois-Rivieres
Savannah, Georgia (3)................................ -- -- No 2.0 mile temporary street course
Grand Prize Circuit at Savannah Harbor
</TABLE>

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

(1) Added to race schedule for 1998.

(2) Indy Lights race only, to be held on August 2, 1998 and held on August 3,
1997.

(3) Indy Lights ran a stand alone race on May 18, 1997, but will not race at
Savannah in 1998.

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<PAGE> 36

DRIVERS AND CORPORATE SPONSORS

Drivers. During the 1997 season, 31 drivers competed in at least one of
the CART race events, including such well known drivers as Michael Andretti,
Bobby Rahal, Al Unser, Jr., Jimmy Vasser and Alex Zanardi. Set forth below is
information regarding each of the drivers who participated in the 1997 CART
Championship:

<TABLE>
<CAPTION>
DRIVER BIRTH PLACE 1997 RACE TEAM
------ ----------- --------------
<S> <C> <C>
MICHAEL ANDRETTI*................. Bethlehem, Pennsylvania Newman/Haas Racing
Mark Blundell..................... Barnet, Hertforshire, England PacWest Racing Group
Raul Boesel....................... Curitiba, Brazil Brahma Sports Team/Patrick Racing
Patrick Carpentier................ Ville Lasalle, Quebec, Canada Bettenhausen Motorsports
Gil DeFerran...................... Paris, France Walker Racing
Juan Fangio II.................... Balcarce, Buenos Aires, Argentina All American Racers
Adrian Fernandez.................. Mexico City, Mexico Tasman Motorsports Group
Christian Fittipaldi.............. Sao Paulo, Brazil Newman/Haas Racing
Dario Franchitti.................. Edinburgh, Scotland Hogan Racing
Mauricio Gugelmin................. Joinville, Brazil PacWest Racing Group
Richie Hearn...................... Glendale, California Della Penna Motorsports
Bryan Herta....................... Warren, Michigan Team Rahal
Parker Johnstone.................. Fort Benning, Georgia Team KOOL Green
PJ Jones.......................... Torrance, California All American Racers
Michel Jourdain, Jr............... Mexico City, Mexico Payton/Coyne Racing
Hiro Matsushita................... Kobe, Japan Arciero-Wells/Panasonic Racing
Arnd Meier........................ Hanover, Germany Project Indy
Roberto Moreno.................... Rio de Janeiro, Brazil Payton/Coyne Racing
Greg Moore........................ British Columbia, Canada Player's Forsythe Racing Team
Charlie Nearwood.................. Midland, Texas Payton/Coyne Racing
Max Papis......................... Como, Italy Arciero-Wells/MCI Racing
Scott Pruett...................... Sacramento, California Brahma Sports Team/Patrick Racing
BOBBY RAHAL*...................... Medina, Ohio Team Rahal
Andre Ribeiro..................... Sao Paulo, Brazil Tasman Motorsports Group
Gualter Salles.................... Rio de Janeiro, Brazil Davis Racing
Paul Tracy........................ Scarborough, Ontario, Canada Marlboro Team Penske
AL UNSER JR.*..................... Albuquerque, New Mexico Marlboro Team Penske
JIMMY VASSER*..................... Canoga Park, California Target/Chip Ganassi Racing
Dennis Vitolo..................... Massapequa, New York Project Indy
ALEX ZANARDI*..................... Bologna, Italy Target/Chip Ganassi Racing
</TABLE>

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

*Indicates past champion of the CART Championship.

Corporate Sponsors. Sponsorship revenues are paid to CART pursuant to
sponsorship contracts, primarily for the opportunity to receive brand and
product exposure. For the year ended December 31, 1996, the Company received
sponsorship revenues of approximately $5.5 million, representing approximately
13% of the Company's total revenues. For the year ended December 31, 1997, the
Company received sponsorship revenues of approximately $7.2 million,
representing approximately 17% of the Company's total revenues. Based upon
existing sponsorship agreements, the Company expects that it will receive
sponsorship revenues of approximately $12.1 million in 1998.

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<PAGE> 37

Management believes that as CART expands the audience for CART events, it
will see a corresponding increase in sponsorship opportunities and expects that
sponsorship revenues would increase. In addition, CART has taken a different
approach to selling sponsorship by integrating the rights of the sanctioning
body and the race tracks. This approach provides series-wide exclusivity and a
centralized sponsorship program which increases the value and appeal of the
sponsorship opportunity. MCI was the first such integrated sponsor, becoming the
Official Communications Company of CART in 1997.

Beginning with the 1998 race season, Federal Express has become the
co-title sponsor of the CART Championship, which has been officially designated
the "FedEx Championship Series." Under the agreement, Federal Express has
acquired a comprehensive range of marketing benefits as well as opportunities to
supply services to CART, its teams and its race promoters. A significant feature
of this sponsorship arrangement is the combination of the marketing rights of
both CART and its race promoters to provide an exclusive sponsorship involvement
through the entire CART Championship. PPG Industries, CART's long-time title
sponsor, will continue to be involved as a co-title sponsor of the series and
will continue to be the name sponsor of the CART Championship winner's
trophy--the "PPG Cup." PPG will also continue with its successful pace car
program at each CART race event.

The current list of sponsors for the 1998 CART Championship is set forth
below:

<TABLE>
<CAPTION>
SPONSOR OFFICIAL DESIGNATION YEARS AS SPONSOR
------- -------------------- ----------------
<S> <C> <C>
Federal Express............................. Official Co-Title Sponsor New
PPG Industries.............................. Official Co-Title Sponsor 18
MCI Telecommunications...................... Official Communications Company 1
Budweiser................................... Official Beer 3
Craftsman Tools............................. Official Hand Tools 3
Featherlite Trailers and Vantare Coach...... Official Trailer and Coach 3
Ford SVO Technology......................... Official Safety Technology Provider 1
Holmatro.................................... Official Rescue Tool 6
Honda Motorcycles........................... Official Motorcycle 2
Honda Power Equipment....................... Official Power Equipment 2
K&K Insurance............................... Official Insurance Provider 4
Mercedes-Benz............................... Official Car 3
Motorola/Racing Radios...................... Official Two-Way Radio 8
Omega....................................... Official Watch and Timekeeper 1
Toyota Trucks............................... Official Truck 2
The Valvoline Company....................... Official Fuel and Oil 18
</TABLE>

In addition to the sponsors listed above, CART has entered into various
sponsorship agreements with other companies which supply CART with products and
services. Official sponsors of the CART Championship pay money and provide
products and services to CART in return for being designated as an official
sponsor. The payment obligations, as well as the amount of advertising exposure
and other benefits vary significantly among sponsors based on the negotiated
terms of each sponsorship agreement. No sponsorship agreement provided more than
10% of the Company's revenues during 1996 or 1997.

ATTENDANCE, VIEWERSHIP AND BROADCAST RIGHTS

Attendance. CART spectator attendance has grown dramatically in the 1990s,
with more than a 48% increase from 1990 to 1997, based upon figures compiled by
Goodyear Tire & Rubber Co. Race Reports (the "Goodyear Race

36
<PAGE> 38

Reports"). The table below shows attendance information for CART events, based
upon the Goodyear Race Reports. The figures do not include attendance at the
Indianapolis 500, which was not a CART-sanctioned event.

<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996 1997
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Attendance at CART Events... 1,683,139 1,803,601 1,890,327 1,964,180 2,015,417 2,259,751 2,366,440 2,491,050
Number of Race Events............. 15 16 15 15 15 16 16 17
Average Attendance per Event...... 112,209 112,725 126,022 130,945 134,361 141,234 147,902 146,532
Total Attendance Percentage
Change.......................... -- 0.1% 11.8% 3.9% 2.6% 5.1% 4.7% 5.3%
</TABLE>

Viewership. In addition to the fan support offered by spectators at CART
race events, millions of people around the world watch CART racing on
television. The last available detailed report regarding television viewership
was for the 1996 race season. According to the Nielson Season Summary for 1996,
an aggregate of 32.6 million gross United States households were delivered for
the CART races, with gross United States viewership of approximately 41.8
million. The CART races are televised in 188 countries and territories through
terrestrial and satellite broadcasts, in 19 languages. Based upon an independent
study conducted by Sponsorship Research International ("SRI"), the 1996 CART
Championship had an average of 61 million viewers per race, an increase of 7%
over the 1995 per race average, with cumulative worldwide viewership of 973.5
million.

Broadcast Rights. In 1994, CART entered into a long-term agreement with
ESPN, which was amended in 1996 to extend through 2001, to provide broadcast
coverage of each CART race, with at least 50% of the races each year to be
broadcast on one of the three major broadcast networks of ABC, CBS or NBC.
Pursuant to the agreement, CART receives 50% of the net revenues received by
ESPN for distribution of the race programs, subject to an escalating minimum
guarantee.

In certain countries outside the United States where CART sanctions races,
CART has retained broadcast rights in order to facilitate affiliation with a
domestic host broadcast entity. For example, CART retained the television rights
for Brazil, Canada and Australia, and has entered into exclusive agreements with
(i) Fittipaldi U.S.A., Inc. to provide television broadcasts in Brazil of the
CART race events through the 2001 race season, (ii) Molstar for the distribution
of television broadcasts in Canada through the 2002 race season, and (iii) Gold
Coast Motor Events for the distribution of television broadcasts in Australia
through the 2000 race season. None of these agreements represent a material
amount of revenue to the Company.

In August 1997, the Company introduced "Inside CART," a weekly
magazine-type show aired on the Fox Sport Network. During 1997, the Company
produced 14 episodes of "Inside CART," and in 1998, the Company intends to
produce 28 episodes of "Inside CART." The Company intends to expand this show in
future years and will explore additional media opportunities. Television
programming that is in addition to race coverage is an important element in the
Company's strategy to increase brand awareness and educate its fans although the
show has not provided the Company with significant revenue or viewership.

CART LICENSED PRODUCTS

As a part of the Company's initiative to increase CART's brand awareness
and increase licensing opportunities, the Company formed CART Licensed Products,
a Georgia limited partnership, in 1996. The Company has a 55% interest in CART
Licensed Products. The remaining 45% interest is owned by Top Gear, Inc., a
company owned by Mr. Robert E. Hollander, president of CART Licensed Products.
The Company has no present intention to acquire the minority interest of CART
Licensed Products. The primary purpose of CART Licensed Products is to provide
"one stop shopping" for potential licensees for the servicemarks and trademarks
of CART, the race teams, drivers and tracks. This integrated structure allows
licensees and retailers to work with a single licensing entity rather than
negotiating in the fragmented licensing environment found in other sports.

CART Licensed Products pays approximately 60% of the royalties it receives
to the owners of the licensed property (including CART). The Company is paid a
royalty for the sale of products which bear the CART name or logo. Drivers, team
owners and track promoters are similarly paid royalties for products bearing
their names, likeness or other property. The remaining 40% of revenues is used
to fund the operations of CART Licensed Products. CART will be attributed with
55% of the net income (or loss) of CART Licensed Products related to its
ownership interest in the entity.

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<PAGE> 39

CART Licensed Products has executed long-term licensing agreements with
such major companies as Microsoft, Sony, Mattel, Antigua, Warner Brothers,
Sierra Online and Racing Champions, in addition to other licensing contracts.
The Company believes that none of the licensing agreements are material to the
Company's results of operations.

COMPETITION

The Company's racing events compete not only with other sports and
recreational events scheduled on the same dates, but also with racing events
sanctioned by various other racing bodies such as the FIA, NASCAR, the IRL,
USAC, NHRA, SCCA, PSCR, ARCA and others. Racing events sanctioned by other
organizations often are held on the same dates as CART events, at separate
tracks, and compete for attendance as well as television viewership. In
addition, CART competes with other racing bodies to sanction racing events at
various motorsports facilities. The quality of the competition, caliber of the
events, drivers and team owners participating in CART, and speed of the CART
cars distinguish CART events from the racing events staged by other racing
bodies. CART receives numerous requests to sanction racing events at venues
throughout the world. However, there can be no assurance that the Company will
maintain or improve its position in light of such competition.

EMPLOYEES

As of December 31, 1997, the Company had 48 full-time employees and a
roster of approximately 101 people who serve as race officials and 204
volunteers for CART events. None of the Company's employees are represented by a
labor union. Management believes that the Company enjoys a good relationship
with its employees.

LEGAL PROCEEDINGS

The Company is a party to routine litigation incidental to its business.
Management does not believe that the resolution of any or all of such litigation
is likely to have a material adverse effect on the Company's financial
condition.

Racing events can be dangerous to participants and spectators. CART
requires all race participants (excluding the general public) to execute a
general release and waiver of liability prior to participating in racing events
sanctioned by CART and requires each track promoter to indemnify CART against
any liability for personal injuries sustained at such promoter's racing event.
In addition, CART requires each track promoter to carry a minimum of $10.0
million in liability insurance, with CART as a named insured, and CART maintains
a $15.0 million umbrella insurance policy. Nevertheless, there can be no
assurance that the release and waivers will be fully enforced in a court of law,
that the promoter will have sufficient assets to satisfy any indemnification
requirement, or that such insurance will be adequate or available at all times
at reasonable premiums and in all circumstances.

PATENTS AND TRADEMARKS

The Company has various registered and common law trademark rights to
"CART" and related logos. The Company has licenses from various drivers, teams,
tracks and industry sponsors to use names and logos for merchandising programs
and product sales. Management's policy is to vigorously protect its intellectual
property rights to maintain its proprietary value in merchandise and promotional
sales.

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<PAGE> 40

MANAGEMENT

Set forth below is the name, age as of the date of this Prospectus, and
position of each of the directors, executive officers and other significant
employees of the Company and CART as they will exist at the closing of the
Offering. Each director is elected by the stockholders to serve a one-year term.
The Company intends to add two additional outside directors as soon as possible
after the Offering.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Andrew Craig..................... 48 President, Chief Executive Officer, Chairman of the Board
and Director of the Company
Randy K. Dzierzawski............. 34 Executive Vice President and Chief Financial Officer of the
Company
Carl L. Cohen.................... 37 Executive Vice President of Marketing of CART
Robert E. Hollander.............. 50 President of CART Licensed Products
J. Kirk Russell.................. 53 Vice President of Competition of CART
Dennis Swan...................... 50 Vice President of Logistics of CART
Keith Allo....................... 31 Vice President of Television of CART
Rena Shanaman.................... 45 Vice President of Promoter Relations of CART
Ron Richards..................... 45 Vice President of Communications of CART
Wally Dallenbach................. 60 Chief Steward of CART
Michael J. Mills................. 46 Secretary and General Counsel of the Company
Gerald R. Forsythe(1)............ 57 Director of the Company
Chip Ganassi..................... 39 Director of the Company
Carl A. Haas(1).................. 68 Director of the Company
Bruce R. McCaw(2)................ 51 Director of the Company
U.E. Patrick(1).................. 68 Director of the Company
Robert W. Rahal.................. 44 Director of the Company
Derrick Walker(1)................ 52 Director of the Company
</TABLE>

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

(1) Member of the Compensation Committee

(2) Member of the Audit Committee. Both of the outside directors to be added by
the Company will be appointed to the Audit Committee.

Messrs. Craig, Dzierzawski, Cohen and Hollander have entered into
employment agreements with the Company or CART pursuant to which they hold their
current positions. See "-- Employment Agreements." The other officers of the
Company and CART are elected by the Board of Directors to serve one year terms.

Set forth below is a brief description of the background of each of the
directors, executive officers and significant employees of the Company and CART:

Andrew Craig was first elected President, Chief Executive Officer and
Chairman of the Board of the Company in December 1997 and has served as the
President and Chief Executive Officer of CART since January 1994. He has served
as a director of the Company since December 1997. From 1983 to 1994, Mr. Craig
was employed by ISL Marketing, AG, an international sports marketing firm
located in Switzerland. For the four years prior to his employment with CART,
Mr. Craig served as deputy chief executive officer and executive vice president
of ISL Marketing, AG.

Randy K. Dzierzawski was first elected Executive Vice President and Chief
Financial Officer of the Company in December 1997 and has served as Executive
Vice President and Chief Financial Officer of CART since October 1996. From
December 1990 until his appointment as Executive Vice President of CART in 1996,
Mr. Dzierzawski served in various positions with CART, including Director of
Administration, Treasurer, Vice President and Senior Vice President. From 1988
to 1990, Mr. Dzierzawski served as a Senior Analyst in the Financial and
Reporting Division of General

39
<PAGE> 41

Motors Corporation and as the president of his own financial consulting company.
Prior to 1988, Mr. Dzierzawski, a certified public accountant, was employed by
Arthur Andersen and Company as a Senior Tax Consultant.

Carl L. Cohen was first named Executive Vice President of Series Marketing
for CART in May 1997. From 1995 to 1997, Mr. Cohen was the director of marketing
for Ryder System. Prior to his position with Ryder System, Mr. Cohen served as
brand director of Philip Morris Companies. He has also held marketing positions
with Airwick Industries and Colgate-Palmolive.

Robert E. Hollander was first named President and Chief Executive Officer
of CART Licensed Products in 1997. From 1992 to 1996, Mr. Hollander was the
leader of the worldwide licensing and merchandising effort for the 1996 Summer
Olympic Games held in Atlanta, Georgia. Prior to that, Mr. Hollander worked with
various companies, including IBM and Shearson, Lehman Brothers, in the area of
licensing and marketing consumer products.

J. Kirk Russell was first named Vice President of Competition of CART in
November 1996 after serving as Vice President of Operations of CART for two
years. Mr. Russell joined CART on a full-time basis in 1980 as director of
operations and technical director. In 1986, Mr. Russell received the
Championship Drivers Association's highest honor, the "Carl Horton Safety
Award." In addition, Mr. Russell has served on the Board of Directors of the
Automobile Competition Committee of the United States since 1988.

Dennis Swan was first named Vice President of Logistics of CART in November
1994. Prior to joining CART, Mr. Swan spent two years as test team manager for
the Honda engine program at Rahal-Hogan Racing. From 1989 to 1992, Mr. Swan
served as test team manager and then team manager for Truesports. Mr. Swan has
been involved in racing since 1964, and has worked with drivers such as Al
Unser, Jr., Danny Sullivan and Raul Boesel.

Keith Allo was first named Vice President of Television for CART in June
1997. Prior to his employment with CART, Mr. Allo was an executive for PASS
Sports beginning in 1994. While with PASS Sports, Mr. Allo served as executive
producer of programming for the Detroit Redwings, Pistons, Tigers and Lions, and
the University of Michigan and Michigan State University. From 1988 to 1993, Mr.
Allo worked as producer and director for SportsChannel Florida and the
University of Florida Athletic Association, as well as producing programs for
Jefferson Pilot Teleproductions and Host Creative.

Rena Shanaman was first named Vice President of Promoter Relations for CART
in July 1996 after serving as the General Manager of CART's inaugural U.S. 500
on a contractual basis. Ms. Shanaman has been involved in motorsports for more
than 16 years, including the Detroit Grand Prix, Molson Indy Vancouver and the
Arrivederci, Mario tour for racing legend Mario Andretti.

Ron Richards was first named Vice President of Communications of CART in
November 1996. From 1989 to 1996, Mr. Richards worked for Miller Brewing Company
in several positions including manager and director of employee communications,
including the management of all sports marketing public relations. From 1982 to
1984 and from 1987 to 1989, Mr. Richard worked with the Sports Car Club of
America as both director of marketing and public relations manager. During this
time, he also served as the motorsports public relations manager for
Coors-sponsored racing programs.

Wally Dallenbach was first appointed Chief Steward of CART in 1981. Mr.
Dallenbach joined CART as Competition Director in 1979 after retiring as a
driver. Mr. Dallenbach's distinguished racing career spanned fourteen years and
included five wins. He was a fixture at the Indianapolis 500, starting thirteen
times. In 1995, Mr. Dallenbach received the Championship Drivers Association's
highest honor, the "Carl Horton Safety Award."

Michael J. Mills was appointed general corporate counsel and corporate
secretary to CART in 1990. From 1978 to 1989, Mr. Mills served as CART's
associate counsel. In addition to his positions with CART, Mr. Mills currently
serves in an "of counsel" position with the law firm of Monaghan, LoPrete,
McDonald, Yakima & Grenke. From 1989 to 1996, Mr. Mills was the managing partner
of Tripp and Mills. Prior to that time, he was a partner with Frasco, Hackett &
Mills. Mr. Mills' law practice focuses on corporate and pension law, business
and commercial transactions, labor/management relations and general litigation.

Gerald R. Forsythe was elected a director of the Company in December 1997.
Mr. Forsythe currently serves as President of Forsythe Racing, Inc. and a
director and President of Player's/Forsythe Racing Team, Ltd. Since 1963, Mr.
Forsythe has been employed in various positions with and currently serves as
Chairman and Chief Executive Officer

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<PAGE> 42

of INDECK Power Equipment Company, its subsidiaries and affiliates. INDECK Power
Equipment Company is North America's largest emergency and back-up steam
generating source. The company also designs and fabricates water treatment
equipment and rents generator sets, chillers and compressors.

Chip Ganassi was elected a director of the Company in December 1997. Since
1987, Mr. Ganassi has served as President and owner of Chip Ganassi Racing
Teams, Inc., which won the CART Championship in 1996 and 1997. Mr. Ganassi
currently holds executive positions with Fox Gulf, a private air transportation
company; Premier Marine, a barge towing company; and Tessa One Incorporated, a
holding company.

Carl A. Haas was elected a director of the Company in December 1997.
Currently, Mr. Haas serves as Chief Executive Officer of Carl A. Haas Auto
Imports, a company specializing in the distribution of race cars and parts. Mr.
Haas is also the Managing Partner of Newman Haas Racing. He currently serves as
President of Carl A. Haas Racing Teams, Ltd. and the Managing Member of Texaco
Grand Prix of Houston, LLC. Both Carl A. Haas Racing Teams, Ltd. and Texaco
Grand Prix of Houston, LLC are race promotion organizations. In addition, Mr.
Haas also holds positions with various companies, including, but not limited to,
Carl A. Haas Enterprises, Inc., Team Haas USA Ltd., Road America, SCCA Pro
Racing, Inc. and Milwaukee Mile, Inc, all of which are racing related
businesses.

Bruce R. McCaw was elected a director of the Company in December 1997. Mr.
McCaw currently serves as the president of RaceSport Management Company, which
he founded in 1993, PacWest Racing Group, LLC and PacWest Lights, each of which
is involved in various types of auto racing. Mr. McCaw is also involved in
various other ventures in the areas of communications, real estate and aviation
and holds a variety of positions in entities involved in these businesses.

U.E. Patrick was elected a director of the Company in December 1997. Mr.
Patrick was a founding member of CART in November of 1978 and served as its
first President and Chief Executive Officer. Mr. Patrick currently serves as
President of Patrick Racing, Patrick Racing International and Patrick
Properties. He holds the position of Chairman of the Board for Patrick
Exploration, Inc., an oil and gas exploration company; Turbo-Mac Software, a
company specializing in software sales; and ARS. In addition, Mr. Patrick serves
on the Board of Directors of Marcum Natural Gas Services, Inc., a publicly-held
oil and gas company.

Robert W. Rahal was elected a director of the Company in December 1997. Mr.
Rahal is the co-owner of Team Rahal, Inc. He has an accomplished career as a
CART competitor, winning the PPG CART World Series title three times in his
15-year CART career. Additionally, Mr. Rahal won the Indianapolis 500 in 1986.
Mr. Rahal is the only driver in the CART Championship who is also a team owner.

Derrick Walker was elected a director of the Company in December 1997. Mr.
Walker is currently the President and owner of Derrick Walker Racing, Inc. In
1988, he joined Al Holbert's Porsche Indy car project and assumed control of the
program upon the death of Al Holbert. From 1980 to 1988, he was responsible for
Penske Racing, Inc.'s Indy car program.

COMMITTEES

The Board of Directors of the Company has established an Audit Committee
and a Compensation Committee. The Audit Committee is charged with recommending
to the Board of Directors the appointment of the Company's independent auditors,
reviewing the compensation of such auditors and reviewing with such accountants
the plans for the result and scope of their auditing engagement. The
Compensation Committee reviews the performance and compensation of directors,
executive officers and key employees and makes recommendations to the Board of
Directors with respect thereto. It also administers the Company's Stock Option
Plan. See "-- Stock Option Plans."

LIMITED LIABILITY AND INDEMNIFICATION OF DIRECTORS

The Company's Certificate of Incorporation provides that the liability of
the directors for monetary damages shall be limited to the fullest extent
permissible under Delaware law, except in the case of: (i) a breach of the
director's duty of loyalty to the Company or its stockholders, (ii) an act or
omission not in good faith or which involves intentional misconduct or a knowing
violation of law, (iii) the unlawful payment of dividends or unlawful stock
purchases or redemptions, or (iv) a transaction from which a director derived an
improper personal benefit.

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<PAGE> 43

The Company's Bylaws indemnify its directors and officers to the fullest
extent possible under Delaware law, except as otherwise provided in the
Certificate of Incorporation. These indemnification provisions require the
Company to indemnify such persons against certain liabilities and expenses to
which they may become subject by reason of their service as a director or
officer of the Company. The provisions also set forth certain procedures,
including the advancement of expenses, that apply in the event of a claim for
indemnification. The Company intends to enter into indemnification agreements
with each of the directors of the Company, pursuant to which the Company will
indemnify each such director to the fullest extent permitted by law, except as
otherwise provided in the Certificate of Incorporation. The Company also intends
to obtain insurance to protect its officers and directors from liability.

DIRECTOR COMPENSATION

Members of the Board of Directors who are not Company officers and who are
not affiliated with team owners participating in CART events will receive
options to purchase 10,000 shares of Common Stock when first elected and options
to purchase 5,000 shares of Common Stock upon each re-election. See "-- Stock
Option Plans -- Director Option Plan." In addition, independent directors will
be paid a per meeting fee of $1,000 and $250 for each telephonic meeting. The
Company will also reimburse all directors for their expenses incurred in
connection with their activities as directors of the Company. Directors who are
also employees of the Company or who otherwise participate as a team owner in
CART events receive no compensation for serving on the Board of Directors.

EXECUTIVE COMPENSATION

Set forth below is information regarding all forms of compensation paid or
payable by the Company to the Chief Executive Officer and the four most highly
compensated executive officers whose annual salary and bonus exceeded $100,000
in 1997 (the "Named Officers"):

ANNUAL COMPENSATION
SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
NAME AND OTHER ANNUAL ALL OTHER
PRINCIPAL POSITIONS YEAR SALARY BONUS COMPENSATION(1) COMPENSATION
------------------- ---- -------- -------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Andrew Craig.............................. 1997 $439,465 $160,000 -- $5,912(2)
Chief Executive Officer and President
Randy K. Dzierzawski...................... 1997 199,412 35,000 -- 2,375(3)
Executive Vice President
Robert E. Hollander....................... 1997 175,492(4) -- -- --
President and Chief Executive Officer of
CART Licensed Products
Dennis Swan............................... 1997 125,089 -- -- 1,963(3)
Vice President of Logistics
J. Kirk Russell........................... 1997 124,693 -- -- 2,375(3)
Vice President of Competition
</TABLE>

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

(1) The aggregate amount of perquisite compensation to be reported herein is
less than the lesser of $50,000 or 10% of the total of annual salary and
bonus reported for the named executive officer. No other annual compensation
was paid or payable to the named executive officers in the years indicated.

(2) Includes annual Company contributions of $2,375 to vested and unvested
defined contribution plans, and insurance premiums of $3,537 paid by the
Company with respect to term life insurance for the benefit of the named
executive officer.

(3) Represents annual contributions to vested and unvested defined contribution
plans.

(4) Does not include $45,034 paid to Mr. Hollander for consulting services prior
to becoming an executive officer.

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<PAGE> 44

Carl L. Cohen, the Executive Vice President of Marketing of CART, was hired
in May 1997. Mr. Cohen has entered into an employment agreement with CART which
provides for a salary payable to Mr. Cohen in the amount of $185,000 for 1998.

STOCK OPTION PLANS

In December 1997, the Board of Directors of the Company (the "Board")
authorized, and the stockholders of the Company approved, a stock incentive plan
for executive and key management employees of the Company and its subsidiaries,
including a limited number of outside consultants and advisors, effective as of
the completion of the Offering (the "Stock Option Plan"). Under the Stock Option
Plan, key employees, outside consultants and advisors (the "Participants") of
the Company and its Subsidiaries (as defined in the Stock Option Plan) may
receive awards of stock options (both Nonqualified Options and Incentive
Options, as defined in the Stock Option Plan). A maximum of 2,000,000 shares of
Common Stock will be subject to the Stock Option Plan. The purpose of the Stock
Option Plan is to provide key employees (including officers and directors who
are also key employees) and key non-employee consultants and advisors of the
Company and its Subsidiaries ("employees") with an increased incentive to make
significant and extraordinary contributions to the long-term performance and
growth of the Company and its Subsidiaries, to join the interests of key
employees with the interests of the stockholders of the Company, and to
facilitate attracting and retaining key employees of exceptional ability.

In connection with the Offering, the Company intends to grant options to
purchase an aggregate of 1,088,050 shares of Common Stock to employees, of which
an aggregate of 600,000; 300,000; 0; 20,000; and 40,000 will be granted to
Messrs. Craig, Dzierzawski, Hollander, Swan and Russell, respectively, at the
initial public offering price.

Administration. The Stock Option Plan is administered by the Compensation
Committee of the Board of Directors of the Company (the "Committee"), or such
other committee as may be specified by the Board of Directors to perform the
functions and duties of the Committee under the Stock Option Plan. Subject to
the provisions of the Stock Option Plan, the Committee shall determine, from
those eligible to be Participants, the persons to be granted stock options, the
amount of stock options granted to each such person, and the terms and
conditions of any stock options. Subject to the provisions of the Stock Option
Plan, the Committee is authorized to interpret the Stock Option Plan, to make,
amend and rescind rules and regulations relating to the Stock Option Plan and to
make all other determinations necessary or advisable for the Stock Options
Plan's administration.

Participants. The Participants in the Stock Option Plan are those key
employees, consultants and advisors of the Company or any Subsidiary who in the
judgment of the Committee are or will become responsible for the direction and
financial success of the Company or any Subsidiary. Key employees include
officers and directors who are also key employees of the Company or any
Subsidiary.

Shares Subject to Plan. The maximum number of shares with respect to which
stock options may be granted under the Stock Option Plan is 2,000,000 shares of
Common Stock. Shares covered by expired or terminated stock options will again
become available for grant under the Stock Option Plan. The number of shares
subject to each outstanding stock option, the option price with respect to
outstanding stock options, and the aggregate number of shares remaining
available under the Stock Option Plan will be subject to such adjustment as the
Committee, in its discretion, deems appropriate to reflect such events as stock
dividends, stock splits, recapitalizations, mergers, consolidations or
reorganizations of or by the Company.

Stock Options. Subject to the terms of the Stock Option Plan, the
Committee may grant to Participants either Incentive Options meeting the
definition of an incentive stock option under Section 422 of the Code or
Nonqualified Options not meeting such definition, or any combination thereof.
The exercise price for an Incentive Option may not be less than 100% of the fair
market value of the stock on the date of grant; however, the exercise price for
an Incentive Option granted to an employee who owns more than 10% of the voting
stock of the Company or any subsidiary may not be less than 110% of the fair
market value of the stock on the date of grant. The exercise price for a
Nonqualified Option may not be less than 100% of the fair market value of the
stock on the date of grant.

The exercise period for stock options will be determined by the Committee,
but no stock option may be exercisable after 10 years from the date of grant,
subject to certain conditions and limitations.

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<PAGE> 45

Stock options are not transferable by a Participant other than by will or
by the laws of descent and distribution, and stock options are exercisable,
during the lifetime of the Participant, only by the Participant.

If the employment or consultancy of a Participant by the Company or a
Subsidiary terminates, the committee may, in its discretion, permit the exercise
of stock options granted to such Participant (i) for a period not to exceed
three months following termination of employment with respect to Incentive
Options if termination is not due to death or permanent disability of the
Participant, (ii) for a period not to exceed one year following termination of
employment with respect to Incentive Options if termination is due to the death
or permanent disability of the Participant, and (iii) for a period not to extend
beyond the expiration date with respect to Nonqualified Options.

Termination, Duration and Amendments Of Plan. The Stock Option Plan may be
abandoned or terminated at any time by the Board of Directors. Unless sooner
terminated, the Stock Option Plan will terminate on the date ten years after its
adoption by the Board of Directors. The termination of the Stock Option Plan
will not affect the validity of any stock option outstanding on the date of
termination.

For the purpose of conforming to any changes in applicable law or
governmental regulation, or for any other lawful purpose, the Board of Directors
will have the right, with or without approval of the stockholders of the
Company, to amend or revise the terms of the Stock Option Plan at any time;
however, no such amendment or revision will (i) without approval or ratification
of the stockholders (A) increase the maximum number of shares in the aggregate
which are subject to the Stock Option Plan (other than anti-dilution
adjustments), (B) increase the maximum number of shares for which any
Participant may be granted stock options under the Stock Option Plan (other than
anti-dilution adjustments), (C) change the class of persons eligible to be
Participants under the Stock Option Plan, or (ii) without the consent of the
holder thereof, change the stock option price (other than anti-dilution
adjustments) or alter or impair any stock option which has been previously
granted or awarded under the Stock Option Plan.

Federal Income Tax Consequences. The rules governing the tax treatment of
stock options, stock appreciation rights, and shares acquired upon the exercise
of stock options are technical. Therefore, the description of federal income tax
consequences set forth below is necessarily general in nature and does not
purport to be complete. Moreover, statutory provisions are subject to change, as
are their interpretations, and their application may vary in individual
circumstances. Finally, the tax consequences under applicable state and local
income tax laws may not be the same as under the federal income tax laws.

Incentive Options. Incentive Options granted pursuant to the Plan are
intended to qualify as "Incentive Options" within the meaning of Section 422 of
the Code. If the Participant makes no disposition of the shares acquired
pursuant to exercise of an Incentive Option within one year after the transfer
of shares to such Participant and within two years from grant of the option,
such Participant will realize no taxable income as a result of the grant or
exercise of such option, and any gain or loss that is subsequently realized may
be treated as long-term capital gain or loss, as the case may be. Under these
circumstances, the Company will not be entitled to a deduction for federal
income tax purposes with respect to either the issuance of such Incentive
Options or the transfer of shares upon their exercise. However, the exercise of
an Incentive Option is an item of tax preference and a Participant may have
alternative minimum tax liability.

If shares acquired upon exercise of Incentive Options are disposed of prior
to the expiration of the above time periods, the Participant will recognize
ordinary income in the year in which the disqualifying disposition occurs, the
amount of which will generally be the lesser of (i) the excess of the market
value of the shares on the date of exercise over the option price, or (ii) the
gain recognized on such disposition. Such amount will ordinarily be deductible
by the Company for federal income tax purposes in the same year, provided that
the amount constitutes reasonable compensation. In addition, the excess, if any,
of the amount realized on a disqualifying disposition over the market value of
the shares on the date of exercise will be treated as capital gain.

Nonqualified Options. A Participant who acquires shares by exercise of a
Nonqualified Option generally realizes as taxable ordinary income, at the time
of exercise, the difference between the exercise price and the fair market value
of the shares on the date of exercise. Such amount will ordinarily be deductible
by the Company in the same year, provided that the amount constitutes reasonable
compensation. Subsequent appreciation or decline in the value of the shares on
the sale or other disposition of the shares will generally be treated as capital
gain or loss.

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<PAGE> 46

Withholding Payments. If, upon exercise of a Nonqualified Option or upon a
disqualifying disposition of shares acquired upon exercise of an Incentive
Option, the Company or any Subsidiary must pay amounts for income tax
withholding, then in the Committee's sole discretion, either the Company will
appropriately reduce the amount of stock or cash to be delivered or paid to the
Participant or the Participant must pay such amount to the Company to reimburse
the Company for such payment. The Committee may permit a Participant to satisfy
such withholding obligations by electing to reduce the number of shares of
Common Stock delivered or deliverable to the Participant upon exercise of a
stock option or by electing to tender an appropriate number of shares of Common
Stock back to the Company subsequent to exercise of a stock option (with such
restrictions as the Committee may adopt).

Limitation on Compensation Deduction. Publicly-held corporations are
precluded from deducting compensation paid to certain of its executive officers
in excess of $1.0 million. The employees covered by the $1.0 million limitation
on deductibility of compensation include the chief executive officer and those
employees whose annual compensation is required to be reported to the Securities
and Exchange Commission because the employee is one of the company's four
highest compensated employees for the taxable year (other than the chief
executive officer). The grant of stock options generally are included in an
employees compensation for purposes of the $1.0 million limitation on
deductibility of compensation.

There is an exception to the $1.0 million deduction limitation for
compensation (including the grant of stock options paid pursuant to a qualified
performance-based compensation plan.) Compensation attributable to stock options
is deemed to satisfy the qualified performance-based compensation exception if
the grant is made by a compensation committee comprised of outside directors;
the plan under which the option is granted states the maximum number of shares
with respect to which options may be granted during a specified period to any
employee; and, under the terms of the option, the amount of compensation the
employee could receive is based solely on an increase in the value of the stock
after the date of the grant.

If the amount of compensation a covered employee will receive under the
grant is not based solely on an increase of the value of the stock after the
date of the grant (e.g., an option that is granted with an exercise price that
is less than the fair market value as of the date of the grant), none of the
compensation attributable to the grant is qualified performance-based
compensation unless the grant is made on account of the attainment of a
performance goal that has been previously established and approved by the
stockholders of the Company.

The grant of stock options to a Participant under the Stock Option Plan to
purchase the Company's stock at fair market value determined on the date of the
grant will, if granted at fair market value, be deemed to satisfy the
requirements of the performance-based compensation exception and the $1.0
million deduction limitation will not otherwise limit the deductibility of the
compensation paid to covered employees by the Company. However, the grant of a
stock option with an exercise price less than the fair market value of the stock
on the date of grant will be included in a covered employee's compensation in
determining the $1.0 million deductibility limit.

Accounting Treatment. Generally, under current accounting rules neither
the grant nor the exercise of an Incentive Option or a Nonqualified Option
granted to employees at an exercise price equal to the fair market value of the
shares on the date of grant requires any charge against earnings. The Company
will follow the provisions of Statement of Financial Accounting Standards (SFAS)
No. 123, Accounting for Stock-Based Compensation, which provide for the
disclosure of the pro forma impact of the issuance of options to employees on
net income and earnings per share in the footnotes to the Company's financial
statements. Accordingly, management currently believes that there will be no
material impact on earnings of the Company as a result of applying SFAS 123.

Director Option Plan. The Director Option Plan permits the granting of
non-qualified stock options ("Director NQSOs") for up to 100,000 shares of
Common Stock to directors of the Company who are neither employees of the
Company nor affiliates of a race team which participates in CART race events (an
"Independent Director"). Each person who is first elected or appointed to serve
as an Independent Director of the Company is automatically granted an option to
purchase 10,000 shares of Common Stock. In addition, each individual who is
re-elected as an Independent Director is automatically granted an option to
purchase 5,000 shares of Common Stock each year on the date of the annual
meeting of stockholders. Each of the options automatically granted upon
election, appointment or re-election as an Independent Director (the "Fixed
Options") are exercisable at a price at least equal to the fair market value of
the Common Stock on

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<PAGE> 47

the date of grant. In addition to the Fixed Options, each Independent Director
may elect to receive stock options in lieu of any director's fees payable to
such individuals.

All Directors NQSOs are immediately exercisable upon grant. The exercise
price for all such options may be paid in cash, shares of Common Stock or other
property. If an independent Director dies or becomes ineligible to participate
in the Director Option Plan due to disability, his Director NQSOs expire on the
first anniversary of such event. If an Independent Director retires with the
consent of the Company, his Director NQSOs expire 90 days after his retirement.
In no event may a Director NQSO be exercised more than 10 years from the date of
grant.

EMPLOYMENT AGREEMENTS

Andrew Craig, Randy K. Dzierzawski, Carl L. Cohen and Robert E. Hollander
currently have employment agreements with the Company. Pursuant to the terms of
the agreements, Messrs. Craig and Dzierzawski have agreed to serve as full-time
employees of the Company until December 2000. Mr. Cohen has agreed to serve as a
full-time employee of CART until May 1999, and Mr. Hollander has agreed to serve
as a full-time employee of CART Licensed products until September 2001.

In the event there is a change in control in the Company, the Company will
pay Messrs. Craig and Dzierzawski, upon termination for any reason, a lump sum
equal to a multiple of their respective base salaries in effect at termination.
Neither Mr. Cohen nor Mr. Hollander have change of control provisions in their
employment agreements. If the change of control provisions were applied at the
present time, Messrs. Craig and Dzierzawski would receive $1.5 million and
$450,000, respectively.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Prior to the Reorganization in December 1997, all matters concerning
executive officer compensation were determined by the Compensation Committee of
CART. No executive officer of the Company was a director of CART during 1994,
1995, 1996 or 1997. In connection with the Reorganization, the Board of
Directors has established a Compensation Committee to deliberate upon matters
concerning executive compensation, the issuance of options under the Stock
Option Plan and other benefits payable to the Company's executive officers. The
members of the Compensation Committee are Messrs. Haas, Patrick, Forsythe and
Walker.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CART has entered into, and the Company will continue to enter into,
transactions with entities that are affiliated with the Company's stockholders
and directors and with affiliates of its race teams (the "Race Teams"). Race
Teams that participate in the CART Championship and are franchise members have
received certain payments and reimbursements from CART. In addition, Race Teams
receive purse distributions on a per race basis and from the year end point fund
which amounts have been paid based solely upon their performance in specific
races.

Penske Motorsports, Inc. ("PMI"), a public company controlled indirectly by
Roger S. Penske, a race team owner and stockholder, has entered into Promoter
Agreements with CART with respect to PMI's race tracks in Brooklyn, Michigan,
Nazareth, Pennsylvania, and Fontana, California. Pursuant to the terms thereof,
and subject to such agreement's extension or renewal, a CART Championship race
will be held at the Brooklyn and Nazareth facilities through 1998, and at the
Fontana facilities in each year through 1999. The sanction fees payable to CART
pursuant to these agreements vary from year to year and track to track and are
similar to sanction fees paid by independent third parties. Pursuant to existing
Promoter Agreements, PMI has paid or will pay sanction fees to CART in the
aggregate amount of $3.4 million, $3.7 million and $1.1 million in 1997, 1998
and 1999, respectively. In 1997, PMI also acquired a 40% interest in the race
track at Homestead, Florida. Pursuant to the Promoter Agreement for Homestead,
CART will sanction a race through 2000 and will be paid a sanction fee in the
amount of $1.3 million, $1.37 million and $1.43 million in 1998, 1999 and 2000,
respectively. See "Business -- Racing Events and Sanction Fees."

In May 1996, CART leased PMI's Michigan facility, the Michigan
International Speedway, at which CART organized, promoted and staged the U.S.
500. CART paid PMI a total lease payment of $1.2 million.

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<PAGE> 48

Carl A. Haas, a director of the Company and a race team owner and
stockholder, is a principal owner of Carl Haas Racing Teams, Ltd. and Texaco
Houston Grand Prix L.L.C., each of which have entered into Promoter Agreements
with respect to CART Championship races at the Wisconsin State Park Speedway in
West Allis, Wisconsin and at a temporary road course to be constructed in
Houston, Texas. Pursuant to the terms thereof, a CART Championship race will be
held in West Allis through 1998, and in Houston through 2003. The sanction fees
payable to CART under these agreements are similar to those paid by independent
race promoters. Pursuant to existing Promoter Agreements, entities affiliated
with Mr. Haas have paid or will pay sanction fees to CART in the aggregate
amount of $792,200, $2.0 million, $1.4 million, $1.9 million, $2.4 million, $2.7
million and $2.7 million in 1997, 1998, 1999, 2000, 2001, 2002 and 2003,
respectively. See "Business -- Racing Events and Sanction Fees."

Gerald R. Forsythe, a director of the Company and a race team owner and
stockholder, is a principal of North American Touring Car Championship, L.L.C.
("NATCC"). In 1997, NATCC entered into an agreement with CART which provided
that CART would sanction the NATCC racing series held in conjunction with
certain CART Championship races for a fee of $200,000. The term of the agreement
commenced in the 1997 season. At the end of the 1997 racing season, NATCC
decided to terminate its racing activities and subsequently the agreement
between NATCC and CART was terminated by mutual agreement.

ARS, the organizer of the Indy Lights Championship, is controlled
indirectly by U.E. Patrick, a director of the Company and a Race Team owner. ARS
has entered into an agreement with CART that provides that ARS will be the
"Official Development Series of the CART Championship", that its racing
activities will be sanctioned by CART and for the sharing of sanction fees,
television revenues and costs. In connection with this agreement, CART has paid
ARS $269,625, $120,406 and $593,693 for the fiscal year ended December 31, 1995,
1996 and 1997, respectively. In addition, the Company has entered into a binding
letter of intent to purchase all of the stock of ARS and certain assets of BP
for a total purchase price of $10.0 million and the grant of 100,000 options to
purchase Common Stock at the initial public offering price. At the time of the
Offering, the shareholders of ARS and BP will be granted the right to purchase
67,000 of the shares being sold in the Offering at the initial public offering
price. Mr. Patrick did not participate in or vote upon the approval of the Indy
Lights Acquisition.

Mr. Michael J. Mills, secretary of the Company, is a principal in a law
firm which received fees for legal services from the Company in the amount of
$111,540, $128,660 and $133,200 during 1995, 1996 and 1997, respectively.

Each of the current directors is affiliated with entities engaged in
various levels of business activity with CART, however, the Company intends to
add two independent directors as soon as possible after the Offering. These and
other transactions of the Company with officers, directors, employees, principal
stockholders or affiliates have been or will be (i) made in the ordinary course
of business, (ii) on substantially the same terms as those prevailing at the
time for comparable transactions with unrelated persons, and (iii) such that did
not or do not involve more than normal levels of risk or present other
unfavorable features. In order to avoid conflicts of interest, directors of the
Company who are affiliated with an entity that is entering into a transaction
with the Company will not vote on any matter related to such transaction, and
may, in certain circumstances, refrain from participating in any discussions
related to such transaction.

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PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth information, as of March 3, 1998, with
respect to the beneficial ownership of the Common Stock by (i) each director,
(ii) each of the Named Officers, (iii) all directors and executive officers as a
group, (iv) each person or entity known by the Company to be the beneficial
owner of more than five percent of the outstanding shares of Common Stock, and
(v) each of the Selling Stockholders.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY NUMBER OF SHARES BENEFICIALLY
OWNED SHARES OWNED
NAME OF BENEFICIAL OWNER(1) PRIOR TO OFFERING BEING OFFERED AFTER OFFERING
--------------------------- --------------------- ------------- ------------------------
NUMBER PERCENT NUMBER PERCENT(2)
--------- ---- --------- -----
<S> <C> <C> <C> <C> <C>
Gerald Forsythe(3).............................. 400,000 3.9% -- 400,000 2.8%
Chip Ganassi(4)................................. 800,000 7.9 80,000 720,000 5.0
Carl A. Haas(5)................................. 800,000 7.9 -- 800,000 5.5
Bruce R. McCaw(6)............................... 800,000 7.9 -- 800,000 5.5
U.E. Patrick(7)................................. 800,000 7.9 -- 800,000 5.5
Robert W. Rahal(8).............................. 800,000 7.9 -- 800,000 5.5
Derrick Walker(9)............................... 400,000 3.9 40,000 360,000 2.5
Andrew Craig(10)................................ -- -- -- -- --
Randy K. Dzierzawski(10)........................ -- -- -- -- --
Robert E. Hollander(10)......................... -- -- -- -- --
Dennis Swan(10)................................. -- -- -- -- --
J. Kirk Russell(10)............................. -- -- -- -- --
All executive officers and directors as a group
(12) persons)................................. 4,800,000 47.4 120,000 4,680,000 32.4

All American Racers, Inc........................ 466,666 4.6 46,666 420,000 2.9
Arciero-Wells Racing, Ltd., LLC................. 400,000 3.9 40,000 360,000 2.5
Arciero-Wells Racing II, Ltd., LLC.............. 66,666 * -- 66,666 *
Bettenhausen Motorsports, Inc. ................. 400,000 3.9 -- 400,000 2.8
Payton/Coyne Racing, Inc.(11)................... 800,000 7.9 80,000 720,000 5.0
Davis Racing, Inc. ............................. 400,000 3.9 -- 400,000 2.8
Della Penna Motorsports, Inc. .................. 400,000 3.9 40,000 360,000 2.5
Hogan Racing, L.L.C. ........................... 400,000 3.9 -- 400,000 2.8
Penske Racing, Inc.(12)......................... 800,000 7.9 -- 800,000 5.5
Tasman Motorsports Group(13).................... 800,000 7.9 -- 800,000 5.5
Team Green, Inc................................. 400,000 3.9 40,000 360,000 2.5
</TABLE>

- ---------------
* Less than 1%.

(1) Unless otherwise noted, each beneficial owner has sole voting and
dispositive power with respect to the shares.

(2) Assumes no exercise of the overallotment option for 705,000 shares granted
to the Underwriters by the Company.

(3) The shares are held of record by Forsythe Racing, Inc.

(4) The shares are held of record by Chip Ganassi Racing Teams, Inc. The
address for Chip Ganassi Racing Teams, Inc. and Mr. Ganassi is 3821
Industrial Boulevard, Indianapolis, Indiana 46254. Mr. Ganassi is a
director of the Company.

(5) The shares are held of record by Newman/Haas Racing. The address for
Newman/Haas Racing and Mr. Haas is 500 Tower Parkway, Lincolnshire,
Illinois 60069.

(6) The shares are held of record by PacWest Racing Group. The address for
PacWest Racing Group and Mr. McCaw is 4601 Methanol Lane, Indianapolis,
Indiana 46268.

(7) The shares are held of record by Patrick Racing, Inc. The address for
Patrick Racing, Inc. and Mr. Patrick is 8431 Georgetown Road, Indianapolis,
Indiana 46268.

(8) The shares are held of record by Team Rahal, Inc. The address for Team
Rahal, Inc. and Mr. Rahal is 4601 Lyman Drive, Hilliard, Ohio 43026.

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<PAGE> 50

(9) The shares are held of record by Derrick Walker Racing, Inc. Mr. Walker is
a director of the Company.

(10) In connection with the Offering Messrs. Craig, Dzierzawski, Hollander, Swan
and Russell will be granted options to purchase 600,000, 300,000, 0,
20,000, and 40,000, shares, respectively. The exercise price of such
options will be equal to the initial public offering price and 33 1/3% of
such options will vest on each anniversary of their grant.

(11) The address for Payton/Coyne Racing, Inc. is 13400 Budler Road, Plainfield,
Illinois 60544.

(12) The address for Penske Racing, Inc. is 366 Penske Plaza, Reading,
Pennsylvania 19603.

(13) The address for Tasman Motorsports Group is 4192 Weaver Court, Hilliard,
Ohio 43026.

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<PAGE> 51

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 50,000,000 shares
of Common Stock, par value $.01 per share, and 5,000,000 shares of Preferred
Stock, par value $.01 per share. On March 3, 1998, a total of 10,133,332 shares
of Common Stock were issued and outstanding and such shares were held by 18
stockholders. No shares of Preferred Stock were outstanding. Upon completion of
the Offering, there will be 14,466,666 shares of Common Stock (15,171,666 shares
if the Underwriters' over-allotment option is exercised in full) and no shares
of Preferred Stock issued and outstanding.

The following summary description of the Company's capital stock does not
purport to be complete and is qualified in its entirety by this reference to the
Company's Certificate of Incorporation and By-laws, copies of which have been
filed as exhibits to the Registration Statement of which this Prospectus is a
part.

COMMON STOCK

All outstanding shares of Common Stock are, and the shares offered hereby
will be, duly authorized, validly issued, fully paid and nonassessable. Subject
to the prior rights of holders of any Preferred Stock then outstanding, holders
of Common Stock are entitled to receive dividends, when and if declared by the
Board of Directors, out of funds legally available therefor and to share ratably
in the net assets of the Company upon liquidation. The payment by the Company of
dividends, if any, rests with the Board of Directors and will depend upon the
Company's results of operation, financial condition and capital expenditure
plans, as well as other factors considered relevant by the Board of Directors.
Holders of Common Stock do not have preemptive or other rights to subscribe for
additional shares, nor are there any redemption or sinking fund provisions
associated with the Common Stock.

Holders of Common Stock are entitled to one vote per share on all matters
requiring a vote of stockholders. Since the Common Stock does not have
cumulative voting rights in electing directors, the holders of more than a
majority of the outstanding shares of Common Stock voting for the election of
directors can elect all of the directors whose terms expire that year.

PREFERRED STOCK

Under the Company's Certificate of Incorporation ("Certificate"), the Board
of Directors has the power, without further action by the holders of the Common
Stock, to designate the relative rights and preferences of the Preferred Stock,
when and if issued. The Board of Directors are authorized to issue up to
5,000,000 shares of Preferred Stock in one or more series. The rights and
preferences could include preferences as to liquidation, redemption and
conversion rights, voting rights, dividends or other preferences, any of which
may be dilutive to the interests of the holders of Common Stock. The issuance of
Preferred Stock may have the effect of delaying or preventing a change in
control of the Company and may have an adverse effect on the rights of the
holders of Common Stock.

The issuance of any series of Preferred Stock, and the relative powers,
preferences, rights, qualifications, limitations and restrictions of such
series, if and when established, will depend upon, among other things, the
future capital needs of the Company, then-existing market conditions and other
factors that, in the judgment of the Board of Directors, might warrant the
issuance of Preferred Stock. At the date of this Prospectus, there are no plans,
agreements or understandings relative to the issuance of any shares of Preferred
Stock.

DELAWARE LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS

Certain provisions of the General Corporation Law of the State of Delaware
(the "DGCL")and of the Company's Certificate of Incorporation and By-laws,
summarized in the following paragraphs, may be considered to have an anti-
takeover effect and may delay, deter or prevent a tender offer, proxy contest or
other takeover attempt that a stockholder might consider to be in such
stockholder's best interest, including such an attempt as might result in
payment of a premium over the market price for shares held by stockholders.

Anti-Greenmail. The Certificate of Incorporation prohibits redemption by
the Company of any of its securities held by a person holding 5% or more of its
securities at a price in excess of the securities' then fair market value unless
certain conditions are met, including stockholder approval or a comparable offer
to all stockholders.

Other Voting Requirements. The Certificate of Incorporation requires the
approval of 67% of the Company's voting securities for an amendment of certain
provisions of the Certificate of Incorporation, unless 2/3 of the Board of
Directors first approve the matter. The Certificate of Incorporation also
requires either the approval of 67% of the Company's voting securities or a vote
of not less than a majority of the Board of Directors to amend the By-Laws.

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<PAGE> 52

Delaware Anti-Takeover Law. The Company, a Delaware corporation, is
subject to the provisions of the General Corporation Law of the State of
Delaware, including Section 203 thereof. In general, Section 203 prohibits a
public Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which such person became an interested stockholder unless: (i)
prior to such date, the Board of Directors approved either the business
combination or the transaction which resulted in the stockholder becoming an
interested stockholder; or (ii) upon becoming an interested stockholder, the
stockholder then owned at least 85% of the voting stock, as defined in Section
203; or (iii) subsequent to such date, the business combination is approved by
both the Board of Directors and by holders of at least 66 2/3% of the
corporation's outstanding voting stock, excluding shares owned by the interested
stockholder. For these purposes, the term "business combination" includes
mergers, asset sales and other similar transactions with an "interested
stockholder." An "interested stockholder" is a person who together with
affiliates and associates, owns (or, within the prior three years, did own) 15%
or more of the corporation's voting stock. Although Section 203 permits a
corporation to elect not to be governed by its provisions, the Company has not
made this election.

Special Meetings of Stockholders; No Action Without Meeting. The Company's
By-laws provide that special meetings of stockholders may be called only by the
Chairman, the President or the Board of Directors. The Company's Certificate of
Incorporation and By-laws also provide that no action required to be taken or
that may be taken at any annual or special meeting of stockholders may be taken
without a meeting. Additionally, the power of stockholders to consent in
writing, without a meeting, to the taking of any action is specifically denied.
These provisions may make it more difficult for stockholders to take action
opposed by the Board of Directors.

Advance Notice Requirements for Stockholder Proposals and Director
Nominations. The Company's By-laws provide that stockholders seeking to bring
business before an annual or special meeting of stockholders, or to nominate
candidates for election as directors at an annual or a special meeting of
stockholders, must provide timely notice thereof in writing. To be timely, a
stockholder's notice must be delivered to, or mailed and received at, the
principal executive office of the Company (i) with respect to business to be
considered at the annual meeting of the stockholders of the Company not less
than 90 days prior to the anniversary date of the immediately preceding annual
meeting of stockholders of the Company, and (ii) with respect to business to be
considered at a special meeting of stockholders of the Company not later than
the close of business on the 10th day following the day on which notice of the
date of the special meeting was mailed to stockholders of the Company, or public
disclosure of the date of the special meeting was made, whichever first occurs.
These provisions may preclude some stockholders from making nominations for
directors at an annual or special meeting or from bringing other matters before
the stockholders at a meeting.

RIGHTS AGREEMENT

The Company and a rights agent have entered into a Rights Agreement which
provides for the distribution of a right to purchase one share of Common Stock
to the holder of each share of Common Stock. The holders of rights do not have
any voting rights and are not entitled to dividends. Prior to the distribution
date (the "Distribution Date"), the rights will be evidenced by certificates
representing the shares of Common Stock to which they are attached and may be
transferred with, and only with, shares of Common Stock. The Distribution Date
will occur, if at all, upon the earlier of (a) the tenth day following a public
announcement that a person has acquired or obtained the right to acquire,
beneficial ownership of 15% or more of the outstanding shares of Common Stock,
or (b) the tenth business day (or such later date as determined by the board of
Directors) following the commencement of or the first public announcement of
intent of a tender offer or exchange for 15% or more of the outstanding shares
of Common Stock (other than by the Company or certain related entities). The
rights are not exercisable until the Distribution Date and will expire at the
close of business on December 22, 2007, unless earlier redeemed by the Company.

After the Distribution Date, the rights may either "flip-in" or
"flip-over," allowing a stockholder to acquire the common stock or the voting
equity securities of the acquiring person, respectively, at a 50% discount. Once
any person (other than the Company or certain related entities) becomes a 15%
beneficial owner of the outstanding shares of Common Stock, the rights (other
than rights beneficially owned by the acquiring person which would become null
and void) automatically flip-in, unless the Board of Directors has decided to
exchange the rights for shares of Common Stock. If, after the Distribution Date,
the Company consolidates or merges with, or transfers a majority of its assets
to, any person, the rights will flip-over.

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<PAGE> 53

The rights may have certain anti-takeover effects. The rights are designed
to cause substantial dilution to a person or group that attempts to acquire the
Company on terms not approved by the Board of Directors. The rights will not
interfere with any merger or other business combination approved by the Board
because the rights may be redeemed by the Company at $.01 per right at any time
prior to a 15% acquisition. The Rights Agreement may be amended, without
limitation prior to the distribution of the Rights, by the Board of Directors
without the approval of the holders of the rights.

TRANSFER AGENT

The transfer agent and registrar of the Common Stock is Norwest Bank
Minnesota, National Association.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have outstanding
14,466,666 shares of Common Stock (15,171,666 shares if the Underwriters'
over-allotment option is exercised in full). Of such outstanding shares, the
4,700,000 shares (5,405,000 shares if the over-allotment option is exercised in
full) sold in the Offering will be freely transferable after the Offering and
may be resold without further registration under the Securities Act. The
remaining 9,766,666 shares outstanding are restricted shares and the holders
will be entitled to resell them only pursuant to a registration statement under
the Securities Act or an applicable exemption from registration thereunder, such
as an exemption provided by Rule 144. None of the current stockholders have any
registration rights with respect to the outstanding shares of Common Stock. In
addition, the Company has reserved 2,000,000 and 100,000 shares of Common Stock
for issuance pursuant to the Stock Option Plan and Directors Option Plan,
respectively, which shares will be registered under the Securities Act and will
be freely transferable upon issuance.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned "restricted securities"
for at least one year may, under certain circumstances, resell within any three-
month period such number of shares as does not exceed the greater of one percent
of the then-outstanding shares or the average weekly trading volume during the
four calendar weeks prior to such resale. Rule 144 also permits, under certain
circumstances, the resale of shares without any quantity limitation by a person
who has satisfied a two-year holding period and who is not, and has not been for
the preceding three months, an affiliate of the Company. In addition, holding
periods of successive non-affiliate owners are aggregated for purposes of
determining compliance with these one- and two-year holding period requirements.
The availability of shares for sale or actual sales under Rule 144 may have an
adverse effect on the market price of the Common Stock. Sales under Rule 144
also could impair the Company's ability to market additional equity securities.

Upon completion of the Offering, 8,480,000 of the restricted shares will
have been held for at least one year and may be resold pursuant to Rule 144
three months after the date of this Prospectus.

The Company and all of its stockholders, executive officers and directors
have each agreed not to offer for sale, sell or otherwise dispose of any shares
of Common Stock or other securities convertible into or exchangeable for Common
Stock for a period of 180 days after the date of this Prospectus without the
prior written consent of the representatives of the Underwriters. In addition,
each of the current stockholders has entered into an agreement with the Company
which restricts the resale of shares of Common Stock for a period of one year
from the date of this Prospectus.

52
<PAGE> 54

UNDERWRITING

Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company and the Selling Stockholders have severally agreed to
sell to the underwriters named below (the "Underwriters"), for whom Jefferies &
Company, Inc. ("Jefferies") and A.G. Edwards & Sons, Inc. are acting as
representatives (the "Representatives"), and the Underwriters have severally
agreed to purchase, the number of shares of Common Stock set forth opposite
their respective names in the table below at the public offering price less the
underwriting discount set forth on the cover page of this Prospectus:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
------------ ---------
<S> <C>
Jefferies & Company, Inc.................................... 1,570,000
A.G. Edwards & Sons, Inc.................................... 1,570,000
Bear, Stearns & Co. Inc..................................... 80,000
BT Alex. Brown Incorporated................................. 80,000
CIBC Oppenheimer Corp....................................... 80,000
Credit Suisse First Boston Corporation...................... 80,000
Credit Lyonnais Securities (USA) Inc........................ 80,000
Lazard Freres & Co. LLC..................................... 80,000
Lehman Brothers Inc......................................... 80,000
Morgan Stanley & Co. Incorporated........................... 80,000
NationsBanc Montgomery Securities LLC....................... 80,000
PaineWebber Incorporated.................................... 80,000
Prudential Securities Incorporated.......................... 80,000
McDonald & Company Securities, Inc.......................... 40,000
Black & Company, Inc........................................ 40,000
J.C. Bradford & Co.......................................... 40,000
Dain Rauscher Incorporated.................................. 40,000
EVEREN Securities, Inc...................................... 40,000
First of Michigan Corporation............................... 40,000
Gaines, Berland Inc......................................... 40,000
Gerard Klauer Mattison & Co., Inc........................... 40,000
Hoefer & Arnett, Incorporated............................... 40,000
Josephthal & Co. Inc........................................ 40,000
Ladenburg Thalmann & Co. Inc................................ 40,000
Morgan Keegan & Company, Inc................................ 40,000
The Ohio Company............................................ 40,000
Roney & Co., L.L.C.......................................... 40,000
The Seidler Companies Incorporated.......................... 40,000
Stifel, Nicolaus & Company, Incorporated.................... 40,000
Sutro & Co. Incorporated.................................... 40,000
---------
Total............................................. 4,700,000
=========
</TABLE>

The Underwriting Agreement provides that the obligation of the Underwriters
to purchase the shares of Common Stock offered hereby is subject to certain
conditions. The Underwriters are committed to purchase all of the shares of
Common Stock offered hereby (other than those covered by the over-allotment
option described below), if any are purchased.

The Underwriters propose to offer the Common Stock initially at the public
offering price set forth on the cover page of this Prospectus and to certain
dealers at such price less a concession not in excess of $0.61 per share. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of $0.10 per share to certain other dealers. After the initial public offering
of Common Stock, the public offering price, concession to selected dealers and
reallowance to other dealers may be changed by the Representatives.

53
<PAGE> 55

The Company has granted the Underwriters an option, exercisable for 30 days
from the date of this Prospectus, to purchase up to 705,000 additional shares of
Common Stock at the initial public offering price, less the underwriting
discount. The Underwriters may exercise this option solely for the purpose of
covering over-allotments, if any, made in connection with the shares of Common
Stock offered by this Prospectus. To the extent such option is exercised, each
Underwriter will become obligated, subject to certain conditions, to purchase
additional shares of Common Stock proportionate to such Underwriters' initial
commitment as indicated in the preceding table.

The Company, the stockholders and the directors and executive officers of
the Company have agreed not to offer for sale, sell or otherwise dispose of any
shares of Common Stock or options, right or warrants to acquire any Common
Stock, or any securities convertible into or exchangeable for Common Stock, for
a period of 180 days from the date of this Prospectus, without the prior written
consent of Jefferies.

The Representatives have informed the Company that they do not expect the
Underwriters to confirm sales of shares of Common Stock offered by this
Prospectus to any accounts over which they exercise discretionary authority.

The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities that may be incurred in connection with
the Offering, including liabilities under the Securities Act, or to contribute
to payments the Underwriters may be required to make in respect thereof.

In order to facilitate the Offering of the Common Stock, the Underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the Common Stock. Specifically, the Underwriters may overallot in
connection with the Offering, creating a short position in the Common Stock for
their own account. In addition, to cover over-allotments or to stabilize the
price of the Common Stock, the Underwriters may bid for, and purchase, the
Common Stock in the open market. Finally, the underwriting syndicate may reclaim
selling concessions allowed to an Underwriter or a dealer in distributing the
Common Stock in the Offering if the syndicate repurchases previously distributed
shares of Common Stock in transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the Common Stock above independent market
levels. The Underwriters are not required to engage in these activities and may
end any of these activities at any time.

The Common Stock has been approved for listing on the New York Stock
Exchange under the symbol "OPW". The Underwriters have undertaken to sell the
shares of Common Stock in the Offering in such a manner as to ensure that the
New York Stock Exchange distribution standards will be met.

The Underwriters have reserved for sale, at the initial public offering
price, up to 302,900 shares of Common Stock being sold in the Offering for
certain employees, directors and business associates of, and certain other
persons designated by, the Company who have expressed an interest in purchasing
such shares of Common Stock. The number of shares available for sale to the
general public in the Offering will be reduced to the extent such persons
purchase such reserved shares. Any reserved shares not so purchased will be
offered to the general public on the same basis as other shares offered hereby.

Prior to the Offering, there has been no public trading market for the
Common Stock and there can be no assurance that an active trading market will
develop or be sustained upon the completion of the Offering. The initial public
offering price of the Common Stock was determined by negotiations among the
Company, the Selling Stockholders and the Representatives. The material factors
considered in determining such public offering price included the history of and
the prospects for the industry in which the Company competes, an assessment of
the Company's management, the Company's past and present operations, the
Company's past and present earnings and the trend of its earnings, the general
condition of the securities markets at the time of the Offering and the
price-earnings ratio and market prices of publicly traded securities of
companies that the Company and the Representatives believe to be comparable to
the Company.

LEGAL MATTERS

Certain legal matters related to this Offering will be passed upon for the
Company and the Selling Stockholders by Kegler, Brown, Hill & Ritter Co.,
L.P.A., Columbus, Ohio. Certain legal matters related to this Offering will be
passed upon for the Underwriters by Vinson & Elkins L.L.P., Houston, Texas.

54
<PAGE> 56

EXPERTS

The Consolidated Financial Statements of the Company included in this
Prospectus and the Consolidated Financial Statements from which the Selected
Consolidated Financial Data included in this Prospectus have been derived, have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
report (which includes an explanatory paragraph relating to the restatement of
the Company's consolidated financial statements) appearing herein. Such
Consolidated Financial Statements and Selected Consolidated Financial Data have
been included herein in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.

The Combined Financial Statements of American Racing Series, Inc. and BP
Automotive, Inc. as of December 31, 1996 and 1997 and for the two-year period
ended December 31, 1997, included in this Prospectus, have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report appearing
herein and have been so included in reliance upon the report of such firm given
their authority as experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission,
Washington, D.C. 20549 (the "SEC"), a registration statement on Form S-1 under
the Securities Act of 1933 with respect to the shares of Common Stock offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits thereto. For further information with
respect to the Company and the Common Stock, reference is made to the
Registration Statement, including the exhibits filed as a part thereof.
Statements contained in this Prospectus as to the contents of any contract or
any other document are not necessarily complete, and, in each such instance,
reference is hereby made to the contract or document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
this reference thereto. The Registration Statement, together with its exhibits,
may be inspected at the Public Reference Section of the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the regional offices of the SEC located at
7 World Trade Center, Suite 1300, New York, New York 10048 and at 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of all or any part
of such materials may be obtained from any such office upon the payment of the
fees prescribed by the SEC, or through the Internet at www.sec.gov. The Company
intends to furnish its stockholders with annual reports containing financial
statements audited by its independent public accountants and to announce
publicly its quarterly results for the first three quarters of each fiscal year.

55
<PAGE> 57

[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 58

CHAMPIONSHIP AUTO RACING TEAMS, INC.

INDEX TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
INFORMATION, CONSOLIDATED FINANCIAL STATEMENTS, AND
COMBINED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
CHAMPIONSHIP AUTO RACING TEAMS, INC. UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL INFORMATION (As Restated)
Unaudited Pro Forma Condensed Consolidated Financial
Information............................................... F-2
Unaudited Pro Forma Condensed Consolidated Balance Sheet
as of December 31, 1997................................... F-3
Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the Year Ended December 31, 1997........... F-4
Notes to Unaudited Pro Forma Condensed Consolidated
Financial Information..................................... F-5
CHAMPIONSHIP AUTO RACING TEAMS, INC. (As Restated)
Independent Auditors' Report.............................. F-7
Consolidated Balance Sheets as of December 31, 1996 and
1997...................................................... F-8
Consolidated Statements of Operations for the Years Ended
December 31, 1995, 1996 and 1997.......................... F-9
Consolidated Statements of Stockholders' Deficit for the
Years Ended December 31, 1995, 1996 and 1997.............. F-10
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1995, 1996 and 1997.......................... F-11
Notes to Consolidated Financial Statements................ F-12
AMERICAN RACING SERIES, INC. AND BP AUTOMOTIVE, INC.
Independent Auditors' Report.............................. F-20
Combined Balance Sheets as of December 31, 1996 and
1997...................................................... F-21
Combined Statements of Income for the Years Ended December
31, 1996 and 1997......................................... F-22
Combined Statements of Stockholders' Equity (Deficit) for
the Years Ended December 31, 1996 and 1997................ F-23
Combined Statements of Cash Flows for the Years Ended
December 31, 1996 and 1997................................ F-24
Notes to Combined Financial Statements.................... F-25
</TABLE>

F-1
<PAGE> 59

CHAMPIONSHIP AUTO RACING TEAMS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The unaudited pro forma condensed consolidated balance sheet as of December 31,
1997 (as restated) gives effect to (i) the Reorganization and the elimination of
certain payments to franchise members (See "Business -- Franchise System and
Race Teams"), (ii) the Indy Lights Acquisition (See "Business -- PPG Dayton Indy
Lights Championship") and (iii) the Offering and application of the net proceeds
from the Offering (after deducting underwriting discounts and commissions and
estimated expenses of the Offering, but excluding the underwriters'
over-allotment option), as if each had occurred as of December 31, 1997. The
following unaudited pro forma condensed consolidated statement of operations for
the year ended December 31, 1997 (as restated) give effect to each of the above
transactions as if each had occurred as of January 1, 1997. Pro forma
adjustments are described in the accompanying notes.

The unaudited pro forma condensed consolidated financial information should
be read in conjunction with "Capitalization" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and with the
Consolidated and Combined Financial Statements and the Notes thereto included
elsewhere in this Prospectus. The unaudited pro forma condensed consolidated
statement of operations is not necessarily indicative of the actual results of
operations that would have been reported if the events described above had
occurred as of January 1, 1997, nor does such statement propose to indicate the
results of future operations of the Company. Furthermore, the pro forma results
do not give effect to cost savings or incremental costs, if any, which may occur
as a result of the integration and consolidation of the Indy Lights Acquisition
or the investment of cash balances available from the Offering. In the opinion
of management, all adjustments necessary to present fairly such unaudited pro
forma condensed consolidated financial statements have been made.

F-2
<PAGE> 60

CHAMPIONSHIP AUTO RACING TEAMS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

DECEMBER 31, 1997

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
PRO FORMA FOR ACQUISITION OF INDY LIGHTS
----------------------------------------
PRO FORMA
INDY FOR ADJUSTMENTS
HISTORICAL LIGHTS PRO FORMA INDY LIGHTS FOR THE PRO FORMA
(AS RESTATED) HISTORICAL ADJUSTMENTS (AS RESTATED) OFFERING (AS RESTATED)
-------------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............. $ 1,164 $ 451 $(10,000)(A) $(8,836) $ (9,500)(A) $45,394
(451)(A) 63,730(B)
Accounts receivable................... 3,156 1,354 (410)(A) 4,100 -- 4,100
Inventory............................. -- 54 -- 54 -- 54
Prepaid expenses...................... 751 149 (112)(A) 788 (554)(B) 234
Deferred tax asset.................... 4,683 -- -- 4,683 -- 4,683
------- ------ -------- ------- -------- -------
Total current assets........... 9,754 2,008 (10,973) 789 53,676 54,465
PROPERTY AND EQUIPMENT -- Net........... 2,236 957 (476)(A) 4,599 -- 4,599
1,882(A)
INTANGIBLES............................. 141 -- 7,459(A) 7,600 -- 7,600
OTHER ASSETS............................ 217 3 -- 220 -- 220
------- ------ -------- ------- -------- -------
TOTAL ASSETS............................ $12,348 $2,968 $ (2,108) $13,208 $ 53,676 $66,884
======= ====== ======== ======= ======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
CURRENT LIABILITIES:
Accounts payable...................... $ 1,890 $ 746 $ (746)(A) $ 1,890 $ (154)(B) $ 1,736
Accrued liabilities................... 10,707 398 (94)(A) 11,011 (9,500)(A) 1,511
Unearned revenue...................... 2,352 556 -- 2,908 -- 2,908
Current portion of notes payable...... 130 200 (200)(A) 130 -- 130
------- ------ -------- ------- -------- -------
Total current liabilities...... 15,079 1,900 (1,040) 15,939 (9,654) 6,285
NOTES PAYABLE........................... 314 -- -- 314 -- 314
MINORITY INTEREST....................... -- -- -- -- -- --
COMMITMENTS AND CONTINGENCIES........... -- -- -- -- -- --
STOCKHOLDERS' EQUITY (DEFICIT).......... (3,045) 1,068 (660)(A) (3,045) 63,330(B) 60,285
-- -- (408)(A) -- --
------- ------ -------- ------- -------- -------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)...................... $12,348 $2,968 $ (2,108) $13,208 $ 53,676 $66,884
======= ====== ======== ======= ======== =======
</TABLE>

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

F-3
<PAGE> 61

CHAMPIONSHIP AUTO RACING TEAMS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1997

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
PRO FORMA FOR ACQUISITION
OF INDY LIGHTS
-------------------------------------------
PRO FORMA
FOR ADJUSTMENTS
HISTORICAL INDY LIGHTS PRO FORMA INDY LIGHTS FOR THE PRO FORMA
(AS RESTATED) HISTORICAL ADJUSTMENTS (AS RESTATED) OFFERING (AS RESTATED)
-------------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Sanction fees..................... $ 24,248 $ -- $ -- $ 24,248 $ -- $24,248
Sponsorship revenue............... 7,221 2,962 (594)(D) 9,589 -- 9,589
Television revenue................ 4,991 -- -- 4,991 -- 4,991
Engine leases, rebuilds and wheel
sales........................... -- 2,926 -- 2,926 -- 2,926
Other revenue..................... 5,360 144 -- 5,504 -- 5,504
-------- ------ ----- -------- -------
Total revenues............. 41,820 6,032 (594) 47,258 -- 47,258
EXPENSES:
Race and franchise fund
payments........................ 28,939 722 -- 29,661 (16,980)(E) 12,681
Race expenses..................... 6,970 1,135 (594)(D) 7,511 (2,219)(E) 5,292
Cost of engine rebuilds and wheel
sales........................... -- 888 -- 888 -- 888
Administrative and indirect
expenses........................ 14,341 1,802 -- 16,143 (214)(E) 15,929
Compensation expense (H).......... 12,200 -- -- 12,200 -- 12,200
Depreciation and amortization..... 549 329 25(C) 903 -- 903
Minority interest................. (232) -- -- (232) -- (232)
-------- ------ ----- -------- -------- -------
Total expenses............. 62,767 4,876 (569) 67,074 (19,413) 47,661
-------- ------ ----- -------- -------- -------
INCOME (LOSS) BEFORE INCOME TAXES... (20,947) 1,156 (25) (19,816) 19,413 (403)
INCOME TAX EXPENSE (BENEFIT)........ (3,423) -- 405(F) (3,018) 6,795(F) 3,777
-------- ------ ----- -------- -------- -------
NET INCOME (LOSS)................... $(17,524) $1,156 $(430) $(16,798) $ 12,618 $(4,180)
======== ====== ===== ======== ======== =======
LOSS PER SHARE (G).................. $ (1.72) $ (.29)
======== =======
</TABLE>

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

F-4
<PAGE> 62

CHAMPIONSHIP AUTO RACING TEAMS, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION

BALANCE SHEET -- In December 1997, the Company entered into a binding
letter of intent to acquire all of the outstanding shares of stock of ARS and
certain of the assets of BP (entities related through certain common ownership)
for $10,000,000 in cash and options to purchase 100,000 shares of the Company's
Common Stock at the initial public offering price. ARS operates Indy Lights and
BP provides certain equipment to the participants of Indy Lights. The excess of
the purchase price over the net book value of the net assets acquired of Indy
Lights has been allocated to the tangible and intangible assets based on the
Company's estimate of the fair market value of the net assets acquired. The
allocation of the purchase price paid for Indy Lights is as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Fair market value of net assets acquired.................... $ 2,541
Allocation of purchase price in excess of acquired
assets--Goodwill.......................................... 7,459
-------
Total Purchase Price................................... $10,000
=======
</TABLE>

The accompanying unaudited pro forma condensed consolidated balance sheet
as of December 31, 1997 (as restated) has been prepared as if the Offering, the
Indy Lights Acquisition and the Reorganization had been consummated as of
December 31, 1997 and includes:

(A) a pro forma adjustment has been made to:

- record the write-up to fair market value of assets acquired
($1,882,000) and goodwill related to the Indy Lights Acquisition
($7,459,000);

- repay accrued point awards of $9,500,000;

- present the Indy Lights Acquisition for $10,000,000 in cash;

- eliminate Indy Lights historical equity balances ($660,000) and the
net assets and liabilities (net amount of $408,000) that will be
distributed to the stockholders of ARS and BP immediately prior to
the Indy Lights Acquisition.

(B) a pro forma adjustment has been recorded to present the
application of the net proceeds ($63,330,000) of the Offering, assuming
Offering expenses of $1,150,000 ($554,000 prepaid, $154,000 accrued at
December 31, 1997).

STATEMENT OF OPERATIONS -- The accompanying unaudited pro forma condensed
consolidated statement of operations for the year ended December 31, 1997 (as
restated) presents the results as though the Offering, the Indy Lights
Acquisition and the Reorganization had been consummated on January 1, 1997.

The accompanying unaudited pro forma condensed consolidated statement of
operations for the year ended December 31, 1997 (as restated) has been prepared
by combining the historical results for the Company and Indy Lights for such
period and includes the following adjustments:

(C) Adjustments for the year ended December 31, 1997 have been made to
increase depreciation and amortization by $25,000 related to the Indy
Lights Acquisition (which has been primarily allocated to property and
equipment and goodwill) as if the Indy Lights Acquisition had occurred as
of January 1, 1997. Property and equipment are depreciated over their
estimated useful lives of 5 to 15 years. Goodwill is amortized over 40
years. The Company intends to periodically evaluate the recoverability of
goodwill based upon future profitability and undiscounted operating cash
flows of the Indy Lights Acquisition.

(D) Represents the elimination of inter-entity revenues and expenses
based upon agreements between the Company and Indy Lights.

F-5
<PAGE> 63

(E) Pro forma adjustments for the period presented have been made to
reduce certain benefits paid to franchise members, including reimbursement
of travel expenses, director fees and other race related payments, to
discontinue specific expenses that would not have been incurred had the
Offering, the Indy Lights Acquisition and the Reorganization occurred as of
January 1, 1997. Effective January 1, 1998, the Company and the existing
franchise members entered into an agreement whereby reimbursements for
travel expenses, director fees and race related payments will be
discontinued. Such agreement expires in December 2000. Because each
franchise member is also a stockholder of the Company, and as such, has an
interest in the success of the Offering, the agreement constitutes a
related party transaction. Management does not intend to resume making such
payments to franchise members in the foreseeable future. See "Risk
Factors -- Elimination of Certain Payments in Connection with the
Reorganization." Additional cost savings that the Company expects to
realize through the integration of the Indy Lights Acquisition have not
been included.

(F) Prior to the Indy Lights Acquisition, ARS and BP were
S-Corporations and, accordingly, were not subject to federal income taxes.
The pro forma provision for income taxes has been computed as if the Indy
Lights Acquisition was subject to federal income taxes for the period
presented based on the statutory tax rate then in effect. Additionally, the
pro forma adjustments have been tax effected at a 35% federal rate.

(G) Pro forma loss per share is computed by dividing pro forma net
loss by the weighted average common shares outstanding and the shares
offered hereby. Pro forma common shares outstanding for the year ended
December 31, 1997 were 14,533,334 shares.

(H) Total expenses for the historical and pro forma year ended
December 31, 1997 include compensation expense of $12,200,000 (as restated)
related to the issuance of Common Stock to franchise race teams below its
fair value, on the date the Common Stock became eligible for purchase.

F-6
<PAGE> 64

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Championship Auto Racing Teams, Inc.:

We have audited the accompanying consolidated balance sheets of
Championship Auto Racing Teams, Inc. (the "Company") as of December 31, 1996 and
1997, and the related consolidated statements of operations, stockholders'
deficit, and cash flows for each of the three years in the period ended December
31, 1997. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

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

In our opinion, such consolidated financial statements present fairly, in
all material respects, the consolidated financial position of the Company as of
December 31, 1996 and 1997, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1997, in
conformity with generally accepted accounting principles.

As discussed in Note 11, the accompanying 1997 consolidated financial
statements have been restated.

Deloitte & Touche LLP
Detroit, Michigan
January 31, 1998 (March 4, 1998 as to Note 11)

F-7
<PAGE> 65

CHAMPIONSHIP AUTO RACING TEAMS, INC.

CONSOLIDATED BALANCE SHEETS

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1997
------- -------------
(AS RESTATED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 630 $ 1,164
Accounts receivable (no allowance for doubtful accounts
deemed necessary in
1996 and 1997)......................................... 2,302 3,156
Inventory................................................. 16 --
Prepaid expenses.......................................... 423 751
Deferred income taxes..................................... 12 4,683
------- -------
Total current assets.............................. 3,383 9,754
PROPERTY AND EQUIPMENT -- Net............................... 1,929 2,236
DEFERRED INCOME TAXES....................................... 1,042 --
TRADEMARKS (Net of accumulated amortization of $0 in 1996
and $24 in 1997).......................................... 101 141
OTHER ASSETS................................................ 145 217
------- -------
TOTAL ASSETS................................................ $ 6,600 $12,348
======= =======
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable.......................................... $ 931 $ 1,890
Accrued liabilities:
Race expenses and point awards......................... -- 9,500
Payroll................................................ 195 431
Taxes.................................................. 250 491
Other.................................................. 70 285
Unearned revenue.......................................... 2,331 2,352
Current portion of long-term debt......................... 130 130
------- -------
Total current liabilities.............................. 3,907 15,079
LONG-TERM DEBT.............................................. 444 314
MEMBERSHIP DEPOSITS......................................... 960 --
FRANCHISE FUND LIABILITY.................................... 1,440 --
COMMITMENTS AND CONTINGENCIES (Note 7)...................... -- --
MINORITY INTEREST IN SUBSIDIARIES........................... -- --
STOCKHOLDERS' DEFICIT:
Preferred Stock, $.01 par value; 5,000,000 shares
authorized, none issued and outstanding at December 31,
1996 and 1997.......................................... -- --
Common stock, $.01 par value; 50,000,000 shares
authorized, 8,000,000 and 10,199,998 shares issued and
outstanding at December 31, 1996 and 1997,
respectively........................................... 80 102
Additional paid-in capital................................ 1,367 15,975
Accumulated deficit....................................... (1,598) (19,122)
------- -------
Total stockholders' deficit....................... (151) (3,045)
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT................. $ 6,600 $12,348
======= =======
</TABLE>

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

F-8
<PAGE> 66

CHAMPIONSHIP AUTO RACING TEAMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1995 1996 1997
------- ------- -------------
(AS RESTATED)
<S> <C> <C> <C>
REVENUES:
Sanction fees............................................. $18,708 $21,078 $ 24,248
U.S. 500.................................................. -- 7,054 --
Sponsorship revenue....................................... 4,780 5,501 7,221
Television revenue........................................ 3,177 4,139 4,991
Other revenue............................................. 3,312 3,682 5,360
------- ------- --------
Total revenues.................................... 29,977 41,454 41,820
EXPENSES:
Race and franchise fund payments.......................... 18,446 17,198 28,939
U.S. 500.................................................. -- 8,246 --
Race expenses............................................. 4,612 6,055 6,970
Administrative and indirect expenses...................... 5,832 8,620 14,341
Compensation expense...................................... -- 1,167 12,200
Depreciation and amortization............................. 306 685 549
Minority interest in loss of subsidiaries................. -- -- (232)
------- ------- --------
Total expenses.................................... 29,196 41,971 62,767
------- ------- --------
INCOME (LOSS) BEFORE INCOME TAXES........................... 781 (517) (20,947)
INCOME TAX BENEFIT.......................................... 204 179 3,423
------- ------- --------
NET INCOME (LOSS)........................................... $ 985 $ (338) $(17,524)
======= ======= ========
EARNINGS (LOSS) PER SHARE................................... $ .10 $ (.04) $ (1.72)
======= ======= ========
WEIGHTED AVERAGE SHARES OUTSTANDING......................... 10,200 9,400 10,200
======= ======= ========
</TABLE>

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

F-9
<PAGE> 67

CHAMPIONSHIP AUTO RACING TEAMS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

(IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL NOTE
--------------- PAID-IN RECEIVABLE- ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL STOCKHOLDER DEFICIT DEFICIT
------ ------ ---------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCES, JANUARY 1, 1995................... 8,800 $ 88 $ 282 $ -- $ (2,245) $(1,875)
Net income................................ -- -- -- -- 985 985
Stock redemption.......................... (1,600) (16) (464) -- -- (480)
Issuance of note receivable to
stockholder............................ -- -- -- (600) -- (600)
Stock issuance............................ 1,600 16 704 -- -- 720
------ ----- ------- ------- -------- -------
BALANCES, DECEMBER 31, 1995................. 8,800 88 522 (600) (1,260) (1,250)
Net loss.................................. -- -- -- -- (338) (338)
Compensation expense...................... -- -- 1,167 -- -- 1,167
Stock redemption and repayment of note
receivable............................. (2,000) (20) (940) 600 -- (360)
Stock issuance............................ 1,200 12 618 -- -- 630
------ ----- ------- ------- -------- -------
BALANCES, DECEMBER 31, 1996................. 8,000 80 1,367 -- (1,598) (151)
Net loss (as restated).................... -- -- -- -- (17,524) (17,524)
Compensation expense (as restated)........ -- -- 12,200 -- -- 12,200
Stock redemption.......................... (400) (4) (206) -- -- (210)
Stock issuance............................ 2,600 26 2,614 -- -- 2,640
------ ----- ------- ------- -------- -------
BALANCES, DECEMBER 31, 1997
(as restated)............................. 10,200 $ 102 $15,975 $ -- $(19,122) $(3,045)
====== ===== ======= ======= ======== =======
</TABLE>

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

F-10
<PAGE> 68

CHAMPIONSHIP AUTO RACING TEAMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------
1995 1996 1997
------- ------- -------------
(AS RESTATED)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................... $ 985 $ (338) $(17,524)
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation............................................ 292 671 525
Amortization............................................ 14 14 24
Compensation expense.................................... -- 1,167 12,200
Net gain from sale of property and equipment............ (77) (133) 160
Write-off of trademark.................................. -- 88 --
Deferred income taxes................................... (471) (226) (3,629)
Minority interest in loss of subsidiaries............... -- -- (232)
Changes in assets and liabilities that provided (used)
cash:
Accounts receivable................................... (447) (1,481) (854)
Prepaid expenses...................................... (34) (302) (328)
Inventory............................................. (65) 37 16
Other assets.......................................... (11) (70) (72)
Accounts payable...................................... 192 134 959
Accrued liabilities................................... 198 65 10,192
Unearned revenue...................................... 1,233 (253) 21
------- ------- --------
Net cash provided by (used in) operating
activities.......................................... 1,809 (627) 1,458
------- ------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment..................... (1,365) (1,094) (999)
Proceeds from sale of property and equipment.............. 177 194 13
Acquisition of trademark.................................. -- (101) (63)
------- ------- --------
Net cash used in investing activities............... (1,188) (1,001) (1,049)
CASH FLOWS FROM FINANCING ACTIVITIES:
Note receivable from stockholder.......................... (600) -- --
Proceeds from long-term debt.............................. -- 650 --
Payments on long-term debt................................ -- (76) (130)
Redemption of common stock................................ (480) (360) (210)
Issuance of common stock.................................. 720 630 2,640
Proceeds from membership deposit.......................... 480 360 360
Payments on membership deposits........................... (240) -- (1,320)
Payments on franchise fund liability...................... (240) (600) (1,440)
Capital contributions to subsidiaries by minority
stockholder............................................. -- -- 225
Advances (Payments) on line of credit..................... 392 (392) --
------- ------- --------
Net cash provided by financing activities........... 32 212 125
------- ------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........ 653 (1,416) 534
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............ 1,393 2,046 630
------- ------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 2,046 $ 630 $ 1,164
======= ======= ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes.............................................. $ -- $ 23 $ 15
======= ======= ========
Interest.................................................. $ -- $ 50 $ 43
======= ======= ========
</TABLE>

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES -- During
1995, 1996 and 1997 the Company received property and equipment worth
approximately $110, $75 and $79, respectively, in exchange for sponsorship
privileges to the providers. In 1996, the Company redeemed 800,000 shares of
common stock for $600,000 (including $240,000 representing a refund of
membership deposits or franchise fund liability), which was used to offset a
note receivable from a stockholder.

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

F-11
<PAGE> 69

CHAMPIONSHIP AUTO RACING TEAMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization. CART, Inc., ("CART") (a Michigan Corporation) was organized
as a not-for-profit corporation in 1978, with its main purpose being to promote
the sport of automobile racing, primarily open-wheel type racing cars. As of
January 1, 1992, the entity became a profit corporation and continued to use the
CART name.

In December 1997, Championship Auto Racing Teams, Inc., a Delaware
corporation was formed to serve as a holding company for the Company and its
subsidiaries (the "Reorganization"). Each outstanding share of common stock of
CART was acquired in exchange for 400,000 shares of common stock of the Company.
References to the "Company" mean Championship Auto Racing Teams, Inc. and its
subsidiaries.

The Company has a total of 19 stockholders at December 31, 1997. These
stockholders are team owners who participate in the Company's sanctioned events
and certain of these stockholders are members of the Board of Directors. Certain
team owners are franchise members of CART ("Franchise Members") and also serve
as promoters of the Company's sanctioned events.

As of January 1, 1997, the consolidated financial statements include the
financial statements of the Company and its wholly owned subsidiary corporations
CART Properties, Inc. and CART Licensed Products, Inc. In addition, the
consolidated financial statements include the financial statements of CART
Licensed Products, L.P., a 55% owned subsidiary. All significant intercompany
balances and transactions have been eliminated in consolidation.

Operations and Major Customer. The Company is the sanctioning body
responsible for organizing, marketing and staging each of the racing events for
the open-wheeled motorsports series in North America -- the CART Championship.
The Company stages events at four different types of tracks, including
superspeedways, ovals, temporary road courses and permanent road courses, each
of which require different skills and disciplines from the drivers and teams.

Substantially all of the Company's revenue is derived from sanction fees,
sponsorship revenues, television revenues and licensing royalties, each of which
is dependent upon continued fan support and interest in CART race events.
Sanction fee revenues are fees paid to the Company by track promoters to
sanction a CART event at the race venue, and to provide the necessary race
management. The Company receives sponsorship revenues from companies who desire
to receive brand and product exposure in connection with CART races. Pursuant to
broadcast agreements, the Company generates revenues for the right to broadcast
the races, with revenues based upon viewership with a minimum guarantee. The
Company also receives revenues from royalty fees paid for licenses to use
servicemarks of the Company, various drivers, teams, tracks and industry
sponsors for merchandising programs and product sales.

The Company has one sponsor which accounted for approximately 13% of the
Company's total revenues for the year ended December 31, 1995. There was no
other sponsor or major customer that accounted for more than 10% of total
revenues for 1996 and 1997.

Inventory. Inventory consists of merchandise which is stated at the lower
of cost or market on a first-in, first-out (FIFO) basis.

Property and Equipment. Property and equipment are stated at cost and are
depreciated using the straight-line and accelerated methods over their estimated
useful lives which range from 3 to 20 years. Leasehold improvements are
amortized over the life of the related lease.

Revenue Recognition. Recognition of revenue from race sanction agreements
is deferred until the event has occurred. Sponsorship revenue is recognized
during the racing season to which the sponsorship agreement relates. Television
revenue is recognized ratably over the race schedule. Other revenue includes
membership and entry fees, contingency awards money, royalty income and other
revenue and are recognized as earned.

Cash and Cash Equivalents. Cash and cash equivalents include investments
with original maturities of three months or less at the date of original
acquisition.

F-12
<PAGE> 70
CHAMPIONSHIP AUTO RACING TEAMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Trademarks. The Company has incurred costs during 1996 and 1997 relating
to the development of a new corporate logo and trademarks. These costs are being
amortized on a straight-line basis over 10 years. The unamortized costs
associated with the previous corporate logo were written-off in 1996.

Earnings (Loss) Per Share. Earnings (loss) per share are based on the
weighted average number of common shares outstanding. The weighted average
common shares used in the computation of earnings (loss) per share were
10,200,000, 9,400,000 and 10,200,000, respectively, for the years ended December
31, 1995, 1996 and 1997, respectively. All per share information included in
these financial statements have been restated to reflect the effect of the
Reorganization of the Company and the issuance of 1,400,000 shares on December
19, 1997.

Fair Value of Financial Instruments. Statement of Financial Accounting
Standards ("SFAS") No. 107, "Disclosures About Fair Value of Financial
Instruments", requires disclosures about the fair value of financial instruments
whether or not such instruments are recognized on the balance sheet. Due to the
short-term nature of the Company's financial instruments, other than debt, fair
values are not materially different from their carrying values. Based on the
borrowing rates available to the Company, the carrying value of debt
approximated fair value as of December 31, 1996 and 1997.

Membership Deposits and Franchise Fund Liability. Any Franchise Member who
acquired stock subsequent to December 31, 1991 was required to make a
conditionally refundable deposit. The deposit amount was determined annually by
the Board of Directors and was $120,000 at December 31, 1996 ("New Member"). Any
Franchise Member who acquired his stock prior to January 1, 1992 was not
required to make such a deposit ("Old Member"). All Franchise Members must sign
an agreement which obligates the member to participate, as defined by the Board
of Directors, in all of the Company's events. If the participation requirement
is met in a given year and the Franchise Member elects to sell his stock to the
Company prior to signing the following year's participation agreement, the
Franchise Member is entitled to a final "Franchise Fund Payment" (the
"Payment"). The amount of the Payment is determined annually by the Board of
Directors. For New Members, the minimum Payment represents a return of the
membership deposit though such amount may exceed the original deposit.
Incremental increases, as determined by the Board of Directors, in the Payment
amount are charged to expense annually. Franchise Members forfeit their rights
to return of the membership deposit and/or payment of the franchise fund
liability if the minimum participation requirement is not met.

In December 1997, in connection with the Reorganization and the Company's
planned underwritten public offering of common shares (the "Offering").
Membership Deposits and Franchise Fund Liability amounts due to the Franchise
Members were paid to the Franchise Members.

Management Estimates. The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at December 31,
1996 and 1997, and the reported amounts of revenues and expenses during the
periods presented. The actual outcome of the estimates could differ from the
estimates made in the preparation of the financial statements.

Accounting Pronouncements. In February 1997, Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings per Share" was issued by the
Financial Accounting Standards Board ("FASB"). SFAS No. 128 establishes
standards for computing and presenting earnings per share ("EPS") and applies to
all entities with publicly-held common shares or potential common shares. SFAS
No. 128 replaces the presentation of primary EPS and fully-diluted EPS with a
presentation of basic EPS and diluted EPS, respectively. Basic EPS excludes
dilution and is computed by dividing earnings available to common shareholders
by the weighted-average number of common shares outstanding for the period.
Similar to fully diluted EPS, diluted EPS reflects the potential dilution of
securities that could share in the earnings.

In June 1997, SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information was issued by the FASB. SFAS No. 131 establishes
standards for the way that public business enterprises report financial and
descriptive information about its reporting operating segments. The Company has
not determined the impact on the Company's financial statement disclosure. SFAS
No. 131 is effective for the Company's financial statements for the year ending
December 31, 1998.

F-13
<PAGE> 71
CHAMPIONSHIP AUTO RACING TEAMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. INCOME TAXES

Deferred income tax assets and liabilities are computed annually for
differences between the financial statement and tax bases of assets and
liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized. Income tax expense is the tax payable or refundable for the
period plus or minus the change during the period in deferred tax assets and
liabilities.

Realization of the Company's deferred tax assets is dependent on generating
sufficient taxable income. Although realization is not assured, management
believes it is more likely than not that all of the deferred tax assets will be
realized. The amount of the deferred tax asset considered realizable, however,
could be reduced in the near term if estimates of future taxable income are
reduced.

The tax effects of temporary differences giving rise to deferred tax assets
(liabilities) at December 31 are as follows:

<TABLE>
<CAPTION>
1996 1997
------ ------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets (liabilities):
Franchise fund liability.................................. $ 522 $ --
Accrued race expense and points award..................... -- 3,446
Compensation expense...................................... 415 --
Net operating loss carryforwards.......................... 15 1,186
Alternative minimum tax credit carryforwards.............. 83 44
Pension liability......................................... 2 8
Membership deposits....................................... 7 --
State taxes............................................... (12) (22)
Other..................................................... 22 21
------ ------
Total.................................................. 1,054 4,683
Current portion........................................... 12 4,683
------ ------
Noncurrent portion.......................................... $1,042 $ 0
====== ======
</TABLE>

The provision (credit) for income taxes consists of the following at
December 31:

<TABLE>
<CAPTION>
1995 1996 1997
----- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Current.................................................. $ 267 $ 25 $ 158
Deferred................................................. (471) (204) (3,581)
----- ------- -------
Total.................................................... $(204) $ (179) $(3,423)
===== ======= =======
</TABLE>

The Company had net operating loss carryforwards of approximately
$3,491,000 as of December 31, 1997 which are available to offset future taxable
income through 2012. The Company also has tax credit carryforwards of
approximately $44,000 as of December 31, 1997, which have an indefinite
carryforward period.

F-14
<PAGE> 72
CHAMPIONSHIP AUTO RACING TEAMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The reconciliation of income tax expense (benefit) computed at the U.S.
federal statutory tax rate to the Company's effective income tax rate is as
follows:

<TABLE>
<CAPTION>
1995 1996 1997
------ ------ -------------
<S> <C> <C> <C>
<-> B1(AS RESTATED)
Tax at U.S. federal statutory rate.................... 34.0% (34.0)% (34.0)%
Meals and entertainment............................... 2.3 6.5 0.1
Compensation expense.................................. -- -- 17.3
Change in valuation allowance......................... (62.1) -- --
Other................................................. (0.3) (7.1) 0.2
------ ------ ------
Total................................................. (26.1)% (34.6)% (16.4)%
====== ====== ======
</TABLE>

The change in the valuation allowance during 1995 and 1996 is primarily due
to utilization of net operating loss carryforwards.

Additional compensation expense recorded for financial statement purposes
in connection with Common Stock issued to race teams in December 1997, exceeded
the Company's deductible amount for federal income tax purposes. See Note 11.

3. DEBT

At December 31, 1997, the Company had an unused bank line of credit of
$1,500,000. There were no amounts outstanding at December 31, 1996 and 1997.
Advances on the line of credit are payable on demand, with interest at the
bank's prime rate. The line of credit is secured by the Company's deposits with
the bank.

At December 31, 1997, the Company has a five-year note payable to a bank
with an original face value of $650,000, with interest at 8.25%; payable in
monthly installments of $11,000, plus interest through May 2001. The note
payable is secured by the Company's mobile medical unit. Future payments under
the above agreement are as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1998........................................................ $130
1999........................................................ 130
2000........................................................ 130
2001........................................................ 54
----
Total..................................................... 444
Less current portion........................................ 130
----
Long-term portion........................................... $314
====
</TABLE>

4. EMPLOYEE BENEFIT PLANS

During 1991, the Company indicated its intent to terminate its defined
benefit pension plan. The plan assets were frozen and remain in trust at
December 31, 1997. The outstanding accrued liability (frozen benefit obligation
of $291,000 less fair value of plan assets of $270,000) at December 31, 1997 was
approximately $21,000.

In addition, the Company began a 401(k) savings plan (the "plan") in 1991
to which it contributes 25% of the participating employee's contribution. The
Company's contributions to the plan were approximately $18,000, $25,000 and
$50,000 in 1995, 1996 and 1997, respectively.

5. OPERATING LEASES

The Company has entered into various noncancelable operating leases for
office space and equipment which expire through 2002. Total rent expense was
approximately $159,000, $194,000 and $345,000 for 1995, 1996 and 1997,
respectively.

F-15
<PAGE> 73
CHAMPIONSHIP AUTO RACING TEAMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Approximate future minimum lease payments under noncancelable operating
leases are as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Year ending December 31:
1998...................................................... $ 370
1999...................................................... 372
2000...................................................... 394
2001...................................................... 398
2002...................................................... 116
------
Total....................................................... $1,650
======
</TABLE>

6. PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31:

<TABLE>
<CAPTION>
1996 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Equipment................................................... $ 1,045 $ 1,570
Vehicles.................................................... 1,421 1,616
Furniture and fixtures...................................... 174 329
Leasehold improvements...................................... 56 1
Construction in progress.................................... -- 65
Pop-off valves.............................................. 303 162
------- -------
Total..................................................... 2,999 3,743
Less accumulated depreciation and amortization.............. (1,070) (1,507)
------- -------
Property and equipment -- net............................... $ 1,929 $ 2,236
======= =======
</TABLE>

During 1996 and 1997, the Company received vehicles worth approximately
$75,000 and $79,000, respectively, in exchange for sponsorship privileges to the
providers.

7. COMMITMENTS AND CONTINGENCIES

Television Agreements. The Company has entered into multi-year television
arrangements with ESPN and ESPN International for the production, sales and
worldwide distribution of the Company's events. ESPN has guaranteed the Company
a rights fee payable through 2001. In addition, the Company receives 50% of the
annual net revenues derived from ESPN's distribution of the Company's events.

The Company has also entered into multi-year television arrangements with
Molstar for the distribution of the Company's events in Canada, Fittipaldi USA
in Brazil and Gold Coast Motor Events in Australia. The Company receives a fixed
rights fee for these territories that are contracted for outside of the ESPN
agreement.

Insurance. The Company is self-insured for the deductible amount ($50,000)
on an insurance policy which provides accident medical expense benefits for
participants of CART sanctioned races. Losses above the deductible amount are
covered by the insurance policy.

Promoter Agreements. The Company has entered into promoter contracts that
extend through the year 2000 racing season, whereby it is obligated to sanction
CART Championship racing events and provide related race management functions.

Employment Agreements. The Company has employment agreements with its
President and Chief Executive Officer, Executive Vice President and Chief
Financial Officer, Executive Vice President of Marketing and President of

F-16
<PAGE> 74
CHAMPIONSHIP AUTO RACING TEAMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

CART Licensed Products, L.P. The employment agreements expire at various dates
through September 2001. Certain of the employment agreements provide for a
multiple of the individual's base salary in the event there is a termination of
their employment as a result of a change in control in the Company.

Capital Stock. During 1995, the Company redeemed 1,600,000 shares of
common stock for $960,000 (including $480,000 representing a refund of
Membership Deposits or Franchise Fund Liability).

During 1996, the Company redeemed 2,000,000 shares of common stock for
$1,440,000 (including $480,000 representing a refund of Membership Deposits or
Franchise Fund Liability), and sold 1,200,000 shares of common stock for
$990,000 (including $360,000 representing Membership Deposits). A total of
800,000 of the shares of common stock were redeemed for $600,000 (including
$240,000 representing a refund of Membership Deposits or Franchise Fund
Liability), which was used to offset a note receivable from a stockholder as of
December 31, 1995.

In January 1997, CART redeemed 400,000 shares of common stock for $330,000
(including $120,000 representing a refund of Membership Deposits or Franchise
Fund Liability). In January and February 1997, the Company issued 1,200,000
shares of common stock for $1,200,000 (including $360,000 representing
Membership Deposits). In December 1997, the Company issued 1,400,000 shares for
$1,800,000.

In January 1996, a lawsuit was filed against the Company by one of its
shareholders and a related company. The lawsuit alleged antitrust and
anticompetitive violations as well as damage of reputation. In December 1996,
the Company settled the lawsuit and other related litigation. Included in the
settlement amount was the redemption of common stock and related Franchise Fund
Liability. Expenses incurred in 1996 and included in administrative and indirect
expenses include approximately $1,734,000 related to litigation expense and the
settlement of lawsuits.

SFAS No. 123 "Accounting for Stock Based Compensation" was issued in
October 1995 and was effective for years beginning after December 15, 1995. That
standard requires the recognition of compensation expense for equity investments
that are issued for consideration other than employee services based upon the
fair value of the common stock issued. The fair value of the Company's Common
Stock has been measured on the date New Franchise Members become eligible to
acquire such stock. Compensation expense of $1,167,000 and $12,200,000 (as
restated) has been recorded for the years ended 1996 and 1997, respectively,
related to certain shares that became eligible for purchase based upon
eligibility requirements met during 1996 and 1997.

8. RELATED PARTY TRANSACTIONS

The Company receives sanction fees from two entities related through
certain common ownership. Total sanction fee revenue related to these entities
for 1995, 1996 and 1997 was approximately $2,800,000, $3,100,000 and $4,200,000,
respectively.

The Company rented track facilities from an entity related through certain
common ownership. Total track rental expense related to this entity for 1996 was
approximately $1,200,000.

The Company has entered into an agreement with an entity related through
certain common ownership whereby the Company has agreed to sanction the Indy
Lights Championship. The agreement provides for sharing of sanction fees,
television revenues and costs. The Company incurred expenses of $270,000,
$120,000 and $594,000 for 1995, 1996 and 1997, respectively.

At December 31, 1996 and 1997, the Company has accounts receivable of
approximately $194,000 and $266,000, respectively, due from entities related
through certain common ownership.

The Company receives entry fees to participate in the CART Championship
from certain franchise members. Such fees received from certain franchise
members amounted to $76,500, $80,000 and $150,000 in 1995, 1996 and 1997,
respectively.

An officer of the Company is a principal in a law firm which received fees
for legal services provided to the Company. Such fees amounted to approximately
$111,500, $128,700 and $133,200 in 1995, 1996 and 1997, respectively.

F-17
<PAGE> 75
CHAMPIONSHIP AUTO RACING TEAMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

In connection with the Reorganization, effective January 1, 1998, the
Company and the existing franchise race teams entered into an agreement on
December 19, 1997 whereby reimbursements for travel expenses, directors fees and
race-related payments will be discontinued. These payments approximated
$9,000,000, $8,500,000 and $19,400,000 for the years 1995, 1996 and 1997,
respectively. Such agreement expires in December 2000. Because each franchise
member is also a stockholder of the Company, and as such, has an interest in the
success of the Offering, the agreement constitutes a related party transaction.
Management does not intend to resume making such payments to franchise members
in the foreseeable future.

9. INITIAL PUBLIC OFFERING

On December 23, 1997, the Company filed a registration statement with the
Securities and Exchange Commission to register shares of common stock for sale
in an underwritten public offering.

In December 1997 the Company entered into a binding letter of intent to
acquire all of the outstanding shares of stock of American Racing Series, Inc.
("ARS") and certain of the assets of BP Automotive, Inc. ("BP") (entities
related through certain common ownership) for $10,000,000 in cash and options to
purchase 100,000 shares of the Company's Common Stock at the initial public
offering price, (the "Indy Light Acquisition"). ARS operates Indy Lights and BP
provides certain equipment to participants of Indy Lights. The Indy Lights
Acquisition is anticipated to close concurrently with the Offering and a portion
of the proceeds from the Offering will be used to fund the Indy Lights
Acquisition.

In December 1997, the Board of Directors of the Company (the "Board")
authorized, and the stockholders of the Company approved, a stock incentive plan
for executive and key management employees of the Company and its subsidiaries,
including a limited number of outside consultants and advisors, effective as of
the completion of the Offering (the "Stock Option Plan"). Under the Stock Option
Plan, key employees, outside consultants and advisors (the "Participants") of
the Company and its subsidiaries (as defined in the Stock Option Plan) may
receive awards of stock options (both Nonqualified Options and Incentive
Options, as defined in the Stock Option Plan). A maximum of 2,000,000 shares of
Common Stock will be subject to the Stock Option Plan. The purpose of the Stock
Option Plan is to provide key employees (including officers and directors who
are also key employees) and key non-employee consultants and advisors of the
Company and its subsidiaries ("employees") with an increased incentive to make
significant contributions to the long-term performance and growth of the Company
and its subsidiaries. There were no options granted or outstanding during 1997.

10. SUBSEQUENT EVENTS (UNAUDITED)

In March 1998, at the request of a race team owner, the Company rescinded
the sale of an aggregate of 66,666 shares of Common Stock it issued in December
1997 at a price of $150,000.

11. RESTATEMENT

Subsequent to the issuance of the 1997 consolidated financial statements,
the Company determined that compensation expense recorded in connection with the
issuance of 1,399,998 shares of its common stock to certain race teams in
December 1997 should reflect a valuation of $10 per share versus the valuation
of $2.34 per share used in the previously issued financial statements.

The Company originally engaged an independent appraiser to value the
Company's common stock as private market securities on the date the race teams
become eligible to acquire such stock. The independent appraiser used two
approaches in determining the fair value of the Company's stock. The two
approaches were the cost approach and the income approach. The independent
appraiser utilized a variation of the income approach, the discounted net cash
flow method. The discounted net cash flow method was applied on a free-cash-flow
basis to arrive at an estimated fair value of the Company's common stock of
$2.34 per share on the date the race teams became eligible to acquire such
stock.

F-18
<PAGE> 76
CHAMPIONSHIP AUTO RACING TEAMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Notwithstanding the results of the original appraisal, the Company
determined that a valuation based on a discount from the proposed initial public
offering price provided a more appropriate methodology because of the disparity
between the original appraisal and the proposed initial public offering price of
$15 per share. Based on the proposed initial public offering price discounted to
reflect the risk of completing the offering and the lack of marketability, the
Company determined based on another independent valuation reflecting the changed
methodology that a valuation of $10 per share is appropriate. Accordingly, the
accompanying consolidated financial statements have been restated to record the
additional compensation expense and related increase in additional paid-in
capital to reflect the increased fair value as described herein. The following
is a summary of the effect of the restatement.

<TABLE>
<CAPTION>
AS PREVIOUSLY
REPORTED AS RESTATED
------------- -----------
(IN THOUSANDS, EXCEPT PER
SHARE AMOUNTS)
<S> <C> <C>
Additional paid-in capital.................................. $ 5,258 $ 15,975
Accumulated deficit......................................... (8,401) (19,122)
Stockholders' deficit....................................... (3,041) (3,045)
Compensation expense........................................ 1,483 12,200
Net loss.................................................... (6,803) (17,524)
Loss per share.............................................. $ (.67) $ (1.72)
</TABLE>

F-19
<PAGE> 77

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
American Racing Series, Inc.
and BP Automotive, Inc.:

We have audited the accompanying combined balance sheets of American Racing
Series, Inc. and BP Automotive, Inc. (the "Companies") (entities related through
common ownership) as of December 31, 1996 and 1997, and the related combined
statements of income, stockholders' equity (deficit), and cash flows for each of
the two years in the period December 31, 1997. These combined financial
statements are the responsibility of the Companies' management. Our
responsibility is to express an opinion on these combined financial statements
based on our audits.

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

In our opinion, such combined financial statements present fairly, in all
material respects, the financial position of the Companies' as of December 31,
1996 and 1997, and the results of their operations and their cash flows for each
of the two years in the period December 31, 1997, in conformity with generally
accepted accounting principles.

Deloitte & Touche LLP
Detroit, Michigan
January 31, 1998

F-20
<PAGE> 78

AMERICAN RACING SERIES, INC. AND BP AUTOMOTIVE, INC.

COMBINED BALANCE SHEETS

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1996 1997
------ ------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 229 $ 451
Accounts receivable (less allowance of $26 and $81 as of
1996 and 1997, respectively)........................... 519 1,354
Inventory................................................. 20 54
Note receivable........................................... -- 58
Prepaid expenses and other current assets................. 51 91
------ ------
Total current assets.............................. 819 2,008
PROPERTY AND EQUIPMENT -- Net............................... 856 957
OTHER ASSETS................................................ 1 3
------ ------
TOTAL ASSETS................................................ $1,676 $2,968
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable.......................................... $ 415 $ 746
Accrued liabilities....................................... 86 86
Purse Awards payable...................................... -- 8
Deposits.................................................. 107 304
Distribution payable...................................... 135 --
Unearned revenue.......................................... 280 556
Bank lines of credit...................................... -- 200
Notes payable to related party............................ 750 --
------ ------
Total current liabilities......................... 1,773 1,900
COMMITMENTS AND CONTINGENCIES (NOTE 5)
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock.............................................. 46 46
Retained earnings (deficit)............................... (11) 1,078
Notes receivable -- stockholders.......................... (132) (56)
------ ------
Total stockholders' equity (deficit)................... (97) 1,068
------ ------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)........ $1,676 $2,968
====== ======
</TABLE>

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

F-21
<PAGE> 79

AMERICAN RACING SERIES, INC. AND BP AUTOMOTIVE, INC.

COMBINED STATEMENTS OF INCOME

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
----------------
1996 1997
------ ------
<S> <C> <C>
REVENUES:
Engine leases............................................. $1,129 $1,293
Engine rebuilds and wheel sales........................... 1,218 1,633
Sponsorship and commissions............................... 2,416 2,962
Other revenue............................................. 160 144
------ ------
Total revenues.................................... 4,923 6,032
EXPENSES:
Race expenses............................................. 818 1,135
Race distributions........................................ 731 722
Cost of engine rebuilds and wheels sold................... 898 888
Television................................................ 4 88
Administrative and indirect expenses...................... 1,686 1,714
Depreciation and amortization............................. 397 329
------ ------
Total expenses......................................... 4,534 4,876
------ ------
NET INCOME.................................................. $ 389 $1,156
====== ======
</TABLE>

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

F-22
<PAGE> 80

AMERICAN RACING SERIES, INC. AND BP AUTOMOTIVE, INC.

COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON STOCK RETAINED NOTE STOCKHOLDERS'
---------------- EARNINGS RECEIVABLE- EQUITY
SHARES AMOUNT (DEFICIT) STOCKHOLDER (DEFICIT)
------ ------ --------- ----------- -------------
<S> <C> <C> <C> <C> <C>
BALANCES, JANUARY 1, 1996........................ 475 $47 $ 34 $ -- $ 81
Net income..................................... -- -- 389 -- 389
Stock redemption............................... (90) (1) (299) -- (300)
Distributions to stockholders.................. -- -- (135) -- (135)
Issuance of notes receivable -- stockholders... -- -- -- (132) (132)
---- --- ------- ----- -------
BALANCES, DECEMBER 31, 1996...................... 385 46 (11) (132) (97)
Net income..................................... -- -- 1,156 -- 1,156
Distributions to stockholders.................. -- -- (67) -- (67)
Repayment of notes
receivable -- stockholders.................. -- -- -- 76 76
---- --- ------- ----- -------
BALANCES, DECEMBER 31, 1997...................... 385 $46 $ 1,078 $ (56) $ 1,068
==== === ======= ===== =======
</TABLE>

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

F-23
<PAGE> 81

AMERICAN RACING SERIES, INC. AND BP AUTOMOTIVE, INC.

COMBINED STATEMENTS OF CASH FLOWS

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------
1996 1997
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 389 $ 1,156
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 397 329
Net loss from disposal of property and equipment....... 200 --
Changes in assets and liabilities that provided (used)
cash:
Accounts receivable.................................. 31 (835)
Inventory............................................ 5 (40)
Note receivable...................................... -- (58)
Prepaid expenses and other current assets............ (29) (40)
Other assets......................................... -- (2)
Accounts payable..................................... 74 331
Accrued liabilities.................................. (11) --
Deposits............................................. (25) 197
Distribution payable................................. 135 (135)
Purse payable........................................ -- 8
Unearned revenue..................................... 190 276
------- -------
Net cash provided by operating activities......... 1,356 1,187
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment..................... (453) (424)
Issuance of notes receivable -- stockholders.............. (132) --
Payment of notes receivable -- stockholders............... -- 76
------- -------
Net cash used in investing activities............. (585) (348)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment for stock redemption.............................. (300) --
Proceeds from note payable to related party............... 1,100 720
Payments on notes payable to related party................ (875) (1,470)
Advances on lines of credit............................... 200
Payments on lines of credit............................... (400) --
Distributions to stockholders............................. (135) (67)
------- -------
Net cash used in financing activities............. (610) (617)
------- -------
NET INCREASE IN CASH AND CASH EQUIVALENTS................... 161 222
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............ 68 229
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 229 $ 451
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for interest.................... $ 22 $ 67
======= =======
</TABLE>

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

F-24
<PAGE> 82

AMERICAN RACING SERIES, INC. AND BP AUTOMOTIVE, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS -- American Racing Series, Inc. ("ARS") was
incorporated in 1985 and is a racing league for Indy Lights cars which race in
the PPG Dayton Indy Lights Championship (the "Championship"). ARS leases engines
and provides engine rebuild services to the teams that race in the Championship.
The leases for the engines are for a period of 1 year and are subject to annual
renewal.

BP Automotive ("BP") was incorporated in 1988 and provides wheels and parts
for teams in the Indy Lights series.

ARS and BP (the "Companies") (entities related through common ownership)
conduct their business in the United States and Canada.

PRINCIPLES OF COMBINATION -- The accompanying combined financial statements
include the assets, liabilities and operations associated with ARS and BP. All
significant inter-entity balances and transactions have been eliminated in
combination.

CASH EQUIVALENTS include investments with original maturities of three
months or less at the date of original acquisition.

INVENTORY consists of wheels and parts and are stated at the lower of cost
or market on a first-in, first-out (FIFO) basis.

PROPERTY AND EQUIPMENT are stated at cost and are depreciated using
accelerated methods over their estimated useful lives which range from five to
seven years.

REVENUE RECOGNITION -- Recognition of revenue from engine leases and
sponsorship and commissions are recognized during the year to which the leases
and sponsorship agreements relate. Engine rebuilds and wheel sales are
recognized as earned. Other revenue includes rental income (related party),
testing fees, interest income and other revenue and are recognized as earned.

INCOME TAXES -- The Companies have elected by consent of its stockholders
to be taxed under the provisions of Subchapter S of the Internal Revenue Code.
Under those provisions, the Companies will not pay federal corporate income tax
on its taxable income; rather, the individual stockholders are liable for
federal income tax on their respective share of the Company's taxable income.

FAIR VALUE OF FINANCIAL INSTRUMENTS -- Statement of Financial Accounting
Standards ("SFAS") No. 107, "Disclosures About Fair Value of Financial
Instruments," requires disclosures about the fair value of financial instruments
whether or not such instruments are recognized on the balance sheet. Due to the
short-term nature of the Companies financial instruments, other than debt, fair
values are not materially different from their carrying values. Based on the
borrowings rates available to the Companies, the carrying value of debt
approximated fair value as of December 31, 1996 and 1997.

MANAGEMENT ESTIMATES -- The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at December 31,
1996 and 1997, and the reported amounts of revenues and expenses during the
periods presented. The actual outcome of the estimates could differ from the
estimates made in the preparation of the financial statements.

F-25
<PAGE> 83
AMERICAN RACING SERIES, INC. AND BP AUTOMOTIVE, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

2. PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31:

<TABLE>
<CAPTION>
1996 1997
------ ------
(IN THOUSANDS)
<S> <C> <C>
Engines..................................................... $1,123 $1,508
Airplane and hanger......................................... 1,062 1,062
Machinery and office equipment.............................. 84 126
Vehicles.................................................... 213 213
Molds and other............................................. 134 137
------ ------
Total............................................. 2,616 3,046
Less accumulated depreciation and amortization.............. (1,760) (2,089)
------ ------
Property and equipment -- net............................... $ 856 $ 957
====== ======
</TABLE>

3. BANK LINES OF CREDIT

The Companies have a bank line of credit of $300,000 and a revolving credit
facility of $600,000. At December 31, 1997, $200,000 had been advanced on the
line of credit. The line of credit is unsecured and is payable on demand, with
monthly interest at the bank's prime rate (8.50% at December 31, 1997). The
revolving credit facility is secured by certain assets of the Companies and is
payable on demand, with monthly interest at the bank's prime rate. There are no
amounts outstanding on the revolving credit facility at December 31, 1997. The
line of credit and revolving credit facility are guaranteed by a stockholder of
the Companies. There were no amounts outstanding on the bank line of credit and
revolving credit facility at December 31, 1996.

4. OPERATING LEASES

The Companies have entered into a noncancelable operating lease for office
space, vehicles and office equipment which expire on various dates through 1999.
Total lease expense was approximately $52,000 and $34,000 for 1996 and 1997,
respectively.

Approximate future minimum lease payments under noncancelable operating
leases are as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Year ending December 31:
1998............................................. $34
1999............................................. 14
---
Total.................................... $48
===
</TABLE>

5. COMMITMENTS AND CONTINGENCIES

ARS has employment agreements with its President and Chief Executive
Officer (CEO) and a key management employee. The employment agreements expire
September 1, 1999 for the President and CEO and November 1, 1999 for its key
management employee unless earlier terminated as provided in the agreements. The
President and CEO and key management employee are entitled to receive annual
base salaries which at December 31, 1997 were $240,000 and $100,000,
respectively, plus certain fringe benefits. The key management employee has
agreed not to compete with ARS during specified periods.

F-26
<PAGE> 84
AMERICAN RACING SERIES, INC. AND BP AUTOMOTIVE, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

6. RELATED PARTY TRANSACTIONS

At December 31, 1996 and 1997, the Companies have accounts receivable of
approximately $2,000 and $373,000, respectively, due from entities related
through certain common ownership. At December 31, 1997, the Companies have
accounts payable to an entity related through certain common ownership of
approximately $25,000.

The Companies have notes payable due to related parties of $750,000 at
December 31, 1996. The amounts were repaid in full during 1997.

The Companies have notes receivable due from stockholders of $132,000 and
$56,000 at December 31, 1996 and 1997, respectively. The notes are due on demand
and interest accrues at a rate of 6% per annum.

ARS receives rental income for the use of its airplane and hanger from an
entity related through certain common ownership. Total rental income for 1996
and 1997 was approximately $64,000 and $68,000, respectively.

ARS pays management and consulting fees to an entity related through
certain common ownership and certain stockholders. Total management and
consulting fees for both 1996 and 1997 was approximately $276,000.

7. PENDING ACQUISITION

In December 1997, the Companies entered into a binding letter of intent to
sell to Championship Auto Racing Teams, Inc. all of the outstanding shares of
stock of ARS and certain of the assets of BP for $10,000,000 in cash and options
to purchase 100,000 shares of CART common stock at the initial public offering
(the "Offering") price (the "Indy Lights Acquisition"). The Indy Lights
Acquisition is anticipated to close concurrently with the Offering and a portion
of the proceeds from the Offering will be used to fund the Indy Lights
Acquisition.

F-27
<PAGE> 85

[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 86

[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 87

[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 88

1998 FEDEX CHAMPIONSHIP SERIES RACE SCHEDULE
<PAGE> 89

======================================================

NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFERING OTHER
THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND, IF
GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED ON
AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES IN ANY STATE
TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
STATE. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO ITS DATE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.............................. 3
Risk Factors.................................... 8
Use of Proceeds................................. 14
Capitalization.................................. 15
Dividend Policy................................. 15
Dilution........................................ 16
Selected Consolidated Financial Data............ 17
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 19
Auto Racing Industry Overview................... 26
Business........................................ 28
Management...................................... 39
Certain Relationships and Related
Transactions.................................. 46
Principal and Selling Stockholders.............. 48
Description of Capital Stock.................... 50
Shares Eligible for Future Sale................. 52
Underwriting.................................... 53
Legal Matters................................... 54
Experts......................................... 55
Additional Information.......................... 55
Index to Unaudited Pro Forma Condensed
Consolidated Financial Information,
Consolidated Financial Statements, and
Combined Financial Statements................. F-1
</TABLE>

------------------------
UNTIL APRIL 4, 1998 (25 DAYS AFTER THE COMMENCEMENT OF THE OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK OFFERED HEREBY, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
======================================================
======================================================

4,700,000 SHARES

[CART LOGO]

CHAMPIONSHIP AUTO
RACING TEAMS, INC.
COMMON STOCK
PROSPECTUS
JEFFERIES & COMPANY, INC.

A.G. EDWARDS & SONS, INC.
March 10, 1998
======================================================