<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, 1997         COMMISSION FILE NUMBER: 0-28044
 
                            PENSKE MOTORSPORTS, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
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<S>                                            <C>
                   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)
</TABLE>
 
       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (313) 592-8255
                            ------------------------
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
 
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<CAPTION>
                                                                 NAME OF EACH EXCHANGE
          TITLE OF EACH CLASS                                     ON WHICH REGISTERED
          -------------------                                    ---------------------
<S>                                                     <C>
COMMON STOCK, PAR VALUE $0.01 PER SHARE                         NASDAQ STOCK MARKET(SM)
</TABLE>
 
                            ------------------------
 
        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.  [ ]
 
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF THE
REGISTRANT WAS APPROXIMATELY $201,846,611 BASED UPON THE CLOSING SALES PRICE OF
THE REGISTRANT'S COMMON STOCK ON THE NASDAQ STOCK MARKET(SM) AT MARCH 24, 1998,
OF $32.125 PER SHARE. AS OF MARCH 24, 1998, 14,208,898 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 1998 ANNUAL MEETING
OF STOCKHOLDERS ARE INCORPORATED BY REFERENCE INTO PART III OF THIS FORM 10-K.
 
================================================================================
<PAGE>   2
 
                              TABLE OF CONTENTS
 
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                                                                            PAGE
                                                                            ----
<S>       <C>                                                               <C>
                                    PART I
Item 1.   Business.........................................................   2
                                                                               
Item 2.   Properties.......................................................  10
                                                                               
Item 3.   Legal Proceedings................................................  10
                                                                               
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.........................................  33
                                                                               
                                   PART III                                    
                                                                               
Item 10.  Directors and Executive Officers of the Registrant...............  33
                                                                               
Item 11.  Executive Compensation...........................................  33
                                                                               
Item 12.  Security Ownership of Certain Beneficial Owners and                  
          Management.......................................................  33
                                                                               
Item 13.  Certain Relationships and Related Transactions...................  33
                                                                               
                                   PART IV                                     
                                                                               
Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K..  33
                                                                               
Signatures.................................................................  37
</TABLE>
 
                                        1
<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 Motor
Speedway, Inc. ("North Carolina Speedway") in Rockingham, North Carolina. In
addition, PMI owns 45% of the ownership interests in 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"
mean Penske Motorsports, Inc. ("PMI") 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 17 major
racing events at Michigan Speedway, Nazareth Speedway, California Speedway and
North Carolina Speedway in 1997 and expects to promote a total of 19 major
racing events at these speedways in 1998. Of the 17 1997 events, 11 were stock
car races, 9 of which were sanctioned by NASCAR, 4 (including an Indy Lights
Series event) were Indy car races sanctioned by Championship Auto Racing Teams,
Inc. ("CART"), and 2 were Craftsman Truck Series races sanctioned by NASCAR.
NASCAR events promoted by PMI in 1997 included 4 NASCAR races associated with
the Winston Cup Series, 4 races associated with the NASCAR Busch Grand National
Series, 1 race associated with NASCAR Winston West Series and 2 races associated
with the NASCAR Craftsman Truck Series.
 
     Management believes that spectator demand for its Winston Cup events at
California Speedway, Michigan Speedway and North Carolina Speedway will exceed
existing permanent seating capacity. At December 31, 1997, permanent seating
capacity, excluding infield capacity, at California Speedway was 70,644, at
Michigan Speedway was 106,775 and at North Carolina Speedway was 50,219. In
1998, PMI expects to add approximately 5,000 grandstand seats at Michigan
Speedway, 15,000 grandstand seats at California Speedway and 14,000 grandstand
seats at North Carolina Speedway. In addition, PMI expects to add 21,000 new
grandstand seats at California Speedway prior to the year 2002. PMI has received
the necessary government approvals for these additional seats as well as
approval for a total capacity of 107,000 spectators at California Speedway.
Also, in 1997, PMI added approximately 11,000 grandstand seats at Nazareth
Speedway which now has permanent seating capacity, excluding infield capacity,
of 46,288, and also added 8,500 seats at Michigan Speedway.
 
     In addition to permanent seating capacity, California Speedway has 71
terrace suites and 55 chalets and Michigan Speedway has 37 suites, 40 chalets
and 10 grandstand pavilions for corporate hospitality. North Carolina Speedway
has 34 suites. Nazareth Speedway has 39 hospitality chalets and additional space
for large corporate gatherings which can accommodate up to 5,000 people.
 
     PMI owns 45% of the outstanding ownership interests in Homestead-Miami
Speedway. Homestead-Miami Speedway has permanent seating capacity of 35,924
seats, excluding infield capacity, and temporary seating of 5,730. In addition,
Homestead-Miami Speedway has 30 terrace suites, 20 skybox lounges and 30
chalets.
 
                                        2
<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 1997,
       the Company hosted an ARCA-sanctioned race on the Saturday preceding the
       Miller 400, which is a Winston Cup event, and 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 1997 speedway
       revenue in 10 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 upgraded 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.
        
       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. PMI currently has 10 full-time employees who spend the
       majority of their time marketing events at PMI's facilities to corporate
       customers.
        
       No speedway currently promotes more than two Winston Cup races per year.
       In 1998, 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 1998. Homestead-Miami
       Speedway will also have one CART FedEx Championship Series event.
       Management of the Company intends to seek additional racing events for
       its facilities.
        
     - 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.
        
                                        3
<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, and Nazareth 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 its Winston Cup events at Michigan Speedway,
      California Speedway and North Carolina Speedway will exceed the Company's
      existing permanent grandstand seating capacity at these facilities. PMI
      plans to continue to expand by adding permanent grandstand seating and
      luxury suites at Michigan Speedway, California Speedway, North Carolina
      Speedway and Nazareth Speedway. Prior to the 1997 season, PMI added
      approximately 8,500 grandstand seats at Michigan Speedway and
      approximately 11,000 grandstand seats at Nazareth Speedway. Prior to the
      commencement of the 1998 racing season, PMI expects to add approximately
      5,000 grandstand seats at Michigan Speedway and approximately 15,000
      grandstand seats at California Speedway. In addition, prior to the October
      race at North Carolina Speedway, PMI expects to add approximately 14,000
      grandstand seats.
 
     - 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
      45% of the ownership interests of Homestead-Miami Speedway.
 
EVENTS AND FACILITIES
 
Events
 
     PMI's operations in 1997 consisted principally of promoting racing and
related events at its Michigan Speedway, Nazareth Speedway, and California
Speedway. In addition, PMI acquired 70% of the outstanding common stock of North
Carolina Speedway in May 1997 and the remaining common stock in December 1997.
In 1997, North Carolina Speedway hosted two Winston Cup events, one in February
(while PMI owned approximately 5%) and the other in October (when PMI owned
approximately 70%).
 
     PMI's 1998 scheduled racing events at all of its facilities are as follows:
 
<TABLE>
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   DATE                     RACE                             CIRCUIT                       FACILITY
   ----                     ----                             -------                       --------
<S>           <C>                                 <C>                              <C>
February 21   GM Goodwrench Service Plus 200      NASCAR Busch Grand National      North Carolina Speedway
February 22   GM Goodwrench Service Plus 400      NASCAR Winston Cup               North Carolina Speedway
March 15
                                                  PPG-Dayton Indy Lights           Homestead-Miami Speedway
March 15      Marlboro Grand Prix of Miami        CART/FedEx Championship          Homestead-Miami Speedway
              Presented by Toyota
April 4
                                                  NASCAR Slim Jim All-Pro          Homestead-Miami Speedway
April 4       Florida Dodge Dealers 400           NASCAR Craftsman Truck           Homestead-Miami Speedway
April 25
                                                  KOOL Toyota Atlantic             Nazareth Speedway
                                                  Championship
April 26
                                                  PPG-Dayton Indy Lights           Nazareth Speedway
April 26      Bosch Spark Plug Grand Prix         CART/FedEx Championship          Nazareth Speedway
              Presented by Toyota
May 2         Auto Club 200                       NASCAR Winston West              California Speedway
May 2         IROC Round II                       IROC                             California Speedway
May 3         California 500 Presented by NAPA    NASCAR Winston Cup               California Speedway
May 16
                                                  USRRC/F2000                      Homestead-Miami Speedway
May 17
                                                  USRRC NTB Trans Am               Homestead-Miami Speedway
May 17
                                                  USRRC Can-Am GT                  Homestead-Miami Speedway
May 17        First Union 200                     NASCAR Busch Grand National      Nazareth Speedway
</TABLE>
 
                                        4
<PAGE>   6
 
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   DATE                     RACE                             CIRCUIT                       FACILITY
   ----                     ----                             -------                       --------
<S>           <C>                                 <C>                              <C>
May 17
                                                  NASCAR Featherlite Modified      Nazareth Speedway
                                                  Tour
June 13       ARCA 200                            ARCA                             Michigan Speedway
June 13       IROC Round III                      IROC                             Michigan Speedway
June 14       Miller Lite 400                     NASCAR Winston Cup               Michigan Speedway
July 12
                                                  NASCAR Slim Jim All-Pro          Nazareth Speedway
July 12       NAPA AutoCare 200                   NASCAR Craftsman Truck           Nazareth Speedway
July 18       No Fear Challenge                   NASCAR Craftsman Truck           California Speedway
July 18
                                                  NASCAR Winston West              California Speedway
July 19       Kenwood Home & Car Audio 300        NASCAR Busch Grand National      California Speedway
July 25       Detroit News 100                    PPG-Dayton Indy Lights           Michigan Speedway
July 26       US 500 Presented by Toyota          CART/FedEx Championship          Michigan Speedway
August 15     Pepsi 200 Presented by DeVilbiss    NASCAR Busch Grand National      Michigan Speedway
August 16     Pepsi 400 Presented by DeVilbiss    NASCAR Winston Cup               Michigan Speedway
October 17
                                                  FIA GT Championship              Homestead-Miami Speedway
October 31
                                                  PPG-Dayton Indy Lights           California Speedway
October 31    ACDelco 200                         NASCAR Busch Grand National      North Carolina Speedway
November 1    Marlboro 500 Presented by Toyota    CART/FedEx Championship          California Speedway
November 1    ACDelco 400                         NASCAR Winston Cup               North Carolina Speedway
November 14
                                                  NASCAR Goody's Dash              Homestead-Miami Speedway
November 15
                                                  NASCAR Slim Jim All-Pro          Homestead-Miami Speedway
November 15   Jiffy Lube Miami 300                NASCAR Busch Grand National      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
1998, 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.
 
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 106,775 grandstand seats, 37 suites, a chalet village
containing 40 hospitality chalets and 10 grandstand pavilions. In 1997, PMI
added approximately 8,500 grandstand seats.
 
     The speedway and all adjacent parking areas consist of approximately 977
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 1995. PMI acquired Michigan Speedway in 1973.
 
     NAZARETH SPEEDWAY. Nazareth Speedway is located in Lower Nazareth Township,
Pennsylvania, approximately 12 miles from Allentown, 50 miles from Philadelphia
and 80 miles from New York City. Nazareth Speedway sits on approximately 107
acres and on race days uses more than 183 acres of land, some of which is
leased. Nazareth Speedway has permanent seating capacity of 46,288 including
approximately 11,000 grandstand seats which were added in 1997. The track is a
one-mile speedway. Turn one is banked
 
                                        5
<PAGE>   7
 
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 and an 18-foot wide warm up lane encompassing the entire inside of the
track. This 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 48,229
reserved grandstand seats and 34 suites with seating for 1,990 guests.
 
     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 1.017-mile oval with 22
degree to 25 degree banking in the turns and 8 degree banking on the front and
back straightaway. 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 1998, PMI intends to rebuild the grandstands along the
backstretch, which will add approximately 14,000 seats. 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 Indy 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 70,644 grandstand seats to which PMI
expects to add 21,000 grandstand seats by the year 2002 (15,000 in 1998). PMI
has received the necessary governmental approvals for these additional seats as
well as approval for a total capacity of 107,000 spectators. In addition to its
grandstand seats, California Speedway has 71 terrace suites and 55 chalets.
 
     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 the third quarter, 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
                                        6
<PAGE>   8
 
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"), the Automobile Racing Club of America ("ARCA"), the Indy Racing League
("IRL") 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.
 
     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, 1997, the Company had 163 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 4,000 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
 
                                        7
<PAGE>   9
 
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.
 
     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 revenue each year from the
promotion, sponsorship, and advertising of various companies and their products.
Government regulation can adversely impact the availability to motorsports of
this promotion, sponsorship and advertising revenue. Advertising by the tobacco
and liquor industries is generally subject to greater governmental regulation
than advertising by other sponsors
 
                                        8
<PAGE>   10
 
of PMI's events. During the past year, various state attorney generals and
certain plaintiffs' attorneys announced settlement arrangements with the tobacco
industry that if approved and, if implemented, could potentially restrict
tobacco industry sponsorship of, and advertising at, sporting events.
Advertising revenue from the tobacco and liquor industry accounted for less than
2% of the Company's total revenue in the year ended December 31, 1997.
 
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.
 
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.
 
                                        9
<PAGE>   11
 
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               977           2 miles
Nazareth, Pennsylvania      Nazareth Speedway               183            1 mile
Rockingham, North Carolina  North Carolina Speedway         300       1.017 miles
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 77 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, 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. 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 alleges, 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 names various persons as
alleged co-conspirators, but does not name them (or others) as defendants, at
this time. The suit alleges similar conduct that appeared in the purported
national class actions pending in the U.S. District Court, Northern District of
Georgia, filed against approximately 28 other business and which is discussed
above. The suit against North Carolina Speedway has been transferred for
consolidated pre-trial proceedings with the Georgia case upon the motion of
North Carolina Speedway. North Carolina Speedway disputes the claims and expects
to vigorously defend itself. The lawsuit does not state the amount of damages
being sought by the claimants.
 
     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
 
                                       10
<PAGE>   12
 
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 has appealed
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 courts with respect to Mr.
Smith's appeal or the dissenters proceeding could materially increase the
purchase price paid for North Carolina Speedway by PMI.
 
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
     During the fourth quarter of 1997, 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>
James H. Harris....................  46    Senior Vice President and Treasurer
Gene Haskett.......................  54    Executive Vice President
Robert H. Kurnick, Jr. ............  36    Senior Vice President, General
                                           Counsel and Secretary
Les Richter........................  67    Executive Vice President
</TABLE>
 
     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 and Nazareth Speedway. Prior to
 
                                       11
<PAGE>   13
 
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.
 
     Les Richter has been Executive Vice President of PMI since July 1994. Since
1988, Mr. Richter has served as Chairman of the Board of the International Race
of Champions, Inc. 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 19, 1998, 14,208,898 shares of Common Stock were outstanding and there
were approximately 11,883 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>
                                                            1997                                 1996
                                                ----------------------------         ----------------------------
               QUARTER ENDED                        HIGH            LOW                  HIGH            LOW
               -------------                        ----            ---                  ----            ---
<S>                                             <C> <C>         <C> <C>              <C> <C>         <C> <C>
First Quarter (March 31)....................     32              25                   40 3/4          28 1/2
Second Quarter (June 30)....................     33 3/4          27 1/4               38 1/4          24 3/4
Third Quarter (September 30)................     35 3/4          32 1/8               35 1/2          23
Fourth Quarter (December 31)................     34 3/8          24 3/8               35 1/2          24 1/8
</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>   14
 
ITEM 6: SELECTED FINANCIAL DATA
 
                   PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES
 
                      SELECTED CONSOLIDATED FINANCIAL DATA
 
<TABLE>
<CAPTION>
                                                         YEAR ENDED DECEMBER 31,
                                       -----------------------------------------------------------
                                          1997          1996          1995        1994      1993
                                          ----          ----          ----        ----      ----
                                            ($ IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S>                                    <C>           <C>           <C>          <C>        <C>
STATEMENT OF INCOME:
  Total revenues.....................  $   109,816   $    55,175   $   42,005   $ 40,518   $33,216
                                       -----------   -----------   ----------   --------   -------
  Expenses:
     Operating expenses..............       40,399        18,067       14,060     13,322    11,026
     Cost of sales...................       16,954        12,834        9,672     10,169     7,573
     Depreciation and amortization...        7,212         3,167        2,563      2,018     1,601
     Selling, general and
       administrative................       16,379         6,185        4,631      4,632     4,420
                                       -----------   -----------   ----------   --------   -------
  Operating income...................       28,872        14,922       11,079     10,377     8,596
  Income before income taxes.........       26,454        16,872       10,184      9,372     7,721
  Net income.........................  $    16,445   $    10,880   $    6,774   $  6,340   $ 5,193
                                       ===========   ===========   ==========   ========   =======
  Basic net income per share.........  $      1.19
                                       ===========
  Pro forma basic net income per
     share...........................                $      0.90   $     0.84
                                                     ===========   ==========
  Diluted net income per share.......  $      1.19
                                       ===========
  Pro forma diluted net income per
     share...........................                $      0.90   $     0.84
                                                     ===========   ==========
  Weighted average shares
     outstanding.....................   13,810,570
  Pro forma weighted average shares
     outstanding.....................                 12,128,920    8,077,245
SELECTED OPERATING DATA:
  Operating margin...................         26.3%         27.0%        26.4%      25.6%     25.9%
  Number of seats:
     Michigan Speedway...............      106,775        98,276       88,141     77,991    72,906
     Nazareth Speedway...............       46,288        35,654       30,534     30,534    26,668
     California Speedway.............       70,644
     North Carolina Speedway.........       50,219
  Total attendance...................    1,083,206       599,480      518,396    448,168   414,937
  Number of events:
     Winston Cup.....................            4             2            2          2         2
     CART............................            3             2            2          2         2
     Other...........................           10             5            4          5         4
 
                                                              DECEMBER 31,
                                       -----------------------------------------------------------
                                          1997          1996          1995        1994      1993
                                       -----------   -----------   ----------   --------   -------
BALANCE SHEET DATA:
  Total assets.......................  $   291,772   $   183,997   $   73,255   $ 34,510   $36,407
  Total debt.........................       48,295         5,563          350     12,515    12,035
  Total stockholders' equity.........      190,694       145,402       45,812     10,187    13,467
</TABLE>
 
                                       13
<PAGE>   15
 
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, 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 40% of the
ownership interests in Homestead-Miami Speedway, LLC. In March 1998, the Company
increased its ownership interest of Homestead-Miami Speedway to 45%. In
addition, the Company sells motorsports-related merchandise such as apparel,
souvenirs and collectibles through its subsidiary Motorsports International
Corp. 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
includes 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. 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, 1997 were $109.8 million, compared
to $55.2 million and $42.0 million, respectively, for the years ended December
31, 1996 and 1995. The increase in revenues resulted primarily from the opening
of California Speedway. In addition, speedway admissions revenues increased due
to additional seating at Michigan and Nazareth Speedways and the inclusion in
the financial statements of one event weekend at North Carolina Speedway.
 
     Net income for the year ended December 31, 1997 was $16.4 million, or $1.19
per share, compared to $10.9 million, or $.90 per share, and $6.8 million, or
$.84 per share, for the years ended December 31, 1996 and 1995, respectively.
Net income increased due to higher revenues as explained above, net of
additional costs associated with opening California Speedway, losses on equity
investments, increased interest expense and a higher effective tax rate.
 
     The Company completed construction of California Speedway during 1997, at a
cost of approximately $117 million, and held its inaugural event weekend June
20-22, 1997. Additional events were also held at California Speedway in
September and October.
 
     During 1997, the Company acquired the outstanding shares of North Carolina
Motor Speedway, Inc. ("NCMS"), which owns and operates North Carolina Speedway,
a 1.017-mile oval speedway in Rockingham, North Carolina. North Carolina
Speedway hosts NASCAR Winston Cup and Busch Series events in the first and
fourth quarters of each year. On May 19, 1997, the Company purchased the shares
of NCMS held by its former majority shareholder in exchange for 906,542 shares
of the Company's stock. On December 2, 1997, the shareholders of NCMS approved a
merger with the Company, whereby shareholders of NCMS 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 common stock were issued. The
merger was completed on December 2, 1997.
 
                                       14
<PAGE>   16
 
     Certain NCMS shareholders dissented to the merger of the Company and NCMS.
These shareholders were paid $16.77 per share, the median fair value of NCMS
shares as determined by an independent investment banking firm retained by NCMS
to evaluate the Company's merger offer. These dissenters have requested
additional compensation and, if they are successful in court, the cost of the
NCMS acquisition may increase.
 
     In July 1997, the Company acquired 40% of Homestead-Miami Speedway for
$11.8 million. Homestead-Miami Speedway operates Miami-Dade Homestead
Motorsports Complex, a 1.5-mile oval speedway in Homestead, Florida.
Homestead-Miami Speedway hosted three event weekends in 1997, including the
inaugural event of the CART season, the Marlboro Grand Prix of Miami, and NASCAR
Craftsman Truck and Busch Series events. 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 of accounting. In March 1998, the Company acquired an additional 5% of
the ownership interest of Homestead-Miami Speedway for $2.85 million, payable on
December 31, 2001.
 
     During 1997, the Company acquired approximately 7.3% of the outstanding
common stock of GPLB for approximately $4.2 million, including acquisition
costs. In March 1998, the Company entered into an agreement to sell this stock
for $5.3 million.
 
     In March 1996, the Company completed its initial public offering ("IPO") of
3,737,500 shares of common stock with an initial offering price of $24.00 per
share. The net proceeds of $82.7 million were used to repay outstanding debt of
$10.6 million and to fund completion of California Speedway.
 
     During 1996, the Company acquired the stock held by the minority
shareholder of Nazareth Speedway in exchange for 92,500 shares of the Company's
common stock. The Company also purchased all of the outstanding common stock of
Competition Tire West and Competition Tire South during 1996. Competition Tire
West was purchased for $7.4 million, of which $4.3 million was paid in cash with
the balance payable over a term of five years with interest at 8% per annum. The
Company acquired the remaining two-thirds of Competition Tire South (Competition
Tire West owned one-third) for $2.2 million, paying $1.4 million in cash and
issuing notes payable over a term of five years at 8% interest per annum for the
remaining $830,000.
 
     The Company does not believe that its financial performance has been
materially affected by inflation. The Company 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, NASCAR Busch Series Grand National Division or CART
event, coupled with a 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. In 1997, along
with weekend events in April through August, California Speedway hosted its
inaugural season events in June, September and October and North Carolina
Speedway hosted an event weekend in October. NCMS also hosts an annual event
weekend in February.
 
     Set forth below is certain information with respect to the Company's
operations for the most recent eight quarters.
 
<TABLE>
<CAPTION>
                                            1997                                       1996
                           ---------------------------------------    --------------------------------------
                           FIRST     SECOND      THIRD     FOURTH     FIRST     SECOND      THIRD     FOURTH
                           -----     ------      -----     ------     -----     ------      -----     ------
                                                           ($ IN THOUSANDS)
<S>                        <C>       <C>        <C>        <C>        <C>       <C>        <C>        <C>
Revenues...............    $5,375    $46,296    $43,974    $14,171    $3,642    $24,614    $23,962    $2,957
Net income (loss)......    (1,511)    10,929      8,845     (1,818)     (990)     6,717      6,499    (1,346)
Number of weekends.....                    5          3          2                    4          2
</TABLE>
 
                                       15
<PAGE>   17
 
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>
                                                                1997     1996     1995
                                                                ----     ----     ----
<S>                                                             <C>      <C>      <C>
REVENUES:
  Speedway admissions.......................................     41.5%    36.7%    41.4%
  Other speedway revenues...................................     30.9     23.6     18.2
  Merchandise, tires and accessories........................     27.6     39.7     40.4
                                                                -----    -----    -----
       TOTAL REVENUES.......................................    100.0    100.0    100.0
                                                                -----    -----    -----
EXPENSES:
  Operating.................................................     36.8     32.8     33.5
  Cost of sales.............................................     15.4     23.3     23.0
  Depreciation and amortization.............................      6.6      5.7      6.1
  Selling, general and administrative.......................     14.9     11.2     11.0
                                                                -----    -----    -----
       TOTAL EXPENSES.......................................     73.7     73.0     73.6
                                                                -----    -----    -----
OPERATING INCOME............................................     26.3%    27.0%    26.4%
                                                                =====    =====    =====
</TABLE>
 
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 North Carolina Speedway, which held one
event subsequent to the acquisition of the controlling interest of NCMS by the
Company, and additional seating at Michigan Speedway (8,500 new seats) and
Nazareth Speedway (11,000 new 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. For the 1998 racing season, the Company
will add approximately 5,000 seats at Michigan Speedway, 15,000 seats at
California Speedway and 14,000 seats at North Carolina Speedway. Merchandise,
tires and accessories revenues will be impacted in 1998 by the December 1997
sale of licensing rights for the distribution of Rusty Wallace merchandise.
Sales of this merchandise approximated $7.3 million in 1997.
 
     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. Cost of sales will
be impacted in 1998 as a result of the sale of the Rusty Wallace licensing
rights.
 
     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
Speedway, depreciation and goodwill amortization resulting from the acquisition
of NCMS and increased depreciation at Michigan and Nazareth Speedways from
capital improvements.
 
                                       16
<PAGE>   18
 
     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 is due primarily to 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. Net interest income resulted from temporarily investing the
proceeds of the IPO, which 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.
During 1997, the Company had average debt outstanding of approximately $28.7
million with an average interest rate of 7.1%. As of December 31, 1997,
outstanding debt totaled $48.3 million. The Company expects interest expense to
increase in 1998.
 
     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 NCMS.
 
     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, equity in
losses of affiliates and interest expense from borrowings.
 
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
 
     Revenues -- Revenues for the year ended December 31, 1996 were $55.2
million, an increase of $13.2 million, or 31.4%, compared to the same period in
1995. This improvement was due to increases in all revenue components.
Admissions revenues for the year of $20.2 million increased $2.9 million, or
16.5%, from the same period in 1995 and reflects increased attendance at the
Company's existing events and the addition of an event at Nazareth Speedway.
Other speedway revenues of $13.0 million increased $5.4 million, or 70.4%,
primarily due to incremental television broadcast revenues, increases in
concessions, hospitality and sponsorship revenues and revenues from hosting the
U.S. 500, an event CART promoted, for which the Company received reimbursement
for the use of Michigan Speedway and its staff. Merchandise, tires and
accessories revenues of $21.9 million increased $4.9 million, or 28.9%, from the
same period in 1995, reflecting the acquisition of Competition Tire South as
well as increases in sales of race-related apparel and tires and accessories.
 
     Operating Expenses -- Operating expenses of $18.1 million for the year
ended December 31, 1996 increased $4.0 million, or 28.5%, from the year ended
December 31, 1995 as a result of higher sanction fees, costs associated with
hosting the U.S. 500, the new event at Nazareth Speedway and the impact of the
acquisition of Competition Tire South. As a percentage of total revenues,
operating expenses were 32.8% for the year ended December 31, 1996 as compared
to 33.5% for the year ended December 31, 1995. The decrease in operating
expenses as a percentage of total revenues for 1996 reflects the ability of the
Company to add incremental revenue without a corresponding increase in operating
expenses.
 
     Cost of Sales -- Cost of sales, which relates entirely to sales of
merchandise, tires and accessories, was $12.8 million for the year ended
December 31, 1996, or 58.6% of merchandise, tires and accessories revenues,
compared to $9.7 million, or 57.0% of those same revenues, for 1995. The
increase in cost of sales as a percentage of merchandise, tires and accessories
revenues reflects an increase in wholesale merchandise sales, which have a lower
gross profit margin.
 
                                       17
<PAGE>   19
 
     Depreciation and Amortization -- Depreciation and amortization expense of
$3.2 million for the year ended December 31, 1996 increased $.6 million, or
23.6%, compared to the year ended December 31, 1995. The increase reflects
capital improvements, primarily additional seating and repaving at the race
tracks for the 1996 racing season, and the acquisition of Competition Tire
South.
 
     Selling, General and Administrative -- Selling, general and administrative
expenses of $6.2 million for the year ended December 31, 1996 increased $1.6
million, or 33.6%, from $4.6 million in 1995 due to expenses incurred to host
the U.S. 500 and the new race at Nazareth Speedway. As a percentage of revenues,
selling, general and administrative expenses were comparable in each year at
11.2% in 1996 and 11.0% in 1995.
 
     Operating Income -- Operating income for the year ended December 31, 1996
was $14.9 million, an increase of $3.8 million, or 34.7%, from $11.1 million for
the year ended December 31, 1995. This resulted from increased speedway
admissions and incremental broadcast and sponsorship revenues for speedway
events, offset in part by increased operating costs associated with hosting
racing events.
 
     Interest -- The Company recorded net interest income for the year ended
December 31, 1996 of $2.0 million, compared to net interest expense of $.9
million in 1995. The interest income resulted from temporarily investing the
proceeds of the IPO while the reduced interest expense reflects the repayment of
existing debt with the IPO proceeds.
 
     Income Tax Expense -- The Company's effective tax rate for 1996 was 35.5%
compared to 33.5% in 1995. The increase primarily reflects the inclusion of
Competition Tire West in taxable income in 1996. Prior to 1996, Competition Tire
West was treated as a subchapter S corporation, whereby its shareholders were
taxed for their proportionate share of the company's taxable income.
 
     Net Income -- Net income for the year ended December 31, 1996 was $10.9
million, an increase of $4.1 million, or 60.6%, over 1995. The increase reflects
increases in speedway admissions and other speedway revenues, higher sales of
merchandise, tires and accessories and the benefit of interest earned on
invested IPO proceeds.
 
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 used the proceeds of
its IPO to repay debt and to fund construction of California Speedway.
 
     The Company obtained new financing during 1997, replacing the previous
lines of credit with 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, 1997, the
Company had available credit under this agreement of $54.6 million.
 
     For the year ended December 31, 1997, the Company generated $26.2 million
in cash flows from operating activities, an increase of $7.6 million from 1996,
primarily reflecting an increase in net income of $5.6 million and an increase
in depreciation and amortization expense of $4.0 million.
 
     During the year ended December 31, 1997, the Company used $92.4 million for
investing activities, consisting of $73.3 million in capital expenditures and
$19.1 million related primarily to the acquisitions of Homestead-Miami Speedway
and GPLB. Cash of $38.6 million was provided by financing activities in 1997,
reflecting increased borrowings to fund final construction costs of California
Speedway and the investments in Homestead-Miami Speedway and GPLB.
 
     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>   20
 
YEAR 2000
 
     The Company is in the process of evaluating the potential impact to its
computer systems and computerized equipment from the change from the year 1999
to the year 2000. This will involve a comprehensive assessment of the Company's
computer and equipment vendors to determine whether there are significant year
2000 issues regarding the Company's management information systems. Recent
additions to the Company's management information systems are year 2000
compliant. Although this evaluation has not yet been completed, based upon
preliminary information the Company does not expect the cost of potential
changes to be material.
 
NEW ACCOUNTING PRONOUNCEMENTS
 
     The Financial Accounting Standards Board has issued Statements of Financial
Accounting Standards No. 130, "Comprehensive Income", and No. 131, "Disclosures
about Segments of an Enterprise and Related Information." These statements are
effective for fiscal years beginning after December 15, 1997. The Company
expects the adoption of these accounting standards will not materially impact
its results of operations or financial position.
 
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, 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>   21
 
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
                   PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1997 AND 1996
 
<TABLE>
<CAPTION>
                                                                1997       1996
                                                              --------   --------
                                                                (IN THOUSANDS)
<S>                                                           <C>        <C>
ASSETS
Current Assets:
  Cash and cash equivalents.................................  $    249   $ 27,862
  Receivables...............................................     4,787      2,365
  Inventories...............................................     2,433      2,060
  Prepaid expenses..........................................     1,769      1,272
  Deferred taxes............................................       313
                                                              --------   --------
     Total Current Assets...................................     9,551     33,559
Property and Equipment, net.................................   224,666    140,402
Investments.................................................    15,366
Goodwill, net...............................................    40,112      6,918
Other Assets................................................     2,077      3,118
                                                              --------   --------
Total.......................................................  $291,772   $183,997
                                                              ========   ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Current portion of long-term debt.........................  $  1,017   $  1,738
  Accounts payable..........................................     3,868      8,223
  Accrued expenses..........................................     2,343      1,715
  Other payables (Note 3)...................................     9,956
  Deferred revenues, net....................................    22,529     14,125
                                                              --------   --------
     Total Current Liabilities..............................    39,713     25,801
Long Term Debt, less current portion........................    47,278      3,825
Deferred Revenues, net......................................       738
Deferred Taxes..............................................    13,349      8,969
Commitments and Contingencies (Note 11)
Stockholders' Equity:
  Common stock, par value $.01 share:
     Authorized 50,000,000 shares
     Issued and outstanding 14,208,898 shares in 1997 and
      13,241,798 shares in 1996.............................       142        132
  Additional paid-in-capital................................   159,371    130,534
  Retained earnings.........................................    31,181     14,736
                                                              --------   --------
     Total Stockholders' Equity.............................   190,694    145,402
                                                              --------   --------
Total.......................................................  $291,772   $183,997
                                                              ========   ========
</TABLE>
 
                See notes to consolidated financial statements.
 
                                       20
<PAGE>   22
 
                   PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF INCOME
                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
 
<TABLE>
<CAPTION>
                                                                  1997       1996       1995
                                                                  ----       ----       ----
                                                                 (IN THOUSANDS EXCEPT FOR PER
                                                                         SHARE DATA)
<S>                                                             <C>         <C>        <C>
REVENUES:
  Speedway admissions.......................................    $ 45,550    $20,248    $17,375
  Other speedway revenues...................................      33,926     13,041      7,654
  Merchandise, tires and accessories........................      30,340     21,886     16,976
                                                                --------    -------    -------
     Total Revenues.........................................     109,816     55,175     42,005
EXPENSES:
  Operating expenses........................................      40,399     18,067     14,060
  Cost of sales.............................................      16,954     12,834      9,672
  Depreciation and amortization.............................       7,212      3,167      2,563
  Selling, general and administrative.......................      16,379      6,185      4,631
                                                                --------    -------    -------
     Total Expenses.........................................      80,944     40,253     30,926
Operating Income............................................      28,872     14,922     11,079
Equity in Loss of Affiliates................................        (860)
Interest Income (Expense), net..............................      (1,558)     1,950       (895)
                                                                --------    -------    -------
Income Before Income Taxes..................................      26,454     16,872     10,184
Income Taxes................................................      10,009      5,992      3,410
                                                                --------    -------    -------
Net Income..................................................    $ 16,445    $10,880    $ 6,774
                                                                ========    =======    =======
Basic Net Income Per Share..................................    $   1.19
                                                                ========
Pro Forma Basic Net Income Per Share........................                $   .90    $   .84
                                                                            =======    =======
Diluted Net Income Per Share................................    $   1.19
                                                                ========
Pro Forma Diluted Net Income Per Share......................                $   .90    $   .84
                                                                            =======    =======
</TABLE>
 
                See notes to consolidated financial statements.
 
                                       21
<PAGE>   23
 
                   PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES
 
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
 
<TABLE>
<CAPTION>
                                                                 ADDITIONAL
                                                        COMMON    PAID-IN     RETAINED
                                                        STOCK     CAPITAL     EARNINGS    TOTAL
                                                        ------   ----------   --------    -----
                                                                    ($ IN THOUSANDS)
<S>                                                     <C>      <C>          <C>        <C>
Balance, January 1, 1995..............................   $ 78     $  2,485    $ 7,624    $ 10,187
  Net income..........................................                          6,774       6,774
  Dividends...........................................                         (6,125)     (6,125)
  Capital contribution (Note 9).......................              19,976                 19,976
  Stock issuance......................................     15       14,985                 15,000
                                                         ----     --------    -------    --------
Balance, December 31, 1995............................     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 Motor Speedway, Inc. acquisition
     (Note 3).........................................     10       28,837                 28,847
                                                         ----     --------    -------    --------
Balance, December 31, 1997............................   $142     $159,371    $31,181    $190,694
                                                         ====     ========    =======    ========
</TABLE>
 
                See notes to consolidated financial statements.
 
                                       22
<PAGE>   24
 
                   PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
 
<TABLE>
<CAPTION>
                                                                  1997        1996        1995
                                                                  ----      --------    --------
                                                                         (IN THOUSANDS)
<S>                                                             <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income................................................    $ 16,445    $ 10,880    $  6,774
  Adjustments to reconcile net income to net cash provided
     by operating activities:
     Depreciation and amortization..........................       7,212       3,167       2,563
     Equity in loss of affiliates...........................         860
     Changes in assets and liabilities which provided (used)
       cash:
       Receivables..........................................      (2,110)       (431)        (75)
       Inventories, prepaid expenses and other assets.......        (821)     (2,784)        323
       Accounts payable and accrued liabilities.............      (5,082)      2,668       4,461
       Deferred taxes.......................................       3,750        (146)
       Deferred revenue.....................................       5,952       5,259         275
                                                                --------    --------    --------
     Net cash provided by operating activities..............      26,206      18,613      14,321
CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions of property and equipment, net..................     (73,349)    (73,812)    (14,205)
  Acquisition of Competition Tire South, Inc. (Note 4)......                    (758)
  Competition Tire West, Inc. transaction (Note 4)..........                  (3,326)
  Acquisition of equity interests in affiliates and
     subsidiary.............................................     (19,050)       (622)       (520)
                                                                --------    --------    --------
     Net cash used in investing activities..................     (92,399)    (78,518)    (14,725)
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from sale of common stock........................                  82,740
  Capital contribution......................................                              19,976
  Proceeds from issuance of debt............................      45,400      14,016       4,672
  Principal payments on long-term debt......................      (5,000)    (12,540)    (16,837)
  Distribution to Parent....................................                              (3,600)
  Dividends.................................................                                (385)
  Repayment of related party debt...........................      (1,820)     (1,254)
                                                                --------    --------    --------
     Net cash provided by financing activities..............      38,580      82,962       3,826
                                                                --------    --------    --------
Net Increase (Decrease) in Cash and Cash Equivalents........     (27,613)     23,057       3,422
Cash and Cash Equivalents at Beginning of Year..............      27,862       4,805       1,383
                                                                --------    --------    --------
Cash and Cash Equivalents at End of Year....................    $    249    $ 27,862    $  4,805
                                                                ========    ========    ========
SUPPLEMENTAL CASH FLOW INFORMATION:
  Cash paid during the year for interest....................    $  1,834    $    133    $  1,041
                                                                ========    ========    ========
  Cash paid during the year for taxes.......................    $  8,089    $  9,279    $  1,168
                                                                ========    ========    ========
</TABLE>
 
                See notes to consolidated financial statements.
 
                                       23
<PAGE>   25
 
                   PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
 
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 Motor Speedway, Inc. ("NCMS"),
Motorsports International Corp., Competition Tire West, Inc. ("CTW") and
Competition Tire South, Inc. ("CTS"). As of December 31, 1997, the Company also
owned 40% of the ownership interests of Homestead-Miami Speedway, LLC ("HMS")
and 7.3% of Grand Prix Association of Long Beach, Inc. ("GPLB") (Note 3). These
investments have been recorded using the equity method of accounting. The
Company is an indirect majority-owned 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
revenues from operating Michigan Speedway, Nazareth Speedway, California
Speedway and North Carolina Speedway. 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 (FIFO) 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 $872,000 and $326,000 at December 31, 1997 and
1996, 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.
 
     Prior to the purchase of CTW by the Company in March 1996, CTW was a
subchapter S corporation under the Internal Revenue Code whereby the
shareholders are taxed on the proportionate share of the
 
                                       24
<PAGE>   26
                   PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
 
company's federal taxable income. Therefore, no provision or liability for
federal income taxes was included in the consolidated financial statements prior
to 1996 for CTW.
 
     Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent 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. 1997 ACQUISITIONS AND INVESTMENTS
 
     North Carolina Motor Speedway, Inc. Acquisition -- During 1997, the Company
acquired the outstanding shares of NCMS, which owns and operates North Carolina
Speedway in Rockingham, North Carolina. On May 19, 1997, the Company purchased
the shares of NCMS held by its former majority shareholder in exchange for
906,542 shares of the Company's stock. On December 2, 1997, the shareholders of
NCMS approved a merger with the Company, whereby shareholders of NCMS 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 NCMS shareholders dissented to the merger of the Company and NCMS.
These shareholders were paid $16.77 per share, the median fair value of NCMS
shares as determined by an independent investment banking firm retained by NCMS
to evaluate the Company's merger offer. These dissenters have requested
additional compensation and, if they are successful in court, the cost of the
NCMS acquisition may increase.
 
     The acquisition, which totaled $41.7 million, was accounted for using the
purchase method of accounting and resulted in goodwill of $33.7 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. The Company has recorded a liability of $10.0 million to
recognize amounts due to NCMS shareholders. NCMS 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 basic net income
per share.
 
     Investments -- In July 1997, the Company acquired a 40% ownership interest
in HMS, which operates Miami-Dade Homestead Motorsports Complex in Homestead,
Florida, for $11.8 million. 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.
This investment is accounted for using the equity method of accounting. In March
1998, the Company acquired an additional 5% of the ownership interest of HMS for
$2.85 million, payable on December 31, 2001 (unaudited).
 
     During 1997, the Company acquired approximately 7.3% of the outstanding
common stock of GPLB for approximately $4.2 million, including acquisition
costs. In March 1998, the Company entered into an agreement to sell this stock
for approximately $5.3 million (unaudited).
 
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.

                                       25
<PAGE>   27
                   PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
 
     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.
 
     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 of accounting 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>
                                                             1997       1996
                                                             ----       ----
                                                             (IN THOUSANDS)
<S>                                                        <C>        <C>
Land and improvements....................................  $100,653   $ 85,469
Buildings and improvements...............................   124,622     63,685
Equipment................................................    21,360      6,929
                                                           --------   --------
                                                            246,635    156,083
Less accumulated depreciation............................    21,969     15,681
                                                           --------   --------
                                                           $224,666   $140,402
                                                           ========   ========
</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.
 
                                       26
<PAGE>   28
                   PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
 
6. LONG-TERM DEBT
 
     Long-term debt consists of the following as of December 31:
 
<TABLE>
<CAPTION>
                                                               1997      1996
                                                               ----      ----
                                                               (IN THOUSANDS)
<S>                                                           <C>       <C>
$100 million unsecured revolving line of credit, bearing
  interest at LIBOR-based and prime rates ranging from 6.5%
  to 8.5% due in 2002.......................................  $45,400
Notes payable through 2006, bearing interest at 8.0%........    2,895   $5,563
                                                              -------   ------
                                                               48,295    5,563
Less current portion........................................    1,017    1,738
                                                              -------   ------
                                                              $47,278   $3,825
                                                              =======   ======
</TABLE>
 
     The following table presents the expected repayment of the long-term debt
(in thousands):
 
<TABLE>
<S>                                                             <C>
1998........................................................    $ 1,017
1999........................................................        512
2000........................................................        520
2001........................................................        117
2002........................................................     45,526
2003 and thereafter.........................................        603
                                                                -------
                                                                $48,295
                                                                =======
</TABLE>
 
     Long-term debt at December 31, 1997 and 1996 includes $1.3 million and $3.1
million, respectively, which are due to related parties as a result of the
purchase of CTW and CTS in March 1996 and $1.2 million and $1.7 million,
respectively, which are secured by certain parcels of land included in property
and equipment.
 
     At December 31, 1997 the carrying value of the debt approximates 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 $185,000 in 1997 and $100,000 in each of 1996 and 1995 were
made to the plan.
 
     The Company also sponsors a defined contribution plan under Section 401(k)
of the Internal Revenue Code. The expense related to this plan was $150,000,
$80,000 and $66,000 in 1997, 1996 and 1995, respectively.
 
8. TAXES
 
     The provision for income taxes consists of the following for the years
ended December 31:
 
<TABLE>
<CAPTION>
                                                        1997      1996     1995
                                                        ----      ----     ----
                                                            (IN THOUSANDS)
<S>                                                    <C>       <C>      <C>
Current..............................................  $ 6,259   $5,753   $3,466
Deferred.............................................    3,750      239      (56)
                                                       -------   ------   ------
Total................................................  $10,009   $5,992   $3,410
                                                       =======   ======   ======
</TABLE>
 
                                       27
<PAGE>   29
                   PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
 
     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>
                                                      1997      1996      1995
                                                      ----      ----      ----
                                                           (IN THOUSANDS)
<S>                                                  <C>       <C>       <C>
Income before income taxes.........................  $26,454   $16,872   $10,184
                                                     -------   -------   -------
Taxes computed at statutory rate...................  $ 9,259   $ 5,905   $ 3,463
State and local taxes, net of federal benefit......      616        37       102
Amortization of goodwill...........................      190        60
Other..............................................      (56)      (10)     (155)
                                                     -------   -------   -------
Total income tax expense...........................  $10,009   $ 5,992   $ 3,410
                                                     =======   =======   =======
Effective tax rate.................................     37.8%     35.5%     33.5%
                                                     =======   =======   =======
</TABLE>
 
     Temporary differences which give rise to deferred tax (assets) and
liabilities are as follows as of December 31:
 
<TABLE>
<CAPTION>
                                                               1997      1996
                                                               ----      ----
                                                               (IN THOUSANDS)
<S>                                                           <C>       <C>
Property, non-current.......................................  $13,349   $8,969
Other, current..............................................     (313)       3
                                                              -------   ------
Total.......................................................  $13,036   $8,972
                                                              =======   ======
</TABLE>
 
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>
                                                          1997      1996      1995
                                                          ----      ----      ----
                                                               (IN THOUSANDS)
<S>                                                      <C>       <C>       <C>
Balances included in assets and liabilities:
  Accounts receivable - affiliates...................    $  388    $  339    $   158
                                                         ======    ======    =======
  Accounts payable - affiliates......................    $1,038    $1,702    $ 1,658
                                                         ======    ======    =======
  Accrued expenses payable to affiliates.............    $  424    $  405
                                                         ======    ======
Other transactions:
  Dividends..........................................                        $ 6,125
  Advances to affiliates.............................                         (2,525)
                                                                             -------
  Net distribution to Parent.........................                        $ 3,600
                                                                             =======
  Sales to affiliates................................    $3,149    $2,005    $ 1,786
                                                         ======    ======    =======
  Purchases from affiliates..........................    $1,078    $  587    $   223
                                                         ======    ======    =======
</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, 1997, 1996 and 1995, the Company paid the Parent $511,000,
$478,000 and $1,100,000, 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 and $3.4 million for its portion of taxes relating to the period in
1996 prior to the IPO and for 1995, respectively.
 
                                       28
<PAGE>   30
                   PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
 
     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 and $89,000 during the years ended December 31, 1997
and 1996, respectively. 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 $9.9 million, $3.8 million and $2.8 million for the years ended
December 31, 1997, 1996 and 1995, respectively.
 
     During 1995, the Company received a capital contribution of $19,976,000
from PSH Corp., an affiliate.
 
10. 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 year ended December 31, 1997
reflects the weighted average number of shares outstanding of 13,810,570. The
pro forma basic net income per share for the years ended December 31, 1996 and
1995 reflects the weighted average number of post-split shares outstanding of
12,128,920 and 8,077,245, 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 year ended December 31, 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 options of 19,534 and 12,621, respectively. There were no
dilutive securities outstanding prior to 1996. The dilutive effect was
calculated using the treasury stock method.
 
     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. A maximum of 400,000 shares of common
stock may be
 
                                       29
<PAGE>   31
                   PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
 
issued under this plan. The following table summarizes stock option activity
during the years ended December 31, 1997 and 1996. There were no stock options
issued prior to 1996.
 
<TABLE>
<CAPTION>
                                                                     YEAR ENDED DECEMBER 31,
                                                          ----------------------------------------------
                                                                  1997                     1996
                                                          ---------------------    ---------------------
                                                                       WEIGHTED                 WEIGHTED
                                                                       AVERAGE                  AVERAGE
                                                          NUMBER OF    EXERCISE    NUMBER OF    EXERCISE
                                                           OPTIONS      PRICE       OPTIONS      PRICE
                                                          ---------    --------    ---------    --------
<S>                                                       <C>          <C>         <C>          <C>
Options, beginning of year............................      75,000      $24.00
Granted...............................................     115,000       27.75      75,000       $24.00
Forfeited.............................................     (35,000)      27.75
                                                           -------      ------      ------       ------
Options, end of year..................................     155,000      $26.06      75,000       $24.00
                                                           =======      ======      ======       ======
Options exercisable at end of year....................      34,100      $25.26       7,500       $24.00
                                                           =======      ======      ======       ======
Weighted average fair value of options granted during
  the year............................................                  $10.91                   $ 9.90
                                                                        ======                   ======
</TABLE>
 
     The 155,000 stock options outstanding as of December 31, 1997 had exercise
prices ranging from $24.00 to $27.75 per share and a weighted average remaining
contractual life of 7.7 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 and $10.8 million and basic net income per share of $1.17 and $.89
for the years ended December 31, 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 5.53% and 6.15% in 1997 and 1996, respectively, no dividend
payout and a volatility of 35%.
 
11. 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.
 
12. 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
                                -----------------   -----------------   -----------------   -----------------
                                 1997      1996      1997      1996      1997      1996      1997      1996
                                 ----      ----      ----      ----      ----      ----      ----      ----
<S>                             <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
Revenues......................  $ 5,375   $ 3,642   $46,296   $24,614   $43,974   $23,962   $14,171   $ 2,957
Operating income (loss).......   (2,606)   (1,521)   17,965     9,829    15,295     9,321    (1,782)   (2,707)
Net income (loss).............   (1,511)     (990)   10,929     6,717     8,845     6,499    (1,818)   (1,346)
Basic net income (loss) per
  share.......................  $  (.11)  $  (.10)  $   .80   $   .52   $   .63   $   .50   $  (.13)  $  (.10)
</TABLE>
 
     Net income per share for the first quarter of 1996 is pro forma to reflect
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 per share (see Notes 4 and 10).
 
                                       30
<PAGE>   32
 
                   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 independents 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, 1997 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.
 
ROGER S. PENSKE                   GREGORY W. PENSKE                    
Roger S. Penske                   Gregory W. Penske                    
Chairman of the Board             President and Chief Executive Officer
 
 
January 30, 1998

 
                                       31
<PAGE>   33
 
                          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 as of December 31, 1997 and 1996, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for each of the three years in the period ended December 31, 1997.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the 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,
1997 and 1996, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1997, in conformity with
generally accepted accounting principles.
 
DELOITTE & TOUCHE LLP     DELOITTE & TOUCHE LOGO
 
Detroit, Michigan
January 30, 1998
 
                                       32
<PAGE>   34
 
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 1998 Annual
Meeting of Stockholders, to be filed on or before April 30, 1998, 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 1998 Annual Meeting of Stockholders to be
filed on or before April 30, 1998, 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 1998 Annual Meeting of Stockholders to be
filed on or before April 30, 1998, 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 1998 Annual Meeting of Stockholders to be
filed on or before April 30, 1998, 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, 1997 and 1996,
        and for the years ended December 31, 1997, 1996, and 1995, 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 1997, 1996, and 1995.
 
        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.
 
(b) Reports on Form 8-K
 
    During the fourth quarter the Company filed one current report on Form 8-K
    on December 16, 1997, reporting the completion of the Merger of North
    Carolina Motor Speedway, Inc. with and into Penske
        
                                       33
<PAGE>   35
 
     Acquisition, Inc., a wholly owned subsidiary of Penske Motorsports, Inc.
     The Form 8-K included the following financial statements:
 
     (1) Balance Sheets of North Carolina Motor Speedway, Inc., as of August 31,
         1997 and 1996 and the related statements of income and retained
         earnings and of cash flow for the years then ended and for the seven
         months ended August 31, 1995 and the year ended January 31, 1995.
 
     (2) Unaudited pro forma financial data of Penske Motorsports, Inc. and
         subsidiaries as of June 30, 1997 and for the six months ended June 30,
         1997 and the year ended December 31, 1996.
 
                                       34
<PAGE>   36
 
(c) Exhibits.
 
                                    EXHIBITS
 
<TABLE>
<CAPTION>
EXHIBIT
 NUMBER
-------
DOCUMENT
------------------------------------------------------------------------
<S>         <C>
(B)3.1      Amended and Restated Certificate of Incorporation of Penske
            Motorsports, Inc.
(A)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 Nancy
            DeWitt Daugherty
</TABLE>
 
                                       35
<PAGE>   37
 
<TABLE>
<CAPTION>
EXHIBIT                         
 NUMBER                         DOCUMENT
-------                         --------
<S>         <C>
(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*   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.
(A)10.24    Stock Purchase Agreement, dated March 26, 1998, by and
            between Penske Motorsports, Inc. and Dover Downs
            Entertainment, Inc.
(A)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.
 
 *   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 stockholder and the payment to the Company of
the reasonable expenses incurred by the Company in furnishing such copy.
 
     (e) Excluded Financial Statements. None.
 
                                       36
<PAGE>   38
 
                                   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, 1998.
 
                                          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, 1998
---------------------------------------------------
                   H. LEE COMBS
 
              /s/ WALTER P. CZARNECKI                    Vice Chairman of the Board         March 25, 1998
---------------------------------------------------
                WALTER P. CZARNECKI
 
               /s/ GARY W. DICKINSON                     Director                           March 25, 1998
---------------------------------------------------
                 GARY W. DICKINSON
 
               /s/ WILLIAM C. FRANCE                     Director                           March 25, 1998
---------------------------------------------------
                 WILLIAM C. FRANCE
 
               /s/ GREGORY W. PENSKE                     President, Chief Executive         March 25, 1998
---------------------------------------------------        Officer, (Principal Executive
                 GREGORY W. PENSKE                         Officer)
 
                /s/ ROGER S. PENSKE                      Chairman of the Board              March 25, 1998
---------------------------------------------------
                  ROGER S. PENSKE
 
               /s/ RICHARD J. PETERS                     Director                           March 25, 1998
---------------------------------------------------
                 RICHARD J. PETERS
 
              /s/ RICHARD E. STODDARD                    Director                           March 25, 1998
---------------------------------------------------
                RICHARD E. STODDARD
 
               /s/ JAMES E. WILLIAMS                     Director                           March 25, 1998
---------------------------------------------------
                 JAMES E. WILLIAMS
 
               /s/ JO DEWITT WILSON                      Director                           March 25, 1998
---------------------------------------------------
                 JO DEWITT WILSON
 
                /s/ JAMES H. HARRIS                      Principal Financial and            March 25, 1998
---------------------------------------------------        Accounting Officer
                  JAMES H. HARRIS
</TABLE>
 
                                       37
<PAGE>   39
 
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
EXHIBIT
 NUMBER
-------
DOCUMENT
------------------------------------------------------------------------
<S>         <C>
(B)3.1      Amended and Restated Certificate of Incorporation of Penske
            Motorsports, Inc.
(A)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 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>
<PAGE>   40
 
<TABLE>
<CAPTION>
EXHIBIT
 NUMBER
-------
DOCUMENT
------------------------------------------------------------------------
<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
(B)10.21*   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.
(A)10.24    Stock Purchase Agreement, dated March 26, 1998, by and
            between Penske Motorsports, Inc. and Dover Downs
            Entertainment, Inc.
(A)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.
 
 *   Denotes a compensatory plan, contract or arrangement.