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SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 for the quarterly period ended September 30, 2005.
 o
    
    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.
  Delaware
    
    38-3389456(State or other jurisdiction of
Incorporation or organization)
    
    (IRS Employer Identification No.)
 5350
Lakeview Parkway Drive South, Indianapolis, IN 46268
   (Registrants
telephone number, including area code)
 þ o
 o þ
 o þ
  COMMON STOCK $0.01 PAR VALUE
    
    14,718,134 SHARES(class of common stock)
    
    (outstanding at September 30, 2005)
    1




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PAGEPART I  FINANCIAL INFORMATIONITEM 1.
    
    CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)Consolidated Balance Sheets as of September 30, 2005 and December 31, 2004
    
    3Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2005 and 2004
    
    4Consolidated Statement of Stockholders Equity for the Nine Months Ended September 30, 2005
    
    5Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2005 and 2004
    
    6Notes to Consolidated Financial Statements
    
    7ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    11ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
    
    16ITEM 4.
    
    CONTROLS AND PROCEDURES
    
    16PART II  OTHER INFORMATIONITEM 1.
    
    LEGAL PROCEEDINGS
    
    17ITEM 6.
    
    EXHIBITS AND REPORTS ON FORM 8-K
    
    17SIGNATURESCERTIFICATIONSEXHIBITS
 2




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CHAMPIONSHIP AUTO RACING TEAMS, INC.
 CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2005 AND DECEMBER 31, 2004
(Unaudited)
(Dollars in Thousands, Except Per Share Data)
 September 30, 2005
    
    
    December 31, 2004ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    4,943
    
    
    $
    5,459Accounts receivable (net of allowance for doubtful accounts of
$1,666 and $2,116 at September 30, 2005 and December 31, 2004)
    
    
    13
    
    
    
    8Prepaid expenses and other current assets
    
    
    95
    
    
    
    253Other
    
    
    2
    
    
    
    3Total current assets
    
    
    5,053
    
    
    
    5,723TOTAL ASSETS
    
    $
    5,053
    
    
    $
    5,723LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    58
    
    
    $
    102Accrued liabilities:Payroll
    
    
    
    
    
    
    13Professional fees and other
    
    
    51
    
    
    
    90Total current liabilities
    
    
    109
    
    
    
    205COMMITMENTS AND CONTINGENCIES (NOTE 3)
    
    
    
    
    
    
    STOCKHOLDERS EQUITY:Preferred stock, $.01 par value, 5,000,000 shares authorized, none
issued and
outstanding at September 30, 2005
and December 31, 2004Common stock $.01 par value, 50,000,000 shares authorized,
14,718,134 shares issued and outstanding at September 30, 2005 and
December 31, 2004
    
    
    147
    
    
    
    147Additional paid-in capital
    
    
    87,765
    
    
    
    87,765Accumulated deficit
    
    
    (82,968
    )
    
    
    (82,394
    )Total stockholders equity
    
    
    4,944
    
    
    
    5,518TOTAL
LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    5,053
    
    
    $
    5,723
  3




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\

CHAMPIONSHIP AUTO RACING TEAMS, INC.
 CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE and NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
(Unaudited)
(In Thousands, Except Per Share Data)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004REVENUES:Other revenue
    
    $
    
    
    
    $
    63
    
    
    $
    2
    
    
    $
    167Total revenues
    
    
    
    
    
    
    63
    
    
    
    2
    
    
    
    167EXPENSES:Administrative and indirect expenses
    
    
    160
    
    
    
    408
    
    
    
    642
    
    
    
    3,175OPERATING LOSS
    
    
    (160
    )
    
    
    (345
    )
    
    
    (640
    )
    
    
    (3,008
    )Realized gain on sale of investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13Interest income
    
    
    36
    
    
    
    54
    
    
    
    91
    
    
    
    113LOSS BEFORE INCOME TAXES
    
    
    (124
    )
    
    
    (291
    )
    
    
    (549
    )
    
    
    (2,882
    )Income tax expense (benefit)
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    (877
    )NET INCOME (LOSS)
    
    $
    (124
    )
    
    $
    (291
    )
    
    $
    (574
    )
    
    $
    (2,005
    )NET INCOME (LOSS) PER SHARE:BASIC AND DILUTED
    
    $
    (0.01
    )
    
    $
    (0.02
    )
    
    $
    (0.04
    )
    
    $
    (0.14
    )WEIGHTED
AVERAGE SHARES OUTSTANDING:BASIC AND DILUTED
    
    
    14,718
    
    
    
    14,718
    
    
    
    14,718
    
    
    
    14,718
  4




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CHAMPIONSHIP AUTO RACING TEAMS, INC.
 CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005
(Unaudited)
(In Thousands)
 AdditionalCommon Stock
    
    
    Paid-in
    
    
    Accumulated
    
    
    StockholdersShares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    EquityBALANCES, JANUARY 1, 2005
    
    
    14,718
    
    
    $
    147
    
    
    $
    87,765
    
    
    $
    (82,394
    )
    
    $
    5,518Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (574
    )
    
    
    (574
    )BALANCES, SEPTEMBER 30, 2005
    
    
    14,718
    
    
    $
    147
    
    
    $
    87,765
    
    
    $
    (82,968
    )
    
    $
    4,944
  5




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CHAMPIONSHIP AUTO RACING TEAMS, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
(Unaudited)
(Dollars in Thousands)
 2005
    
    
    2004CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (574
    )
    
    $
    (2,005
    )Adjustments to reconcile net loss to
net cash used in operating activities:Bad debt
    
    
    450
    
    
    
    (422
    )Accounts receivable
    
    
    (455
    )
    
    
    1,607Income tax refundable
    
    
    
    
    
    
    (188
    )Prepaid expenses and other assets
    
    
    158
    
    
    
    468Other
    
    
    1
    
    
    
    (13
    )Accounts payable
    
    
    (44
    )
    
    
    (2,911
    )Accrued liabilities
    
    
    (52
    )
    
    
    247Net cash used in operating activities
    
    
    (516
    )
    
    
    (3,217
    )CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from sale of investments
    
    
    
    
    
    
    7,306Acquisition of property and equipment
    
    
    
    
    
    
    3,039Net cash provided by investing activities
    
    
    
    
    
    
    10,345CASH FLOWS FROM FINANCING ACTIVITIES:Payments on notes payable
    
    
    
    
    
    
    (1,750
    )Net cash used in financing activities
    
    
    
    
    
    
    (1,750
    )NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    (516
    )
    
    
    5,378CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
    
    5,459
    
    
    
    3,211CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    4,943
    
    
    
    8,589SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash paid during the period for:Income taxes
    
    $
    25
    
    
    $
    Cash received during period from income tax refund
    
    $
    
    
    
    $
    694SUPPLEMENTAL DISCLOSURES ON NON CASH INVESTING AND
FINANCING ACTIVITIES: During 2004, the Company negotiated settlements
with certain Raceworks, LLC creditors which resulted in reductions to trade
accounts payables of approximately $640.
  6




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CHAMPIONSHIP AUTO RACING TEAMS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 1. Basis of Presentation and Summary of Significant Accounting Policies
 Basis of Presentation.
  Organization. CART CART CART
 CART CART
    7




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8




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2. Summary of Significant Accounting Policies
 Principles of Consolidation.
 Basic and Diluted Loss Per Share.
 Stock Based Compensation.
 9




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Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net lossAs reported
    
    $
    (124
    )
    
    $
    (291
    )
    
    $
    (574
    )
    
    $
    (2,005
    )Total stock-based employee compensation expense
determined
under the fair value based method, net of tax
    
    
    
    
    
    
    (399
    )
    
    
    
    
    
    
    (1,177
    )Pro forma
    
    $
    (124
    )
    
    $
    (690
    )
    
    $
    (574
    )
    
    $
    (3,182
    )Diluted
loss per shareAs reported
    
    $
    (0.01
    )
    
    $
    (0.02
    )
    
    $
    (0.04
    )
    
    $
    (0.14
    )Total stock-based employee compensation expense
determined
under the fair value based method, net of tax
    
    
    
    
    
    
    (0.03
    )
    
    
    
    
    
    
    (0.08
    )Pro forma
    
    $
    (0.01
    )
    
    $
    (0.05
    )
    
    $
    (0.04
    )
    
    $
    (0.22
    )
  Management Estimates.
 3. Commitments and Contingencies
 Litigation.
  Employment Agreements
 10




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Item 2:
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
   Critical Accounting Policies
 Use of Estimates
    Litigation
  Results of Operations Three Months Ended September 30, 2005
    11




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Results of Operations Nine Months Ended September 30, 2005
     Results of Operations Three Months Ended September 30, 2004
        12




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Results of Operations Nine Months Ended September 30, 2004
     Liquidity and Capital Resources
    Payments due by PeriodLess Than
    
    1-3
    
    4-5
    
    After 5Contractual Obligations
    
    Total
    
    1 Year
    
    Years
    
    Years
    
    YearsOperating Leases*
    
    $
    1,570,572
    
    
    $
    308,965
    
    
    $
    926,895
    
    
    $
    334,712
    
    
    $
    Employment Agreements
    
    
    55,000
    
    
    
    55,000
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    1,625,572
    
    
    $
    363,965
    
    
    $
    926,895
    
    
    $
    334,712
    
    
    $
    
 
 *
    
    Sublet to Open Wheel Racing Series for the amounts of lease obligations. 13




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Factors That May Affect Future Results
 WE CANNOT ASSURE YOU OF THE AMOUNT, IF ANY, OF ANY DISTRIBUTION TO OUR STOCKHOLDERS UNDER A PLAN OF
COMPLETE LIQUIDATION AND DISSOLUTION .
  WE MAY NOT BE ABLE TO SETTLE ALL OF OUR OBLIGATIONS TO CREDITORS.
  WE WILL CONTINUE TO INCUR CLAIMS, LIABILITIES AND EXPENSES WHICH WILL REDUCE THE AMOUNT AVAILABLE
FOR DISTRIBUTION TO STOCKHOLDERS.
  DISTRIBUTION OF ASSETS, IF ANY, TO OUR STOCKHOLDERS COULD BE DELAYED.
  IF WE FAIL TO CREATE AN ADEQUATE CONTINGENCY RESERVE FOR PAYMENT OF OUR EXPENSES AND LIABILITIES,
OUR STOCKHOLDERS COULD BE HELD LIABLE FOR PAYMENT TO OUR CREDITORS OF EACH SUCH STOCKHOLDERS PRO
RATA SHARE OF AMOUNTS OWED TO THE CREDITORS IN EXCESS OF THE CONTINGENCY RESERVE, UP TO THE AMOUNT
ACTUALLY DISTRIBUTED TO SUCH STOCKHOLDER.
 14




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WE DO NOT EXPECT TO RECOGNIZE ANY MATERIAL REVENUE IN THE FUTURE
  WE WILL CONTINUE TO INCUR THE EXPENSES OF COMPLYING WITH PUBLIC COMPANY REPORTING REQUIREMENTS.
  Related Party Transactions
    15




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Cautionary Statement Regarding Forward-Looking Statements
  www.sec.gov.
 Item 3:
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
 Interest Rate Risk.
 Item 4: CONTROLS AND PROCEDURES
   16




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CHAMPIONSHIP AUTO RACING TEAMS, INC.
 PART
II  OTHER INFORMATION
 Item 1.
    
    Legal Proceedings.
 Item 6.
    
    Exhibits and Reports on Form 8-K.
  31.1
    
    Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 by Christopher R. Pook, Chief Executive
Officer dated as of November 14, 2005.31.2
    
    Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 by Thomas L. Carter, Chief Financial Officer
dated as of November 14, 2005.32.1
    
    Certification Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by
Christopher R. Pook, Chief Executive Officer dated as of
November 14, 2005.32.2
    
    Certification Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by
Thomas L. Carter, Chief Financial Officer dated as of November 14, 2005.
  17




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SIGNATURES
  CHAMPIONSHIP AUTO RACING TEAMS, INC.Date: November 14, 2005
    
    By:
    
    /s/ Thomas L. Carter

Thomas L. CarterChief Financial Officer
 18