<PAGE>   1
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

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

FOR FISCAL YEAR ENDED: DECEMBER 31, 1998         COMMISSION FILE NUMBER: 0-28044

                            PENSKE MOTORSPORTS, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                 DELAWARE                          51-0369517
     (STATE OR OTHER JURISDICTION                 (IRS EMPLOYER
     OF INCORPORATION OR ORGANIZATION)        IDENTIFICATION NUMBER)

           13400 WEST OUTER DRIVE
                DETROIT, MI                         48239-4001
    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)        (ZIP CODE)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (313) 592-8255
                                ---------------

           SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

                                                         NAME OF EACH EXCHANGE
          TITLE OF EACH CLASS                             ON WHICH REGISTERED
 COMMON STOCK, PAR VALUE $0.01 PER SHARE                 NASDAQ STOCK MARKET(SM)
                                ---------------

        SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
                                ---------------

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. [X] YES [ ] NO.

INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. [X]

THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF THE
REGISTRANT WAS APPROXIMATELY $208,865,521 BASED UPON THE CLOSING SALES PRICE OF
THE REGISTRANT'S COMMON STOCK ON THE NASDAQ STOCK MARKET(SM) AT MARCH 25, 1999,
OF $35.25 PER SHARE. AS OF MARCH 25, 1999, 13,854,998 SHARES OF REGISTRANT'S
COMMON STOCK, $.01 PAR VALUE PER SHARE, WERE OUTSTANDING. PORTIONS OF THE
REGISTRANT'S DEFINITIVE PROXY STATEMENT TO BE FILED FOR ITS 1999 ANNUAL MEETING
OF STOCKHOLDERS ARE INCORPORATED BY REFERENCE INTO PART III OF THIS FORM 10-K.

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

<PAGE>   2

                                        
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                          PAGE
                                                                                                          ----
                                                PART I
<S>          <C>                                                                                          <C>
Item 1.      Business ...............................................................................       1

Item 2.      Properties .............................................................................       9

Item 3.      Legal Proceedings ......................................................................       9

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

             Supplementary Item: Executive Officers of Registrant....................................      11

                                                PART II

Item 5.      Market for the Registrant's Common Equity and Related Stockholder Matters...............      12

Item 6.      Selected Financial Data.................................................................      13

Item 7.      Management's Discussion and Analysis of Financial Condition and Results of Operations...      14

Item 8.      Financial Statements and Supplementary Data.............................................      20

Item 9.      Changes in and Disagreements with Accountants on Accounting and
             Financial Disclosure....................................................................      34

                                               PART III

Item 10.     Directors and Executive Officers of the Registrant......................................      34

Item 11.     Executive Compensation..................................................................      34

Item 12.     Security Ownership of Certain Beneficial Owners and Management..........................      34

Item 13.     Certain Relationships and Related Transactions..........................................      34

                                                PART IV

Item 14.     Exhibits, Financial Statement Schedules and Reports on Form 8-K.........................      34

Signatures.........................................................................................        37
</TABLE>


                                       i


<PAGE>   3
                                     PART I

ITEM 1: BUSINESS

     Penske Motorsports, Inc. ("PMI") is a leading promoter and marketer of
professional motorsports in the United States. PMI owns and operates speedways
through its subsidiaries, Michigan International Speedway, Inc. ("Michigan
Speedway") in Brooklyn, Michigan, Pennsylvania International Raceway, Inc.
("Nazareth Speedway") in Nazareth, Pennsylvania, California Speedway Corporation
("California Speedway") in Fontana, California, and North Carolina Speedway,
Inc. ("North Carolina Speedway") in Rockingham, North Carolina. In addition, PMI
owns 45% of the ownership interests of Homestead-Miami Speedway, LLC, which owns
and operates the Miami-Dade Homestead Motorsports Complex in Homestead, Florida
("Homestead-Miami Speedway"). PMI also produces and markets motorsports-related
merchandise such as apparel, souvenirs and collectibles through its wholly-owned
subsidiary, Motorsports International Corp. ("MIC"). In addition, through its
wholly-owned subsidiaries, Competition Tire West, Inc. ("Competition Tire West")
and Competition Tire South, Inc. ("Competition Tire South" and, together with
Competition Tire West, "Competition Tire"), PMI distributes and sells Goodyear
brand racing tires in the midwest and southern regions of the United States.

     Unless the context otherwise requires, references herein to the "Company"
and "PMI" mean Penske Motorsports, Inc. and its subsidiaries considered as one
enterprise. "NASCAR(R)" and "Winston Cup(R)" are registered trademarks and
service marks of the National Association for Stock Car Auto Racing, Inc.
("NASCAR").

    PMI, excluding Homestead-Miami Speedway, promoted a total of 19 major racing
events at Michigan Speedway, Nazareth Speedway, California Speedway and North
Carolina Speedway in 1998 and expects to promote a total of 19 major racing
events at these speedways in 1999. Of the 1998 events, 12 were stock car races,
11 of which were sanctioned by NASCAR, 5 were Indy car races (including 2 Indy
Lights Series events) sanctioned by Championship Auto Racing Teams, Inc.
("CART"), and 2 were Craftsman Truck Series races sanctioned by NASCAR. NASCAR
events promoted by PMI in 1998 included 5 races associated with the Winston Cup
Series, 5 races associated with the Busch Grand National Series, 1 race
associated with the Winston West Series and 2 races associated with the
Craftsman Truck Series. In addition, PMI expects Homestead-Miami Speedway to
host two major racing event weekends in 1999. These events will include an
inaugural NASCAR race associated with the Winston Cup Series coupled with the
final season race associated with the NASCAR Busch Grand National Series and a
FedEx Championship Series event sanctioned by CART coupled with a race
associated with the NASCAR Craftsman Truck Series.

    Management believes that spectator demand for many of its Winston Cup events
at its facilities will exceed existing permanent seating capacity. At December
31, 1998, permanent seating capacity, excluding infield capacity at California
Speedway was 86,439, at Michigan Speedway was 111,899, at North Carolina
Speedway was 60,122, at Nazareth Speedway was 44,044 and at Homestead-Miami
Speedway was 45,876. In 1999, PMI expects to add approximately 13,000 grandstand
seats at Michigan Speedway and approximately 25,000 grandstand seats at
Homestead-Miami Speedway. PMI has received the necessary government approvals
for a total capacity of 107,000 spectators at California Speedway. Also in 1998,
PMI added 5,013 seats at Michigan Speedway, 15,777 seats at California Speedway
and increased seating at North Carolina Speedway by 11,893.

    In addition to permanent seating capacity, California Speedway has 71
terrace suites, 55 chalets and expects to complete permanent construction of 28
skyboxes. The skyboxes will each accommodate between 30 and 49 guests. Michigan
Speedway has 37 suites, 40 chalets and 2 grandstand pavilions for corporate
hospitality and a concourse to accommodate up to 10,000 additional spectators.
North Carolina Speedway has 34 suites and 28 chalets. Nazareth Speedway has 39
hospitality chalets and additional space for large corporate gatherings which
can accommodate up to 5,000 people. Nazareth Speedway is also adding six
temporary corporate suites for the 1999 season. Homestead-Miami Speedway has 30
terrace suites, 20 skybox lounges and 30 chalets.




                                       1
<PAGE>   4



COMPANY STRATEGY

    The Company's strategy is to continue to increase revenue and profitability
by hosting premier weekend events, expanding its existing seating capacity and
otherwise improving its facilities, increasing its sales of racing-related
merchandise and pursuing opportunities to expand into other markets. The key
elements of this strategy are as follows:

    -   Hosting Premier Weekend Events. The Company plans its racing events, and
        designs and maintains its facilities, to create an environment which
        maximizes the spectators' entertainment experience. Management believes
        that associating supporting race events with a Winston Cup event
        sanctioned by NASCAR or FedEx Championship Series event sanctioned by
        CART helps to increase overall weekend attendance at the Company's
        facilities, in part by attracting spectators traveling longer distances,
        and makes the overall experience more satisfying. For example, in 1998,
        the Company hosted a race sanctioned by the Automobile Racing Club of
        America ("ARCA") on the Saturday preceding the Miller 400, which is a
        Winston Cup event, and an Indy Lights event sanctioned by CART on the
        Saturday preceding the Marlboro 500, which is a CART-sanctioned event.
        As a result of this strategy, the Company generated virtually all of its
        1998 speedway revenue in 11 weekends.

        To maximize the spectators' entertainment experience, the Company
        designs and maintains its facilities to maximize the comfort, view and
        amenities offered to the spectators. To that end, upon acquiring
        Michigan Speedway in 1973, management embarked upon a series of capital
        improvements, including the construction of additional permanent
        grandstand seating, new hospitality suites, improvements to the
        concession stands and innovative corporate entertainment facilities. At
        Michigan Speedway, most spectators can see the entire track from the
        grandstands due to the banking of the track and the absence of
        obstruction in the infield. Following the purchase of Nazareth Speedway
        in 1986, PMI implemented a similar strategy by converting Nazareth
        Speedway from a dirt track to a one-mile asphalt speedway and
        constructing grandstands and corporate entertainment facilities. In
        addition, in 1996 PMI constructed new concession and restroom facilities
        at Michigan Speedway and Nazareth Speedway to increase the comfort of
        race spectators and also replaced the seating in the main grandstands at
        Nazareth Speedway. Capitalizing on its successful experience at Michigan
        Speedway and Nazareth Speedway, PMI designed the California Speedway
        with state-of-the-art seating, concessions and amenities. Upon
        completion of its acquisition of North Carolina Speedway in 1997, PMI
        improved the grandstand seating by repainting and sealing the tiered
        cement bleachers and adding aluminum seats with backs on the front
        stretch, improved landscaping and cleared additional property to
        increase camping and parking availability. Prior to the November 1998
        event at North Carolina Speedway, a state-of-the-art 28,000 seat
        grandstand was constructed on the backstretch, resulting in a net
        increase of 11,893 seats.

        Expanding corporate entertainment at racing events also offers the
        opportunity for increased revenue. PMI improved its corporate
        entertainment facilities by expanding its corporate concourses, and
        expanded and upgraded the chalet village at Michigan Speedway for the
        1997 season.

        No speedway currently promotes more than two Winston Cup races per year.
        In 1999, PMI will promote two Winston Cup events at Michigan Speedway,
        one Winston Cup event at the California Speedway and two Winston Cup
        events at North Carolina Speedway. In addition, PMI will promote one
        CART FedEx Championship Series event at each of Michigan Speedway,
        California Speedway and Nazareth Speedway in 1999. Homestead-Miami
        Speedway will also have one Winston Cup event and one CART FedEx
        Championship Series event. Management of the Company intends to seek
        additional racing events for its facilities, where appropriate.

    -   Sales of Merchandise, Tires and Accessories. The Company sells
        merchandise, such as apparel, souvenirs and collectibles, directly to
        spectators at its facilities, to retail customers through catalogue
        sales and through direct sales to dealers. The Company also rents "show
        cars" for promotional events to corporate customers. The Company expects
        to increase revenue derived from third party merchandisers as the number
        of merchandisers at the Company's races increase. The Company is also
        exploring additional distribution channels, such as the Internet.



                                       2
<PAGE>   5

        Additionally, the Company engages in the wholesale and retail sale and
        distribution of Goodyear brand racing tires for various types of racing
        events. The Company's strategy is to continue to increase sales of
        racing tires through the favorable reputation of the Goodyear tire, as
        well as capitalizing on the growing popularity of motorsports in the
        United States.

    -   Continued Expansion of California Speedway, Michigan Speedway, North
        Carolina Speedway, Nazareth Speedway and Homestead-Miami Speedway. Since
        the acquisition of Michigan Speedway and Nazareth Speedway, PMI has
        constructed more than 109,000 grandstand seats at the two facilities.
        Management believes that spectator demand for many of its Winston Cup
        events at its facilities exceeds the Company's existing permanent
        grandstand seating capacity and plans to continue to expand by adding
        permanent grandstand seating at Michigan Speedway and luxury suites at
        California Speedway. Prior to and during the 1998 season, PMI added
        5,013 grandstand seats at Michigan Speedway, added 15,777 grandstand
        seats at California Speedway and 11,893 grandstand seats at North
        Carolina Speedway. Prior to the commencement of the 1999 racing season,
        PMI expects to add approximately 13,000 grandstand seats at Michigan
        Speedway and six temporary corporate suites at Nazareth Speedway. In
        addition, prior to the November Winston Cup race at Homestead-Miami
        Speedway, PMI expects approximately 25,000 grandstand seats to be added.
        PMI will also add 28 skyboxes at California Speedway prior to the
        October race weekend which includes the FedEx Championship Series
        sanctioned by CART. Each suite will accommodate between 30 and 49
        guests.

    -  Pursuing Expansion Opportunities. The Company intends to consider
       expansion opportunities as they become available, including growth by
       acquisition. For example, in 1997 the Company acquired all of the issued
       and outstanding common stock of North Carolina Speedway (of which it
       owned approximately five percent at the beginning of 1997) and, in 1997
       and 1998, acquired 45% of the ownership interests of Homestead-Miami
       Speedway. During 1998, PMI continued to explore the possible construction
       of a new venue for motorsports near Denver, Colorado.

EVENTS AND FACILITIES

Events

    PMI's operations in 1998 consisted principally of promoting racing and
related events at its Michigan Speedway, Nazareth Speedway, California Speedway,
North Carolina Speedway, and Homestead-Miami Speedway.

    PMI's 1999 scheduled racing events at all of its facilities are as follows:

<TABLE>
<CAPTION>

     DATE                           RACE                                  CIRCUIT                   FACILITY
     ----                           ----                                  -------                   --------

<S>                    <C>                                     <C>                          <C>               
FEBRUARY 20            ALLTEL 200                              NASCAR BUSCH  SERIES GRAND   NORTH CAROLINA SPEEDWAY
                                                               NATIONAL DIVISION

FEBRUARY 21            DURA-LUBE/BIG KMART 400                 NASCAR WINSTON CUP SERIES    NORTH CAROLINA SPEEDWAY

MARCH 20               FLORIDA DODGE DEALERS 400               NASCAR CRAFTSMAN TRUCK       HOMESTEAD-MIAMI SPEEDWAY
                                                               SERIES

MARCH 21               DAYTONA TIRE CHALLENGE                  CART PPG DAYTON INDY LIGHTS  HOMESTEAD-MIAMI SPEEDWAY

MARCH 21               MARLBORO GRAND PRIX OF MIAMI            CART FEDEX CHAMPIONSHIP      HOMESTEAD-MIAMI SPEEDWAY
                       PRESENTED BY TOYOTA                     SERIES

MAY 1                  WINSTON WEST 200                        NASCAR WINSTON WEST SERIES   CALIFORNIA SPEEDWAY

MAY 1                  PPG-TOYOTA ATLANTIC EVENT               KOOL/TOYOTA ATLANTIC SERIES  NAZARETH SPEEDWAY

MAY 1                  AUTO CLUB 300                           NASCAR BUSCH SERIES GRAND    CALIFORNIA SPEEDWAY
                                                               NATIONAL DIVISION

MAY 2                  INDY LIGHTS 100                         CART PPG DAYTON INDY LIGHTS  NAZARETH SPEEDWAY
</TABLE>

                                       3
<PAGE>   6


<TABLE>
<CAPTION>

     DATE                           RACE                                  CIRCUIT                   FACILITY
     ----                           ----                                  -------                   --------
<S>                    <C>                                     <C>                          <C>
MAY 2                  BOSCH SPARK PLUG GRAND PRIX PRESENTED   CART FEDEX CHAMPIONSHIP      NAZARETH SPEEDWAY
                       BY TOYOTA                               SERIES

MAY 2                  CALIFORNIA 500 PRESENTED BY NAPA        NASCAR  WINSTON CUP SERIES   CALIFORNIA SPEEDWAY

MAY 23                 PENNSYLVANIA 100                        NASCAR MODIFIED TOUR         NAZARETH SPEEDWAY
                                                               FEATHERLITE SERIES

MAY 23                 FIRST UNION 200                         NASCAR BUSCH SERIES GRAND    NAZARETH SPEEDWAY
                                                               NATIONAL DIVISION

JUNE 11                INTERNATIONAL RACE OF CHAMPIONS,        IROC                         MICHIGAN SPEEDWAY
                       RACE 3

JUNE 12                MICHIGAN ARCA 200                       ARCA SERIES                  MICHIGAN SPEEDWAY

JUNE 13                KMART 400                               NASCAR WINSTON CUP SERIES    MICHIGAN SPEEDWAY

JULY 17                USAC 100                                USAC COORS LIGHT SILVER      NAZARETH SPEEDWAY
                                                               BULLET SERIES

JULY 18                THE BURNHAM BOILERS 100                 NASCAR BUSCH NORTH SERIES    NAZARETH SPEEDWAY

JULY 18                NAPA AUTOCARE 200                       NASCAR CRAFTSMAN TRUCK       NAZARETH SPEEDWAY
                                                               SERIES

JULY 24                MICHIGAN 200                            NASCAR CRAFTSMAN TRUCK       MICHIGAN SPEEDWAY
                                                               SERIES

JULY 24                THE DETROIT NEWS 100                    PPG DAYTON INDY LIGHTS       MICHIGAN SPEEDWAY

JULY 25                US 500 PRESENTED BY TOYOTA              CART FEDEX CHAMPIONSHIP      MICHIGAN SPEEDWAY
                                                               SERIES

AUGUST 21              MICHIGAN 200                            NASCAR BUSCH SERIES GRAND    MICHIGAN SPEEDWAY
                                                               NATIONAL DIVISION

AUGUST 22              PEPSI 400                               NASCAR WINSTON CUP SERIES    MICHIGAN SPEEDWAY

SEPTEMBER 26           SPORTS CAR EXTRAVAGANZA                 USRRC/FIA/GT                 HOMESTEAD-MIAMI SPEEDWAY

OCTOBER 23             GENERAL MILLS 200                       NASCAR BUSCH SERIES GRAND    NORTH CAROLINA SPEEDWAY
                                                               NATIONAL DIVISION

OCTOBER 24             POP SECRET MICROWAVE POPCORN 400        NASCAR WINSTON CUP SERIES    NORTH CAROLINA SPEEDWAY

OCTOBER 30             CRAFTSMAN TRUCK 200                     NASCAR CRAFTSMAN TRUCK       CALIFORNIA SPEEDWAY
                                                               SERIES

OCTOBER 31             PPG - DAYTON INDY LIGHTS 100            CART PPG DAYTON INDY LIGHTS  CALIFORNIA SPEEDWAY
                       PRESENTED BY LOS ANGELES TIMES

OCTOBER 31             MARLBORO 500 PRESENTED BY TOYOTA        CART FEDEX CHAMPIONSHIP      CALIFORNIA SPEEDWAY
                                                               SERIES

NOVEMBER 13            MIAMI 300                               NASCAR BUSCH SERIES GRAND    HOMESTEAD-MIAMI SPEEDWAY
                                                               NATIONAL DIVISION

NOVEMBER 14            PENNZOIL 400                            NASCAR WINSTON CUP SERIES    HOMESTEAD-MIAMI SPEEDWAY
</TABLE>

    NASCAR grants sanctioning agreements on an annual basis for the next
succeeding year, while CART grants multiple year sanctioning agreements. Each
CART FedEx Championship Series race at PMI's facilities is scheduled through
2001, other than Homestead-Miami Speedway, which is scheduled through the year
2000. At Michigan Speedway, the Company has hosted two Winston Cup races
annually since 1973 and North Carolina Speedway has hosted two Winston Cup races
annually since 1966. In addition, the Company has hosted at least one CART FedEx
Championship Series event annually since 1979.



                                       4
<PAGE>   7




Facilities

    MICHIGAN SPEEDWAY. Michigan Speedway is located in Brooklyn, Michigan,
approximately 70 miles southwest of Detroit and 18 miles southeast of Jackson.
Michigan Speedway has 111,899 grandstand seats, 37 suites, a chalet village
containing 40 hospitality chalets, 2 grandstand pavilions and a concourse to
accommodate up to 10,000 spectators. In 1998, PMI added 5,013 grandstand seats.

    The speedway and all adjacent parking areas consist of approximately 1,000
acres, all of which is owned by PMI. Michigan Speedway is a premier
superspeedway with a full view of the track from most of the grandstand seats.
Michigan Speedway is the home of the fastest 500 mile auto race (the 1990
Marlboro 500 at an average winning speed of 189.727 mph) and, prior to 1997, was
the home of the world Indy car speed record (Jimmy Vassar's 234.665 mph
qualifying lap at the 1996 Marlboro 500), which record was broken in 1997 at
California Speedway. Michigan Speedway is a two-mile, tri-oval with 18 degree
banking in the corners, 12 degrees on the front straightaway and five degrees on
the back straightaway. The track is 73 feet wide with a 10-foot apron in the
turns and 45 feet wide with a 12-foot apron on the straightaways. The
backstretch is 2,242 feet in length. The pit road is 2,299 feet long, 50 feet
wide and contains space for 44 individual pit areas. The free parking areas can
accommodate 50,000 cars. The Michigan Speedway oval was resurfaced in the spring
of 1994. PMI acquired Michigan Speedway in 1973.

    NAZARETH SPEEDWAY. Nazareth Speedway is located in Pennsylvania's Lehigh
Valley, approximately 12 miles from Allentown, 50 miles from Philadelphia and 80
miles from New York City. Nazareth Speedway sits on approximately 110 acres and
on race days uses more than 230 acres of land, some of which is leased. Nazareth
Speedway has permanent seating capacity of 44,044 and is adding six temporary
corporate suites for the 1999 season. The track is a one-mile speedway. Turn one
is banked three degrees, turn two is banked four degrees and turns three and
four are banked six degrees. The track width varies from 50 feet on the front
stretch to 60 feet on the back stretch. Nazareth Speedway has an elevation
change of 34 feet. An 18-foot wide warm up lane encompassing the entire inside
of the track provides a racing surface for drivers, traveling slower than race
speeds, to warm up their engines and tires without interfering with faster cars.
PMI acquired Nazareth Speedway in 1986.

    NORTH CAROLINA SPEEDWAY. North Carolina Speedway is located in Rockingham,
North Carolina, approximately 90 miles south of Raleigh, North Carolina. North
Carolina Speedway, which was formed and began operations in 1965, has 60,122
reserved grandstand seats and 34 suites with seating for 1,990 guests and 28
corporate chalets.

    The speedway consists of approximately 248 acres, all of which are owned by
North Carolina Speedway, and the speedway leases an additional 52 acres for
parking on race days. North Carolina Speedway is a one mile oval with 22 
to 25 degree banking in the turns and 8 degree banking on the front and back
straightaways. The track is 55 feet wide with a 50-foot apron on the turns and 
50 feet wide with a 20-foot apron on the straightaways. The backstretch is 1,367
feet in length. The front pit road is 1,013 feet long, 25 feet wide and contains
space for 31 individual pit areas. The back pit road is 841 feet long, 15 feet
wide and contains space for 22 individual pit areas. The oval was resurfaced in
1994. In 1999, PMI is considering expanding the chalet village, doubling the
corporate hospitality area and building a new souvenir vendor row. PMI acquired
North Carolina Speedway in 1997.

    CALIFORNIA SPEEDWAY. California Speedway is located on approximately 529
acres, 40 miles east of Los Angeles in San Bernadino county and consists of a
two-mile, tri-oval track banked in a fashion similar to the Michigan Speedway
facility. In 1997, California Speedway became the home of the world CART Champ
car speed record (Mauricio Gugelmin's 240.942 mph qualifying lap at the 1997
Marlboro 500 Presented by Toyota) surpassing the previous record held at PMI's
Michigan Speedway. California Speedway has 86,439 grandstand seats. PMI has 
received the necessary governmental approvals for a total capacity of 107,000 
spectators. In addition to its grandstand seats, California Speedway has 71 
terrace suites and 55 chalets.

    In 1999 after the May Winston Cup Series event, PMI intends to add 28
skyboxes on top of the main grandstands along the start/finish line. The
skyboxes will each accommodate between 30 and 49 people. The construction will
also include two additional elevators, providing access to the skyboxes and the
main grandstand.

                                       5
<PAGE>   8

    Adjacent to the pit area at California Speedway, there is a two-story
structure housing infield suites on the upper level and work areas on the lower
level. The upper level includes 71 terrace suites, each capable of accommodating
up to 40 persons to view races. Rooftop viewing areas are also provided for the
suiteholders. The lower level of the infield suite building houses 54 units
designed for various functions. A total of 32,000 free parking spaces surround
California Speedway for those seated within the grandstand areas. Additionally,
125 spaces have been designated for bus parking. This equates to a ratio of
slightly more than one parking space for each three grandstand seats. California
Speedway also accommodates a Metrolink station in the northeastern portion of
the parking area, along the Atkinson Topeka & Santa Fe rail line adjacent to the
California Speedway, which is a passenger rail line connecting the area with
downtown Los Angeles, as well as to Oceanside/San Diego, Oxnard/Camarillo and
Lancaster.

    OTHER FACILITIES. During 1997, the Company established its presence in South
Florida through its investment in Homestead-Miami Speedway. In July of 1997, the
Company invested $11.8 million (plus related acquisition costs) for a 40%
interest in Homestead-Miami Speedway. In March, 1998, PMI increased its interest
in Homestead-Miami Speedway to 45% by purchasing an additional 5% of
Homestead-Miami Speedway for $2.85 million payable on December 31, 2001. During
the year, the Company continued to explore a new venue for motorsports in
Denver, Colorado. In 1997, the Company acquired approximately 7.3% of the
outstanding common stock of Grand Prix of Long Beach, Inc. ("GPLB") all of which
stock was sold by the Company in March 1998.

COMPETITION TIRE

    Two of PMI's subsidiaries, Competition Tire West (located in Brooklyn,
Michigan) and Competition Tire South (located in Daytona Beach, Florida), engage
in the wholesale and retail sale and distribution of Goodyear brand racing tires
for various types of racing events, excluding CART-sanctioned events.
Competition Tire West is a dealer of Goodyear brand racing tires. Competition
Tire West's area of primary responsibility includes Ohio, Indiana, Michigan,
Illinois, Wisconsin, Minnesota, North Dakota, South Dakota, Iowa, Missouri and
Kentucky. Competition Tire South is a dealer of Goodyear brand sports car, dirt
car and drag racing tires. Competition Tire South's area of primary
responsibility includes Florida, Georgia, Alabama, Tennessee, North Carolina and
South Carolina. Competition Tire South is also a dealer of Goodyear brand sports
car racing tires in Tennessee and North Carolina. Competition Tire sells racing
tires directly to end users of the tires and to retailers of the tires and
provides supplies of tires for use at racing events. Competition Tire West and
Competition Tire South distribute Goodyear brand tires pursuant to Dealership
Agreements with Goodyear which expire on December 31, 2000.

    The material terms of the Dealership Agreements between Goodyear and
Competition Tire include payment terms (all payments are due on the 10th of each
month) and late payments entitle Goodyear to cancel the Agreement. Goodyear
disclaims any warranty as to merchantability, fitness for a particular purpose,
or otherwise and Goodyear further disclaims any liability for special or
consequential damages arising out of the use of Goodyear products sold under the
Dealership Agreements. Finally, notwithstanding the terms set forth above,
either Goodyear or Competition Tire may cancel the Dealership Agreements at the
end of any calendar year upon 30 days prior written notice.

COMPETITION

    Racing events compete not only with other sports and other recreational
events scheduled on the same dates, but with other racing events sanctioned by
various racing bodies such as NASCAR, CART, the United States Auto Club
("USAC"), the National Hot Rod Association ("NHRA"), Sports Car Club of America
("SCCA"), ARCA, the Indy Racing League ("IRL"), Federation Internationale De
L'Automobile ("FIA") and others. Racing events sanctioned by different
organizations are often held on the same dates at separate tracks, in
competition with the NASCAR and CART event dates. In addition, motorsports
facilities compete with one another for the patronage of motor racing
spectators, with other track owners and with other sports and entertainment
businesses, many of which have resources that exceed those of the Company. The
quality of the competition, type of racing event, caliber of events, sight
lines, ticket pricing, location and customer conveniences, among others,
distinguish the motorsports facilities.


                                       6
<PAGE>   9
    MIC's principal competitors include other authorized (as well as
unauthorized) distributors and retailers of Penske Racing merchandise and
merchandise relating to its drivers, as well as merchandise relating to other
drivers. Competition Tire's principal competitors are distributors and retailers
of racing tires manufactured by companies other than Goodyear, such as Hoosier
and Firestone.

EMPLOYEES

    As of December 31, 1998, the Company had 175 full-time and part-time
employees. The Company engages a small number of temporary employees to assist
during the racing season and a large number of temporary personnel to assist
during periods of peak attendance at its events. For example, Michigan Speedway
may engage up to 7,000 persons for a race weekend at Michigan Speedway, some of
whom are volunteers. None of PMI's employees are represented by a labor union.
Management believes that PMI enjoys a good relationship with its employees.

ENVIRONMENTAL MATTERS

    Prior to the commencement of construction of California Speedway, portions
of the site of California Speedway were identified by Kaiser Ventures Inc.
("Kaiser") and the applicable governmental agency as requiring remediation by
Kaiser to comply with applicable environmental laws. Property owned by Kaiser
adjacent to the site has also been identified as requiring remediation by
Kaiser. Remediation activities at the site, a former steel production facility,
were carried out by Kaiser under a Consent Order between Kaiser and the
California Environmental Protection Agency, Department of Toxic Substances
Control ("DTSC"), dated August 22, 1988. The primary area of potential
environmental concern at the site is an approximately 13 acre area which was the
location of Kaiser's former by-products plant and underground storage tanks.
Under the supervision of the DTSC, Kaiser was able to undertake successful
remedial action at the site through a combination of remedial action
alternatives selected for implementation. Such remedial efforts by Kaiser at the
site include the installation of a low-permeability membrane and cap (and
long-term maintenance of this cap) in the 13 acre by-products and underground
storage tank area by Kaiser, installation of a vapor extraction system for
impacted soils in that area, excavation, treatment and off-site removal and
disposal of impacted soils and residual waste materials. Such efforts also
include containment on the site of potentially impacted soils after the DTSC
considered the public health, environmental protection, benefits derived from
implementation of alternatives and decreased levels of exposure over time.

    The DTSC has determined that the combination of remedial action alternatives
presented by Kaiser meets the DTSC's remedial action objectives for the site
because they significantly reduce or eliminate the potential migration of
contaminants to ground water, surface water and air, result in removal, as
necessary, of residual waste materials and impacted soil from the site, meet
regulatory standards, and are consistent with site development plans.

    Effective January 1, 1995, California Speedway and Michigan Speedway were
released by the DTSC from various liabilities under California environmental
protection laws which might otherwise arise out of their ownership of real
estate or operations at California Speedway site. In addition, Kaiser has agreed
to indemnify California Speedway and Michigan Speedway from environmental
liabilities associated with the condition of the site and the Company obtained
environmental liability insurance coverage to protect the Company during the
construction of California Speedway and for subsequent periods deemed to be
necessary by the Company.

    Nevertheless, if damage to persons or property or contamination of the
environment is determined to have been caused or exacerbated by the conduct of
the Company's business, or by pollutants, substances, contaminants or wastes
used, generated or disposed of by the Company or which may be found on the
property of the Company, or should Kaiser fail to remediate properly or not be
able to honor its indemnification of the Company for such remediation
activities, there may be liability to various parties for such damage and the
Company or its subsidiaries may be required to pay the cost of investigation or
remediation, or both, of such contamination or damage caused thereby. The amount
of such liability, as to which the Company may be self-insured or which is not
subject to indemnification by Kaiser or to which Kaiser does not financially
respond, could also be material.

    Changes in federal, state or local laws, regulations or requirements, or
claims asserting liabilities under federal environmental protection laws and any
other laws outside the scope of the January 1, 1995 DTSC Release, or the
discovery of theretofore unknown conditions, could require material expenditures
by the Company.

                                       7
<PAGE>   10

    Kaiser has agreed to provide sanitary wastewater treatment services to
California Speedway from a nearby treatment facility owned by Kaiser. The
Company has the option to purchase the facility at the fair market value at any
time. Kaiser has agreed not to voluntarily sell, lease or transfer the facility
to a third party without the Company's consent.

    Treated effluent from the site of California Speedway has been historically
utilized by an unrelated party, California Steel Industries ("CSI"), in its
industrial processes under an arrangement with Kaiser. The Company believes that
this utilization will continue into the future, but there can be no assurance in
this regard. Should CSI's utilization cease and a replacement not be found, or
should federal, state or local laws or regulations change, it might be
impracticable for the sewerage treatment facility serving the site of California
Speedway to continue in operation. The Company would then be required to connect
to the public sewerage system. This could require material expenditures by the
Company either to acquire and/or upgrade the treatment facility or to obtain
other sanitary wastewater treatment services from a public utility.

REGULATION

    The motorsports industry generates significant recurring revenue from the
promotion, sponsorship, and advertising of various companies and their products.
Actual or proposed government regulation can adversely impact the availability
to motorsports of this promotion, sponsorship and advertising revenue.
Advertising by the tobacco and alcoholic beverage industries is generally
subject to greater governmental regulation than advertising by other sponsors of
the Company's events. Since August of 1996, there have been several thus far
unsuccessful governmental regulatory attempts to impose restrictions on the
advertising and promotion of cigarettes and smokeless tobacco, including
sponsorship of motorsports activities. These regulatory efforts, if successfully
implemented, would have prohibited the present practice of tobacco brand name
sponsorship of, or identification with, motorsports events, entries and teams.
At this point the ultimate outcome of these or future government regulatory and
legislative efforts to regulate the advertising and promotion of cigarettes and
smokeless tobacco is uncertain and the impact, if any, on the motorsports
industry is unclear. Recently, major United States companies engaged in the
manufacture of cigarettes and smokeless tobacco (collectively the "tobacco
industry") entered into various agreements with the Attorneys General of all 50
states to settle certain state initiated litigation against the tobacco
industry. These settlement agreements will, among other things, place
restrictions upon the sponsorship and advertising of motorsports activities by
the tobacco industry. The actual impact of these settlement agreements upon the
Company's future revenues has not yet been determined. Even more recently, the
executive branch of the United States government has publicly stated its
intention to initiate certain litigation against the tobacco industry which
would be similar to that initiated by the states which was recently settled. The
exact parameters of the proposed litigation and the impact, if any, of this
proposed litigation upon the Company's future revenues is presently unclear.

    The Company is not aware of any proposed governmental regulation which would
materially limit the availability to motorsports of promotion, sponsorship, or
advertising revenue from the alcoholic beverage industry.

    The combined advertising and sponsorship revenue from the tobacco and
alcoholic beverage industries accounted for less than 2% of the Company's total
revenues in 1997 and 1998. In addition, the tobacco and alcoholic beverage
industries provide financial support to the motorsports industry through, among
other things, their purchase of advertising time, their sponsorship of racing
teams and their sponsorship of racing series such as NASCAR's Winston Cup Series
and Busch Series Grand National Division.

INSURANCE

    The Company maintains insurance with insurance companies against such risks
and in such amounts, with such deductibles, as are customarily maintained by
similar businesses. The Company presently maintains a $25 million contractor's
pollution liability policy and a pollution legal liability policy, on a shared
limits basis. The policy has a $500,000 per occurrence deductible and generally
covers the Company's legal liability for bodily injury, property damage and
clean-up costs caused by pollution conditions (i) resulting from construction
activities at the California Speedway site and which are not covered by the
construction contractors' policies, and (ii) which emanate from the covered
sites and damage to third parties as a result of existing conditions or on-going
operations. There can be no assurances that such policy will be sufficient to
cover any potential liability resulting from the environmental condition of
existing facilities or from the construction of the California Speedway or that
such policy will be available in the future for the Company to purchase.



                                       8
<PAGE>   11


PATENTS AND TRADEMARKS

    PMI has various registered and common law trademark rights to "Michigan
Speedway", "Nazareth Speedway" "North Carolina Speedway" and "California
Speedway" and related logos and has a license from a subsidiary of Penske
Corporation to use the name "Penske" in its trade name. MIC has licenses from
various drivers and businesses to use names and logos for merchandising programs
and product sales. Management's policy is to protect its intellectual property
rights zealously, through litigation if necessary, chiefly because of their
proprietary value in merchandise and promotional sales.

ITEM 2: PROPERTIES

    The following table sets forth the location, track name, approximate acreage
and track length for each of the Company's speedway facilities.

<TABLE>
<CAPTION>
                                                                               APPROXIMATE     LENGTH OF
LOCATION                                    TRACK NAME                          ACREAGE*         TRACK
--------                                    ----------                          --------         -----
<S>                                        <C>                                 <C>             <C>  
Brooklyn, Michigan                          Michigan Speedway                     1,000         2 miles
Nazareth, Pennsylvania                      Nazareth Speedway                      230           1 mile
Rockingham, North Carolina                  North Carolina Speedway                300           1 mile
Fontana, California                         California Speedway                    529          2 miles
Homestead, Florida**                        Homestead-Miami Speedway**             344         1.5 miles
----------
</TABLE>


 *  The Company owns all of the acreage listed in the table except for 120 acres
    of property located near Nazareth Speedway which is leased from others to
    supply additional parking space and 52 acres of property located near North
    Carolina Speedway which is leased from others to supply additional parking
    space. In addition, all of the acreage with respect to the Homestead-Miami
    Speedway is leased from the City of Homestead, Florida.

** PMI owns 45% of the outstanding ownership interests in Homestead-Miami 
   Speedway.

     Additional information concerning the Company's facilities is set forth in
"Item 1: Business", under the caption "Events and Facilities -- Facilities."

ITEM 3: LEGAL PROCEEDINGS

    In March 1997, two purported class action companion lawsuits were filed in
the United States District Court, Northern District of Georgia ("Georgia
Cases"), against approximately 28 businesses, including PMI and MIC, many of
which are involved in the sale of souvenirs and merchandise at NASCAR Winston
Cup races. The lawsuits allege, in substance, that the defendants unlawfully
conspired to fix the prices of souvenirs and merchandise at these races in
violation of federal antitrust laws, for which the plaintiffs are seeking treble
damages. In March 1998, the plaintiffs agreed to dismiss PMI from the lawsuit
without prejudice, although PMI's subsidiary MIC continues as a defendant.
Discovery is now complete, and the Court has recently heard argument on
Plaintiff's motion for class certification. The Company disputes the claims and
expects to vigorously defend itself. The lawsuit does not state the amount of
damages being sought by the claimants.

    In August 1997, a purported class action was commenced against North
Carolina Speedway in the U.S. District Court for the Middle District of North
Carolina at Greensboro seeking treble damages under the United States and North
Carolina anti-trust laws. The suit alleged, in substance, that North Carolina
Speedway conspired with various persons to fix the prices of souvenirs sold at
the track during the Winston Cup and Busch Series Grand National Division stock
car races from 1988 until January 1997. The suit was consolidated for pre-trial
purposes with the Georgia Cases. In January 1998, the suit against North
Carolina Speedway was dismissed for failure on the part of the plaintiffs to
timely file a motion seeking class certification and for statute of limitation
reasons. The plaintiffs have appealed this decision to the United States Court
of Appeals for the Eleventh Circuit.


                                       9
<PAGE>   12

    On August 5, 1997, O. Bruton Smith, a shareholder of North Carolina Speedway
and the majority shareholder and chairman of Speedway Motorsports, Inc., filed a
lawsuit in North Carolina Superior Court, Mecklenburg County, against North
Carolina Speedway, PMI, Penske Acquisition, Inc. (a wholly owned subsidiary of
PMI), PSH Corp., a shareholder of PMI, and Walter P. Czarnecki, Richard J.
Peters, Robert H. Kurnick, Jr., Carrie B. DeWitt, Nancy DeWitt Daugherty and Jo
DeWitt Wilson, each a director of North Carolina Speedway, seeking to enjoin the
consummation of the merger of North Carolina Speedway with and into Penske
Acquisition, Inc., a wholly-owned subsidiary of PMI (the "Merger"). Ms. DeWitt
Wilson and Messrs. Czarnecki and Peters are directors of PMI and Mr. Kurnick is
an executive officer of PMI. PMI and the other defendants in the lawsuit filed a
motion to dismiss Mr. Smith's lawsuit, and Mr. Smith filed a motion to obtain a
preliminary injunction to prohibit the Merger. On September 15, 1997, Mr. Smith
filed a motion to add 12 other shareholders of North Carolina Speedway as
additional plaintiffs. In his lawsuit, Mr. Smith alleged that Ms. Carrie DeWitt,
as a majority shareholder, owed a duty to the minority shareholders of North
Carolina Speedway to sell her shares of common stock of North Carolina Speedway
in a transaction that would result in the minority shareholders receiving the
"highest price" for their shares and that she breached this duty by selling her
shares to PMI. In addition, Mr. Smith alleged that the defendant directors
breached their fiduciary duties to North Carolina Speedway and its shareholders
by approving the proposed Merger with PMI. Finally, Mr. Smith alleged that PMI's
negotiation and purchase of Ms. DeWitt's common stock in North Carolina Speedway
and the negotiation and execution of the Merger Agreement constituted an unfair
and deceptive trade practice under North Carolina law.

    On November 12, 1997, the defendants' Motion to Dismiss Mr. Smith's lawsuit
was granted, and Mr. Smith's Motion for a preliminary injunction to enjoin the
Merger was denied. Mr. Smith then petitioned the North Carolina Court of Appeals
to stay the Merger pending his appeal. The Appeals Court denied Mr. Smith's
stay, and the Merger was completed on December 2, 1997. Mr. Smith then appealed
the dismissal and the denial of the preliminary injunction to the North Carolina
Court of Appeals. In January, 1998, the Appeals Court affirmed the trial court's
motion to dismiss and denial of a preliminary injunction. Mr. Smith has
petitioned to North Carolina Supreme Court for a review of the Appeals Court's
decision and continues to seek injunctive or other equitable relief concerning
completion of the Merger.

    In addition, certain of the North Carolina Speedway shareholders
(constituting more than 5% of the NCMS shares outstanding prior to the Merger)
exercised their right to dissent to the price paid for the common stock of NCMS
pursuant to North Carolina law. These dissenting shareholders were paid $16.77
per share, the middle point of the range of fair value of North Carolina
Speedway as determined by an independent investment banking firm hired by North
Carolina Speedway. These dissenters have requested $55.00 per share and have
sued PMI, Penske Acquisition, Inc., and North Carolina Speedway in North
Carolina Superior Court, Mecklenberg County, North Carolina. Under its agreement
with Mrs. DeWitt, at the time of the Merger, if a dissenting shareholder, which
represents more than five percent of the North Carolina Speedway stock, receives
more consideration in a dissenters action than PMI paid in connection with the
Merger, all shareholders at the time of the Merger, other than PMI and its
affiliates, would receive a per share amount equal to the award in dissenter's
court less the per share amount paid in the Merger ($19.61 per share to
shareholders other than dissenting shareholders). There were 673,227 shares
issued and outstanding at the time of the Merger, excluding shares held by PMI
and its affiliates. Mrs. DeWitt is not entitled to any additional payment for
her shares. The Company will vigorously defend the lawsuit.

    An adverse decision by the North Carolina Supreme Court with respect to Mr.
Smith's appeal or the dissenters proceeding could materially increase the
purchase price paid for North Carolina Speedway by PMI.

    In September 1998, Thomas C. Fox, as Independent Personal Representative of
the Estate of Kenneth D. Fox, filed a wrongful death lawsuit in Circuit Court
for Lenawee County, State of Michigan against the Company, its subsidiary
Michigan Speedway, and the Company's majority shareholder, PSH Corp. In
addition, in October 1998, Mary Tautkus, as Personal Representative for the
Estate of Michael T. Tautkus, filed a wrongful death lawsuit in the Circuit
Court of Lenawee County, State of Michigan, against the Company, its subsidiary
Michigan Speedway and the Company's majority shareholder, PSH Corp. The two
lawsuits collectively seek damages in excess of $10 million arising out of an
accident which occurred during the July 26, 1998 U.S. 500 CART Championship
Series race. The Company's majority shareholder, PSH Corp., was dismissed from
the lawsuits, in the fourth quarter of 1998.



                                       10
<PAGE>   13

    In addition, in December 1998, Gerald Bramer, Richard Stevens Bramer, and
Richard Bramer, II filed a lawsuit in Circuit Court for Lenawee County, State of
Michigan, against the Company and Michigan Speedway seeking damages for injuries
allegedly received in connection with the accident at the July 1998 U.S. 500
race. The Company denies the allegations and will vigorously defend itself. Four
other spectators have asserted potential claims but have not filed litigation.

    The Company, including Michigan Speedway, maintains insurance against
liability for personal injuries sustained by spectators on the speedway
premises, which the Company believes should be sufficient to protect the Company
from any material potential liability resulting from the incident which occurred
during the July U.S. 500 race.

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

    During the fourth quarter of 1998, no matters were submitted to a vote of
security holders.

SUPPLEMENTARY ITEM: EXECUTIVE OFFICERS OF MANAGEMENT (PURSUANT TO INSTRUCTION 3 
TO ITEM 401(B) OF REGULATION S-K).

<TABLE>
<CAPTION>

                   NAME                      AGE                POSITION(S)
                   ----                      ---                -----------

<S>                                           <C>     <C>                      
Scott Atherton........................        39      President, California Speedway
James H. Harris.......................        47      Senior Vice President and Treasurer
Gene Haskett..........................        55      Executive Vice President
Robert H. Kurnick, Jr.................        37      Senior Vice President, General Counsel
                                                      and Secretary
Gregory W. Penske.....................        36      President and Chief Executive Officer
Les Richter...........................        68      Executive Vice President
</TABLE>


     Scott Atherton has been the President and General Manager of California
Speedway since January 1999. Prior to 1999, Mr. Atherton was the Executive Vice
President and General Manager of Nazareth Speedway since September 1997. Mr.
Atherton served as General Manager of Laguna Seca Raceway from 1993 until 1997.

     James H. Harris has been Senior Vice President and Treasurer of PMI since
January 1996 and, prior thereto, served as Controller of PMI. Mr. Harris was the
Controller for Penske Corporation from 1990 until 1997 and currently serves as
Vice President -- Finance of Penske Corporation.

     Gene Haskett has been Executive Vice President of PMI since January 1996
and, prior thereto, was a Vice President of PMI. Mr. Haskett is the President of
Michigan Speedway. Prior to January 1996, he served as Vice President and
General Manager of Michigan Speedway and has served in such capacity since 1987.
Mr. Haskett also served as Vice President and General Manager of Indy Car Grand
Prix, Inc. from 1985 until 1993.

     Robert H. Kurnick, Jr. has been Senior Vice President, General Counsel and
Secretary of PMI since January 1996. Mr. Kurnick has also served as Assistant
General Counsel of Penske Corporation since January 1995 and Senior Vice
President, General Counsel and Secretary of Penske Auto Centers, Inc. since
October 1995. Prior to January 1995, Mr. Kurnick was a partner in the Detroit
law firm of Honigman Miller Schwartz and Cohn.

     Gregory W. Penske has been a director of the Company since its formation
and President and Chief Executive Officer since July 1, 1997. Prior to July 1,
1997, Mr. Penske served as an Executive Vice President of the Company since
February 1996. In addition, Mr. Penske served as President of the California
Speedway Corporation since January 1997 to January, 1999. Mr. Penske is also the
President of Penske Automotive Group, Inc., which owns and operates six
automobile dealerships in Southern California, and has served in that position
since December 1993. From July 1992 to the present, Mr. Penske served as the
President of D. Longo, Inc. which owns and operates a Toyota dealership in El
Monte, California and is a subsidiary of Penske Automotive Group, Inc. Gregory
W. Penske is the son of Roger S. Penske.



                                       11
<PAGE>   14

     Les Richter has been Executive Vice President of PMI since January 1996.
Mr. Richter has served as Chairman of the Board of the International Race of
Champions, Inc. since 1988 and from 1992 to 1996 Mr. Richter served as Senior
Vice President -- Operations of NASCAR.

                                     PART II

ITEM 5: MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER 
MATTERS

    The common stock of PMI, $.01 per share (the "Common Stock"), is currently
traded on the Nasdaq Stock Market(SM) ("Nasdaq") under the symbol "SPWY". As of
March 15, 1999, 13,854,998 shares of Common Stock were outstanding and there
were approximately 10,661 record holders of Common Stock.

    The following table sets forth the high and low closing sales prices for the
Company's Common Stock, as reported by Nasdaq for each calendar quarter during
the periods indicated:

<TABLE>
<CAPTION>
                                                    1998                    1997
                                          ------------------------- -----------------------
        QUARTER ENDED                         HIGH         LOW        HIGH         LOW
                                              ----         ----       ----        ----
<S>                                       <C>           <C>         <C>        <C>     
First Quarter (March 31)........              33         24 3/4       32          25
Second Quarter (June 30)........            34 3/4       28 3/4     33 3/4      27 1/4
Third Quarter (September 30)....              34         16 7/8     35 3/4      32 1/8
Fourth Quarter (December 31)....            28 5/8       19 1/2     34 3/8      24 3/8
</TABLE>

    The Company may consider the payment of cash dividends from time to time.
However, any declaration and payment of dividends will be (i) dependent upon the
Company's results of operations, financial condition, cash requirements, capital
improvements and other relevant factors, (ii) subject to the discretion of the
Board of Directors of the Company and (iii) payable only out of the Company's
surplus or current net profits in accordance with the General Corporation Law of
the State of Delaware. No assurance can be given that the Company will pay
dividends at any time in the future.



                                       12
<PAGE>   15



ITEM 6: SELECTED FINANCIAL DATA

                    PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES
                      SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>

                                                                                 YEAR ENDED DECEMBER 31,
($ in thousands, except per share data)                      1998             1997            1996           1995            1994
                                                             ----             ----            ----           ----            ----
<S>                                                         <C>             <C>             <C>            <C>             <C>     
STATEMENT OF INCOME:
     TOTAL REVENUES                                        $116,858         $109,816        $ 55,175       $ 42,005        $ 40,518
                                                                                                          
     EXPENSES                                                                                             
        Operating expenses                                   46,151           40,399          18,067         14,060          13,322
        Cost of sales                                        13,972           16,954          12,834          9,672          10,169
        Depreciation and amortization                        11,189            7,212           3,167          2,563           2,018
        Selling, general and administrative                  14,465           16,379           6,185          4,631           4,632
                                                           --------          -------        --------       --------        --------
                                                                                                          
          Operating income                                   31,081           28,872          14,922         11,079          10,377
                                                                                                          
          Income before taxes                                27,284           26,454          16,872         10,184           9,372
                                                                                                          
NET INCOME                                                 $ 16,587         $ 16,445        $ 10,880       $  6,774        $  6,340
                                                           ========         ========        ========       ========        ========
                                                                                                          
Basic net income per share                                 $   1.17          $  1.19                      
                                                           ========          =======                      
Pro forma basic net income per share                                                        $   0.90         $ 0.84
                                                                                            ========         ======
Diluted net income per share                                $  1.17          $  1.19                      
                                                           ========          =======                      
Pro forma Diluted net income per share                                                        $ 0.90         $ 0.84
                                                                                             =======         ======
                                                                                                          
Weighted average shares outstanding                      14,117,993      13, 810,570
                                                         ==========      ===========                      
Pro forma weighted average shares outstanding                                             12,128,920      8,077,245
                                                                                          ==========      =========
                                                                                                                   
BALANCE SHEET DATA:                                                                                       
     Total assets                                          $310,534         $291,772        $183,997        $73,255        $ 34,510
     Total debt                                              61,954           48,295           5,563            350          12,515
     Total stockholders' equity                             199,746          190,694         145,402         45,812          10,187

SELECTED OPERATING DATA:
     Operating margin                                          26.6%            26.3%           27.0%          26.4%           25.6%

     Number of seats
        Michigan Speedway                                   111,899          106,775          98,276         88,141          77,991
        Nazareth Speedway                                    46,288           46,288          35,654         30,534          30,534
        California Speedway                                  86,439           70,644
        North Carolina Speedway                              60,122           50,219

     Total attendance                                     1,248,096        1,083,206         599,480        518,396         448,168

     Number of events
        Winston Cup                                               5                4               2              2               2
        CART                                                      3                3               2              2               2
        Other                                                    11               10               5              4               5
</TABLE>




                                       13
<PAGE>   16
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

GENERAL

    The Company is a leading promoter and marketer of professional motorsports
in the United States. The Company owns and operates speedways through its
subsidiaries Michigan Speedway in Brooklyn, Michigan, Nazareth Speedway in
Nazareth, Pennsylvania, California Speedway in Fontana, California and North
Carolina Speedway in Rockingham, North Carolina. The Company also owns 45% of
the ownership interests of Homestead-Miami Speedway, which operates Miami-Dade
Homestead Motorsports Complex in Homestead, Florida. In addition, the Company
sells motorsports-related merchandise such as apparel, souvenirs and
collectibles through its subsidiary MIC and Goodyear brand racing tires and
accessories through its subsidiaries Competition Tire West, Inc. and Competition
Tire South, Inc. in the midwest and southeastern regions of the United States.

    The Company classifies its revenues as speedway admissions, other speedway
revenues, and merchandise, tires and accessories revenues. Speedway admissions
include ticket sales for racing events held at the Company's wholly-owned
speedways. Other speedway revenues include revenues from concession sales,
corporate hospitality and sponsorship, broadcast rights, billboard and program
advertising and other promotional activities. Speedway admissions and other
speedway revenues are generally collected in advance and recorded as deferred
revenues until the completion of the related event. Merchandise, tires and
accessories revenues include sales of motorsports-related merchandise and
revenues from showcar appearance fees by MIC and sales of racing tires and
accessories by Competition Tire West and Competition Tire South. Revenues from
sales of merchandise, tires and accessories are recorded as income at the time
of the sale.

    The Company classifies its expenses as operating, cost of sales,
depreciation and amortization, and selling, general and administrative expenses.
Operating expenses consist primarily of costs associated with conducting race
events, such as sanction fees and wages. Cost of sales relates entirely to sales
of merchandise, tires and accessories.

    The Company's major racing events are sanctioned by CART and NASCAR.

    Revenues for the year ended December 31, 1998 were $116.9 million, compared
to $109.8 million and $55.2 million, respectively, for the years ended December
31, 1997 and 1996. The increase in revenues resulted primarily from additional
seating at California Speedway, Michigan Speedway and North Carolina Speedway,
as well as the inclusion in the Company's financial statements of an additional
event during 1998 at North Carolina Speedway, offset partially by a reduction in
merchandise, tires and accessories revenues from the December 1997 sale by MIC
of the licensing rights for Rusty Wallace merchandise.

    Net income for the year ended December 31, 1998 was $16.6 million, or $1.17
per share, compared to $16.4 million, or $1.19 per share, and $10.9 million, or
$.90 per share, for the years ended December 31, 1997 and 1996, respectively.
Net income increased due to the increase in revenues, reduced selling, general
and administrative expenses and the gain on the sale of the Company's investment
in Grand Prix Association of Long Beach, Inc. ("GPLB"), net of additional costs
associated with a full year of operations at California Speedway and North
Carolina Speedway, an increase in the equity in loss of affiliates and higher
interest expense.

    During 1997, the Company acquired the outstanding shares of North Carolina
Speedway through two transactions. On May 19, 1997, the Company purchased the
shares of North Carolina Speedway held by its former majority shareholder in
exchange for 906,542 shares of the Company's stock. On December 2, 1997, the
shareholders of North Carolina Speedway approved a merger with the Company,
whereby shareholders were offered cash of $19.61 per share or an equivalent
amount of the Company's stock. In connection with the merger, 60,558 shares of
the Company's common stock were issued. The merger was completed on December 2,
1997.

    Certain North Carolina Speedway shareholders dissented to the merger of the
Company and North Carolina Speedway. These shareholders were paid $16.77 per
share, the median fair value of North Carolina Speedway shares as determined by
an independent investment banking firm retained by North Carolina Speedway to
evaluate the Company's merger offer. These dissenters have requested additional
compensation and, if they are successful in court, the cost of the North
Carolina Speedway acquisition would increase.


                                       14
<PAGE>   17



    In July 1997, the Company acquired 40% of Homestead-Miami Speedway for $11.8
million. The Company acquired an additional 5% of the ownership interests of
Homestead-Miami Speedway in March 1998 for $2.85 million, payable on December
31, 2001 with interest at 7.5% per annum. Homestead-Miami Speedway operates
Miami-Dade Homestead Motorsports Complex, a 1.5-mile oval speedway in Homestead,
Florida. The Company has joint right of first refusal agreements with the other
investors on the remaining ownership interests of Homestead-Miami Speedway. This
investment is accounted for using the equity method.

    In March 1998, the Company sold its equity interest in GPLB for $5.3
million. This investment was acquired in a series of transactions in 1997 with a
total cost of $4.2 million.

    The Company does not believe that its financial performance has been
materially affected by inflation and has been able to mitigate the effects of
inflation without adversely affecting attendance.

SEASONALITY AND QUARTERLY RESULTS

    The Company's weekend events usually include one premier Sunday event, such
as a NASCAR Winston Cup Series, NASCAR Busch Series Grand National Division or
CART FedEx Championship Series event, coupled with a Saturday supporting event.
The Company believes that combining races creates a more attractive weekend
racing experience than an isolated race event.

    Prior to 1997, the Company's weekend events were held between April and
August. As a result, the Company's business was highly seasonal. During 1997 and
1998, the Company added first and fourth quarter events through the addition of
California Speedway, which commenced operations in June 1997, and North Carolina
Speedway, which was acquired in 1997. In addition, Homestead-Miami Speedway
annually hosts a CART FedEx Championship Series event in the first quarter and
will host a NASCAR Winston Cup Series event in the fourth quarter beginning in
1999. These additional events will help reduce the impact of seasonality on the
Company's results of operations.

    Set forth below is certain summary information with respect to the Company's
operations for the most recent eight quarters. The fluctuation between years in
the third and fourth quarters resulted primarily from a scheduling change at
California Speedway for the CART FedEx Championship Series event.

<TABLE>
<CAPTION>

                                        1998                                                 1997
                   ------------------------------------------------     -----------------------------------------------

                     FIRST       SECOND       THIRD       FOURTH          FIRST       SECOND      THIRD       FOURTH
                     -----       ------       -----       ------          -----       ------      -----       ------
 ($ in thousands)

<S>                   <C>          <C>         <C>         <C>             <C>         <C>         <C>          <C>    
 Revenues            $10,137       $46,087     $35,218     $25,416         $ 5,375     $46,296     $43,974      $14,171

 Net income
 (loss)               (1,648)       10,892       3,510       3,833          (1,511)     10,929       8,845       (1,818)

 Number of
 weekends                  1             4           4           2                           5           3            2
</TABLE>

    In addition to the weekend events shown above for the Company's wholly-owned
speedways, Homestead-Miami Speedway will host a CART FedEx Championship Series
event in March 1999 and a NASCAR Winston Cup Series event in November 1999.

                                       15
<PAGE>   18

RESULTS OF OPERATIONS

    The table below presents the percentage relationships between revenues and
other elements of the Company's consolidated statements of income for the years
ended December 31:

<TABLE>
<CAPTION>

                                                                 1998                1997               1996
                                                            --------------     ---------------     ---------------
<S>                                                         <C>                 <C>                 <C> 
REVENUES:
    Speedway admissions                                              43.9%               41.5%               36.7%
    Other speedway revenues                                          35.8                30.9                23.6
    Merchandise, tires and accessories                               20.3                27.6                39.7
                                                            --------------     ---------------     ---------------
      Total Revenues                                                100.0               100.0               100.0
                                                            --------------     ---------------     ---------------

EXPENSES:
    Operating                                                        39.5                36.8                32.8
    Cost of sales                                                    11.9                15.4                23.3
    Depreciation and amortization                                     9.6                 6.6                 5.7
    Selling, general and administrative                              12.4                14.9                11.2
                                                            --------------     ---------------     ---------------
    Total Expenses                                                   73.4                73.7                73.0
                                                            --------------     ---------------     ---------------

OPERATING INCOME                                                     26.6%               26.3%               27.0%
                                                            ==============     ===============     ===============
</TABLE>

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

    Revenues - Revenues for the year ended December 31, 1998 were $116.9
million, an increase of $7.1 million, or 6.4%, over revenues of $109.8 million
for the year ended December 31, 1997. This increase is due to increases in
speedway admissions of $5.8 million and other speedway revenues of $7.9 million,
net of a decrease in merchandise, tires and accessories revenues of $6.6
million. The increase in speedway admissions resulted from additional seating at
California Speedway (15,777 seats), Michigan Speedway (5,013 seats) and North
Carolina Speedway (11,893 seats), as well as from the inclusion of the results
of the February NASCAR Winston Cup event at North Carolina Speedway, which the
Company acquired in May 1997. Other speedway revenues increased due to the
additional event at North Carolina Speedway and increases in corporate
hospitality and sponsorship, broadcast revenues and billboard advertising at the
Company's other speedways. The decrease in merchandise, tires and accessories
revenues resulted primarily from the December 1997 sale by MIC of the licensing
rights for Rusty Wallace merchandise. Sales of such merchandise amounted to
approximately $7.3 million in 1997. For the 1999 racing season, the Company
intends to increase seating at Michigan Speedway by approximately 13,000 seats
and add 28 skyboxes at California Speedway prior to the October CART FedEx
Championship Series event.

    Operating Expenses - Operating expenses increased from $40.4 million for the
year ended December 31, 1997 to $46.2 million in 1998, an increase of $5.8
million, or 14.4%. During 1998, operating expenses increased due to the
inclusion of the February event at North Carolina Speedway, which was acquired
in May 1997, and the inclusion in 1998 of a full year of operating expenses at
California Speedway, which hosted its first event in June 1997.

    Cost of Sales - Cost of sales, which relates entirely to sales of
merchandise, tires and accessories, was $14.0 million for the year ended
December 31, 1998, or 58.9% of merchandise, tires and accessories revenues,
compared to $17.0 million, or 55.9% of those same revenues, for 1997. The $3.0
million decrease in cost of sales reflects the December 1997 sale by MIC of the
licensing rights for Rusty Wallace merchandise, while the increase in cost of
sales as a percent of merchandise, tires and accessories revenues reflects a
change in the mix of sales.

    Depreciation and Amortization - Depreciation and amortization expense
increased $4.0 million, from $7.2 million in the year ended December 31, 1997 to
$11.2 million in 1998, reflecting the inclusion of a full year of depreciation
at California Speedway and North Carolina Speedway, goodwill amortization from
the acquisition of North Carolina Speedway and increased depreciation from
capital improvements.

    Selling, General and Administrative - Selling, general and administrative
expenses decreased $1.9 million, from $16.4 million for the year ended December
31, 1997 to $14.5 million in 1998. This decrease resulted primarily from lower
selling, general and administrative expenses at California Speedway, which
incurred significant promotional costs during its inaugural season, and at MIC
due to the sale of the licensing rights for Rusty Wallace merchandise.

    Operating Income - Operating income for the year ended December 31, 1998 was
$31.1 million, an increase of $2.2 million, or 7.6%, from $28.9 million for the
prior year. This increase resulted primarily from the inclusion of a second
event at North Carolina Speedway, increased speedway admissions revenues from
additional seating at California Speedway, Michigan Speedway and North Carolina 
Speedway, and decreased selling, general and administrative expenses, net of 
increases in operating expenses and depreciation and amortization expense.





                                       16
<PAGE>   19


    Equity in Loss of Affiliates - The equity in loss of affiliates increased
from $.9 million in 1997 to $1.4 million in 1998, primarily reflecting a full
year of ownership of Homestead-Miami Speedway by the Company, as well as the 5%
increase in the Company's ownership of Homestead-Miami Speedway.

     Gain on Sale of Investment - The gain on sale of investment of $1.1 million
reflects the March 1998 sale of the Company's investment in GPLB, which was
acquired during 1997.

    Interest - Net interest expense increased from $1.6 million for the year
ended December 31, 1997 to $3.5 million for the year ended December 31, 1998 due
to increased borrowings to fund the completion of the purchase of North Carolina
Speedway, the acquisition of the additional 5% interest in Homestead-Miami
Speedway and capital expenditures at the Company's speedways. During 1998, the
Company had average debt outstanding of approximately $59.5 million with a
weighted average interest rate of 6.4%. As of December 31, 1998, outstanding
debt totaled $62.0 million.

    Income Tax Expense - The Company's effective tax rate for 1998 was 39.2%
compared to 37.8% in 1997, primarily reflecting increased income at California
Speedway and North Carolina Speedway, which operate in states with high tax
rates, as well as an increase in nondeductible goodwill amortization from the
acquisition of North Carolina Speedway.

    Net Income - Net income for the year ended December 31, 1998 was $16.6
million, as compared to $16.4 million in 1997. The increase resulted primarily
from increases in speedway admissions and other speedway revenues from
additional seating at California Speedway, Michigan Speedway and North Carolina
Speedway and the inclusion in the Company's financial results of the second
event at North Carolina Speedway, decreased selling, general and administrative
expenses and the gain on the sale of the Company's investment in GPLB, net of
reduced operating income from the December 1997 sale by MIC of the licensing
rights for Rusty Wallace merchandise, an increase in the equity in loss of
affiliates and increased interest expense.

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996

    Revenues - Revenues for the year ended December 31, 1997 were $109.8
million, an increase of $54.6 million, or 99.0%, compared to the year ended
December 31, 1996 due to increases in speedway admissions of $25.3 million,
other speedway revenues of $20.9 million and merchandise, tires and accessories
revenues of $8.4 million. The increase in speedway admissions resulted primarily
from the opening of California Speedway, which held three weekend events during
1997, and also from the acquisition of a controlling interest in North Carolina
Speedway, which held one event subsequent to the acquisition by the Company, and
additional seating at Michigan Speedway (8,500 seats) and Nazareth Speedway
(11,000 seats). Other speedway revenues increased primarily due to the opening
of California Speedway, as well as from increases in corporate sponsorship,
hospitality and broadcast revenues at existing speedways, and the addition of
North Carolina Speedway. Merchandise, tires and accessories revenues increased
primarily due to strong demand for California Speedway inaugural season
merchandise.

    Operating Expenses - Operating expenses increased from $18.1 million for the
year ended December 31, 1996 to $40.4 million in 1997, an increase of $22.3
million, primarily due to the addition of California Speedway and North Carolina
Speedway. As a percentage of total revenues, operating expenses increased from
32.8% to 36.8% due to higher incremental costs of operating California Speedway.

    Cost of Sales - Cost of sales, which relates entirely to sales of
merchandise, tires and accessories, was $17.0 million for the year ended
December 31, 1997, or 55.9% of merchandise, tires and accessories revenues,
compared to $12.8 million, or 58.6% of those same revenues, for 1996. The
decrease in cost of sales as a percentage of merchandise, tires and accessories
revenues reflects the addition of trackside sales at California Speedway, which
have a higher margin than wholesale and other retail sales.

    Depreciation and Amortization - Depreciation and amortization increased $4.0
million, from $3.2 million in the year ended December 31, 1996 to $7.2 million
in 1997, due to depreciation at the newly-constructed California 

                                       17
<PAGE>   20
Speedway, depreciation and goodwill amortization resulting from the acquisition
of North Carolina Speedway and increased depreciation at Michigan Speedway and
Nazareth Speedway from capital improvements.

    Selling, General and Administrative - Selling, general and administrative
expenses of $16.4 million for the year ended December 31, 1997 increased $10.2
million from $6.2 million in 1996 primarily due to the addition of California
Speedway, which incurred significant promotional costs associated with its
inaugural season, and the addition of North Carolina Speedway.

    Operating Income - Operating income for the year ended December 31, 1997 was
$28.9 million, an increase of $14.0 million, or 93.5%, from $14.9 million for
the year ended December 31, 1996. This increase resulted primarily from the
opening of California Speedway and the addition of North Carolina Speedway, net
of increased costs from operating those speedways.

    Interest - The Company recorded net interest expense of $1.6 million for the
year ended December 31, 1997, compared to net interest income of $2.0 million in
1996. The interest income resulted from temporarily investing the proceeds of
the Company's March 1996 initial public offering. These proceeds were fully
utilized during 1997, at which time the Company obtained financing to fund
completion of construction at California Speedway and to make the investments in
Homestead-Miami Speedway and GPLB.

    Income Tax Expense - The Company's effective tax rate for 1997 was 37.8%
compared to 35.5% in 1996. The increase reflects the increased revenues from
California Speedway, which operates in a state with a high tax rate, as well as
an increase in nondeductible goodwill amortization from the acquisition of North
Carolina Speedway.

    Net Income - Net income for the year ended December 31, 1997 was $16.4
million, an increase of $5.6 million, or 51.1%, over 1996. The increase is due
primarily to the opening of California Speedway, which resulted in increases in
speedway admissions, other speedway revenues and merchandise, tires and
accessories revenues, net of increased expenses from new speedways, the equity
in loss of affiliates and interest expense from borrowings.

LIQUIDITY AND CAPITAL RESOURCES

    Historically, the Company has relied on cash flows from operating activities
supplemented, as necessary, by bank borrowings to finance working capital,
investments and capital expenditures.

    The Company has a $100 million unsecured revolving line of credit that
matures in the year 2002. Borrowings under this agreement bear interest at
LIBOR-based rates and at the prime borrowing rate. As of December 31, 1998, the
Company had available credit under this agreement of $42.7 million. The
outstanding debt of $57.3 million on the line of credit resulted from
expenditures for the completion of construction at California Speedway and other
capital expenditures, the investment in HMS, the acquisition of North Carolina
Speedway and to repurchase shares of the Company's stock. The remaining line of
credit is available for general working capital needs and other capital
expenditures. The Company is in compliance with all covenants in the loan
agreement, and management believes the Company would continue to be in
compliance with all material financial covenants in the loan agreement if the
entire amount of available credit was outstanding.

     The Company expects to make approximately $31 million in capital
expenditures during 1999, consisting primarily of additional seating and suites
and other facility upgrades at its speedways.

     The Company is considering the development of a new speedway near Denver,
Colorado, and will continue to pursue other growth opportunities, including
acquisition and development, in other markets. Future acquisitions or
development will be funded through available credit under existing debt
facilities and, if necessary, under other financing arrangements through the
capital or financial markets, depending on market conditions. The Company
believes that it has the ability to obtain funds through these markets, however,
there can be no assurance that adequate debt or equity financing will be
available on satisfactory terms.

    In September 1998, the Company announced plans to repurchase, from time to
time, up to $10 million of the Company's common stock in open market
transactions, depending on market conditions. As of December 31, 1998, the
Company had repurchased 353,900 shares at prices ranging from $19.875 to $23.25
per share.

    For the year ended December 31, 1998, the Company generated $35.8 million in
cash flows from operating activities, an increase of $9.6 million from 1997,
reflecting an increase in deferred taxes and changes in receivables,
inventories, prepaid expenses and other assets and accounts payable, other
liabilities, and deferred revenues. The Company used $38.0 million for investing
activities, consisting of $32.9 million in capital expenditures and $10.4
million for the completion of the acquisition of North Carolina Speedway, offset
by the proceeds from the sale of the Company's investment in GPLB of $5.3
million. Cash of $3.3 million was provided by financing activities in 1998,
reflecting an increase in debt of $11.9 million, offset partially by the 
purchase of common stock of $7.5 million.

    The Company believes it has sufficient resources from cash flows from
operating activities and, if necessary, from additional borrowings under its
line of credit to satisfy ongoing cash requirements for the next twelve months.


                                       18

<PAGE>   21

YEAR 2000

    The Year 2000 problem arose because many existing computer programs do not
properly recognize a year that begins with "20" instead of the familiar "19". If
not corrected, many computer applications could fail or create erroneous
results. The Company has recognized the need to ensure that its computer
operations and operating systems will not be materially adversely affected by
the Year 2000 problem. To that end, the Company has assessed how it may be
impacted by the Year 2000 problem and management has determined that the
consequences of the Company's Year 2000 issues should not have a material
adverse affect on the Company's business, results of operations or financial
position. The Company's major computer systems have already been updated or
replaced with applications that are Year 2000 compliant in the normal course of
business pursuant to existing service agreements and without incremental cost.

    The Company has implemented a plan of communication with significant
business partners to ensure that the Company's operations are not disrupted
through such relationships and that any Year 2000 issues are resolved in a
timely manner. Because of the nature of the Company's business, however, the
Company believes that failure of the Company's vendors, sponsors or customers to
resolve issues involving the Year 2000 problem will not materially affect the
Company's business, results of operations or financial position.

    The Company believes that some of its non-information technology systems,
such as elevators and heating and air conditioning systems, with date-sensitive
software and embedded microprocessors may be affected by the Year 2000 problem.
Management is currently evaluating these systems. Although the Company has not
yet been able to complete its estimate of the costs of correcting or replacing
such systems, it does not expect such costs to be material. The Company does not
believe that the failure of its non-information technology systems will
materially affect the Company's business, results of operations or financial
position.

    The Company believes that it will satisfactorily resolve issues affecting
its operations as a result of the Year 2000 problem in 1999. The Company also
believes that the related costs of compliance will not be material.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

    Except for the historical information contained herein, certain matters
discussed in this report are forward-looking statements which involve risks and
uncertainties including, but not limited to, the Company's ability to maintain
good working relationships with the sanctioning bodies for its events, the
ability of the Company to cost-effectively and timely correct all relevant and
material applications addressing the Year 2000 problem and their impact on the
Company's financial position or results of operations and the accuracy of the
Company's assumption that failure of third party vendors, sponsors and customers
to correct any Year 2000 problems will not be material to the Company's
financial position or results of operations, as well as other risks and
uncertainties affecting the Company's operations, such as competition,
environmental, industry sponsorships, governmental regulation, dependence on key
personnel, the Company's ability to control construction and operational costs,
the impact of bad weather at the Company's events and those other factors
discussed in the Company's filings with the Securities and Exchange Commission.



                                       19
<PAGE>   22



ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                   PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES
                                        
                          CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
(In thousands)
                                                                 1998         1997
                                                                 ----         ----
<S>                                                          <C>          <C>      
ASSETS
CURRENT ASSETS:
    Cash and cash equivalents                                $   1,311    $     249
    Receivables                                                  4,398        4,787
    Inventories                                                  3,085        2,433
    Prepaid expenses                                             1,246        1,769
    Deferred taxes                                                 368          313
                                                             ---------    ---------
     TOTAL CURRENT ASSETS                                       10,408        9,551

PROPERTY AND EQUIPMENT, NET                                    247,421      224,666

INVESTMENTS                                                     12,679       15,366

GOODWILL, NET                                                   39,497       40,112

OTHER ASSETS                                                       529        2,077
                                                             ---------    ---------

TOTAL                                                        $ 310,534    $ 291,772
                                                             =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
    Current portion of long-term debt                        $     512    $   1,017
    Accounts payable                                             3,915        3,868
    Accrued expenses                                             2,933        2,343
    Other payables (Note 3)                                                   9,956
    Deferred revenues, net                                      19,204       22,529
                                                             ---------    ---------
     TOTAL CURRENT LIABILITIES                                  26,564       39,713

LONG-TERM DEBT, LESS CURRENT PORTION                            61,442       47,278

DEFERRED TAXES                                                  22,413       13,349

DEFERRED REVENUES                                                  369          738
              
COMMITMENTS AND CONTINGENCIES (NOTE 12)

STOCKHOLDERS' EQUITY: 
    Common stock, par value $ .01 share:
     Authorized 50,000,000 shares
     Issued and outstanding 14,208,898 shares
        in 1998 and 1997                                           142          142
    Additional paid-in-capital                                 159,371      159,371
    Retained earnings                                           47,768       31,181
                                                             ---------    ---------
                                                               207,281      190,694
    Treasury stock, at cost, 353,900 shares (Note 11)           (7,535) 
                                                             ---------    ---------
     TOTAL STOCKHOLDERS' EQUITY                                199,746      190,694
                                                             ---------    ---------
TOTAL                                                        $ 310,534    $ 291,772
                                                             =========    =========
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

                                       20
<PAGE>   23

                    PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
                  YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>

(In thousands except for per share data)
                                                   1998             1997            1996
                                                   ----             ----            ----
<S>                                            <C>               <C>              <C>     
REVENUES:
    Speedway admissions                        $  51,335         $  45,550         $ 20,248
    Other speedway revenues                       41,811            33,926           13,041
    Merchandise, tires and accessories            23,712            30,340           21,886
                                               ---------         ---------         --------
    TOTAL REVENUES                               116,858           109,816           55,175

  EXPENSES:
    Operating expenses                            46,151            40,399           18,067
    Cost of sales                                 13,972            16,954           12,834
    Depreciation and amortization                 11,189             7,212            3,167
    Selling, general and administrative           14,465            16,379            6,185
                                               ---------         ---------         --------

    TOTAL EXPENSES                                85,777            80,944           40,253

OPERATING INCOME                                  31,081            28,872           14,922

EQUITY IN LOSS OF AFFILIATES                      (1,382)             (860)              
GAIN ON SALE OF INVESTMENT                         1,108                   
INTEREST INCOME (EXPENSE), NET                    (3,523)           (1,558)           1,950
                                               ---------         ---------         --------
                                                                                    
INCOME BEFORE INCOME TAXES                        27,284            26,454           16,872

INCOME TAXES                                      10,697            10,009            5,992
                                               ---------         ---------         --------

NET INCOME                                     $  16,587         $  16,445         $ 10,880
                                               =========         =========         ========

BASIC NET INCOME PER SHARE                     $    1.17         $    1.19                 
                                               =========         =========                 
PRO FORMA BASIC NET INCOME PER SHARE                                               $    .90
                                                                                   ========

DILUTED NET INCOME PER SHARE                   $    1.17         $    1.19                 
                                               =========         =========                 
PRO FORMA DILUTED NET INCOME PER SHARE                                             $    .90
                                                                                   ========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>

                                       21
<PAGE>   24



                    PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998


(In thousands)
<TABLE>
<CAPTION>

                                                              ADDITIONAL      RETAINED        TREASURY
                                             COMMON STOCK   PAID-IN CAPITAL   EARNINGS          STOCK           TOTAL
                                             ------------   ---------------   --------          -----           -----
<S>                                        <C>              <C>               <C>             <C>              <C>      
BALANCE, JANUARY 1, 1996                   $     93         $  37,446         $  8,273                         $  45,812
   Net income                                                                   10,880                            10,880
   Sale of common stock                          37            82,703                                             82,740
   Competition Tire West, Inc. 
    transaction (Note 4)                                          (28)          (4,417)                           (4,445)
   Acquisition of minority interest
   (Note 4)                                                     2,063                                              2,063
   Stock issuance (Note 5)                        2             8,350                                              8,352
                                           --------         ---------         --------                         ---------
                                                                                                       
BALANCE, DECEMBER 31, 1996                      132           130,534           14,736                           145,402
   Net income                                                                   16,445                            16,445
   North Carolina Speedway,                                                                            
    Inc. acquisition (Note 3)                    10            28,837                                             28,847
                                           --------         ---------         --------                         ---------

BALANCE, DECEMBER 31, 1997                      142           159,371           31,181                           190,694
   Net income                                                                   16,587                            16,587
   Purchase of common
    stock (Note 11)                                                                            $(7,535)           (7,535)
                                           --------         ---------         --------         -------         ---------

BALANCE, DECEMBER 31, 1998                 $    142         $ 159,371         $ 47,768         $(7,535)        $ 199,746
                                           ========         =========         ========         =======         =========

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>


  


                                     22
<PAGE>   25


                    PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>

(In thousands)
                                                                                      1998            1997             1996
                                                                                      ----            ----             ----
<S>                                                                                <C>            <C>               <C>     
 CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                                     $16,587        $ 16,445         $ 10,880
    Adjustments to reconcile net income to net cash
      provided by operating activities:
      Depreciation and amortization                                                 11,189           7,212            3,167
      Equity in loss of affiliates                                                   1,382             860
      Gain on sale of investment                                                    (1,108)
      Deferred taxes                                                                 9,009           3,750             (146)
      Changes in assets and liabilities which provided (used) cash:
       Receivables                                                                     389          (2,110)            (431)
       Inventories, prepaid expenses and other assets                                1,412            (821)          (2,784)
       Accounts payable and accrued liabilities                                        637          (5,082)           2,668
       Deferred revenues                                                            (3,694)          5,952            5,259
                                                                                   -------        --------         --------  
      Net cash provided by operating activities                                     35,803          26,206           18,613

 CASH FLOWS FROM INVESTING ACTIVITIES:
    Additions of property and equipment                                            (32,893)        (73,349)         (73,812)
    Proceeds from sale of investment (Note 3)                                        5,270
    Acquisition of Competition Tire South, Inc. (Note 4)                                                               (758)
    Competition Tire West, Inc. transaction (Note 4)                                                                 (3,326)
    Acquisitions of equity interest in subsidiaries and affiliates                 (10,392)        (19,050)            (622)
                                                                                   -------        --------         --------  
       Net cash used in investing activities                                       (38,015)        (92,399)         (78,518)

 CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from sale of common stock                                                                               82,740
    Purchase of common stock (Note 11)                                              (7,535)
    Proceeds from issuance of debt                                                  11,900          45,400           14,016
    Principal payments on long-term debt                                              (433)         (5,000)         (12,540)
    Repayment of related party debt                                                   (658)         (1,820)          (1,254)
                                                                                   -------        --------         --------  
       Net cash provided by financing activities                                     3,274          38,580           82,962

 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                1,062         (27,613)          23,057

 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                        249          27,862            4,805
                                                                                   -------        --------         --------  


 CASH AND CASH EQUIVALENTS AT END OF YEAR                                          $ 1,311          $  249         $ 27,862
                                                                                   =======          ======         ========

 SUPPLEMENTAL CASH FLOW INFORMATION:
     Cash paid during the year for interest                                        $ 4,088         $ 1,834           $  133
                                                                                   =======         =======           ======
     Cash paid during the year for taxes, net                                      $   380         $ 8,089          $ 9,279
                                                                                   =======         =======          =======


SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>

  
                                     23
<PAGE>   26



                    PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996


1. BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS

The consolidated financial statements include the accounts of Penske
Motorsports, Inc. (the "Company") and its wholly-owned subsidiaries Michigan
International Speedway, Inc., Pennsylvania International Raceway, Inc. ("PIR"),
California Speedway Corporation, North Carolina Speedway, Inc. ("NCS"),
Motorsports International Corp., Competition Tire West, Inc. ("CTW") and
Competition Tire South, Inc. ("CTS"). The Company also owns 45% of
Homestead-Miami Speedway, LLC ("HMS"), which is recorded using the equity
method. The Company is an indirect subsidiary of Penske Corporation (the
"Parent"). All material intercompany balances and transactions have been
eliminated.

Nature of Operations - The Company generates a predominant portion of its
earnings from operating Michigan Speedway in Brooklyn, Michigan, Nazareth
Speedway in Nazareth, Pennsylvania (operated by PIR), California Speedway in
Fontana, California, and North Carolina Speedway in Rockingham, North Carolina.
HMS operates Miami-Dade Homestead Motorsports Complex in Homestead, Florida. The
Company also sells motorsports-related merchandise and apparel and racing tires
and accessories.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents - The Company considers all short-term investments
with a maturity of three months or less, at purchase, as cash equivalents.

Inventories - Inventories are stated at the lower of cost or market, with cost
determined by the first in, first out method.

Property and Equipment and Goodwill - Property and equipment is carried at cost
less accumulated depreciation. Depreciation is calculated using the
straight-line method over the estimated useful lives of the respective assets as
follows:

<TABLE>
<CAPTION>

                                                             YEARS
                                                             -----
              <S>                                          <C>
              Buildings and improvements                   10 - 40
              Equipment                                     2 - 15
</TABLE>

Goodwill represents the excess of the purchase price over the fair value of net
assets acquired and is being amortized primarily over a period of 40 years.
Accumulated amortization was $1,921,000 and $872,000 at December 31, 1998 and
1997, respectively.

The carrying values of property and equipment and goodwill are evaluated for
impairment based upon expected future undiscounted cash flows. If events or
circumstances indicate that the carrying value of an asset may not be
recoverable, an impairment loss would be recognized equal to the difference
between the carrying value of the asset and its fair value.

Revenue Recognition - Race-related revenues and expenses are recognized upon
completion of an event. Deferred revenues represent advance race-related
revenues, net of expenses, on future races. Revenues from the sale of
merchandise, tires and accessories are recognized at the time of sale. Operating
expenses include race-related expenses and other operating costs. Cost of sales
relates entirely to merchandise, tires and accessories sales.

Income Taxes - Deferred taxes reflect the impact of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.





                                       24
<PAGE>   27

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
disclosures of contingent liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period.
Actual results will likely differ from those which are estimated, however, such
differences are not expected to be material.

3. ACQUISITIONS AND INVESTMENTS

North Carolina Speedway Acquisition - During 1997, the Company acquired the
outstanding shares of NCS, which owns and operates North Carolina Speedway in
Rockingham, North Carolina. On May 19, 1997, the Company purchased the shares of
NCS held by its former majority shareholder in exchange for 906,542 shares of
the Company's stock. On December 2, 1997, the shareholders of NCS approved a
merger with the Company, whereby shareholders of NCS would receive cash of
$19.61 per share or an equivalent amount of the Company's stock. In connection
with the merger, 60,558 shares of the Company's stock were issued. The merger
was completed December 2, 1997.

Certain NCS shareholders dissented to the merger of the Company and NCS. These
shareholders were paid $16.77 per share, the median fair value of NCS shares as
determined by an independent investment banking firm retained by NCS to evaluate
the Company's merger offer. These dissenters have requested additional
compensation and, if they are successful in court, the cost of the NCS
acquisition may increase (see Note 12).

The acquisition, which approximated $42.0 million, was accounted for using the
purchase method and resulted in goodwill of $34.2 million and an increase in
stockholders' equity of $28.8 million. The fair market value of the assets
acquired and liabilities assumed was as follows: current assets of $507,000,
fixed assets of $17.6 million, current liabilities of $5.1 million and debt of
$4.2 million. As of December 31, 1997, the Company recorded a liability of $10.0
million to recognize amounts due to the former NCS shareholders. NCS has been
included in the consolidated financial statements since the date of acquisition
of the controlling interest. The pro forma effect of the acquisition for the
years ended December 31, 1997 and 1996, assuming the transactions occurred at
the beginning of each year, would be to increase revenues by $4.8 million and
$9.6 million, respectively, with no material impact on net income or net income
per share.

Investments - In July 1997, the Company acquired 40% of the ownership interests
of HMS for $11.8 million. In March 1998, the Company acquired an additional 5%
of the ownership interests of HMS for $2.85 million, payable on December 31,
2001. This investment is accounted for using the equity method. The Company has
joint right of first refusal agreements with the other investors in HMS for each
to acquire additional shares of HMS proportionate to their current ownership
interest should a sale occur.

During 1998, the Company sold its investment in the common stock of Grand Prix
Association of Long Beach, Inc. for $5.3 million. This investment was acquired
in a series of transactions in 1997 for $4.2 million.

4. INITIAL PUBLIC OFFERING AND RELATED ACQUISITIONS

Initial Public Offering - On March 27, 1996, the Company completed its initial
public offering ("IPO") of 3,737,500 shares of common stock. The initial
offering price was $24.00 per share. The net proceeds to the Company of $82.7
million were used to repay outstanding debt of $10.6 million and to fund
construction of California Speedway.

Acquisition of Minority Interest in PIR - Immediately prior to the effective
date of the IPO, an investor in PIR exchanged 2,557 shares of PIR for 92,500
shares of common stock of the Company. This transaction resulted in goodwill of
approximately $2.0 million and reduced the minority interest in PIR by $1.2
million.

Acquisition of Minority Interest in CTW and Capital Distribution - On March 21,
1996, the Company acquired CTW for $7.4 million, of which $4.3 million was paid
to the two selling shareholders in cash with the balance of $3.1 million payable
over five years with interest at 8% per annum. The acquisition of the shares of
the former 40% CTW shareholder was accounted for as an acquisition of a minority
interest and resulted in recording goodwill of approximately $1.9 million. The
former controlling shareholder of CTW (60%) is also the controlling shareholder
of the Company.  Therefore, the excess of the amount paid for such shares over
the net book value of assets acquired (approximately $2.9 million) was recorded
as a capital distribution. The note payable to the former controlling
shareholder of CTW, which had a balance of $1.8 million, was repaid in April
1997.


                                       25
<PAGE>   28

Acquisition of CTS Common Stock - On March 21, 1996, the Company acquired the
common shares of CTS not owned by CTW (approximately 67%) for cash and notes
totaling approximately $2.2 million. The notes had an original balance of
$830,000 and a term of five years with interest at 8%. This acquisition was
accounted for using the purchase method and resulted in recording $1.7 million
of goodwill. CTS has been included in the consolidated financial statements from
the date acquired.

5. PROPERTY AND EQUIPMENT

Property and equipment consists of the following as of December 31:

<TABLE>
<CAPTION>

     (In thousands)                         1998            1997
                                            ----            ----
     <S>                                  <C>             <C>
     Land and improvements                $ 96,635        $ 95,758
     Buildings and improvements            158,644         129,031
     Equipment                              23,677          21,846
                                          --------        --------
                                           278,956         246,635
     Less accumulated depreciation          31,535          21,969
                                          --------        --------
                                          $247,421        $224,666
                                          ========        ========
</TABLE>

In December 1996, the Company acquired 54 acres of commercial property located
adjacent to California Speedway from a noncontrolling shareholder of the Company
for $13.4 million, which the Company paid in cash of $5 million and by the
issuance of 254,298 shares of the Company's common stock. The issuance of stock
was recorded as an $8.4 million increase in stockholders' equity.

6. LONG-TERM DEBT

Long-term debt consists of the following as of December 31:

<TABLE>
<CAPTION>

(In thousands)                                                             1998          1997
                                                                           ----          ----
<S>                                                                      <C>            <C>
$100 million unsecured revolving line of credit, bearing interest
     at LIBOR plus 0.5% (6.29%) due in 2002                              $57,300        $45,400
Notes payable through 2006, bearing interest at fixed rates
      ranging from 7.5% to 8.0%                                            4,654          2,895
                                                                         -------        -------
                                                                          61,954         48,295
Less current portion                                                         512          1,017
                                                                         -------        -------
                                                                         $61,442        $47,278
                                                                         =======        =======
</TABLE>

The following table presents the expected repayment of long-term debt as of
December 31, 1998 (in thousands):

<TABLE>
       <S>                                  <C>
       1999                                 $      512
       2000                                        520
       2001                                      2,892
       2002                                     57,426
       2003                                        137
       2004 and thereafter                         467
                                              --------
                                              $ 61,954
                                              ========
</TABLE>



                                       26
<PAGE>   29

Long-term debt at December 31, 1998 and 1997 includes $.7 million and $1.3
million, respectively, which are due to related parties as a result of the
purchase of CTW and CTS in March 1996 and $1.1 million and $1.2 million,
respectively, which are secured by certain parcels of land.

At December 31, 1998 and 1997 the carrying value of the debt approximated fair
value.

7.  EMPLOYEE BENEFIT PLANS

The Company participates in a non-contributory profit-sharing plan which covers
employees who meet certain length of service requirements. Contributions of
approximately $235,000, $185,000 and $100,000 were made to the plan in 1998,
1997 and 1996, respectively.

The Company also sponsors a defined contribution plan under Section 401(k) of
the Internal Revenue Code. The Company's expense related to this plan was
$209,000, $150,000 and $80,000 in 1998, 1997 and 1996, respectively.

8.  TAXES

The provision for income taxes consists of the following for the years ended
December 31:

<TABLE>
<CAPTION>
(In thousands)                          1998           1997          1996
                                     -------        -------        ------
<S>                                  <C>            <C>            <C>
Current                              $ 1,878        $ 6,259        $5,753
Deferred                               8,819          3,750           239
                                     -------        -------        ------
Total                                $10,697        $10,009        $5,992
                                     =======        =======        ======
</TABLE>

A reconciliation of taxes computed at the federal statutory rate and the
consolidated effective rate is as follows for the years ended December 31:

<TABLE>
<CAPTION>

(In thousands)                                         1998             1997              1996
                                                     -------         --------          --------
<S>                                                  <C>             <C>               <C>     
Income before income taxes                           $27,284         $ 26,454          $ 16,872
                                                     -------         --------          --------

Taxes computed at statutory rate                     $ 9,549         $  9,259          $  5,905
State and local taxes, net of federal benefit            684              616                37
Amortization of goodwill                                 368              190                60
Other                                                     96              (56)              (10)
                                                     -------         --------          --------
Total income tax expense                             $10,697         $ 10,009          $  5,992
                                                     =======         ========          ========

Effective tax rate                                      39.2%            37.8%             35.5%
                                                     =======         ========          ========
</TABLE>

Temporary differences which give rise to deferred tax (assets) and liabilities
are as follows as of December 31:

<TABLE>
<CAPTION>
(In thousands)                                          1998             1997
                                                      --------         --------
<S>                                                   <C>              <C>
Property, non-current                                 $ 22,413         $ 13,349
Other, current                                            (368)            (313)
                                                      --------         --------

Total                                                 $ 22,045         $ 13,036
                                                      ========         ========
</TABLE>

                                       27

<PAGE>   30



9. RELATED PARTY TRANSACTIONS

The following is a summary of significant related party balances and
transactions as of and for the years ended December 31:

<TABLE>
<CAPTION>
(In thousands)                                        1998      1997       1996
                                                    ------     ------     ------
<S>                                                 <C>        <C>        <C>   
Balances included in assets and liabilities:
      Accounts receivable - affiliates              $  681     $  388     $  339
                                                    ======     ======     ======

      Accounts payable - affiliates                 $  879     $1,038     $1,702
                                                    ======     ======     ======

      Accrued expenses payable to affiliates        $  376     $  424     $  405
                                                    ======     ======     ======

Other transactions:
      Sales to affiliates                           $3,434     $3,149     $2,005
                                                    ======     ======     ======

      Purchases from affiliates                     $  623     $1,078     $  587
                                                    ======     ======     ======
</TABLE>


In addition, the Parent bills the Company for services rendered and expenses
incurred by the Parent for the benefit of the Company. During the years ended
December 31, 1998, 1997 and 1996, the Company paid the Parent $570,000, $511,000
and $478,000, respectively, for general and operating expenses. Prior to the
IPO, the Company was charged for its allocated share of income taxes on the
basis of the Company as a separate tax group. The Company paid the Parent $1.5
million for its portion of taxes relating to the period in 1996 prior to the
IPO.

The Company has a five-year agreement with a shareholder of the Company to
provide sanitary wastewater treatment services to California Speedway, for which
the Company paid $92,000 during the years ended December 31, 1998 and 1997 and
$89,000 during the year ended December 31, 1996. The agreement, which is
adjusted annually by increases in the Consumer Price Index, also grants an
option to the Company to purchase such shareholder's wastewater treatment
facility.

The Company pays fees to the sanctioning bodies which conduct racing events at
its speedways, including the National Association for Stock Car Auto Racing,
Inc. ("NASCAR"). NASCAR is an affiliate of a significant shareholder. The
Company, through its subsidiaries, paid NASCAR sanction fees, prize money and
point funds of $13.6 million, $9.9 million and $3.8 million for the years ended
December 31, 1998, 1997 and 1996, respectively.

10. SEGMENT REPORTING

Effective December 31, 1998, the Company adopted Statement of Financial
Accounting Standards No. 131, Disclosures about Segments of an Enterprise and
Related Information. This statement establishes standards for the way in which
public business enterprises report information about operating segments in
annual financial statements.

The Company's reportable segments are business units that offer different
products and services. The Company classifies its business interests into two
fundamental areas: admissions and other track-related activities, which consists
principally of race-related revenues and expenses from promoting motorsports
events, and merchandise, tires and accessories ("MTA"), consisting principally
of the revenues and expenses from the sale of race-related apparel, tires and
accessories items.

The accounting policies of the segments are the same as those described in the
summary of significant accounting policies.

Revenues relating to the Company's track operations totaled $93.1 million, $79.5
million and $33.3 million in 1998, 1997 and 1996, respectively, with expenses
(operating, depreciation and amortization, and selling, general and
administrative) of approximately $64.6 million, $54.0 million and $20.4 million,
respectively, for the same periods.




                                       28
<PAGE>   31

Revenues relating to the Company's MTA business totaled $23.7 million, $30.3
million and $21.9 million in 1998, 1997 and 1996, respectively. The MTA business
segment had cost of sales of $14.0 million, $17.0 million and $12.8 million,
respectively, and operating, depreciation and amortization, and selling, general
and administrative expenses of approximately $7.2 million, $10.0 million and
$7.0 million, respectively, in 1998, 1997 and 1996 relating to such operations.

Substantially all of the Company's capital expenditures, property, plant and
equipment, equity investments and goodwill, as well as depreciation and
amortization expenses, are related to track operations. Substantially all of the
Company's inventory is related to its MTA businesses.

11. COMMON STOCK AND STOCK OPTIONS

Prior to the completion of the IPO in March 1996, the Company effected a
recapitalization pursuant to which the Company (i) increased its authorized
shares of common stock to 50,000,000 shares, (ii) effected a 91.575-to-one share
split, and (iii) converted 15,000 shares of outstanding preferred stock to
1,373,625 shares of common stock.

The basic net income per share for the years ended December 31, 1998 and 1997
reflects the weighted average number of shares outstanding of 14,117,993 and
13,810,570. The pro forma basic net income per share for the year ended December
31, 1996 reflects the weighted average number of post-split shares outstanding
of 12,128,920, including the dilutive effect of the number of shares issued
equivalent to the $2.9 million capital distribution of 121,667 shares, based on
the offering price of $24.00 per share, from the March 1996 acquisition of CTW.

The diluted net income per share for the years ended December 31, 1998 and 1997
and the pro forma diluted net income per share for the year ended December
31,1996 reflect the weighted average number of shares outstanding plus the
dilutive effect of outstanding stock options of 16,048, 19,534 and 12,621,
respectively. The dilutive effect was calculated using the treasury stock
method.

In September 1998, the Company announced plans to repurchase, from time to time,
up to $10 million of the Company's common stock in open market transactions,
depending on market conditions. As of December 31, 1998, the Company had
repurchased 353,900 shares at prices ranging from $19.875 to $23.25 per share.

In March 1996, the stockholders of the Company approved a stock incentive plan
whereby key employees and certain outside consultants and advisors of the
Company and its subsidiaries may receive awards of stock options, stock
appreciation rights or restricted stock up to a maximum of 400,000 shares of
common stock. In May 1998, the stockholders of the Company approved an increase
in the number of shares authorized pursuant to this plan to 720,000. The
following table summarizes stock option activity during the years ended December
31, 1998, 1997 and 1996.

                                       29
<PAGE>   32


<TABLE>
<CAPTION>

                                                                    YEAR ENDED DECEMBER 31,
                                               1998                              1997                              1996
                                               ----                              ----                              ----

                                                      WEIGHTED                       WEIGHTED                            WEIGHTED
                                      NUMBER OF        AVERAGE        NUMBER OF       AVERAGE            NUMBER OF        AVERAGE
                                      OPTIONS         EXERCISE         OPTIONS       EXERCISE            OPTIONS         EXERCISE 
                                      ---------         PRICE         ---------       PRICE              ---------         PRICE
                                                     ---------                       --------                           ---------
<S>                                   <C>           <C>               <C>           <C>                  <C>            <C>  
OPTIONS, BEGINNING OF YEAR            155,000       $    26.06          75,000      $    24.00
GRANTED                               165,000            26.38         115,000           27.75            75,000        $    24.00
FORFEITED                                                              (35,000)          27.75                                     
                                      -------       ----------         -------      ----------            ------        ----------
OPTIONS, END OF YEAR                  320,000       $    26.22         155,000      $    26.06            75,000        $    24.00
                                      =======       ==========         =======      ==========            ======        ==========
OPTIONS EXERCISABLE AT
     END OF YEAR                       76,534       $    25.70          34,100      $    25.26             7,500        $    24.00
                                      =======       ==========         =======      ==========            ======        ==========

WEIGHTED AVERAGE FAIR VALUE OF
   OPTIONS GRANTED DURING THE YEAR
                                                    $     9.27                      $    10.91                          $     9.90
                                                    ==========                      ==========                          ==========
</TABLE>

The 320,000 stock options outstanding as of December 31, 1998 had exercise
prices ranging from $24.00 to $27.75 per share and a weighted average remaining
contractual life of 7.9 years.

The Company applies APB Opinion 25 and related Interpretations in accounting for
stock options. Accordingly, no compensation cost has been recognized in the
consolidated statements of income. If the Company had recognized compensation
cost, the Company would have reported net income of $16.2 million, $16.2 million
and $10.8 million and basic net income per share of $1.15, $1.17 and $.89 for
the years ended December 31, 1998, 1997 and 1996, respectively. The Black-Sholes
valuation model was used, assuming an average life of the options of five years,
a discount rate of 4.53%, 5.53% and 6.15% in 1998, 1997 and 1996, respectively,
no dividend payout and a volatility of 30% in 1998 and 35% in 1997 and 1996.

12. COMMITMENTS AND CONTINGENCIES

The Company is party to certain claims and contingencies arising in the normal
course of business. In the opinion of management, the Company has meritorious
defenses on all such claims, or they are of such kind, or involve such amounts,
as would not have a materially adverse effect on the financial position or
results of operations of the Company if disposed of unfavorably.

                                       30
<PAGE>   33



13. SELECTED QUARTERLY DATA (UNAUDITED)

The following table presents the Company's quarterly results for the most recent
eight quarters (in thousands, except per share amounts).

<TABLE>
<CAPTION>
                       FIRST QUARTER            SECOND QUARTER          THIRD QUARTER            FOURTH QUARTER
                      ----------------         ----------------        ----------------         ----------------
                      1998        1997         1998        1997        1998        1997         1998        1997
                      ----        ----         ----        ----        ----        ----         ----        ----
<S>                  <C>          <C>          <C>         <C>         <C>          <C>         <C>        <C>   
Revenues             $10,137      $ 5,375      $46,087     $46,296     $35,218      $43,974     $25,416    $ 14,171

Operating
income (loss)         (3,442)      (2,606)      19,606      17,965       7,749       15,295       7,168      (1,782)

Net income
(loss)                (1,648)      (1,511)      10,892      10,929       3,510        8,845       3,833      (1,818)

Basic Net
income (loss)
per share           $   (.12)     $  (.11)     $   .77      $  .80     $   .25      $   .63       $ .28    $   (.13)


</TABLE>
                                       31

<PAGE>   34



                    PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES

                              REPORT OF MANAGEMENT


The consolidated financial statements of Penske Motorsports, Inc. and
subsidiaries (the "Company") have been prepared by management and have been
audited by the Company's independent auditors, Deloitte & Touche LLP. Management
is responsible for the consolidated financial statements, which have been
prepared in conformity with generally accepted accounting principles and include
amounts based on management's judgments.

Management is also responsible for maintaining internal accounting control
systems designed to provide reasonable assurance, at appropriate cost, that
assets are recorded in accordance with established policies and procedures. The
Company's systems are under continuing review and are supported by, among other
things, business conduct and other written guidelines and the selection and
training of qualified personnel.

The Board of Directors is responsible for the Company's financial and accounting
policies, practices and reports. Its Audit Committee meets annually with the
independent auditors and representatives of management to discuss and make
inquiries into their activities. The independent auditors have free access to
the Audit Committee, with and without management representatives in attendance,
to discuss the results of the audit, the adequacy of internal accounting
controls, and the quality of the financial reporting.

It is management's conclusion that the system of internal accounting controls at
December 31, 1998 provides reasonable assurance that the books and records
reflect the transactions of the Company and that the Company has complied with
its established policies and procedures.


/s/ Roger S. Penske                       /s/ Gregory W. Penske

Roger S. Penske                           Gregory W. Penske
Chairman                                  President and Chief Executive Officer

February 1, 1999



                                       32
<PAGE>   35


                          INDEPENDENT AUDITORS' REPORT




Stockholders and Board of Directors
Penske Motorsports, Inc.


We have audited the accompanying consolidated balance sheets of Penske
Motorsports, Inc. and subsidiaries (the "Company") as of December 31, 1998 and
1997, and the related consolidated statements of income, stockholders' equity
and cash flows for each of the three years in the period ended December 31,
1998. 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 financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of December 31, 1998
and 1997, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 1998, in conformity with generally
accepted accounting principles.


/s/ Deloitte & Touche LLP


Detroit, Michigan
February 1, 1999





                                       33

<PAGE>   36

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

    None.

                                    PART III

ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    Information regarding executive officers required by this Item is set forth
as a Supplementary Item at the end of Part I hereof (pursuant to Instruction 3
to Item 401(b) of Regulation S-K). Other information required by this Item will
be contained in the Company's definitive Proxy Statement for its 1999 Annual
Meeting of Stockholders, to be filed on or before April 30, 1999, and such
information is incorporated herein by reference.

ITEM 11: EXECUTIVE COMPENSATION

    Information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1999 Annual Meeting of Stockholders to be
filed on or before April 30, 1999, and such information is incorporated herein
by reference.

ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    Information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1999 Annual Meeting of Stockholders to be
filed on or before April 30, 1999, and such information is incorporated herein
by reference.

ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    Information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1999 Annual Meeting of Stockholders to be
filed on or before April 30, 1999, and such information is incorporated herein
by reference.

                                     PART IV

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

(a) Listing of Documents:

    (1) Financial Statements. The Company's consolidated Financial Statements
        included in Item 8 hereof, as required at December 31, 1998 and 1997,
        and for the years ended December 31, 1998, 1997, and 1996, consist of
        the following:

        Consolidated Balance Sheets
        Consolidated Statements of Income
        Consolidated Statements of Changes in Stockholders' Equity
        Consolidated Statements of Cash Flows
        Notes to Consolidated Financial Statements

    (2) Financial Statement Schedules for 1998, 1997, and 1996.

    None. These schedules are omitted because the information required to be
    contained therein is disclosed elsewhere in the financial statements or the
    amounts involved are not sufficient to require submission or the schedule is
    otherwise not required to be submitted.




                                       34

<PAGE>   37



(b) Reports on Form 8-K
    During the third quarter on September 14, 1998, the Company filed one
    current report on Form 8-K announcing its plan to repurchase, from time to
    time, up to $10 million shares of the Company's common stock in open market
    transactions pursuant to a stock repurchase program.

(c) Exhibits.

                                    EXHIBITS

<TABLE>
<CAPTION>
    EXHIBIT         
    NUMBER                                            DOCUMENT
    ------                                            --------

<S>                <C>                                                                                     
     (B)3.1        Amended and Restated Certificate of Incorporation of Penske Motorsports, Inc.

     (K)3.2        Amended and Restated Bylaws of Penske Motorsports, Inc.

     (B)4.1        Form of Common Stock Certificate

     (F)10.1       Credit Agreement dated as of September 30, 1997 among Penske Motorsports, Inc.,
                   and certain of its U.S. subsidiaries, as Borrowers, and each of the financial
                   institutions initially a signatory thereto, as Lenders, and First Union National
                   Bank, as Agent, and NationsBank, N.A., as Co-Agent



     (C)10.2       Purchase Agreement and Escrow Instructions dated October 8, 1996 among Kaiser
                   Ventures, Inc., The California Speedway Corporation and Penske Motorsports, Inc.


     (C)10.3       Conditional Demand Registration Rights Agreement dated December 12, 1996 between
                   Penske Motorsports, Inc., and Kaiser Ventures, Inc.


     (C)10.4       Water Rights Agreement Extension dated December 11, 1996 between Kaiser Ventures
                   Inc., and The California Speedway Corporation


     (B)10.5       Organization Agreement, dated November 22, 1995 by and among PSH Corp., Kaiser
                   Ventures, Inc., and Penske Motorsports, Inc. (f/k/a Penske Speedway Holdings
                   Corp.)


     (B)10.6       Shareholders Agreement, dated November 22, 1995 by and among PSH Corp., Kaiser
                   Ventures, Inc., and Penske Motorsports, Inc. (f/k/a Penske Speedway Holdings
                   Corp.)


     (B)10.7       Water Rights Agreement, dated November 21, 1995 by and between Kaiser Ventures,
                   Inc., and The California Speedway Corporation (successor by merger to Speedway
                   Development Corporation).


     (B)10.8       Access Agreement, dated as of November 22, 1995 by and among Kaiser Ventures,
                   Inc., Kaiser Land Development, Inc., and The California Speedway Corporation.


     (B)10.9       Sewer Services Agreement, dated as of November 21, 1995 between Kaiser Ventures,
                   Inc., and The California Speedway Corporation (successor by merger to Speedway
                   Development Corporation).


     (B)10.10      Registration Rights Agreement, dated March 21, 1996 between Penske Motorsports,
                   Inc., and Kaiser Ventures, Inc.
 
     (B)10.11      First Amendment to Shareholders Agreement, dated March 21, 1996 by and among PSH
                   Corp., Kaiser Ventures, Inc., and Penske Motorsports, Inc. (f/k/a Penske
                   Speedways Holding Corp.)


     (B)10.12      Agreement, dated March 21, 1996 among PSH Corp., Penske Motorsports, Inc., and
                   Kaiser Ventures, Inc., amending the Organization Agreement


     (D)10.13      Amended and Restated Stockholder Option and Voting Agreement among Carrie B.
                   DeWitt, Penske Acquisition, Inc., and Penske Motorsports, Inc. dated April 1,
                   1997


     (G)10.14      First Amendment to Amended and Restated Stockholder Option and Voting Agreement
                   dated May 15, 1997 among Carrie B. DeWitt, Penske Motorsports, Inc. and Penske
                   Acquisition, Inc.


     (H)10.15      Second Amendment to Amended and Restated Stockholder Option and Voting Agreement
                   dated as of April 1, 1997, between PMI and Carrie B. DeWitt


     (H)10.16      Employment Agreement, dated August 5, 1997, between PMI and Carrie B. DeWitt

     (H)10.17      Employment Agreement, dated August 5, 1997, between PMI and Jo DeWitt Wilson

     (H)10.18      Employment Agreement dated August 5, 1997, between PMI and Nancy DeWitt
                   Daugherty

     (H)10.19      Agreement and Plan of Merger dated August 5, 1997 by and among North Carolina
                   Motor Speedway, Inc., Penske Motorsports, Inc., and Penske Acquisition, Inc.
</TABLE>



                                       35
<PAGE>   38
<TABLE>
<S>                <C>

     (E)10.20      Purchase Agreement dated July 23, 1997 among Homestead-Miami Speedway, LLC,
                   International Speedway Corporation, Penske Motorsports, Inc., Homestead
                   Motorsports Joint Venture, Miami Motorsports Joint Venture, Rafael A. Sanchez and
                   Wayne Huizenga



     (J)10.21*     Amended and Restated 1996 Penske Motorsports Stock Incentive Plan

     (B)10.22      Lease Agreement, dated December 1, 1994 between Michigan Speedway, Inc. (f/k/a
                   Penske Speedway Inc.) and Motorsports International Corp.


     (B)10.23      Trade Name and Trademark Agreement dated October 18, 1995 between Penske
                   Speedway, Inc., Penske Speedways Holding Corp., and Penske System, Inc.


     (I)10.24      Stock Purchase Agreement, dated March 26, 1998, by and between Penske
                   Motorsports, Inc. and Dover Downs Entertainment, Inc.


     (I)21.1       Subsidiaries of Penske Motorsports, Inc.

     (A)23.1       Consent of Deloitte & Touche, LLP

     (A)27         Financial Data Schedule

----------
</TABLE>

LEGEND FOR EXHIBITS

(A)Filed herewith.

(B)Incorporated by reference to the exhibits filed with the Company's
   Registration Statement No. 333-692 on Form S-1, filed with the Securities
   and Exchange Commission on January 29, 1996, as amended.

(C)Incorporated by reference to the exhibits filed with the Company's Annual
   Report on Form 10-K for the year ended December 31, 1996 filed with the
   Securities and Exchange Commission.

(D)Incorporated by reference to the exhibits filed with the Company's
   Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 filed
   with the Securities and Exchange Commission.

(E)Incorporated by reference to the exhibits filed with the Company's
   Quarterly Report on Form 10-Q for the quarter ended on June 30, 1997 filed
   with the Securities and Exchange Commission.

(F)Incorporated by reference to the exhibits filed with the Company's
   Quarterly Report on Form 10-Q for the quarter ended September 30, 1997
   filed with the Securities and Exchange Commission.

(G)Incorporated by reference to the exhibits filed with the Company's current
   report on Form 8-K dated May 15, 1997 filed with the Securities and
   Exchange Commission.

(H)Incorporated by reference to the exhibits filed with the Company's
   Registration Statement No. 333-34923 on Form S-4 filed with the Securities
   and Exchange Commission on September 4, 1997 as amended.

(I)Incorporated by reference to the exhibits filed with the Company's Annual
   Report on Form 10-K for the year ended December 31, 1997 filed with the
   Securities and Exchange Commission.

(J)Incorporated by reference to the exhibits filed with the Company's
   Quarterly Report on Form 10-Q for the quarter ended March 31, 1998 filed  
   with the Securities and Exchange Commission.

(K)Incorporated by reference to the exhibits filed with the Company's
   Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 filed  
   with the Securities and Exchange Commission.

*  Denotes a compensatory plan, contract or arrangement.

    The Company will furnish to any stockholder a copy of the above exhibits
upon the written request of such 


                                       36
<PAGE>   39
stockholder and the payment to the Company of the reasonable expenses incurred
by the Company in furnishing such copy.

    (d) Excluded Financial Statements. None.


                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Detroit, State of Michigan, on the 25th day of March, 1999.

                               PENSKE MOTORSPORTS, INC.

                               By:/s/ GREGORY W. PENSKE
                                  ---------------------
                                      GREGORY W. PENSKE
                                    Chief Executive Officer

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

<TABLE>
<CAPTION>
            SIGNATURES                       TITLE                                         DATES
            ----------                      ------                                         -----

<S>                                        <C>                                          <C>
     /s/ H. LEE COMBS                      Director                                      March 25, 1999
     ----------------                                           
         H. LEE COMBS

     /s/ WALTER P. CZARNECKI               Vice Chairman of the Board                    March 25, 1999
     -----------------------                                                      
         WALTER P. CZARNECKI

     /s/ GARY W. DICKINSON                 Director                                      March 25, 1999
     ---------------------
         GARY W. DICKINSON

     /s/ EDSEL B. FORD                     Director                                      March 25, 1999
     -----------------                                          
         EDSEL B. FORD

     /s/ WILLIAM C. FRANCE                 Director                                      March 25, 1999
     ---------------------                                      
         WILLIAM C. FRANCE

     /s/ GREGORY W. PENSKE                 President, Chief Executive                    March 25, 1999
     ---------------------                 Officer, (Principal Executive
         GREGORY W. PENSKE                 Officer)

     /s/ ROGER S. PENSKE                   Chairman of the Board                         March 25, 1999
     -------------------                                                     
         ROGER S. PENSKE

     /s/ RICHARD J. PETERS                 Director                                      March 25, 1999
     ---------------------                                      
         RICHARD J. PETERS

     /s/ RICHARD E. STODDARD               Director                                      March 25, 1999
     -----------------------
         RICHARD E. STODDARD

     /s/ JAMES E. WILLIAMS                 Director                                      March 25, 1999
     ---------------------                                      
         JAMES E. WILLIAMS

     /s/ JO DEWITT WILSON                  Director                                      March 25, 1999
     --------------------                                       
         JO DEWITT WILSON

     /s/ JAMES H. HARRIS                   Principal Financial and Accounting            March 25, 1999
     -------------------                   Officer
         JAMES H. HARRIS
</TABLE>


                                       37
<PAGE>   40


                                  EXHIBIT INDEX
<TABLE>
<CAPTION>
    EXHIBIT        
    NUMBER                                                   DOCUMENT
    ------                                                   --------
<S>               <C>                                                                                    

     (B)3.1        Amended and Restated Certificate of Incorporation of Penske Motorsports, Inc.

     (K)3.2        Amended and Restated Bylaws of Penske Motorsports, Inc.

     (B)4.1        Form of Common Stock Certificate

     (F)10.1       Credit Agreement dated as of September 30, 1997 among Penske Motorsports, Inc.,
                   and certain of its U.S. subsidiaries, as Borrowers, and each of the financial
                   institutions initially a signatory thereto, as Lenders, and First Union National
                   Bank, as Agent, and NationsBank, N.A., as Co-Agent


     (C)10.2       Purchase Agreement and Escrow Instructions dated October 8, 1996 among Kaiser
                   Ventures, Inc., The California Speedway Corporation and Penske Motorsports, Inc.


     (C)10.3       Conditional Demand Registration Rights Agreement dated December 12, 1996 between
                   Penske Motorsports, Inc., and Kaiser Ventures, Inc.


     (C)10.4       Water Rights Agreement Extension dated December 11, 1996 between Kaiser Ventures
                   Inc., and The California Speedway Corporation


     (B)10.5       Organization Agreement, dated November 22, 1995 by and among PSH Corp., Kaiser
                   Ventures, Inc., and Penske Motorsports, Inc. (f/k/a Penske Speedway Holdings
                   Corp.)



     (B)10.6       Shareholders Agreement, dated November 22, 1995 by and among PSH Corp., Kaiser
                   Ventures, Inc., and Penske Motorsports, Inc. (f/k/a Penske Speedway Holdings
                   Corp.)


     (B)10.7       Water Rights Agreement, dated November 21, 1995 by and between Kaiser Ventures,
                   Inc., and The California Speedway Corporation (successor by merger to Speedway
                   Development Corporation).


     (B)10.8       Access Agreement, dated as of November 22, 1995 by and among Kaiser Ventures,
                   Inc., Kaiser Land Development, Inc., and The California Speedway Corporation.


     (B)10.9       Sewer Services Agreement, dated as of November 21, 1995 between Kaiser Ventures,
                   Inc., and The California Speedway Corporation (successor by merger to Speedway
                   Development Corporation).


     (B)10.10      Registration Rights Agreement, dated March 21, 1996 between Penske Motorsports,
                   Inc., and Kaiser Ventures, Inc.

     (B)10.11      First Amendment to Shareholders Agreement, dated March 21, 1996 by and among PSH
                   Corp., Kaiser Ventures, Inc., and Penske Motorsports, Inc. (f/k/a Penske
                   Speedways Holding Corp.)


     (B)10.12      Agreement, dated March 21, 1996 among PSH Corp., Penske Motorsports, Inc., and
                   Kaiser Ventures, Inc., amending the Organization Agreement


     (D)10.13      Amended and Restated Stockholder Option and Voting Agreement among Carrie B.
                   DeWitt, Penske Acquisition, Inc., and Penske Motorsports, Inc. dated April 1,
                   1997


     (G)10.14      First Amendment to Amended and Restated Stockholder Option and Voting Agreement
                   dated May 15, 1997 among Carrie B. DeWitt, Penske Motorsports, Inc. and Penske
                   Acquisition, Inc.


     (H)10.15      Second Amendment to Amended and Restated Stockholder Option and Voting Agreement
                   dated as of April 1, 1997, between PMI and Carrie B. DeWitt


     (H)10.16      Employment Agreement, dated August 5, 1997, between PMI and Carrie B. DeWitt

     (H)10.17      Employment Agreement, dated August 5, 1997, between PMI and Jo DeWitt Wilson

     (H)10.18      Employment Agreement dated August 5, 1997, between PMI and Nancy DeWitt Daugherty

     (H)10.19      Agreement and Plan of Merger dated August 5, 1997 by and among North Carolina
                   Motor Speedway, Inc., Penske Motorsports, Inc., and Penske Acquisition, Inc.


     (E)10.20      Purchase Agreement dated July 23, 1997 among Homestead-Miami Speedway, LLC,
                   International Speedway Corporation, Penske Motorsports, Inc., Homestead
                   Motorsports Joint Venture, Miami Motorsports Joint Venture, Rafael A. Sanchez and
                   Wayne Huizenga

     (B)10.21*     Amended and Restated 1996 Penske Motorsports Stock Incentive Plan 
</TABLE>


                                       38
<PAGE>   41


<TABLE>
<CAPTION>
    EXHIBIT
    NUMBER                                                   DOCUMENT
    ------                                                   --------
<S>               <C>  

     (B)10.22      Lease Agreement, dated December 1, 1994 between Michigan Speedway, Inc. (f/k/a
                   Penske Speedway Inc.) and Motorsports International Corp.


     (B)10.23      Trade Name and Trademark Agreement dated October 18, 1995
                   between Penske Speedway, Inc., Penske Speedways Holding Corp.,
                   and Penske System, Inc.


     (I)10.24      Stock Purchase Agreement, dated March 26, 1998, by and between Penske
                   Motorsports, Inc. and Dover Downs Entertainment, Inc.


     (I)21.1       Subsidiaries of Penske Motorsports, Inc.

     (A)23.1       Consent of Deloitte & Touche, LLP

     (A)27         Financial Data Schedule 
---------- 
</TABLE>

LEGEND FOR EXHIBITS

(A)Filed herewith.

(B)Incorporated by reference to the exhibits filed with the Company's
   Registration Statement No. 333-692 on Form S-1, filed with the Securities
   and Exchange Commission on January 29, 1996, as amended.

(C)Incorporated by reference to the exhibits filed with the Company's Annual
   Report on Form 10-K for the year ended December 31, 1996 filed with the
   Securities and Exchange Commission.

(D)Incorporated by reference to the exhibits filed with the Company's
   Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 filed
   with the Securities and Exchange Commission.

(E)Incorporated by reference to the exhibits filed with the Company's
   Quarterly Report on Form 10-Q for the quarter ended on June 30, 1997 filed
   with the Securities and Exchange Commission.

(F)Incorporated by reference to the exhibits filed with the Company's
   Quarterly Report on Form 10-Q for the quarter ended September 30, 1997
   filed with the Securities and Exchange Commission.

(G)Incorporated by reference to the exhibits filed with the Company's current
   report on Form 8-K dated May 15, 1997 filed with the Securities and
   Exchange Commission.

(H)Incorporated by reference to the exhibits filed with the Company's
   Registration Statement No. 333-34923 on Form S-4 filed with the Securities
   and Exchange Commission on September 4, 1997 as amended.

(I)Incorporated by reference to the exhibits filed with the Company's Annual
   Report on Form 10-K for the year ended December 31, 1997 filed with the
   Securities and Exchange Commission.

(J)Incorporated by reference to the exhibits filed with the Company's
   Quarterly Report on Form 10-Q for the quarter ended March 31, 1998 filed with
   the Securities and Exchange Commission.

(K)Incorporated by reference to the exhibits filed with the Company's
   Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
   filed with the Securities and Exchange Commission.

 * Denotes a compensatory plan, contract or arrangement.




                                       39