<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549



                                    FORM 10-Q

(Mark One)

(X)  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 for the quarterly period ended June 30, 2003.

( ) Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934 for the transition period ______ to ______.

                           Commission File No. 1-13925

                      CHAMPIONSHIP AUTO RACING TEAMS, INC.
                      ------------------------------------
             (Exact name of registrant as specified in its charter)

              Delaware                             38-3389456
              --------                             ----------
   (State or other jurisdiction of      (IRS Employer Identification No.)
    Incorporation or organization)

            5350 Lakeview Parkway Drive South, Indianapolis, in 46268
            ---------------------------------------------------------
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (317) 715-4100
              (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X]  No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 126-2 of the Securities Exchange Act). Yes [ ] No [X]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

         COMMON STOCK $0.01 PAR VALUE            14,718,134 SHARES
         ----------------------------            -----------------
           (class of common stock)        (outstanding at July 1, 2003)



                         This report contains 35 pages.






                                       1
<PAGE>


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>


PART I - FINANCIAL INFORMATION                                                         PAGE

<S>          <C>                                                                       <C>
     ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

              Consolidated Balance Sheets as of June 30, 2003 and
              December 31, 2002                                                         3

              Consolidated Statements of Operations for the Three and Six Months
              Ended June 30, 2003 and 2002                                              4

              Consolidated Statement of Stockholders' Equity for the Six Months
              Ended June 30, 2003                                                       5

              Consolidated Statements of Cash Flows for the Six Months Ended
              June 30, 2003 and 2002                                                    6

              Notes to Consolidated Financial Statements                                7

     ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS                            16


     ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES                                 32
              ABOUT MARKET RISKS

     ITEM 4.  CONTROLS AND PROCEDURES                                                  33


PART II - OTHER INFORMATION

     ITEM 1.  LEGAL PROCEEDINGS                                                        34

     ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                                         34

SIGNATURES                                                                             35

EXHIBITS

</TABLE>






                                       2
<PAGE>


                      CHAMPIONSHIP AUTO RACING TEAMS, INC.
                           CONSOLIDATED BALANCE SHEETS
                    AS OF JUNE 30, 2003 AND DECEMBER 31, 2002
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                      JUNE 30, 2003      DECEMBER 31, 2002
                                                                                      -------------      -----------------
                                                                                       (UNAUDITED)

<S>                                                                                       <C>               <C>
ASSETS
CURRENT ASSETS:
   Cash and cash equivalents                                                               $   7,553         $    6,773
   Short-term investments                                                                     44,501             79,489
   Accounts receivable (net of allowance for doubtful accounts
      of $1,270 and $1,282 at June 30, 2003 and December 31, 2002, respectively)              10,078              4,657
   Prepaid expenses and other current assets                                                   8,241              1,474
   Income tax refundable                                                                         681             10,087
   Deferred income taxes                                                                          --              1,184
   Current portion notes receivable                                                              105                 --
                                                                                          ----------         ----------
      Total current assets                                                                    71,159            103,664

NOTES RECEIVABLE                                                                                 909                 --
PROPERTY AND EQUIPMENT- Net                                                                   14,849             10,403
DEFERRED INCOME TAXES                                                                             --                 --
GOODWILL                                                                                         550                 --
OTHER ASSETS                                                                                     505                384
                                                                                          ----------         ----------
TOTAL ASSETS                                                                               $  87,972         $  114,451
                                                                                          ==========         ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
   Long term debt-current portion                                                          $   1,800         $       --
   Accounts payable                                                                            2,536              1,703
   Accrued liabilities:
      Race expenses and point awards                                                           1,574                 --
      Royalties                                                                                   60                173
      Payroll                                                                                  2,006              2,455
      Taxes                                                                                      454                743
      Litigation                                                                               2,000                 --
      Other                                                                                    6,617              4,879
   Deferred revenue                                                                           11,426              1,423
                                                                                          ----------         ----------
      Total current liabilities                                                               28,473             11,376

DEFERRED INCOME TAXES                                                                             --                 57
STOCKHOLDERS' EQUITY:
   Preferred stock, $.01 par value; 5,000,000 shares
      authorized, none issued and outstanding at June 30, 2003
      and December 31, 2002                                                                       --                 --
   Common stock $.01 par value, 50,000,000 shares authorized, 14,718,134
      and 14,718,134 shares issued and outstanding at June 30, 2003
      and December 31, 2002, respectively                                                        147                147
   Additional paid-in capital                                                                 87,765             87,765
   Accumulated earnings (deficit)                                                            (28,991)            14,511
   Accumulated other comprehensive income                                                        578                595
                                                                                          ----------         ----------
         Total stockholders' equity                                                           59,499            103,018
                                                                                          ----------         ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                 $  87,972         $  114,451
                                                                                          ==========         ==========

</TABLE>

See accompanying notes to consolidated financial statements.




                                       3
<PAGE>


                      CHAMPIONSHIP AUTO RACING TEAMS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
            FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2003 AND 2002
                                   (UNAUDITED)
                      (IN THOUSANDS, EXCEPT LOSS PER SHARE)

<TABLE>
<CAPTION>

                                                                        THREE MONTHS             SIX MONTHS
                                                                        ENDED JUNE 30,         ENDED JUNE 30,
                                                                      2003         2002        2003        2002
                                                                   -----------  -----------  ----------  ----------
<S>                                                                  <C>          <C>         <C>          <C>
REVENUES:
 Sanction fees                                                       $  5,300     $ 11,822    $  8,300     $14,527
 Sponsorship revenue                                                    2,370        2,825       3,968       5,105
 Television revenue                                                       713        2,058         903       2,263
 Race promotion revenue                                                 5,016        1,417       5,020       1,417
 Engine lease revenue                                                     475           --         950          --
 Other revenue                                                            534        1,170       1,431       1,584
                                                                   -----------  -----------  ----------  ----------
      Total revenues                                                   14,408       19,292      20,572      24,896

EXPENSES:
 Race distributions                                                    17,668        6,328      28,662       7,351
 Race expenses                                                          2,374        2,471       3,941       4,322
 Race promotion expense                                                10,577        3,483      10,910       3,483
 Television expense                                                     5,910        4,640       7,417       4,712
 Administrative and indirect expenses                                   4,871        7,470      10,219      11,795
 Litigation expense                                                     1,378           --       1,378          --
 Relocation expense                                                        --        1,305          --       1,305
 Depreciation and amortization                                          1,024          354       1,844         688
                                                                   -----------  -----------  ----------  ----------
      Total expenses                                                   43,802       26,051      64,371      33,656

OPERATING LOSS                                                        (29,394)      (6,759)    (43,799)     (8,760)
 Realized gain on sale of investments                                      --           --          85          --
 Interest income                                                          383        1,115         872       2,201
                                                                   -----------  -----------  ----------  ----------
LOSS BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF

       ACCOUNTING CHANGE                                              (29,011)      (5,644)    (42,842)     (6,559)
 Income tax expense (benefit)                                           5,502       (1,976)        660      (2,295)
                                                                   -----------  -----------------------------------
LOSS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE                   $(34,513)    $ (3,668)   $(43,502)    $(4,264)
CUMULATIVE EFFECT OF ACCOUNTING CHANGE (NET OF TAX)                  $     --     $     --    $     --     $  (956)
                                                                   -----------  -----------  ----------  ----------
NET LOSS                                                             $ (34,513)   $ (3,668)   $(43,502)    $(5,220)
                                                                   ===========  ===========--==========  ==========
LOSS PER SHARE BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE:
             BASIC                                                   $  (2.34)    $  (0.25)   $  (2.96)    $ (0.29)
                                                                   ===========  ===========  ==========  ==========
             DILUTED                                                 $  (2.34)    $  (0.25)   $  (2.96)    $ (0.29)
                                                                   ===========  ===========  ==========  ==========
NET LOSS PER SHARE:
              BASIC                                                  $  (2.34)    $  (0.25)   $  (2.96)    $ (0.35)
                                                                   ===========  ===========  ==========  ==========
              DILUTED                                                $  (2.34)    $  (0.25)   $  (2.96)    $  (0.35)
                                                                   ===========  ===========  ==========  ==========
WEIGHTED AVERAGE SHARES OUSTANDING:
              BASIC                                                    14,718       14,718      14,718      14,718
                                                                   ===========  ===========  ==========  ==========
              DILUTED                                                  14,718       14,718      14,718      14,718
                                                                   ===========  ===========  ==========  ==========

</TABLE>


See accompanying notes to consolidated financial statements.



                                       4
<PAGE>


                      CHAMPIONSHIP AUTO RACING TEAMS, INC.
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                     FOR THE SIX MONTHS ENDED JUNE 30, 2003
                                   (UNAUDITED)
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                        COMMON STOCK      ADDITIONAL                  ACCUMULATED OTHER
                                     ------------------    PAID-IN     ACCUMULATED      COMPREHENSIVE    STOCKHOLDERS' COMPREHENSIVE
                                     SHARES      AMOUNT    CAPITAL  EARNINGS (DEFICIT)   INCOME (LOSS)      EQUITY          LOSS
                                     ------      ------    -------  ------------------   -------------      ------          ----

<S>                                  <C>          <C>      <C>              <C>                 <C>       <C>
BALANCES, JANUARY 1,  2003            14,718       $147     $87,765          $14,511             $595      $103,018
   Net loss                               --         --          --          (43,502)              --       (43,502)      $(43,502)
   Unrealized loss on investments         --         --          --               --             (164)         (164)          (164)
   Increase in valuation allowance,
      deferred taxes                      --         --          --               --              202           202            202
   Reclassification adjustment            --         --          --               --              (55)          (55)           (55)
                                                                                                                          --------
   Comprehensive loss                     --         --          --               --               --            --       $(43,519)
                                    ---------    -------  ----------        --------         --------      ---------      ========
BALANCES, JUNE 30, 2003                14,718      $147      $87,765        $(28,991)            $578      $ 59,499
                                    =========    =======  ==========        ========         ========      =========

</TABLE>


See accompanying notes to consolidated financial statements.



















                                       5
<PAGE>



                      CHAMPIONSHIP AUTO RACING TEAMS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002
                                   (UNAUDITED)
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                               2003                2002
                                                                            ------------        ------------
<S>                                                                            <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                                                  $(43,502)            $(5,220)
     Adjustments to reconcile net loss to
            net cash provided by (used in) operating activities:
     Cumulative effect of accounting change (net of tax)                             --                 956
     Depreciation and amortization                                                1,856                 688
     Net loss from sale of property and equipment                                    77                  20
     Deferred income taxes                                                        1,127              (2,508)
     Changes in assets and liabilities that provided (used) cash
            (net of effects from purchase of Raceworks, LLC):
           Accounts receivable                                                   (5,094)             (5,267)
           Inventory                                                                 --                 (25)
           Prepaid expenses and other assets                                     (6,757)              1,182
           Income tax refundable                                                  9,406                  --
           Accounts payable                                                        (893)                726
           Accrued liabilities                                                    4,461               4,583
           Deferred revenue                                                       9,824              10,318
                                                                            ------------        ------------
                Net cash provided by (used in) operating activities             (29,495)              5,453

CASH FLOWS FROM INVESTING ACTIVITIES:
     Payments for purchase of Raceworks, LLC, net of cash acquired                 (462)                 --
     Purchase of investments                                                     (6,840)            (51,795)
     Proceeds from sale of investments                                           41,811              32,013
     Notes receivable                                                            (1,014)               (255)
     Acquisition of property and equipment                                       (2,308)             (1,525)
     Proceeds from sale of property and equipment                                    61                  21
                                                                            ------------        ------------
                Net cash provided by (used in) investing activities              31,248             (21,541)

CASH FLOWS FROM FINANCING ACTIVITIES:
      Payments on long-term debt                                                   (973)                 --
                                                                            ------------        ------------
                Net cash used in financing activities                              (973)                 --
                                                                            ------------        ------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                780             (16,088)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                  6,773              27,765
                                                                            ------------        ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                     $  7,553             $11,677
                                                                            ============        ============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
     Cash paid during the period for:
          Income taxes                                                         $     --             $     1
                                                                            ============        ============
          Interest                                                             $     --             $    --
                                                                            ============        ============
     Cash received during the period from income tax refund                    $ 10,261             $    --
                                                                            ============        ============

</TABLE>

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES--During
2003, the Company received property, equipment, and/or services of approximately
$500 in exchange for sponsorship privileges to the providers.

See accompanying notes to consolidated financial statements.









                                       6
<PAGE>


                      CHAMPIONSHIP AUTO RACING TEAMS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     BASIS OF PRESENTATION. The accompanying unaudited consolidated financial
statements have been prepared by management and, in the opinion of management,
contain all adjustments, consisting of normal recurring adjustments, necessary
to present fairly the financial position of Championship Auto Racing Teams, Inc.
and subsidiaries (the "Company") as of June 30, 2003 and the results of its
operations and its cash flows for the three and six months ended June 30, 2003
and 2002.

     In 2003, we will use available funds for certain expenditures that are
planned for the year 2003, and we believe that existing cash will be sufficient
to fund capital expenditures and other cash needs for 2003. The cash reserves
remaining at the end of 2003, if any, will not be sufficient to fund anticipated
operating losses and contractual commitments for 2004. Due to the continuing
downward trend in several of our critical revenue streams, management expects
that we will need to raise additional capital in order to complete the 2004 race
season and to continue to operate in 2004. In addition, the Company does not
expect to contribute funds in 2004 to assist race teams beyond the series
standard entrant support program, as has been done in 2003. Without such
assistance, there can be no assurance that race teams will continue to
participate in the series in 2004.

     We have retained the investment banking firm of Bear Stearns & Co. Inc. to
assist us in exploring financing and other strategic alternatives that may be
available to us. There cannot be any assurance that this process will result in
any transaction or as to the terms and conditions of any transaction that may be
proposed to or pursued by us.

     The unaudited consolidated financial statements should be read in
conjunction with the audited consolidated financial statements included in the
Company's Form 10-K for the year ended December 31, 2002, filed with the
Securities and Exchange Commission.

     Because of the seasonal concentration of racing events, the results of
operations for the three and six months ended June 30, 2003 and 2002 are not
indicative of the results to be expected for the year.

     PRINCIPLES OF CONSOLIDATION. The consolidated financial statements of the
Company include the financial statements of Championship Auto Racing Teams, Inc.
and its wholly-owned subsidiaries - CART, Inc., Pro-Motion Agency, Ltd. and CART
Licensed Products, Inc. As of March 7, 2003, the consolidated financial
statements also include the financial statements of Raceworks, LLC, a wholly
owned subsidiary (See Note 8). All significant intercompany balances have been
eliminated in consolidation.

     BASIC AND DILUTED LOSS PER SHARE. Diluted per share amounts assume the
exercise of shares issuable under certain stock option plans when dilutive. Due
to losses from operations, approximately 0 and 2,758 shares for the three month
periods ended June 30, 2003 and 2002, respectively, and 0 and 3,237 for the six
month periods ended June 30, 2003 and 2002, respectively, were excluded from the
dilutive loss per share calculation due to their anti-dilutive effect.

     ACCOUNTING PRONOUNCEMENTS. In April 2003, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting Standards
(SFAS) No. 149, "Amendment of Statement 133 on Derivative Instruments and
Hedging Activities." SFAS 149 amends SFAS 133 to provide clarification on the
financial accounting and reporting of derivative instruments and hedging
activities and requires that contracts with similar characteristics be accounted
for on a comparable basis. The provisions of SFAS 149 are effective for
contracts entered into or modified after June 30, 2003, and for hedging
relationships designated after June 30, 2003. The Company adopted this statement
on July 1, 2003 and there was no impact on the financial statements upon
adoption.




                                       7
<PAGE>


     In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity." SFAS
150 establishes standards on the classification and measurement of certain
financial instruments with characteristics of both liabilities and equity. The
provisions of SFAS 150 are effective for financial instruments entered into or
modified after May 31, 2003 and to all other instruments that exist as of the
beginning of the first interim financial reporting period beginning after June
15, 2003. The Company adopted this statement on July 1, 2003 and there was no
impact on the financial statements upon adoption.

     In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46")
"Consolidation of Variable Interest Entity." The term "variable interest" is
defined in FIN 46 as "contractual, ownership or other pecuniary interests in an
entity that change with changes in the entity's net asset value." Variable
interests are investments or other interests that will absorb a portion of an
entity's expected losses if they occur or receive portions of the entity's
expected residual returns if they occur. The Company does not expect the
recognition provisions of FIN 46 to have a material impact on the Company's
financial position or results of operations.

     On July 30, 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." The statement addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)." SFAS 146 is
effective for exit or disposal activities that are initiated after December 31,
2002. The Company adopted this statement on January 1, 2003, and there was no
impact on the financial statements upon adoption.

     In November 2002, the FASB issued FASB Interpretation No. 45 ("FIN 45"),
"Guarantor's Accounting and Disclosure Requirements for Guarantee Including
Indirect Guarantees of Indebtedness of Others." FIN 45 requires that upon
issuance of certain guarantees, a guarantor must recognize a liability for the
fair value of the obligation assumed under the guarantee. FIN 45 also requires
additional disclosures by a guarantor in its interim and annual financial
statements regarding certain guarantees and product warranties. The recognition
provisions of FIN 45 will be effective for guarantees issued or modified after
December 31, 2002. The Company adopted this interpretation on January 1, 2003,
and there was no impact on the financial statements upon adoption.

     On December 31, 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure." This statement amends SFAS
No. 123, "Accounting for Stock-Based Compensation," to provide alternative
methods of transition for a voluntary change to the fair value based methods of
accounting for stock-based employee compensation. In addition, this Statement
amends the disclosure requirements of SFAS 123 to require prominent disclosures
in both annual and interim financial statements about the method of accounting
for stock-based employee compensation and the effect of the method used on
reported results.

     As permitted by SFAS No. 123, the Company has chosen to follow Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
("APB No. 25") in accounting for its stock options granted to employees and
directors. Under APB No. 25, the Company does not recognize compensation expense
on the issuance of its stock options because the option terms are fixed, and the
exercise price equals the market price of the underlying stock on the grant
date.

     However, as required by SFAS No. 123, companies who have chosen to follow
APB No. 25 are required to calculate pro forma information as if it had
calculated compensation based on the fair value at the grant date for its stock
options granted to employees and directors. In the second quarters of 2003 and
2002, there was no compensation expense under APB No. 25.





                                       8
<PAGE>






<TABLE>
<CAPTION>
                                                                                           (In Thousands)
                                                               Three Months Ended June 30,      Six Months Ended June 30,
                                                                  2003           2002             2003             2002
                                                              ------------    -------------    ------------    -----------
<S>                                                            <C>              <C>              <C>             <C>
NET LOSS
As reported                                                    $ (34,513)       $ (3,668)        $(43,502)       $ (5,220)
Total stock-based employee compensation expense determined
    under the fair value based method, net of tax                   (578)           (444)          (1,140)           (578)
                                                              ------------    -------------    ------------    -----------
Pro forma                                                        (35,091)         (4,112)         (44,642)         (5,798)

DILUTED LOSS PER SHARE
As reported                                                        (2.34)          (0.25)           (2.96)          (0.35)
Total stock-based employee compensation expense determined
    under the fair value based method, net of tax                  (0.04)          (0.03)           (0.08)          (0.04)
                                                              ------------    -------------    ------------    -----------
Pro forma                                                      $   (2.38)       $  (0.28)        $  (3.04)       $  (0.39)

</TABLE>


     RECLASSIFICATIONS. Certain reclassifications have been made to the 2002
unaudited consolidated financial statements in order for them to conform to the
2003 presentation.

     MANAGEMENT ESTIMATES. The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period presented. The actual outcome
of the estimates could differ from the estimates made in the preparation of the
consolidated financial statements.

2. GOODWILL AND INTANGIBLE ASSETS

     In June 2001, the FASB issued SFAS No. 142, "Goodwill and Intangible
Assets." The statement requires companies to stop amortizing goodwill and
certain intangible assets with indefinite useful lives. Instead, goodwill and
intangible assets with indefinite useful lives are tested for impairment upon
adoption of the statement and annually thereafter. As a result of adoption, the
Company no longer records amortization expense related to goodwill or intangible
assets with indefinite useful lives.

     The Company adopted SFAS No. 142, effective January 1, 2002, which resulted
in a one-time, non-cash charge of $1.5 million, or $956,000 net of tax benefit
of $514,000, to write-off the value of its goodwill. The goodwill was recorded
under the purchase method of accounting for the purchases of Pro-Motion Agency,
Inc. and CART Licensed Products, LP, on April 10, 1998 and January 1, 1999,
respectively. Such charge is non-recurring and reflected as a cumulative effect
of an accounting change in the accompanying consolidated statements of
operations. Prior to the adoption of SFAS No. 142, the Company had accounted for
its goodwill and intangible assets in accordance with the accounting standards
existing at the time.

     Under SFAS No. 142, goodwill impairment is deemed to exist if the carrying
value of a reporting unit exceeds its estimated fair value. The Company's
reporting units are generally consistent with the operating segments identified
in Note 6 - Segment Reporting. In calculating the impairment charge, the fair
values of the reporting units were estimated using a discounted cash flow
methodology.

     In the first quarter of 2003, the Company recorded $562,000 of goodwill and
other intangible assets in conjunction with the acquisition of Raceworks, LLC
(See Note 8). The Company is in the process of obtaining third-party valuations
of certain separately identifiable intangible assets. The acquired intangible
asset values, including goodwill recorded on the balance sheet, may be adjusted
based




                                       9
<PAGE>


on the results of the third-party valuation. Any portion determined to be
goodwill and intangible assets that have indefinite useful lives will not be
amortized, but rather will be tested at least annually for impairment. Any
portion allocated to intangible assets that have finite useful lives will be
amortized over their useful lives.

3. SHORT-TERM INVESTMENTS

     The following is a summary of the estimated fair value of
available-for-sale short-term investments by balance sheet classification:

<TABLE>
<CAPTION>
                                                                   GROSS UNREALIZED
                                                                   ----------------
(IN THOUSANDS)                       COST        FAIR VALUE        GAIN           LOSS
                                  -----------    -----------    ----------     ----------
<S>                                <C>            <C>              <C>            <C>
JUNE 30, 2003
-------------
U.S. agencies securities            $ 43,923       $ 44,501         $ 578          $  --
                                  -----------    -----------    ----------     ----------
Total short-term investments        $ 43,923       $ 44,501         $ 578          $  --
                                  ===========    ===========    ==========     ==========

DECEMBER 31, 2002
-----------------
Letters of credit                   $     30       $     30         $  --          $  --
Corporate bonds                        2,538          2,556            18             --
U.S. agencies securities              76,003         76,903           900              2
                                  -----------    -----------    ----------     ----------
Total short-term investments        $ 78,571       $ 79,489         $ 918          $   2
                                  ===========    ===========    ==========     ==========

</TABLE>


     Net proceeds from sales of investments for the six months ended June 30,
2003 and 2002 were approximately $34.9 million and $0, respectively.

     Contractual maturities range from less than one year to two years. The
weighted average maturity of the portfolio does not exceed one year.

4. PROPERTY AND EQUIPMENT

     Property and equipment consisted of the following at June 30, 2003 and
December 31, 2002:

<TABLE>
<CAPTION>
                                                   (IN THOUSANDS)
                                             JUNE 30,        DECEMBER 31,        USEFUL LIFE
                                              2003              2002             (IN YEARS)
                                        ----------------    ---------------     -----------------------------------
<S>                                           <C>                <C>           <C>
     Engines                                   $ 4,300            $ 4,000       2
     Equipment                                  13,184              7,242       5-20
     Furniture and fixtures                        622                425       10
     Vehicles                                    4,057              4,065       5-7
     Other                                         275                268       5 (except leasehold improvements)
                                        ----------------    ---------------

     Total                                      22,438             16,000

     Less accumulated depreciation              (7,589)            (5,597)
                                        ----------------    ---------------

     Property and equipment (net)              $14,849            $10,403
                                        ================    ===============

</TABLE>







                                       10
<PAGE>



5. NOTES RECEIVABLE

     During the quarter ended June 30, 2003, the Company entered into an
agreement with a third party where we paid for the costs of capital improvements
retained by the third party necessary to stage an event where we are the
promoter. We accepted an unsecured note of $750,000 for said improvements, to be
received, without interest over five years. Payment in the amount of $75,000
will be due in each of the first four years with a final payment of $450,000 due
in the fifth year. These payments are payable each November 1st, beginning in
2003. The Company imputed interest on the note at a rate of 6% and recorded a
discount on the note receivable which reduced the note by $146,000.

     During the quarter ended June 30, 2003, the Company entered into a sanction
agreement with a promoter where we accepted a note in the amount of $400,000 as
payment for a portion of the sanction fee. This note is payable in 36 equal
monthly installments, bearing interest at 10% per annum, beginning January 1,
2004. The note is secured by all products and proceeds of all other events
staged by the promoter at the promoter's facility.

6. SEGMENT REPORTING

     The Company has two reportable segments, sanctioning and race promotions.
In 2003, the Company added "Race Promotions" as a reportable segment. There were
no prior period adjustments relating to the new reportable segment.

     Sanctioning encompasses all the business operations of organizing,
marketing and staging all of our open-wheel racing events when we act as a
sanctioning body as well as corporate expenses. We receive a sanction fee from
the event promoter for our services that is either fixed or is based upon a
profit sharing agreement. Sanction fees revenue, sponsorship revenue, television
revenue, engine lease revenue, race distributions and race expenses, television
expenses and administrative and indirect expenses are recognized in the
sanctioning segment.

     Race promotions encompasses all the business operations of marketing and
promoting our open-wheel racing events when we act as promoter and have
exclusive rights to the event. We receive the revenues from the event and are
responsible for the expenses of the event.

     The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. The Company's long-lived assets
are substantially used in the sanctioning segment in the United States. The
Company evaluates performance based on income before income taxes.


<TABLE>
<CAPTION>

                                                           THREE MONTHS ENDED JUNE 30,
                                                           ---------------------------
($ in thousands)                            SANCTIONING      RACE PROMOTIONS      OTHER*     TOTAL
                                            -----------      ---------------      ------     -----
<S>                                            <C>               <C>            <C>        <C>
2003
----
Revenues                                       $  9,341          $  5,016       $  51      $ 14,408
Interest income (net)                               380                --           3           383
Depreciation and amortization                     1,009                --          15         1,024
Segment income (loss) before income taxes       (23,452)           (5,561)          2       (29,011)

2002
----
Revenues                                       $ 19,251          $     --       $  41      $ 19,292
Interest income (net)                             1,112                --           3         1,115
Depreciation and amortization                       335                --          19           354
Segment loss before income taxes                 (5,632)               --         (12)       (5,644)

</TABLE>




                                       11
<PAGE>




<TABLE>
<CAPTION>

                                                           SIX MONTHS ENDED JUNE 30,
                                                           -------------------------
($ in thousands)                            SANCTIONING      RACE PROMOTIONS      OTHER*     TOTAL
                                            -----------      ---------------      ------     -----
<S>                                            <C>               <C>            <C>        <C>
2003
----

Revenues                                        $ 15,346           $ 5,020          $206           $20,572
Interest income (net)                                866                --             6               872
Depreciation and amortization                      1,807                --            37             1,844
Segment income (loss) before income taxes        (37,058)           (5,890)          106           (42,842)

2002
----

Revenues                                        $ 24,816            $   --          $ 80           $24,896
Interest income (net)                              2,194                --             7             2,201
Depreciation and amortization                        650                --            38               688
Segment loss before income taxes and
   cumulative effect of accounting change         (6,535)               --           (24)           (6,559)

</TABLE>


*  Amounts are below the quantitative thresholds for presentation as a
   reportable segment. These amounts are related to the Company's licensing
   royalties.

Reconciliations to consolidated financial statement totals are as follows:

<TABLE>
<CAPTION>
              ($ in thousands)                             JUNE 30,        DECEMBER 31,
                                                             2003            2002
                                                         -------------    ------------
<S>                                                         <C>            <C>
             Total assets for sanctioning segment           $ 78,387       $  114,194
             Total assets for race promotion segment           9,398               --
             Other assets                                        187              257
                                                         -------------    ------------

             Total consolidated assets                      $ 87,972       $  114,451
                                                         =============    ============

</TABLE>


     As a result of the Company's adoption of SFAS No. 142, the sanctioning
segment recorded a non-cash charge of $632,000, or $411,000 net of tax benefit
of $221,000, and the Other segment recorded a non-cash charge of $838,000, or
$545,000 net of tax benefit of $293,000, as a cumulative effect of accounting
change for the write-off of goodwill effective in the first quarter of 2002.

7. COMMITMENTS AND CONTINGENCIES

     LITIGATION. On September 8, 2000, a complaint for damages was filed against
the Company in the Superior Court of the State of California, County of
Monterey. This lawsuit was filed by the heirs of Gonzolo Rodriguez, a race car
driver who died on September 11, 1999 while driving his race car at the Laguna
Seca Raceway in a practice session for the CART race event. The suit sought
damages in an unspecified amount for negligence and wrongful death. On November
5, 2001, the Court upheld a release signed by Mr. Rodriguez and the causes of
action for negligence were dismissed. On March 13, 2003 a jury verdict found in
favor of the Company with respect to the claim for willful and/or reckless
conduct and the case was dismissed. An appeal has been filed. Management does
not believe that the outcome of this lawsuit will have a material adverse affect
on the Company's financial position or future results of operations.

     On October 30, 2000, a complaint for damages was filed against the Company
in the Superior Court of the State of California, County of San Bernardino. This
lawsuit was filed by the estate of Greg Moore, a race car driver who died on
October 31, 1999 while driving his race car at the California Speedway during
the CART race event. The suit sought actual and punitive damages from the
Company in an unspecified amount for breach of duty, wanton and reckless
misconduct, breach of implied contract, battery, wrongful death and negligent
infliction of emotional distress. On a motion for Summary Judgment, the
complaint was dismissed on all counts on October 16, 2002. An appeal of the
dismissal




                                       12
<PAGE>


was filed. Management does not believe that the outcome of this lawsuit will
have a material adverse affect on the Company's financial position or future
results of operations.

     On November 8, 2001, two former team owners, DellaPenna Motorsports and
Precision Preparation, Inc., filed suit against the Company in the Circuit Court
for the County of Wayne, State of Michigan, each alleging damages in excess of
$1.0 million for breach of contract, promissory estoppel, misrepresentation, and
tortious interference with contract and business expectancy. The claim was
settled for $400,000 in May of 2003.

     On March 26, 2002, the Company filed a complaint against Joseph F.
Heitzler, a former director and former chairman, chief executive officer and
president of the Company in U.S. District Court, Eastern District of Michigan,
Southern Division. The complaint alleges that Mr. Heitzler breached his
employment contract, breached his fiduciary duties and intentionally or
recklessly omitted to disclose information to the Company in order to induce the
continuation of Mr. Heitzler's employment agreement. The suit seeks damages of
an unspecified amount. On March 28, 2002, Mr. Heitzler filed a complaint against
the Company in the Superior Court of the State of California, County of Los
Angeles. The suit seeks compensatory, exemplary and punitive damages in excess
of $2.0 million for breach of contract, fraud, negligent misrepresentation,
breach of covenant of good faith and fair dealing and declaratory relief. An
amended complaint adding a count for tortious breach of contract in violation of
public policy was filed on April 9, 2002.

     On July 9, 2002 a Demand for Arbitration was filed against the Company with
the American Arbitration Association in Indianapolis, Indiana by Engine
Developments Ltd. The Demand alleged that the Company breached an agreement to
purchase engines and seeks unspecified damages. This claim was settled July 29,
2003 and the Company paid $1.75 million in settlement of any and all claims.

     In June 2003, the Company received $1.0 million from proceeds received from
a bankruptcy settlement regarding claims filed against Eurospeedway Lausitz for
loss of sanction fees and other damages that occurred when the 2002 event was
cancelled as a result of the bankruptcy of the promoter. These proceeds have
been recorded in the quarter ended June 30, 2003 as a reduction of litigation
expense.

     As we have previously reported, we are party to several lawsuits. We cannot
predict the outcome of the litigation, and at this time, management is unable to
estimate the impact that ultimate resolution of these matters may have on our
financial position or future results of operations.

8. ACQUISITION OF RACEWORKS, LLC

     On March 7, 2003, the Company acquired one hundred percent (100%) of the
membership interests in Raceworks, LLC ("Raceworks"). The results of Raceworks'
operations have been included in the consolidated financial statements since
that date. Raceworks is a motorsports promotion company and holds a revocable
license agreement to annually conduct a street race in downtown Miami through
2017, with an option to extend for an additional ten (10) years. The aggregate
purchase price was $1.2 million including $473,000 of cash and a contingent
promissory note of $722,000. The payment of the promissory note is contingent
upon specified events in the future and has neither been recorded as a liability
or an acquisition cost.



                                       13
<PAGE>


     The following table summarizes the estimated fair values of the assets
acquired and liabilities assumed at the date of acquisition.


        Current assets                                $  449,000
        Property and equipment                         4,120,000
        Other assets                                      36,000
        Intangible assets including goodwill             562,000
                                                      ----------
                 Total assets acquired                 5,167,000
                                                      ----------
        Current liabilities                           (1,916,000)
        Long-term debt                                (2,778,000)
                                                      ----------
                 Total liabilities assumed            (4,694,000)
                                                      ----------
        Net assets acquired                           $  473,000
                                                      ==========


     The acquisition has been accounted for using the purchase method of
accounting. Under purchase accounting, the total purchase price has been
allocated to the tangible and intangible assets and liabilities of Raceworks
based upon their respective fair values as of the date of the acquisition. A
preliminary allocation of the purchase price has been made to major categories
of assets and liabilities based on available information. The final allocation
of purchase price and the resulting effect on income from operations may differ
from the amounts recorded by the Company. The Company is in the process of
obtaining third-party valuations of certain separately identifiable intangible
assets. The acquired intangible asset values, including goodwill, will be
assigned based on the results of the third-party valuation. Any portion
allocated to the license agreement would be amortized over its remaining life.
The contingent consideration will be recorded when the contingency is resolved
and the consideration is issued or becomes issuable. Such consideration will be
an addition to the cost of the acquisition and to goodwill and/or intangible
assets based on the results of the third-party valuation.

     The following unaudited pro forma financial data illustrates the estimated
effects as if the acquisition had been completed as of the beginning of the
periods.

                                                       (In Thousands)
                                                      Six Months Ended
                                            June 30, 2003       June 30, 2002
                                           ---------------     ---------------
Revenues                                       $ 20,579           $24,896
Expenses                                         64,621            33,980
Loss before income taxes and cumulative
   effect of accounting change                 $(43,085)          $(6,883)



     The pro forma results are not necessarily indicative of the actual results
if the transactions had been in effect for the entire period presented. In
addition, they are not intended to be a projection of future results and do not
reflect, among other things, any synergies that might have been achieved from
combined operations.

9. LONG TERM NOTE-CURRENT PORTION

     In July 2002, the Company guaranteed a $1.8 million commercial term loan in
connection with the operations of Raceworks, LLC. The principal on the loan
shall be paid quarterly, commencing on October 31, 2003 and on the last day of
each January, April, July and October thereafter, in the amount of $50,000 per
quarter. The entire unpaid principal amount of the loan and all accrued and
unpaid interest and other amounts payable thereunder shall be due and payable in
July 2007. The loan may be prepaid, in whole or in part, without a penalty. The
rate of the interest on the outstanding principal amount of the loan will be
equal to The Wall Street Journal prime rate (the "prime rate") plus 150 basis
points. (As of June 30, 2003, the rate of interest was 5.5 %.)




                                       14
<PAGE>


     At June 30, 2003, the Company was in default of certain financial covenants
for which a waiver will be requested. As a result the entire amount of the note
has been classified as current.

10. DEFERRED TAXES

     SFAS No. 109 requires that net deferred tax assets be reduced by a
valuation allowance if, based on the weight of available evidence, it is more
likely than not that some portion or all of the net deferred tax asset will not
be realized. The Company has U.S. net operating loss carryforwards, foreign tax
credit carryforwards and future tax deductions of $16.2 million, $278,000 and
$425,000, respectively. The carryforward items expire over the next 5 to 20
years. Failure to achieve taxable income within the carryforward period would
affect the ultimate realization of the net deferred tax assets. Management
believes there is sufficient uncertainty regarding the future generation of
taxable income. Because it is more likely than not that deferred tax assets will
not be realized, the tax benefit for current year losses and net deferred tax
assets recorded at December 31, 2002 has been reduced by a $16.9 million
valuation allowance at June 30, 2003. As a result, income tax expense was $5.5
million and $660,000 for the three and six month periods ended June 30, 2003,
respectively.

11. ASSET IMPAIRMENT CHARGES

     The Company recognized a charge of $890,000 in race promotion expense
during the quarter ended June 30, 2003 in connection with the impairment of
prepaid expenses for a self-promoted event that occurred on July 5, 2003.
Expenses directly related to an event are treated as a prepaid expense asset and
are recognized as an expense in the period in which the event takes place,
unless it can be determined that prepaid expenses will not be recovered from the
revenues of the event. The prepaid asset is then deemed impaired and recognized
as an expense in the period when it is determined unrecoverable. Based on
information available at June 30, 2003, management determined that those assets
were not recoverable.






                                       15
<PAGE>



ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

CRITICAL ACCOUNTING POLICIES

Use of Estimates

     The following discussion and analysis of our financial condition and
results of operations are based upon our consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these financial statements
requires us to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting periods.

     Significant accounting estimates include the allowance for doubtful
accounts for trade accounts receivable, impairment of fixed assets and deferred
race expenses, the recoverability of intangible assets and goodwill, income
taxes, certain accrued liabilities and fair values allocated to assets acquired
and liabilities assumed in business combinations.

     We believe that the estimates, assumptions and judgments involved in the
accounting policies described below will not have a material impact on our
financial statements. These areas are subject to the risks and uncertainties we
describe in this report. Actual results, therefore, could differ from those
estimated.

Revenue Recognition

     One of our most critical accounting policies is revenue recognition. We
recognize our revenues as they are earned, but the determination of when they
are earned depends on the source of the revenue. Our policy for each revenue
source is outlined below.

     SANCTION FEE REVENUE. Generally, sanction fees are paid in advance of the
race and are recorded as deferred revenue. Revenue from sanction fees is not
recognized until the event is completed. In 2002 and 2003, we entered into
agreements with certain promoters where all or a portion of the contracted
sanction fee was reduced in exchange for a percentage of the profits from the
event. The sanction fee received and our share of any profits from these events
is recognized as sanction fee revenue when the event is completed.

     SPONSORSHIP REVENUE. Revenue is recorded ratably over the life of the
sponsorship agreement. On occasion, revenue is recorded at the time of the race
if the sponsorship pertains to that race. Generally, sponsorship agreements call
for quarterly payments, and each payment is recorded as deferred revenue when
received. Included in sponsorship revenue is revenue generated through barter
transactions. We recognize this revenue at the value of the consideration given
or the consideration received, whichever is more clearly determinable.

     ENGINE LEASE REVENUE. In 2002, we purchased the engines that will be used
for the 2003 and 2004 Champ Car World Series race season. Each team is required
to use these engines in order to compete in the series. We will lease the
engines to the teams for $100,000 per car per year. The revenue is realized
ratably over the life of the agreement.

     TELEVISION REVENUE. We receive television revenue in the form of rights
fees and advertising sales. Revenue is not recognized until earned which is when
the show airs. Television revenue arising from




                                       16
<PAGE>


minimum guarantees and rights fees is recognized ratably over the race schedule.
Advertising sales relate to specific shows and is recognized when the show and
advertisements air. Payments related to television revenue that are received
prior to when earned are recorded as deferred revenue until earned.

     RACE PROMOTION REVENUE. Race promotion revenue consists of all commercial
rights such as ticket sales, event sponsorship, hospitality and all other
revenues related to promoting an event. Payments received prior to the event are
recorded as deferred revenue. Revenue is recorded when the event is completed.

     OTHER REVENUES. Other revenues include membership and entry fees,
contingency awards money, royalty income and other miscellaneous revenues.
Membership and entry fees and contingency award money are recognized ratably
over the race schedule. Royalty income is recognized as the related product
sales occur or on a monthly basis based on a minimum guarantee.

Expense recognition

     RACE PROMOTION EXPENSES. General and administrative expenses related to
races we promote are recognized when incurred. Expenses directly related to the
event are recognized when the event occurs. Impairment of prepaid expenses is
recognized when the assets are determined to not be recoverable.

Goodwill Impairment

     We adopted FASB Statement of Financial Accounting Standards (SFAS) No. 142,
"Goodwill and Intangible Assets," effective January 1, 2002. The statement
requires companies to stop amortizing goodwill and certain intangible assets
with indefinite useful lives. The statement also requires that we test our
goodwill and intangible assets with indefinite useful lives for impairment upon
adoption of the statement and annually thereafter. Our goodwill was associated
with our acquisitions of Pro-Motion Agency, Inc. and CART Licensed Products, LP,
on April 10, 1998 and January 1, 1999, respectively. Upon adoption of the
statement, we recorded a one-time, non-cash charge of $1.5 million, or $956,000
net of tax benefit of $514,000, to write-off the value of our goodwill. The
write-off of goodwill results from the use of discounted cash flows in
assessment of fair value for each reporting unit as required by SFAS No. 142.
Under SFAS No. 142, goodwill impairment is deemed to exist if the carrying value
of a reporting unit exceeds its estimated fair value.

Litigation

     We are involved in litigation as a part of our normal course of business.
Our litigation proceedings are included in our most recent Form 10-K, Item 3:
Legal Proceedings and updated, as needed, in Part II-Other Information, Item 1:
Legal Proceedings in this and subsequent Form 10-Qs. When a complaint is filed
by or against us that represents a material claim, we disclose the proceeding in
our financial statements. When a claim against us is probable and reasonably
estimable, we record the expense. When we are the party filing the claim, we do
not record income until any damages from the claim are assured.

REVENUES

     We derive revenues primarily from (i) sanction fees, (ii) sponsorship,
(iii) television rights, (iv) race promotion, (v) engine leases and (vi) other
revenue. Following is an explanation of our individual revenue items:

     SANCTION FEES. We receive sanction fees from the promoters of our races
(other than races we promote). The fees are based on contracts between the
promoters and CART. We have entered into




                                       17
<PAGE>


agreements with certain promoters of the Champ Car World Series for a reduction
in the previously contracted sanction fees. In return, we will receive a share
of the net income from the event. The percentage of net income, if any, will
also be included in sanction fees. Therefore, there is less visibility and less
predictability for CART's earnings than in the previous financial model as
CART's revenues will be affected by the success of these races.

     SPONSORSHIP REVENUE. We receive corporate sponsorship revenue based on
negotiated contracts. An official corporate sponsor receives status and
recognition rights, event rights and/or product category exclusivity.

     In 2003, we have developed an Entrant Support Program. The new program is
part of an enhanced incentive program we developed with our teams, whereby we
provide financial support to new and existing teams to run in the Champ Car
World Series and, in exchange, each team will provide logo space on its cars for
Champ Car-designated sponsors to advertise. Sponsorship fees, if any, paid by
these corporate sponsors will be retained by us to offset the financial support
we are providing to the teams. The program will also combine Champ Car World
Series event and team sponsorship opportunities, along with advertising on
television and in print media. None of these sponsorship packages were sold
during the first six months of 2003.

     TELEVISION REVENUE. In 2003, we have contracts for our domestic television
rights with CBS and Speed Channel. We plan to broadcast seven races on CBS, of
which six have aired as of June 30, 2003, and the balance on Speed Channel. We
will buy the air-time and pay for production for the CBS races. Speed Channel
will provide the air-time for the races aired on their network, including Champ
Car practice and qualifying and a half-hour pre-race show. We will pay for
production for the races to be broadcast on their network. We receive the
advertising inventory for all shows aired on both networks and we are
responsible for selling the advertising.

     In 2003, we have international television rights with:

     -    Gold Coast Motor Events Co. (Australia)
     -    Molstar (Canada)
     -    Promotion Entertainment of Mexico LLC (Mexico)
     -    Octagon CSI (all others)

     A rights fee will be paid to us by each international broadcast partner for
rights to air the Champ Car race either live, time-delayed or as a highlight
package, in the country where they hold our rights. See "Other Related Party
Transactions" for a description of our arrangements with Promotion Entertainment
of Mexico, LLC, an entity principally owned by Mr. Gerald R. Forsythe, our 23%
stockholder.

     RACE PROMOTION REVENUE. In 2003, we anticipate promoting six of our races,
of which three occurred during the first six months of 2003. Race promotion
revenue includes all the commercial rights associated with promoting a Champ Car
event, such as admissions, event sponsorship and hospitality sales. We have
partnered with experienced race promoters to promote these events and we will be
responsible for selling all of the commercial rights of the event.

     ENGINE LEASE REVENUE. In 2002, we purchased the engines that will be used
for the 2003 and 2004 Champ Car World Series race season. Each team is required
to use these engines in order to compete in the series. We will lease the
engines to the teams for $100,000 per car per year.

     OTHER REVENUE. Other revenue includes membership and entry fees,
contingency awards money, royalties, commissions and other miscellaneous revenue
items. Membership and entry fees are payable on




                                       18
<PAGE>


an annual basis by Toyota Atlantic Championship competitors. In addition, we
charge fees to competitors for credentials for all team participants and driver
license fees for all drivers competing in the series. We receive royalty revenue
for the use of the CART service marks and trademarks on licensed merchandise
that is sold both at tracks and at off-track sites. We receive commission income
from the sale of chassis and parts to our support series teams.

EXPENSES

     Our expenses are incurred primarily in, (i) distributions to our race
teams: prize money, participation payments and team assistance, (ii) race
operations: expenses directly related to sanctioning the events, (iii) race
promotion: expenses related to races we promote, (iv) television: expenses
directly related to buying air time and production of our domestic and
international television programming and (v) administrative and indirect:
expenses related to administration, marketing, sales and public relations.
Following is an explanation of the individual expense line items:

     RACE DISTRIBUTIONS. We pay the racing teams for their on-track performance.
Race distributions include the following for each event:

     -    event purse which is paid based on finishing position
     -    contingency award payments
     -    year-end point fund, which is paid based on year end finishing
          position
     -    participation payments
     -    entrant support payments
     -    team assistance

     We pay awards to the teams, based on their cumulative performance for the
season, out of the year-end point fund. Participation payments are being made in
2003 to each of our entries (to a maximum of 20 cars) on a per car, per race
basis. In addition, entrant support payments are being made to participating
teams as part of a financial incentive plan to attract and retain teams to
compete in our series. The payments are made to teams in exchange for logo
advertising space on their cars. We have the opportunity to sell and retain the
revenue from the advertising. In 2003, we are providing assistance to certain
teams to ensure that there are a sufficient number of race cars competing in our
series. We will spend up to $33.0 million in team assistance, spread out over
the race season, to make sure there are a sufficient number of viable
competitors for the 2003 season. Through June 30, 2003, we have expensed $15.9
million in team assistance. In exchange for the team assistance, we receive
certain sponsorship rights from the team.

     RACE EXPENSES. We are responsible for officiating and administering all of
our events. Costs primarily include officiating fees, travel, per diem and
lodging expenses for the following officiating groups:

     -    medical services
     -    race administration
     -    race officiating and rules compliance
     -    registration
     -    safety
     -    technical inspection
     -    timing and scoring




                                       19
<PAGE>


     RACE PROMOTION EXPENSES. In 2003, we plan to promote six of our own events,
of which three occurred during the first six months of 2003. Race promotion
expenses relate to all costs associated with staging a Champ Car event,
including track rental, personnel costs and promotion of the event.

     TELEVISION EXPENSES. In 2003, we are buying the air time at approximately
$206,666 per hour for our CBS races. Speed Channel is providing the air time for
the races aired on their network, including Champ Car practice and qualifying
and a half-hour pre-race show. We pay for production costs associated with the
races to be broadcast on their network. We also incur expenses for our
international production for all of our races.

     ADMINISTRATIVE AND INDIRECT EXPENSES. Administrative and indirect expenses
include all operating costs not directly incurred for a specific event:

     -    administration
     -    marketing and advertising
     -    sponsorship sales and service
     -    public relations

RESULTS OF OPERATIONS

Three Months Ended June 30, 2003 Compared to Three Months Ended June 30, 2002

     REVENUES. Total revenues for the quarter ended June 30, 2003 were $14.4
million, compared to $19.3 million during the same period in the prior year. The
decrease was due to a decrease in sanction fees, sponsorship revenue, television
revenue and other revenue partially offset by an increase in race promotion and
engine lease revenue as described below.

     Sanction fees for the quarter ended June 30, 2003 were $5.3 million, a
decrease of $6.5 million, or 55%, from the same period in the prior year. The
decrease was partially attributable to running three races that paid sanction
fees in the second quarter of 2003 compared to five races in the same period in
the prior year. The decrease was also due to negotiated reductions in sanction
fees with certain promoters. In addition, one of the races that was not run in
2003 was the race in Motegi, Japan, a higher paying international race. We ran
three self-promoted races in the second quarter of 2003 compared to one in the
prior year. Revenues from self-promoted races are reflected in race promotion
revenue.

     Sponsorship revenue for the quarter ended June 30, 2003 was $2.4 million, a
decrease of $455,000, or 16%, from the same period in the prior year. This
decrease was primarily attributable to the loss of sponsorship income from our
former title sponsor. The decrease was partially offset by new sponsorship from
our two presenting sponsors Bridgestone/Firestone North American Tire, LLC and
Ford Motor Company.

     Television revenue for the quarter ended June 30, 2003 was $713,000, a
decrease of $1.3 million, or 65%, from the same period in the prior year. The
decrease was primarily attributable to a reduction in rights sales for our
international television rights, and a decrease in advertising revenue from our
races broadcast on CBS, partially offset by advertising revenue from our Speed
Channel shows. In 2003, we pay for the production for all of our shows and we
receive the television advertising inventory. In 2002, Speed Channel paid for
the production of the shows aired on their network and received the advertising
inventory.

     Race promotion revenue for the quarter ended June 30, 2003 was $5.0
million, an increase of $3.6 million from the same period in the prior year. The
increase was attributable to promoting three races in




                                       20
<PAGE>


Kent, England, Lausitz, Germany and Portland, Oregon in the quarter ended June
30, 2003 compared to one race in the same prior year period.

     Engine lease revenue for the quarter ended June 30, 2003 was $475,000, with
no corresponding revenue in the prior period. We purchased the engines that will
be used in our series for the 2003 and 2004 seasons. The engines are leased to
the teams for $100,000 per car per year payable in four installments.

     Other revenue for the quarter ended June 30, 2003 was $534,000, which was a
decrease of $636,000, from the same period in the prior year. Other revenue
includes membership and entry fees, contingency awards money, royalty income,
commission on parts sales and other miscellaneous revenue. The decrease was
primarily due to a decrease in entry fees in CART due to a waiver of those fees
for 2003, fewer participants in the Toyota Atlantic series and a decrease in
merchandise sales from licensed merchandise.

     EXPENSES. Total expenses for the quarter ended June 30, 2003 were $43.8
million, an increase of $17.8 million, or 68%, from the same period in the prior
year. This increase was due to an increase in race distributions, race promotion
expense, television expense, litigation expense, and depreciation expense
partially offset by a decrease in race, administrative and indirect and
relocation expenses, as described below.

     Race distributions for the quarter ended June 30, 2003 were $17.7 million,
an increase of $11.3 million from the same period in the prior year. Race
distributions are made up of purse payments, year-end points fund, participation
payments, entrant support payments and team assistance. The increase was
partially due to an increase in participation payments that we make to all of
our teams, from $10,000 per car per race in 2002 to $20,000 per car per race in
2003. In addition, in 2003 we began an entrant support program where we make
payments of $22,500 per car per race to each participating team. The total
increase in participation and entrant support payments are $3.8 million compared
to the same period in the prior year. In the quarter ended June 30, 2003, we
have also provided, in aggregate, team assistance payments of $8.0 million to
substantially all of our teams to ensure their participation in our series for
the 2003 season compared with $501,000 in the same period in the prior year.

     Race expenses for the quarter ended June 30, 2003 were $2.4 million, a
decrease of $97,000, or 4%, from the same period in the prior year. The decrease
was primarily attributable to a reduction in staff and officials and their
related travel expenses in the areas of logistics, safety, competition and
timing and scoring.

     Race promotion expenses for the quarter ended June 30, 2003, were $10.6
million, an increase of $7.1 million, or 204% from the same period in the prior
year. The increase in expenses is due to promoting three races in the quarter
ended June 30, 2003 compared to one race in the same prior year period. The
expenses relate to administrative expenses incurred for all the races we will
promote in 2003 and direct expenses for the races we promoted in the quarter
ended June 30, 2003 in England, Germany and Portland, Oregon. Race promotion
expenses relate to all costs associated with staging a Champ Car event.
Administrative expenses are recognized when incurred; expenses directly related
to the event are recorded as deferred or prepaid expenses and are recognized in
the period the race takes place, unless it can be determined that prepaid
expenses will not be recovered from revenues from the event. Prepaid expenses
are then recognized in the statements of operations, to the extent they are
determined unrecoverable, in the period when it is determined they are
unrecoverable. Included in race promotion expenses in the quarter ended June 30,
2003, were $890,000 of unrecoverable expenses related to the race in Cleveland,
Ohio which took place on July 5, 2003.

     Television expense for the quarter ended June 30, 2003 was $5.9 million, an
increase of $1.3 million, or 27%, from the same period in the prior year. The
increase was partially due to a change in our




                                       21
<PAGE>


television agreement with Speed Channel from the previous year. In 2002, Speed
Channel paid for the production and received the advertising inventory for shows
broadcast on their network. In 2003, we pay for the production and we receive
the advertising inventory. There were two Speed Channel races in the quarter
ended June 30, 2003. In addition, in the quarter ended June 30, 2003 we produced
and paid for air-time for a preseason preview show that aired on CBS. We also
incur incremental expenses to provide an international feed for all of our
races.

     Administrative and indirect expenses for the quarter ended June 30, 2003
were $4.9 million, a decrease of $2.6 million, or 35%, from the same period in
the prior year. This decrease was primarily attributable to a decrease in
marketing and advertising partially offset by an increase in insurance expense,
legal fees, sales staff and related sales costs.

     Litigation expense was $1.4 million for the quarter ended June 30, 2003,
with no corresponding expense in the same prior year period. This expense was
partially attributable to an arbitration settlement of $1.75 million paid to
Engine Developments Ltd., in a breach of contract case over a contract to
purchase engines, a settlement of a breach of contract suit filed by two former
team owners, DellaPenna Motorsports and Precision Preparation, Inc., and
settlement of contract disputes with ESPN television over the canceled Texas
Motor Speedway race. The expenses were partially offset by receipt of $1.0
million from proceeds received from a bankruptcy settlement regarding claims
filed against EuroSpeedway Lausitz for loss of sanction fees and other damages
that occurred when the 2002 event was canceled as a result of the bankruptcy of
the promoter.

     Relocation expense was $1.3 million in the quarter ended June 30, 2002 with
no corresponding expense in the current year quarter. The expense related to the
companies relocation from Troy, MI to Indianapolis, IN.

     Depreciation and amortization for the quarter ended June 30, 2003 was $1.0
million, compared to depreciation and amortization of $354,000 for the same
period in the prior year. The increase was primarily due to depreciation on
engines that we purchased for use in our series for the 2003 and 2004 seasons.

     OPERATING LOSS. Operating loss for the quarter ended June 30, 2003 was
$29.4 million, compared to operating loss of $6.8 million in the corresponding
period in the prior year due to the items discussed above.

     INTEREST INCOME. Interest income for the quarter ended June 30, 2003 was
$383,000, a decrease of $732,000, or 66%, from the same period in the prior
year. This is primarily due to a decrease in cash and short-term investments and
in interest rates.

     LOSS BEFORE INCOME TAXES. Loss before income taxes for the quarter ended
June 30, 2003 was $29.0 million, compared to loss before income taxes of $5.6
million for the same period in the prior year due to the items discussed above.

     INCOME TAX EXPENSE/BENEFIT. Income tax expense for the quarter ended June
30, 2003 was $5.5 million, compared to an income tax benefit of $2.0 million for
the corresponding period in the prior year. Income tax expense for the quarter
ended June 30, 2003 reflects management's decision to record a valuation
allowance for all net deferred tax assets. The effective tax rate was 35.0% for
the quarter ended June 30, 2002.

     LOSS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE. Loss before cumulative
effect of accounting change for the quarter ended June 30, 2003 was $34.5
million compared to $3.7 million for the corresponding period in the prior year.




                                       22
<PAGE>


     NET LOSS. Net loss for the quarter ended June 30, 2003 was $34.5 million
compared to a net loss of $3.7 million for the same period in the prior year due
to the items discussed above.

Six Months Ended June 30, 2003 Compared to Six Months Ended June 30, 2002

     REVENUES. Total revenues for the six months ended June 30, 2003 were $20.6
million, compared to $24.9 million during the same period in the prior year. The
decrease was due to a decrease in sanction fees, sponsorship revenue, television
revenue and other revenue partially offset by an increase in race promotion and
engine leases as described below.

     Sanction fees for the six months ended June 30, 2003 were $8.3 million, a
decrease of $6.2 million, or 43%, from the same period in the prior year. The
decrease was partially attributable to running five races that paid sanction
fees in the period ended June 30, 2003 compared to six races in the same period
in the prior year. The decrease was also due to negotiated reductions in
sanction fees with certain promoters. In addition, one of the races that was not
run in 2003 was the race in Motegi, Japan, a higher paying international race as
well as a general reduction in sanction fees.

     Sponsorship revenue for the six months ended June 30, 2003 was $4.0
million, a decrease of $1.1 million, or 22%, from the same period in the prior
year. This decrease was primarily attributable to the loss of sponsorship income
from our former title sponsor. The decrease was partially offset by new
sponsorship from our two presenting sponsors Bridgestone/Firestone North
American Tire, LLC and Ford Motor Company.

     Television revenue for the six months ended June 30, 2003 was $903,000, a
decrease of $1.4 million, or 60%, from the same period in the prior year. The
decrease was primarily attributable to a reduction in rights sales for our
international television rights and a decrease in television advertising revenue
from our four races broadcast on CBS, partially offset by advertising revenue
from our Speed Channel broadcasts. In 2003, we pay for the production for all of
our shows and we receive the television advertising inventory. In 2002, Speed
Channel paid for the production of the shows aired on their network and received
the advertising inventory.

     Race promotion revenue for the six months ended June 30, 2003 was $5.0
million, an increase of $3.6 million, from the same period in the prior year.
The increase was attributable to promoting three races in Kent, England,
Lausitz, Germany and Portland, Oregon in the six months ended June 30, 2003
compared to one race in the same prior year period.

     Engine lease revenue for the six months ended June 30, 2003 was $950,000,
with no corresponding revenue in the prior period. We purchased the engines that
will be used in our series for the 2003 and 2004 seasons; the engines are leased
to the teams for $100,000 per car per year payable in four installments.

     Other revenue for the six months ended June 30 2003 was $1.4 million, which
was a decrease of $153,000, or 10%, from the same period in the prior year.
Other revenue includes membership and entry fees, contingency awards money,
royalty income, commission on parts sales and other miscellaneous revenue. The
decrease was primarily due to certain non-recurring miscellaneous revenues
received in the six months ended June 30, 2003, partially offset by a decrease
in entry fees in CART due to a waiver of those fees for 2003, fewer participants
in the Toyota Atlantic series and a decrease in merchandise sales from licensed
merchandise.

     EXPENSES. Total expenses for the six months ended June 30, 2003 were $64.4
million, an increase of $30.7 million, or 91%, from the same period in the prior
year. This increase was due to an increase in




                                       23
<PAGE>


race distributions, race promotion, television expense, litigation and
depreciation expense partially offset by a decrease in race, administrative and
indirect and relocation expenses, as described below.

     Race distributions for the six months ended June 30, 2003 were $28.7
million, an increase of $21.3 million from the same period in the prior year.
Race distributions are made up of purse payments, year-end points fund,
participation payments, entrant support payments and team assistance. The
increase was partially due to having eight races in the six months ended June
30, 2003 compared to seven races in the same period in the prior year. The
increase was also due to an increase in participation payments that we make to
all of our teams, from $10,000 to $20,000 per car per race. In addition, in 2003
we began an entrant support program where we make payments of $22,500 per car
per race to each participating team. The total increase in participation and
entrant support payments are $5.1 million compared to the same period in the
prior year. In the six months ended June 30, 2003, we have also provided, in
aggregate, team assistance payments of $15.9 million to substantially all of our
teams to ensure their participation in our series for the 2003 season, with no
corresponding expense in the same period in the prior year.

     Race expenses for the six months ended June 30, 2003 were $3.9 million, a
decrease of $381,000, or 9%, from the same period in the prior year. The
decrease was primarily attributable to a reduction in staff and officials and
their related travel expenses in the areas of logistics, safety, competition and
timing and scoring, partially offset by having one more race in the six months
ended June 30, 2003 when compared to the same prior year period.

     Race promotion expenses for the six months ended June 30, 2003, were $10.9
million, an increase of $7.4 million, or 213%, from the same period in the prior
year. The increase in expenses is due to promoting three races in the six months
ended June 30, 2003 compared to one race in the same prior year period. The
expenses relate to administrative expenses incurred for all the races we will
promote in 2003 and direct expenses for the races we promoted in the six months
ended June 30, 2003 in England, Germany and Portland, Oregon. Race promotion
expenses relate to all costs associated with staging a Champ Car event.
Administrative expenses are recognized when incurred; expenses directly related
to the event are recorded as deferred or prepaid expenses and are recognized in
the period the race takes place, unless it can be determined that prepaid
expenses will not be recovered from revenues from the event. Prepaid expenses
are then recognized in the statements of operations, to the extent they are
determined unrecoverable, in the period when it is determined they are
unrecoverable. Included in race promotion expenses in the six months ended June
30, 2003, were $890,000 of unrecoverable expenses related to the race in
Cleveland, Ohio which took place on July 5, 2003.

     Television expense for the six months ended June 30, 2003 was $7.4 million,
an increase of $2.7 million, from the same period in the prior year. The
increase was partially due to a change in our television agreement with Speed
Channel from the previous year. In 2002, Speed Channel paid for the production
and received the advertising inventory for shows broadcast on their network. In
2003, we pay for the production and we receive the advertising inventory. For
the six months ended June 30, 2003 we had four races broadcast on Speed Channel.
In addition, in 2003 we produced and paid for air-time for a preseason preview
show that aired on CBS. We also incur incremental expenses to provide an
international feed for all of our races.

     Administrative and indirect expenses for the six months ended June 30, 2003
were $10.2 million, a decrease of $1.6 million, or 13%, from the same period in
the prior year. This decrease was primarily attributable to a decrease in
marketing and advertising partially offset by an increase in insurance expense,
legal fees, sales staff and related sales costs.

     Litigation expense was $1.4 million for the six months ended June 30, 2003,
with no corresponding expense in the same prior year period. This expense was
partially attributable to an




                                       24
<PAGE>


arbitration settlement of $1.75 million paid to Engine Developments Ltd., in a
breach of contract case over a contract to purchase engines, a settlement of a
breach of contract suit filed by two former team owners, DellaPenna Motorsports
and Precision Preparation, Inc, and settlement of contract disputes with ESPN
television over the canceled Texas Motor Speedway race. The expenses were
partially offset by receipt of $1.0 million from proceeds received from a
bankruptcy settlement regarding claims filed against EuroSpeedway Lausitz for
loss of sanction fees and other damages that occurred when the 2002 event was
canceled as a result of the bankruptcy of the promoter.

     Relocation expense was $1.3 million for the six months ended June 30, 2002
with no corresponding expense in the current year period. The expense related to
the companies relocation from Troy, MI to Indianapolis, IN.

     Depreciation and amortization for the six months ended June 30, 2003 was
$1.8 million, compared to depreciation and amortization of $688,000 for the same
period in the prior year. The increase was primarily due to depreciation on
engines that we purchased for use in our series for the 2003 and 2004 seasons.

     OPERATING LOSS. Operating loss for the six months ended June 30, 2003 was
$43.8 million, compared to operating loss of $8.8 million in the corresponding
period in the prior year due to the items discussed above.

     INTEREST INCOME. Interest income for the six months ended June 30, 2003 was
$872,000, a decrease of $1.3 million, or 60%, from the same period in the prior
year. This is primarily due to a decrease in interest rates and in cash and
short-term investments.

     LOSS BEFORE INCOME TAXES. Loss before income taxes for the six months ended
June 30, 2003 was $42.8 million, compared to loss before income taxes of $6.6
million for the same period in the prior year due to the items discussed above.

     INCOME TAX EXPENSE/BENEFIT. Income tax expense for the six months ended
June 30, 2003 was $660,000, compared to an income tax benefit of $2.3 million
for the corresponding period in the prior year. Income tax expense for the six
months ended June 30, 2003 reflects management's decision to record a valuation
allowance for all net deferred tax assets. The effective tax rate was 35.0% for
the six months ended June 30, 2002.

     LOSS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE. Loss before cumulative
effect of accounting change for the six months ended June 30, 2003 was $43.5
million compared to $4.3 million for the corresponding period in the prior year.

     CUMULATIVE EFFECT OF ACCOUNTING CHANGE (NET OF TAX). There was no
cumulative effect of accounting change for the six months ended June 30, 2003
compared to $956,000 in the same period of the prior year. The amount relates to
our implementation of Statement of Financial Account Standard No. 142 pursuant
to which we wrote off our impaired goodwill.

     NET LOSS. Net loss for the six months ended June 30, 2003 was $43.5 million
compared to a net loss of $5.2 million for the same period in the prior year due
to the items discussed above.

SEASONALITY AND QUARTERLY RESULTS

     A substantial portion of our total revenues during the race season is
expected to remain seasonal, based on our race schedule. Our quarterly results
vary based on the number of races held during the quarter.




                                       25
<PAGE>


In addition, the mix between the type of race (street course, superspeedway,
etc.) and the sanction fees attributed to those races and whether the races are
aired on network television or Speed Channel will affect our quarterly results.
Consequently, changes in race schedules from year to year, with races held in
different quarters, will result in fluctuations in our quarterly results and
affect comparability. During the second quarter ended June 30, 2003, we held six
races: Long Beach, California; Kent, England; Lausitz, Germany; West Allis,
Wisconsin; Monterrey, California; and Portland, Oregon. During the second
quarter ended June 30, 2002, we held six races: Long Beach, California; Motegi,
Japan; West Allis, Wisconsin; Monterrey, California; Portland, Oregon and
Chicago, Illinois. We have provided unaudited quarterly revenues for the second
quarter of 2003 and 2002 in the following table.

                                                   QUARTER ENDED
                                                      JUNE 30,
           (DOLLARS IN THOUSANDS)             2003                2002
                                        -----------------    ---------------
           Revenues                              $14.4              $19.3
           Number of races                           6                  6


LIQUIDITY AND CAPITAL RESOURCES

     We have relied on our cash reserves generated in previous years to finance
working capital, contractual commitments, operating losses, investments and
capital expenditures during the past year. In 2003, we will use available funds
for certain expenditures that are planned for the year 2003, and we believe that
existing cash will be sufficient to fund expected operating losses, capital
expenditures and other cash needs for 2003. The cash reserves remaining at the
end of 2003, if any, will not be sufficient to fund anticipated operating losses
and contractual commitments for 2004. Due to the continuing downward trend in
several of our critical revenue streams, management expects that we will need to
raise additional capital in order to complete the 2004 race season and to
continue to operate in 2004. In addition, the Company does not expect to
contribute funds in 2004 to assist race teams beyond the series standard entrant
support program, as has been done in 2003. Without such assistance, there can be
no assurance that race teams will continue to participate in the series in 2004.

     Future projections beyond 2004 are, in management's view, very speculative.
Currently, however, management does not expect to have positive cash flow from
operations or earnings any earlier than 2006. We have retained the investment
banking firm of Bear Stearns & Co. Inc. to assist us in exploring financing and
other strategic alternatives that may be available to us. There cannot be any
assurance that this process will result in any transaction or as to the terms
and conditions of any transaction that may be proposed to or pursued by us.

     We have a $1.5 million revolving line of credit with a commercial bank. As
of June 30, 2003, there was no outstanding balance under the line of credit. The
line of credit contains no significant covenants or restrictions. Advances on
the line of credit are payable on demand and bear interest at the bank's prime
rate. The line is secured by assets of the Company.

     In August, 2003, the Company issued a $1.0 million irrevocable standby
letter of credit to International Motorsports Association, which shall
automatically terminate upon completion of the American LeMans Series race in
Miami, Florida in September 2003.

     Our cash balance on June 30, 2003 was $7.6 million, a net increase of
$780,000 from December 31, 2002. This increase was primarily the result of net
cash proceeds from investing activities of $31.2 million, partially offset by
net cash used in operating activities of $29.5 million, and net cash used in
financing activities of $1.0 million.





                                       26
<PAGE>



     During the quarter ended June 30, 2003, the Company entered into an
agreement with a third party where we paid for the costs of capital improvements
retained by the third party necessary to stage an event where we are the
promoter. We accepted an unsecured note of $750,000 for said improvements, to be
received, without interest over five years. Payment in the amount of $75,000
will be due in each of the first four years with a final payment of $450,000 due
in the fifth year. These payments are payable each November 1st, beginning in
2003. The Company imputed interest on the note at a rate of 6% and recorded a
discount on the note receivable which reduced the note by $146,000.

     During the quarter ended June 30, 2003, the Company entered into a sanction
agreement with a promoter where we accepted a note in the amount of $400,000 as
payment for a portion of the sanction fee. This note is payable in 36 equal
monthly installments, bearing interest at 10% per annum, beginning January 1,
2004. The note is secured by all products and proceeds of all other events
staged by the promoter at the promoter's facility.

     Short term investments have decreased by $35.0 million since December 31,
2002 due to funding of operations for the six months ended June 30, 2003.

     We anticipate capital expenditures of approximately $2.0 million in 2003.
The capital expenditures will be for computer equipment, a new semi-trailer,
timing and scoring equipment, safety truck conversions and competition related
equipment for technical inspection and data acquisition.

     In April 2002, we entered into a lease for our new corporate headquarters
in Indianapolis, Indiana. The lease commenced on May 1, 2002 and expires October
31, 2010. The total amount due through the life of the lease is $2.6 million.

     In June 2003, we entered into a lease for office space in Miami, Florida.
The lease commenced on June 1, 2003 and expires on May 31, 2008. The total
amount due through the life of the lease is $478,198.

     The following table summarizes our contractual obligations as of June 30,
2003.


<TABLE>
<CAPTION>

                                                                   Payments Due by Period
                                                                   ----------------------
                                                              Less Than        1-3          4-5       After 5
Contractual Obligations                          Total         1 Year         Years        Years       Years
--------------------------------------------- ------------- -------------- ------------ ------------ -----------
<S>                                          <C>            <C>             <C>         <C>          <C>
Operating Leases                              $  2,736,438    $   399,163    $  804,928  $ 811,428    $ 720,918
Team Assistance Payments                        22,250,000     22,250,000           --           --          --
Entrant Support Program                         12,240,000     12,240,000           --           --          --

Television Buys                                  4,625,000      4,625,000           --           --          --
Other Long-Term Obligations                     15,195,163      5,844,257     8,048,934     901,972     400,000
                                              ------------- -------------- ------------ ------------ -----------
Total Contractual Cash Obligations            $ 57,046,600    $45,358,420    $8,853,862  $1,713,400   $1,120,918
                                              ============= ============== ============ ============ ===========

</TABLE>


     In July 2002, we guaranteed a $1.8 million commercial term loan in
connection with our acquisition of Raceworks, LLC. The principal on the loan
shall be paid quarterly, commencing on October 31, 2003 and on the last day of
each January, April, July and October thereafter, in the amount of $50,000 per
quarter. The entire unpaid principal amount of the loan and all accrued and
unpaid interest and other amounts payable thereunder shall be due and payable in
July 2007. The loan may be prepaid, in whole or in part, without a penalty. The
rate of the interest on the outstanding principal amount of the loan will be
equal to The Wall Street Journal prime rate (the "prime rate") plus 150 basis
points. (As of June 30, 2003, the rate of interest was 5.5 %.)

     At June 30, 2003, the Company was in default of certain financial covenants
for which a waiver will be requested. As a result the entire amount of the note
has been classified as current.




                                       27
<PAGE>


     On March 7, 2003, we acquired 100% of the equity in Raceworks, LLC. The
purchase price was $1.2 million, including $473,000 of cash and a contingent
promissory note of $722,000, without interest, and assumption of liabilities of
$4.7 million.

     Litigation expense was $1.4 million for the six months ended June 30, 2003.
This expense was partially attributable to an arbitration settlement of $1.75
million paid in August 2003, to Engine Developments Ltd., in a breach of
contract case over a contract to purchase engines, a settlement of a breach of
contract suit filed by two former team owners, DellaPenna Motorsports and
Precision Preparation, Inc., and settlement of contract disputes with ESPN
television over the canceled Texas Motor Speedway race. The expenses were
partially offset by receipt of $1.0 million from proceeds received from a
bankruptcy settlement regarding claims filed against EuroSpeedway Lausitz for
loss of sanction fees and other damages that occurred when the 2002 event was
canceled as a result of the bankruptcy of the promoter.

FUTURE TRENDS IN OPERATING RESULTS

     An important part of our overall strategy is to make our races major events
in large urban markets. In markets where there are no established race tracks,
we will establish street races. These races may be promoted by us or we may
partner with experienced race promoters to stage these events.

In 2003, we will promote six of our events: Cleveland, OH, Portland, OR, Miami,
FL, Lexington, OH, Kent, England and Lausitz, Germany and we have entered into
agreements with promoters that include revenue sharing arrangements for five
events. Through the six-month period ended June 30, 2003, we have completed
three of our six self-promoted events in England, Germany, and Portland, Oregon.
We recognized race promotion revenue of $5.0 million and race promotion expense
of $10.9 million during the six months ended June 30, 2003. The financial
success of each of the events we promote or in which we share in revenues, is
dependent on the sale of tickets, sponsorship, hospitality, signage and other
commercial rights associated with the events. Our increased focus on these
activities means that our revenues related to our sanction fee and race
promotion income will be subject to a number of factors, including consumer and
corporate spending and the overall economic conditions affecting advertising and
promotion in the motorsports and entertainment business.

     In 2003, our television contracts require us to purchase airtime on CBS and
we will pay for production for our shows on CBS and Speed Channel. We will
retain the advertising revenues for all of our races. The estimated cost for
purchasing airtime and production for domestic and international programming is
$16.1 million for the year. Television revenue for the six months ended June 30,
2003 was $903,000 and television expense for the six months ended June 30, 2003
was $7.4 million.

     In 2003, we began an entry support program and enhanced the participation
payments to retain and attract teams for the 2003 season and beyond. This
program provides up to $42,500 in cash payments to teams, per race, for each car
entered in the 2003 Champ Car series, up to a maximum of twenty (20) cars. These
payments are in addition to prize money and other non-monetary benefits that
accrue to teams participating in the Champ Car Series.

     We committed to spend $33.0 million in team assistance to ensure that there
is adequate participation by race teams in the 2003 season. Through June 30,
2003, we have made entrant support participation and team assistance payments of
$24 million. We have entered into contractual agreements with substantially all
of the teams who have committed to be full season participants in the 2003 CART
Champ Car World Series. We believe that it is necessary to provide this
additional funding to ensure that there would be 18 to 20 competitive race cars
in the field for the 2003 season. Without this additional funding,




                                       28
<PAGE>


it was unlikely that there would have been the necessary number of teams, which
would result in defaults under certain of our agreements with promoters and
television. This could have resulted in severe financial consequences to us. In
exchange for this assistance, the teams provide us with associate sponsor or in
some instances primary sponsorship opportunities with their team to offset these
costs. We have not sold any of these packages in the six months ended June 30,
2003. In addition, if the teams' efforts to sell sponsorship reach certain
levels, they are required to repay a percentage of the assistance they have
received from us.

     In October 2002, we purchased 100 race engines from Cosworth Racing, Inc.
for a total purchase price of $4.0 million and agreed to pay for track support
in the amount of $1.5 million for the 2003 and 2004 season. We in turn have
leased these engines to each team on the basis of $100,000 per entrant per race
season payable in four installments. Through June 30, 2003, the Company has
recorded engine lease revenue of $950,000.

     In light of current events and the overall state of the economy, we believe
it will be difficult to maintain the same levels of sponsorship income that we
have received in the past or secure additional sponsorship. In addition, we are
unable to determine whether these factors will have continuing or increased
negative impact on our television package and our ability to sell television
advertising for our races. We are also unable to assess what impact a decrease
in the disposable income of our fans will have on our promoters and, ultimately,
our races.

     As we have previously reported, we are party to several lawsuits. We cannot
predict the outcome of the litigation, and at this time, management is unable to
estimate the impact that ultimate resolution of these matters may have on our
financial position or future results of operations.

RELATED PARTY TRANSACTIONS

     We have historically entered into transactions with related parties,
because several of our directors and one of our significant shareholders are
team owners. We believe that it is necessary and appropriate to have team owners
involved as our directors or significant shareholders because of their unique
knowledge of our business. We believe that all the transactions which we have
entered into with our directors or significant shareholders, are comparable to
the terms that we have in the past or could in the future enter into with
unaffiliated third parties with respect to each of these transactions. In order
to avoid conflicts of interest, any of our directors who are affiliated with an
entity that is entering into a transaction with us have not and will not vote on
any matters related to such transactions and may, in certain circumstances,
refrain from participating in any discussions related to such transactions.

     The related party transactions under "Purse Distributions, Entry Support
Program and Lease Arrangements" are all payments or transactions that are made
on the identical basis to all race teams, whether they are affiliated with
directors or significant shareholders or not affiliated. The payments payable to
related parties under the caption "Team Assistance Program" relate to further
assistance that we are providing to race teams to assure their participation in
the 2003 race season. The amounts payable to each race team vary, depending upon
the team's ability to raise third party sponsorship, the number of cars that the
team will race in 2003, their budget and other factors. We believe that these
payments are necessary to ensure that there would be 18 to 20 competitive race
cars in the field for the 2003 season. We believe that the amounts payable to
each of the race teams affiliated with a director is consistent with
arrangements that we could enter into with unaffiliated third parties. Both of
these programs were developed to ensure the necessary participation in the
series. Without this additional funding, it was unlikely that there would have
been the necessary number of teams, which would result in defaults under certain
of our agreements with promoters and television. This could have resulted in
severe financial consequences to us.



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<PAGE>


     PURSE DISTRIBUTIONS, ENTRY SUPPORT PROGRAM AND LEASE ARRANGEMENTS. We have
entered into, and we will continue to enter into, transactions with entities
that are affiliated with our directors and/or 5% stockholders who are owners of
our race teams. Race teams that participate in the Champ Car World Series
receive purse distributions on a per race basis and from the year-end point
fund, which amounts have been paid based solely upon their performance in
specific races. All of these payments are made to our race teams regardless of
the affiliation with our directors or significant stockholders. The following
table provides information with respect to expenses incurred through June 30,
2003 by us to race teams that are or were affiliated with our directors and/or
significant stockholders:

RACE TEAM/AFFILIATED PERSON                             PURSE DISTRIBUTIONS

Newman/Haas Racing/Carl A. Haas                            $ 611,500
Forsythe Racing, Inc./Gerald R. Forsythe                     729,250
Patrick Racing, Inc./U.E. Patrick                            219,750
Derrick Walker Racing, Inc./Derrick Walker                   271,250


     In 2003, we lease engines and provide financial assistance to every team
that participates in the Champ Car World Series, including teams affiliated with
our directors and/or 5% stockholders. The financial assistance payments relate
to two programs instituted for the 2003 season, the Entry Support Program (ESP)
and the Team Assistance Program. ESP will provide up to $42,500 in cash payments
to teams, per race, for each car entered into the series.

     We have entered into a sponsorship agreement with Ford Motor Company, which
provides in part, that Ford will lease to each of the teams Ford vehicles for
their use in 2003. For ease of administration, Ford has leased these vehicles to
us and we have subleased the vehicles to each team on a net basis. There is no
net cost or benefit to us related to this arrangement.

     We purchased 100 race engines from Cosworth Racing, Inc. for a total
purchase price of $4.0 million and agreed to pay for track support in the amount
of $1.5 million for the 2003 and 2004 seasons. We in turn have leased these
engines to each team on the basis of $100,000 per entrant per race season.

     The following table lists the amount of engine lease income we have earned
and ESP expenses we have incurred to related parties through June 30, 2003.

                                             ENGINE LEASE INCOME   ESP PAYMENTS
RACE TEAM/AFFILIATED PERSON                     FROM TEAMS           TO TEAMS

Newman/Haas Racing/Carl A. Haas                  $ 100,000           $ 680,000
Forsythe Racing, Inc./Gerald R. Forsythe           100,000             680,000
Patrick Racing, Inc./U.E. Patrick                   50,000             340,000
Derrick Walker Racing, Inc./Derrick Walker         100,000             680,000


     TEAM ASSISTANCE PROGRAM. The Team Assistance Program will supply an
additional $33.0 million in team assistance spread over the 2003 race season as
described above. The following table sets forth the Team Assistance Program
expenses incurred to teams affiliated with directors and/or 5% stockholders
through June 30, 2003.




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<PAGE>


RACE TEAM/AFFILIATED PERSON                               TEAM ASSISTANCE

Derrick Walker Racing, Inc./Derrick Walker                   $ 2,962,500
Patrick Racing, Inc./U.E. Patrick                                700,000
Newman/Haas Racing/Carl A. Haas                                1,000,000

PROMOTER AGREEMENTS

     Some of our directors or stockholders either control or are affiliated with
others who control racing venues which stage Champ Car and other racing events.
We have entered into the following agreements with entities associated with
directors or 5% stockholders:

     Carl A. Haas, our director and a race team owner, is a principal owner of
Carl Haas Racing Teams, Ltd. which has entered into a Promoter Agreement with
respect to the Champ Car World Series race at the Wisconsin State Park Speedway
in West Allis, Wisconsin. The agreement granted Carl Haas Racing Teams, Ltd. the
option to promote the race in 2003 and 2004. They have elected to exercise the
option for 2003, but not for 2004. Pursuant to the Promoter Agreement, entities
affiliated with Mr. Haas have paid sanction fees to us of $1.4 million for the
2003 event. Beginning in 2004, the Champ Car World Series race at West Allis,
Wisconsin will be promoted by the Wisconsin State Fair Grounds and Mr. Haas will
no longer have an affiliation with the promotion of this event.

     Gerald R. Forsythe, a race team owner and our 23.0% stockholder, is a
principal owner of the entities which entered into Promoter Agreements with
respect to Champ Car World Series races in Monterrey, Mexico and Mexico City,
Mexico. These agreements will be amended in 2003 to reduce the amount of the
sanctions fees. Pursuant to terms thereof, a Champ Car World Series race will be
held at Monterrey through 2005 and Mexico City through 2006. These entities
affiliated with Mr. Forsythe have paid or will pay sanction fees to us in the
aggregate amount of $5.0 million for 2003, $6.6 million for 2004, $6.7 million
for 2005 and $4.0 million for 2006.

OTHER RELATED PARTY TRANSACTIONS

     In addition to the above, we have entered into the following transactions
with related parties:

     Mr. Forsythe is also a principal owner of the entity that holds our Mexican
television rights. The television rights agreement will be amended in 2003 to
extend the term through 2006. In return for the Mexican television rights, we
will receive a minimum guarantee of $325,000 in 2003, $350,000 for 2004,
$375,000 for 2005 and $400,000 for 2006. In addition, we will receive 70% of the
net profits, if any, until we reach $550,000, $600,000, $650,000 and $700,000
for each of the years ending 2003, 2004, 2005 and 2006, respectively.

     Ralph Sanchez, our director, is a principal owner of RAS Development, Inc.
which has entered into a five year lease agreement with us for office space in
Miami, Florida. Payments for this lease total $52,528, $91,098, $93,456,
$96,812, $101,259 and $43,045 for 2003, 2004, 2005, 2006, 2007 and 2008,
respectively.

     We entered into a sponsorship agreement with PacifiCare Health Services,
Inc. (PacifiCare), which provides that PacifiCare will be the "Official Health
Care Provider" for the Champ Car World Series for 2003. PacifiCare will also be
provided with two thirty second advertising slots at no cost (other than
production costs) if slots are available on each of the Champ Car race
broadcasts during 2003. As consideration for the Sponsorship Agreement,
PacifiCare agreed to become a sponsor of Newman/Haas Racing for 2003 and has
granted to us the right to negotiate a sponsorship agreement with PacifiCare for
2004. Carl A. Haas, our director, is a principal owner of Newman/Haas Racing.




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<PAGE>


PAYMENTS TO CART

     In addition to the payments described above, we receive revenue from our
race teams, including those affiliated with our directors and/or 5%
stockholders, for miscellaneous items based solely on participation in our
events. As of June 30, 2003, no race teams affiliated with our directors and/or
5% stockholders made payments to us in an amount greater than $50,000.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     With the exception of historical information contained in this Form 10-Q,
certain matters discussed are forward-looking statements. These forward-looking
statements involve risks that could cause the actual results and plans for the
future to differ from these forward-looking statements. The factors listed
below, among others, could cause the forward-looking statements to differ from
actual results and plans:

     -    competition in the sports and entertainment industry
     -    participation by race teams
     -    continued industry sponsorship
     -    regulation of tobacco and alcohol advertising and sponsorship
     -    competition by the Indy Racing League
     -    liability for personal injuries
     -    success of television contracts
     -    renewal of sanction agreements
     -    participation by suppliers
     -    success of co-promoted and self-promoted races
     -    current uncertain economic environment and weak advertising market
     -    impact of engine specifications
     -    availability of financing and financial resources in the amounts, at
          the times and on the terms required to support our business

     Additional information concerning factors that could cause actual results
to differ materially from those in the forward-looking statements is contained
in the company's SEC filings made from time to time, including, but not limited
to, the Form 10-K for the year ended December 31, 2002, as amended, and
subsequent 10-Qs. Copies of those filings are available from the company and the
company's website WWW.CHAMPCARWORLDSERIES.COM and at the SEC's website
WWW.SEC.GOV. The Company undertakes no obligation to update publicly any
forward-looking statements as a result of new information, future events, or
otherwise.

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

     FOREIGN CURRENCY EXCHANGE RISK. Because we collect the revenues and fund
the expenses of two events in currencies other than the United States dollar, we
are exposed to the risk of foreign currency exchange valuation differences. Our
policy is to minimize exposure to foreign currency exchange risk. Based on the
relatively short periods of exposure, our foreign currency exchange risk is not
considered significant.

     INTEREST RATE RISK. Our investment policy was designed to maximize safety
and liquidity while maximizing yield within those constraints. At June 30, 2003,
our investments consisted of U.S. Agency issues, letters of credit, and money
market funds. The weighted average maturity of our portfolio is 276



                                       32
<PAGE>


days. Because of the relatively short-term nature of our investments, our
interest rate risk is not considered significant.

ITEM 4.: CONTROLS AND PROCEDURES

     (a) Within the 90 days prior to the date of filing of this report, we
     carried out an evaluation, under the supervision and with the participation
     of the our management, including the our Chief Executive Officer and Chief
     Financial Officer, of the effectiveness of the design and operation of our
     disclosure controls and procedures pursuant to Exchange Act Rule 13a-14.
     Based upon that evaluation, our Chief Executive Officer and Chief Financial
     Officer concluded that our disclosure controls and procedures are effective
     in timely alerting them to material information relating to us (including
     our consolidated subsidiaries) required to be included in our periodic SEC
     filings.

     (b) There have been no significant changes in our internal controls or in
     other factors that could significantly affect internal controls subsequent
     to the date we carried out this evaluation.













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<PAGE>





                      CHAMPIONSHIP AUTO RACING TEAMS, INC.

                           PART II - OTHER INFORMATION

Item 1.   Legal Proceedings.

          On November 8, 2001, two former team owners, DellaPenna Motorsports
          and Precision Preparation, Inc., filed suit against the Company in the
          Circuit Court for the County of Wayne, State of Michigan, each
          alleging damages in excess of $1.0 million for breach of contract,
          promissory estoppel, misrepresentation, and tortious interference with
          contract and business expectancy. The claim was settled for $400,000
          in May of 2003.

          On March 26, 2002, the Company filed a complaint against Joseph F.
          Heitzler, a former director and former chairman, chief executive
          officer and president of the Company in U.S. District Court, Eastern
          District of Michigan, Southern Division. The complaint alleges that
          Mr. Heitzler breached his employment contract, breached his fiduciary
          duties and intentionally or recklessly omitted to disclose information
          to the Company in order to induce the continuation of Mr. Heitzler's
          employment agreement. The suit seeks damages of an unspecified amount.
          On March 28, 2002, Mr. Heitzler filed a complaint against the Company
          in the Superior Court of the State of California, County of Los
          Angeles. The suit seeks compensatory, exemplary and punitive damages
          in excess of $2.0 million for breach of contract, fraud, negligent
          misrepresentation, breach of covenant of good faith and fair dealing
          and declaratory relief. An amended complaint adding a count for
          tortious breach of contract in violation of public policy was filed on
          April 9, 2002.

          On July 9, 2002 a Demand for Arbitration was filed against the Company
          with the American Arbitration Association in Indianapolis, Indiana by
          Engine Developments Ltd. The Demand alleged that the Company breached
          an agreement to purchase engines and seeks unspecified damages. This
          claim was settled July 29, 2003 and the Company paid $1.75 million in
          settlement of any and all claims.

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

          (a) Exhibits.

               31.1  Form 10-Q Certification by Christopher R. Pook, Chief
                     Executive Officer dated as of August 13, 2003.

               31.2  Form 10-Q Certification by Thomas L. Carter, Chief
                     Financial Officer dated as of August 13, 2003.

               32.1  Section 906 Certification by Christopher R. Pook, Chief
                     Executive Officer dated as of August 13, 2003.

               32.2  Section 906 Certification by Thomas L. Carter, Chief
                     Financial Officer dated as of August 13, 2003.

          (b) Reports on Form 8-K.

               99.3  Item 9. Regulation FD Disclosure/Item 12. Results of
                     Operations and Financial Condition dated May 5, 2003,
                     releasing earnings information.

               99.4  Item 9. Regulation FD Disclosure dated June 16, 2003,
                     releasing guidance information.





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                                   SIGNATURES


Pursuant to the requirements 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.


                                  CHAMPIONSHIP AUTO RACING TEAMS, INC.


   Date:     August 13, 2003      By:    /s/  Thomas L. Carter
         ---------------------         --------------------------------------

                                         Thomas L. Carter
                                         Chief Financial Officer
























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