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 As a result of these initiatives, in 2008 management achieved each of the five key strategic objectives that it set out to achieve by the end of its third year as follows:

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Cleaned-up the parks and improved the overall guest experience; repositioned the brand by diversifying the product offering. For the second year in a row, our key guest satisfaction scores were at or above all-time highs.CORPORATE GOVERNANCE



•

Created and grew new high margin and low capital sponsorship and licensing businesses and achieved annual revenues in excess of $50 million. For 2008, we achieved sponsorship, licensing and other fees of approximately $59 million.



•

Achieved total revenue per capita of at least $40, or 20% cumulative growth from 2005.



•

Operated at a Modified EBITDA margin of at least 30%.



•

Became Free Cash Flow positive, which had never been achieved in our history. We were Free Cash Flow positive with an Adjusted EBITDA in excess of $275 million in 2008.

        Our plan for 2009 includes (i) the launch of a new attraction program featuring a new coaster themed after the Batman movie "The Dark Night"™ at Six Flags Mexico and a new wooden roller coaster themed after the Terminator Salvation™ movie at Six Flags Magic Mountain, (ii) the addition of a Wiggles World at Six Flags Fiesta Texas, (iii) substantially upgrading and relaunching the Superman Ride of Steel coaster at Six Flags New England and the floorless Medusa coaster at Six Flags Great Adventure, (iv) adding our exciting "Glow in the Park" closing parade at two additional parks, (v) continuing our efficient and targeted marketing strategies, focusing on our breadth of product and value proposition, (vi) maintaining focus on containing our operating expenses while at the same time increasing our operating days and operating hours, (vii) improving and expanding upon our branded product offerings and guest-service focused staffing initiatives in order to continue to drive guest spending growth and (viii) continuing our efforts to grow sponsorship and international revenue opportunities.

 Despite our significant achievements, owing to our debt position that existed prior to the arrival of the new management team, and the deterioration in the overall U.S. economy (including the financial markets), we remain highly leveraged and have substantial indebtedness, much of which will become due in the next few years, and significant associated debt service requirements. As of December 31, 2008, we had approximately $2.37 billion of indebtedness outstanding and had approximately $302 million of PIERS, including dividends in arrears, that are mandatorily redeemable (to the extent of assets legally available therefor) on August 15, 2009 for 100% of the liquidation preference plus accrued and unpaid dividends. The following table shows our estimated debt and other obligations and estimated capital expenditures in 2009 and 2010, excluding operating obligations whose costs are included in Adjusted EBITDA:

(1)

Does not include real estate and operating leases or distributions related to Six Flags Over Texas and Six Flags Over Georgia, including Six Flags White Water Atlanta (the "Partnership Parks") which are included in Adjusted EBITDA. Our agreements related to the Partnership Parks (the

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"Partnership Parks Agreements") require minimum annual distributions of approximately $60.7 million in 2009, which grows by the Consumer Price Index (assumed to be an annual inflation rate of 3% herein) to approximately $62.5 million in 2010 of which we would be entitled to receive approximately $20.0 million and $20.6 million in 2009 and 2010, respectively. The parties to our Partnership Parks Agreements are entitled to "put" certain of their investments in these parks to SFI for repurchase. Such amounts are not included in the foregoing table. The put period for 2009 expires on April 28, 2009. For 2009, the maximum amount of the contingent put obligation is $335.2 million, consisting of $188.6 million and $146.6 million for Six Flags Over Texas and Six Flags Over Georgia, respectively, representing approximately 50% and 59% of the ownership units of Six Flags Over Texas and Six Flags Over Georgia, respectively. There is a risk that the fear of the commencement of an in-court solution under chapter 11, in light of the deterioration in the U.S. economy, could cause investors in the Partnership Parks to "put" a greater amount of their investments to SFI than they otherwise would. As of April 22, 2009, we have received put notices from holders of units with an aggregate put price of approximately $24.6 million, but we expect to receive additional puts prior to the expiration of the put period.


Also excluded from the table are purchase obligations associated with costs that are ultimately included in Adjusted EBITDA, such as insurance, inventory, media and advertising commitments, estimated license fees to Warner Bros. and supplies, as well as liabilities related to discontinued operations, such as tax indemnifications and the ground lease in New Orleans. The table also excludes unaccrued contingent liabilities, such as $32.5 million of limited guarantees related to SFI's guarantee on a term loan secured by the hotel and indoor water park adjacent to The Great Escape park and the limited rent guarantee associated with the April 2007 sale of seven parks to PARC 7F-Operations Corporation.

(2)

Includes capital lease obligations. Payments are shown at principal amount.

(3)

Amount shown includes accrued dividends of approximately $31.3 million, including $20.8 million of accrued dividends previously deferred as of March 31, 2009.

(4)

Assumes average outstanding balance for the revolving credit facilities of $244.2 million, with an assumed 5% interest rate.

(5)

Of the expected capital expenditures, assuming revenues for 2009 and 2010 at 2008 levels, we would need to spend approximately $50,000 and $2.3 million at Six Flags Over Texas in 2009 and 2010, respectively, to satisfy our partnership requirement. We would not need to spend any money on capital expenditures at our Atlanta parks as we are well within our partnership requirements. Additionally, we are obligated to make approximately CAD$13.4 million of capital expenditures at our park in Montreal, Canada, through 2011. However, the vast majority of our capital expenditures in 2009 and beyond will be made on a discretionary basis, although such expenditures are important to the parks' ability to sustain and grow revenues.

        We have not declared quarterly dividends on the PIERS for the quarters ending June 30, 2008, September 30, 2008, December 31, 2008 and March 31, 2009. These amounts are being accrued.

        Given the currently negative conditions in the economy generally and the credit markets in particular, there is substantial uncertainty, in the absence of the successful consummation of the Restructuring Plan, or an alternative restructuring plan, that we will be able to effect a refinancing of our debt in the next few years and the PIERS on or prior to their mandatory redemption date on August 15, 2009, and meet our other obligations. As a result of the foregoing, we have explored various restructuring alternatives designed to reduce our leverage and improve our liquidity and financial and operational flexibility. Accordingly, we believe the consummation of the Restructuring Plan, of which the proposals for the Reverse Split, the capital decrease, the Equity Incentive Plan and the PIERS

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Amendments described herein are each an integral part, or an alternative restructuring plan, is critical to our continued viability.

        In the event the Restructuring Plan does not occur because the conditions set forth in "The Restructuring Plan—Conditions to the Restructuring Plan" are not met, we intend to explore all other restructuring alternatives available to us at that time, which may include an alternative out-of-court restructuring or the commencement of a chapter 11 proceeding, with or without a pre-arranged plan of reorganization. We are currently in negotiations with certain holders of our SFO 2016 Senior Notes to support a prearranged plan of reorganization in the event the Restructuring Plan is not successful. There can be no assurance as to whether we will reach any such agreement or the terms thereof. Any alternative reorganization would likely be on terms less favorable to holders of Common Stock and holders of PIERS than the terms of the Restructuring Plan and holders of Common Stock and holders of PIERS would not likely receive any distributions in a chapter 11 proceeding due to the substantial added expense and inherent uncertainty in a chapter 11 proceeding that would likely have a negative impact on our revenues and cash flows and enterprise value. For a discussion of the risks associated with carrying out the Restructuring Plan and our failure to consummate it, see "Risk Factors—Risks Relating to the Restructuring Plan" beginning on page 26. Moreover, there can be no assurance that any alternative out-of-court restructuring arrangement or plan will be pursued or accomplished.

        If we fail to consummate the Restructuring Plan on a timely basis, any alternative we may pursue, whether in or out of court, would likely take substantially longer to consummate than the Restructuring Plan, and any chapter 11 proceeding would also require confirmation by the bankruptcy court and would be subject to contested issues and objections from certain stakeholders, which would result in further delay. Any material delay in the confirmation of a chapter 11 proceeding, or the threat of rejection of any plan by the bankruptcy court, would not only add substantial expense and uncertainty to the process, but also would adversely affect our operations during this period since our operations depend, in substantial part, upon the support of a large group of licensors, lessors, vendors, suppliers, guests, sponsors and employees. Moreover, such a time consuming and disruptive proceeding would have a negative impact on our cash flows due to a likely reduction in trade credit terms and a likely decrease in customer attendance, including daily attendees to our parks and purchasers of advance and group tickets and season passes, all of whom could be concerned regarding our viability.

        Any chapter 11 filing would have adverse effects on our business and operations. The filing of a chapter 11 case would create uncertainties about our business future, which could cause (i) suppliers to attempt to cancel our contracts or restrict ordinary credit terms, require upfront payments or financial assurances of performance or refrain entirely from shipping goods, (ii) employees to become distracted from performance of their duties or more easily attracted to other career opportunities, (iii) a reduction in sponsorship and international development revenues and (iv) our guests to consider spending their discretionary dollars on other entertainment alternatives during the current economic crisis. There is a risk that the fear of commencement of a chapter 11 proceeding, in light of the deterioration in the U.S. economy, could cause investors in the Partnership Parks to "put" a greater amount of their investments to SFI than they otherwise would. Depending upon the magnitude of the puts, we may be required to seek financing for this obligation. There can be no assurance that any such financing could be obtained or the terms thereof. If we were unable to fund the puts, we could be required to forfeit the Partnership Parks to Time Warner Inc. ("Time Warner") or negotiate an alternative arrangement with them. If we are unable to fund the puts we receive or negotiate an acceptable arrangement with Time Warner, we could be required to file a chapter 11 proceeding before the conclusion of the Restructuring Plan. These concerns and effects typically become more acute when a chapter 11 proceeding continues for a protracted period without indication of how or when the case may be completed.

        In addition, if we file a chapter 11 proceeding, there is a risk that our counterparties would object to our assumption of executory contracts (including our important licenses and intellectual property),

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and if those counterparties succeed, we would lose the benefits of these agreements. We believe that many of these contracts, including, without limitation, our license agreements for the Warner Bros., DC Comics, Hanna-Barbara and Thomas the Tank Engine and Friends characters, as well as The Wiggles and our sponsorship agreements, are important to the operation of our parks and the guest experience at those parks, and that our international development agreements, including with Tatweer Dubai LLC, a member of Dubai Holding ("Tatweer") and Oryx Holdings, a Qatari-based diversified group ("Oryx"), are important to the future growth and development of our brand. In addition, we could lose our approximate 41% interest in Six Flags Great Escape Lodge & Indoor Waterpark. As with any judicial proceeding, there are also risks of unavoidable delay with the confirmation of a plan of reorganization and there are risks of objections from certain stakeholders, including the holders of the SFO 2016 Senior Notes, the SFI Notes, the SFI Convertible Notes, the PIERS and the Common Stock and any lenders that vote to reject the plan of reorganization, that would further delay the process and potentially cause the plan of reorganization to be rejected by the bankruptcy court. In addition, although we intend to seek to reinstate our Credit Agreement in any chapter 11 plan that we pursue, it is likely that, due to the favorable terms and pricing contained in our Credit Agreement, the lenders thereunder may seek to terminate, and prevent the reinstatement of our Credit Agreement. If they were successful, we do not believe we would be able to obtain a replacement facility having terms as favorable as the Credit Agreement due to current market conditions.

        If we are not able to consummate an out-of-court restructuring or commence a chapter 11 proceeding with a pre-arranged plan, we would likely become subject to a "free fall" proceeding, which would be lengthy, costly and highly disruptive, and have a more pronounced adverse effect on our business than a chapter 11 filing made pursuant to a pre-arranged plan. A "free fall" proceeding would likely involve contested issues with our multiple creditors, including our lessors, parties to supply contracts, parties to all of our license agreements and the numerous other contractual arrangements to which we are a party. Moreover, in such a proceeding, unless we are able to reinstate our Credit Agreement, we do not believe we would be able to obtain a replacement credit facility having terms as favorable as the Credit Agreement. A non-prearranged proceeding could also cause critical members of our senior management team to pursue other opportunities. As a result, it is likely that holders of Common Stock and holders of PIERS would not receive any distributions under a "free fall" proceeding.

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THE RESTRUCTURING PLAN

Overview

        The Restructuring Plan relates to SFI's 8⁷/8% Senior Notes due 2010 (the "SFI 2010 Notes"), 9³/4% Senior Notes due 2013 (the "SFI 2013 Notes"), 9⁵/8% Senior Notes due 2014 (the "SFI 2014 Notes," each an "Issue" and together with the SFI 2010 Notes and the SFI 2013 Notes, the "SFI Notes"), 4.50% Convertible Senior Notes due 2015 (the "SFI Convertible Notes") and PIERS and is generally designed to reduce our debt and interest expense requirements and improve our liquidity and financial and operational flexibility in order to allow us to compete more effectively and generate long-term growth following consummation of the Restructuring Plan. In particular, the Restructuring Plan contemplates, among other things, the transactions discussed below and proposals (3), (4), (5) and (7). For a description of the percentage of outstanding Common Stock each Issue of SFI Notes, the SFI Convertible Notes and the PIERS will receive, and the existing Common Stock will retain, in the Restructuring Plan, see the graphic "Following the Restructuring Plan" on page 19.

Exchange Offers and Consent Solicitations

        As part of the Restructuring Plan, SFI is conducting exchange offers to exchange all of the SFI Notes (the "SFI Note Exchange") and SFI Convertible Notes (the "SFI Convertible Note Exchange," collectively with the SFI Note Exchange, the "Exchange Offers") for Common Stock in order to exchange 18.5857 shares of Common Stock for each $1,000 claim (consisting of principal amount, and accrued and unpaid interest thereon through, and including, June 25, 2009) and seeking consents to amend the SFI Notes and SFI Convertible Notes' indentures to remove substantially all of the restrictive covenants and modify certain of the events of default and various other provisions contained therein (the "Proposed Amendments").

        The Proposed Amendments include, among other things, the removal of covenants regarding:

•

reports;



•

payment of taxes;



•

stay, extension and usury laws;



•

restricted payments;



•

dividends and other payment restrictions affecting subsidiaries;



•

the incurrence of indebtedness and issuance of preferred stock;



•

asset sales;



•

transactions with affiliates;



•

the creation of liens;



•

line of business;



•

corporate existence;



•

sale and leaseback transactions;



•

payments for consent; and



•

leases.

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        In addition, the Proposed Amendments include the removal of the requirement to make a change of control offer and asset sale offer and certain events of default, including, but not limited to, events of default arising as a result of:

•

any failure to comply with certain covenants and obligations in the indentures and the SFI Notes and SFI Convertible Notes (other than defaults in the payment of principal and interest);



•

any default in the payment of other indebtedness or the acceleration of other indebtedness; and



•

any final judgment.

        Holders who tender and do not revoke their SFI Notes or SFI Convertible Notes in the Exchange Offers will not be entitled to any interest on such SFI Notes or SFI Convertible Notes from June 25, 2009, regardless of when the Exchange Offers close, and any subsequent interest that would otherwise have been earned on such SFI Notes or SFI Convertible Notes will be deemed paid in full upon receipt of the total consideration in the Exchange Offers. SFI currently intends to take advantage of the applicable 30-day grace period for making the semi-annual cash interest payment due on June 1, 2009 on the SFI 2014 Notes. The cash interest that holders of the SFI 2014 Notes would otherwise be entitled has been included in the calculation of the number of shares of Common Stock such holders are being offered in the Exchange Offers and will receive in lieu of such cash interest payment.

        SFI does not currently intend to issue fractional shares of Common Stock in the Exchange Offers. Instead, any fractional shares of Common Stock will be aggregated and sold as soon as practicable after the expiration date at the then prevailing prices on the open market, on behalf of those holders who would otherwise be entitled to receive a fractional share. We expect that it may take several days to sell all of the aggregated fractional shares of Common Stock. After completing such sale, holders otherwise entitled to receive a fractional share will receive a cash payment in an amount equal to their pro rata share of the total net proceeds of that sale.

        The Exchange Offers will not affect SFI's obligation to pay principal and interest on any SFI Notes or SFI Convertible Notes that are not tendered pursuant to the Exchange Offers. The next maturity of principal of SFI Notes is February 2010, when the SFI 2010 Notes mature.

        The Exchange Offers and the consent solicitations with respect to the SFI Notes and the SFI Convertible Notes will expire at 11:59 p.m., New York City time, on June 25, 2009, unless extended. SFI reserves the right to terminate the Exchange Offers and the consent solicitations, in its sole discretion, at any time and for any reason without accepting any of the tendered SFI Notes or SFI Convertible Notes. This right of termination is for the sole benefit of SFI and may be asserted by SFI regardless of the circumstances giving rise to such decision at any time. SFI expressly reserves the right, in its sole discretion, to amend or modify at any time, or from time to time, the terms of the Exchange Offers and the consent solicitations.

Automatic Conversion of PIERS into Common Stock

        As part of the Restructuring Plan, SFI is also seeking your approval to amend the terms of the PIERS Certificate of Designation (Proposal 7) to provide, among other things, that each $25.00 of liquidation preference, including all accrued and unpaid dividends thereon through, and including, the automatic conversion of the PIERS into Common Stock at the closing of the Restructuring Plan, shall automatically convert into 0.17 shares of Common Stock upon consummation of the Restructuring Plan. Holders of PIERS will not be entitled to any additional consideration or shares of Common Stock for the accrued and unpaid dividends on their PIERS, all of which will be deemed cancelled upon the receipt of the 0.17 shares of Common Stock for each $25.00 of liquidation preference of PIERS upon conversion of the PIERS at the closing of the Restructuring Plan.

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        If the Restructuring Plan is consummated, SFI will cause the PIERS to be automatically converted into the shares of Common Stock to which they are entitled to receive in the Restructuring Plan in accordance with the terms of the Deposit Agreement and the Deposit Agreement shall terminate in accordance with its terms on such date.

        SFI does not currently intend to issue fractional shares of Common Stock in the Restructuring Plan. Instead, any fractional shares of Common Stock will be aggregated and sold as soon as practicable after the closing of the Restructuring Plan at the then prevailing prices on the open market, on behalf of those holders of PIERS who would otherwise be entitled to receive a fractional share. We expect that it may take several days to sell all of the aggregated fractional shares of Common Stock. After completing such sale, holders of PIERS otherwise entitled to receive a fractional share will receive a cash payment in an amount equal to their pro rata share of the total net proceeds of that sale.

        The Common Stock issued upon conversion of the PIERS is expected to be freely tradable and will not constitute "restricted securities" as defined in Rule 144 of the Securities Act and may generally be resold by a holder who is not (i) an "affiliate" of SFI within the meaning of Rule 144 of the Securities Act or (ii) a broker-dealer without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Common Stock was acquired in the ordinary course of such holder's business and such holders have no arrangement or understanding with any person to participate in the distribution of Common Stock. If you have any arrangement or understanding with any person to participate in the distribution of Common Stock, you (i) could not rely on the applicable interpretations of the staff of the SEC and (ii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. A broker-dealer who holds PIERS that were acquired for its own account as a result of market-making or other trading activities must comply with special rules under the Securities Act in connection with any resale of Common Stock received upon conversion of such PIERS. In addition, to comply with the securities laws of certain jurisdictions, if applicable, the Common Stock may not be offered or sold unless it has been registered or qualified for sale in such jurisdiction or an exemption from registration or qualification is available and is complied with.

        Certificates representing the Common Stock will not include restrictive legends. The Common Stock will not have the benefit of registration rights.

Conditions to the Restructuring Plan

        The consummation of the Restructuring Plan is conditioned upon a number of prerequisites, each of which may be waived by us, including: (i) at least 95% of the aggregate principal amount (the "Minimum Tender Condition") of each Issue of the outstanding SFI Notes is validly tendered for exchange and not revoked by May 29, 2009 (the "Withdrawal Deadline") in the SFI Note Exchange, such properly tendered SFI Notes not being revocable after the Withdrawal Deadline; (ii) the valid participation of at least 95% of the outstanding principal amount of the SFI Convertible Notes in the SFI Convertible Note Exchange by the Withdrawal Deadline and such validly tendered SFI Convertible Notes not being validly revoked or withdrawn on or prior to the expiration date of the Exchange Offers; (iii) the PIERS Amendments shall have become effective; (iv) SFI shall have received the required approval from its holders of Common Stock and holders of PIERS for any amendments to the Certificate of Incorporation as SFI may determine to be necessary or advisable in order to effect the Restructuring Plan (including, without limitation, approving the 1-for-100 reverse split of our Common Stock, decreasing the number of shares of Common Stock in the Certificate of Incorporation and the PIERS Amendments); (v) SFI shall have received the required approval from its stockholders for the implementation of the Equity Incentive Plan, including the issuance of Common Stock thereunder; (vi) there shall not have occurred and be continuing any event of default under the Credit Agreement or the indentures governing the SFI Notes, the SFI Convertible Notes or the SFO 2016 Senior Notes,

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as applicable, following consummation of the Restructuring Plan; and (vii) the receipt of any consents from government bodies and authorities which are required in order to consummate the Restructuring Plan, including, to the extent applicable, the expiration or early termination of the waiting period (and any extension thereof), or any necessary approvals, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act").

        The foregoing conditions are for the benefit of SFI and may be asserted by SFI regardless of the circumstances giving rise to any such condition (including any action or inaction by SFI) and may be waived by SFI, in whole or in part, at any time and from time to time. The failure by SFI at any time to exercise any of the foregoing rights will not be deemed a waiver of any other right and each right will be deemed an ongoing right that may be asserted at any time and from time to time.

Financial Advisor

        Houlihan, Lokey, Howard & Zukin Capital, Inc. has been appointed as the financial advisor ("Financial Advisor") to us in connection with the Restructuring Plan. The Financial Advisor will not be making any recommendation with regard to the merits of the Restructuring Plan and will not be soliciting, or participating in any solicitation of, any consents from any holders of SFI Notes, SFI Convertible Notes, PIERS or Common Stock in connection with the Restructuring Plan.

Employment Agreements

        On April 9, 2009, we entered into new employment agreements (the "New Agreements") with Mark Shapiro, our President and Chief Executive Officer; Jeffrey R. Speed, our Executive Vice President and Chief Financial Officer; Louis Koskovolis, our Executive Vice President, Corporate Alliances—Sponsorship; Mark Quenzel, our Executive Vice President, Park Strategy and Management; Andrew M. Schleimer, our Executive Vice President, Strategic Development and In-Park Services; and Michael Antinoro, our Executive Vice President, Entertainment and Marketing; which supersede and replace the existing employment agreements with such individuals. The Agreements provide for each executive's continued employment with us in his current position during the four year period expiring on April 1, 2013, unless sooner terminated by either party.

        The New Agreements provide for the following annual base salary and target bonus amounts for the executives:

        The New Agreements did not increase the rate of base salary for any of the executives from their current levels. The maximum annual formulaic bonus Mr. Shapiro may receive for any fiscal year is $2.6 million. The minimum annual bonus Mr. Speed will receive for any fiscal year is $250,000. Bonuses will be determined based upon the level of achievement of the following performance parameters: budgeted Adjusted EBITDA, budgeted Free Cash Flow, budgeted attendance, budgeted in-park net revenue per capita and budgeted sponsorship/licensing revenue, each weighted 20%, except that (i) 50% of Mr. Shapiro's bonus will be based on the attainment of the Adjusted EBITDA target, with the remaining targets weighted 12.5% each, and (ii) 50% of Mr. Koskovolis' bonus will be based on the attainment of the sponsorship revenue target, with the remaining targets weighted 12.5% each. No

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bonuses are payable if 90% of the Adjusted EBITDA target is not obtained, except for Mr. Koskovolis, who will be entitled to 50% of his bonus amount if the sponsorship revenue target is satisfied.

        Upon the earlier of the closing of an exchange offer for the SFI Notes and the SFI Convertible Notes, which would include this Restructuring Plan, or SFI's emergence from a chapter 11 bankruptcy (a "Triggering Event"), the executives will be entitled to receive restructuring bonuses in the following amounts:

        Restructuring bonuses are payable in a lump sum cash payment within ten business days of the Triggering Event, except that $1,000,000 of Mr. Shapiro's success bonus will become payable on the first anniversary of the Triggering Event, subject to his continued employment through such date, or, earlier, upon the termination of Mr. Shapiro's employment without "cause," for "good reason," without "good reason" in connection with a "change in control" or "significant change in board composition," or due to death or "disability" (as such terms are defined in the New Agreements).

        In addition, upon the occurrence of a Triggering Event, SFI will grant stock options and restricted stock to the executives representing the following percentages of SFI's then outstanding shares of Common Stock after giving effect to any restructuring in connection with a Triggering Event and any equity grants:

        The restricted stock will vest ratably over four years and the stock options will cliff vest after four years, subject in each case to an executive's continued employment through the applicable vesting date.

        Severance will become payable under the New Agreements upon termination of an executive's employment without "cause" or for "good reason" during the contract term. Mr. Shapiro would be entitled to receive, in addition to a pro-rated target bonus, a lump sum cash amount equal to the greater of (a) the sum of his base salary and target bonus for the remaining balance of the contract term, or (b) three times the sum of his base salary and bonus, calculated based on his annual bonus for the year. Mr. Speed would be entitled to receive the greater of (a) the sum of his base salary and target bonus for the remaining balance of the contract term, or (b) two times the sum of his base salary and target bonus. Each other executive would receive an amount equal to the sum of the executive's base salary for the remaining balance of the contract term and the executive's annual bonus for the prior year. In addition, each executive will receive twelve months (36 months for Mr. Shapiro) of continued health and life insurance coverage and all outstanding stock options and restricted stock will become fully vested, with stock options generally remaining exercisable for the balance of their terms.

        If Mr. Shapiro terminates his employment without "good reason" during the 90 day period following a "significant change in board composition" (i.e., the directors of SFI cease to hold a majority

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of seats on the Board, plus two additional Board seats), in addition to a pro-rated target bonus, Mr. Shapiro will be entitled to one-half of the severance payments and benefits that he would receive upon a termination without "cause" (as specified above). If Mr. Shapiro terminates his employment without "good reason" during the 90 day period following a "change in control," in addition to a pro-rated target bonus, Mr. Shapiro will be entitled to the severance payments and benefits that he would receive upon a termination without "cause" (as specified above). In addition, upon a "change in control" all of Mr. Shapiro's outstanding stock options and restricted stock fully vest, with continued exercisability of such stock options for the balance of their terms, subject to certain limits.

        Upon expiration of the contract term, Mr. Shapiro will be entitled to receive an amount equal to (i) 18 months base salary, plus (ii) his annual bonus for the prior fiscal year, and all of Mr. Shapiro's outstanding stock options and restricted stock will fully vest, with continued exercisability of such stock options for the balance of their terms, subject to certain limits. In addition, upon expiration of the contract term, each executive will receive a pro-rata target bonus for such year.

        The foregoing description of the New Agreements is qualified in its entirety by reference to the New Agreements, which are attached as Exhibits 10.1 through 10.6 of SFI's Current Report on Form 8-K, filed with the SEC on April 13, 2009, which is incorporated herein by reference.

Equity Incentive Plan and Other Equity-Based Compensation

        As part of the Restructuring Plan, we are also adopting the Equity Incentive Plan, which is proposal (5) contained herein, pursuant to which we may issue additional options, restricted stock and other equity-based compensation up to 12% of our outstanding Common Stock following consummation of the Restructuring on an as converted basis, including the shares in the Equity Incentive Plan.

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Organizational Chart

Before the Restructuring Plan

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        The below graphic shows the percentages of the total outstanding Common Stock each of our outstanding securities will receive following the successful consummation of the Restructuring Plan. The graphic assumes that 100% of the principal amount, including accrued and unpaid interest and dividends thereon, as applicable, of our outstanding SFI 2010 Notes, SFI 2013 Notes, SFI 2014 Notes, SFI Convertible Notes and PIERS are exchanged for or converted into Common Stock pursuant to the Restructuring Plan, but does not reflect the issuance of any equity under the Equity Incentive Plan.

Following the Restructuring Plan

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SUMMARY CONSOLIDATED HISTORICAL FINANCIAL DATA

        The following table presents the summary consolidated historical financial data of SFI for the periods set forth below. The summary consolidated historical financial data of SFI as of and for the years ended December 31, 2008, 2007 and 2006 have been derived from our audited consolidated financial statements and the accompanying notes thereto incorporated by reference in this Proxy Statement. The financial data set forth below should be read in conjunction with the historical financial statements that we incorporate by reference herein and the section entitled "Capitalization" included in this Proxy Statement.

        Our financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2008 incorporated by reference herein have been prepared assuming that we will continue as a going concern. Due to our recurring losses, stockholders' deficit and substantial liquidity needs arising in August 2009, we indicated in the notes to our financial statements that there is substantial doubt about our ability to continue as a going concern unless the Restructuring Plan, or an alternative restructuring plan is successful. Our auditors, KPMG LLP, have also included an explanatory paragraph in their opinion on our consolidated financial statements incorporated by reference herein that there is substantial doubt about our ability to continue as a going concern. We believe that the consummation of the Restructuring Plan or an alternative successful restructuring is critical to our continued viability.

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        Our financial statements for the three-year period ended December 31, 2008 and the following selected historical financial data for the three-year period ended on these dates reflect the effects of our reclassification of the results of twelve parks as discontinued operations.

(1)

Revenues and expenses of international operations are converted into U.S. dollars on a current basis as provided by U.S. generally accepted accounting principles ("GAAP").

(2)

Adjusted EBITDA, a non-GAAP measure, is defined as our net income (loss) before cumulative effect of changes in accounting principles, discontinued operations, income tax expense (benefit),

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other expense, early repurchase of debt (formerly an extraordinary loss), equity in operations of partnerships, minority interest in earnings (losses), interest expense (net), amortization, depreciation, stock-based compensation, gain (loss) on disposal of assets, interests of third parties in the Adjusted EBITDA of the four parks that are less than wholly owned (consisting of Six Flags Over Georgia, Six Flags Over Texas, Six Flags White Water Atlanta, and Six Flags Discovery Kingdom (formerly Six Flags Marine World, the minority interest in which we purchased in July 2007)), plus our interest in the Adjusted EBITDA of Six Flags Great Escape Lodge & Indoor Waterpark and dick clark productions, inc. ("dcp"). We believe that Adjusted EBITDA, Modified EBITDA and Free Cash Flow provide useful information to investors regarding our operating performance and our capacity to incur and service debt and fund capital expenditures. We believe that Adjusted EBITDA, Modified EBITDA and Free Cash Flow are used by many investors, equity analysts and rating agencies as a measure of performance. Adjusted EBITDA, Modified EBITDA and Free Cash Flow are not defined by GAAP and should not be considered in isolation or as alternatives to net income (loss), income (loss) from continuing operations, net cash provided by (used in) operating, investing and financing activities or any other financial data prepared in accordance with GAAP or as an indicator of our operating performance. Adjusted EBITDA, Modified EBITDA and Free Cash Flow as defined in this Proxy Statement may differ from similarly titled measures presented by other companies. This information should be read in conjunction with the consolidated statements of operations and statements of cash flows contained in our Consolidated Financial Statements, which are incorporated by reference into this Proxy Statement. See "Non-GAAP Financial Measures" on page 111.

The following table sets forth a reconciliation of income (loss) from continuing operations to Adjusted EBITDA, Modified EBITDA and to Free Cash Flow for the periods shown ($ in thousands):

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(3)

Excludes restricted cash.

(4)

Reflects accounting change related to adoption of EITF Topic D-98, as amended, in all periods presented. See Note 1(w) to Notes to Consolidated Financial Statements incorporated by reference.

(5)

Represents interest of third parties in the Adjusted EBITDA of Six Flags Over Georgia, Six Flags Over Texas, Six Flags White Water Atlanta, and Six Flags Discovery Kingdom (formerly Six Flags Marine World, the minority interest in which we purchased in July 2007), plus our interest in the Adjusted EBITDA of Six Flags Great Escape Lodge & Indoor Waterpark and dcp, which are less than wholly-owned.

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UNAUDITED PRO FORMA SUMMARY CONSOLIDATED FINANCIAL DATA

        The following pro forma summary consolidated financial data as of and for the year ended December 31, 2008 have been derived by the application of pro forma adjustments to our historical consolidated financial statements incorporated by reference in this Proxy Statement. The pro forma summary consolidated balance sheet data as of December 31, 2008 gives effect to the Restructuring Plan, excluding fees and expenses, as if it had occurred on the date of the consolidated balance sheet. The unaudited pro forma consolidated statements of operations data for the year ended December 31, 2008 give effect to the Restructuring Plan and the 2008 Debt Exchange if each had occurred on January 1, 2008.

        The historical consolidated financial data include certain reclassifications to conform to our current presentation. The pro forma summary consolidated financial data are presented for illustrative purposes only and are not necessarily indicative of the financial position or results of operations that actually would have been reported had the Restructuring Plan and the 2008 Debt Exchange been completed, nor is it indicative of our financial position or results of operations. The pro forma consolidated financial data assume that 100% of our outstanding SFI 2010 Notes, SFI 2013 Notes, SFI 2014 Notes, SFI Convertible Notes and PIERS are exchanged for, and automatically converted into, Common Stock pursuant to the Restructuring Plan.

        The pro forma summary consolidated financial data excludes the non-recurring impacts of the Restructuring Plan and the 2008 Debt Exchange, including (i) the impact on our deferred tax assets and valuation allowance from changes in our expectations regarding the ability to utilize tax planning strategies and the impact of the Restructuring Plan on our net operating losses, and (ii) debt extinguishment gains, including the debt extinguishment gain that would result from the Restructuring Plan, which would be the difference between the fair value of the Common Stock offered by us and the carrying amount of the extinguished debt plus the allocable transaction costs of the Restructuring Plan.

        The pro forma summary consolidated financial data are unaudited and based on assumptions that we believe are reasonable and should be read in conjunction with "Summary Consolidated Historical Financial Data," "Capitalization" and "Unaudited Pro Forma Consolidated Financial Data" beginning on pages 20, 45 and 47, respectively, and the consolidated financial statements and related notes from our Annual Report on Form 10-K for the year ended December 31, 2008 incorporated by reference in this Proxy Statement. See "Unaudited Pro Forma Consolidated Financial Data" beginning on page [

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            ] for the complete pro forma balance sheet and consolidated statement of operations related to the Restructuring Plan.

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RISK FACTORS

Prior to deciding how to vote your shares of Common Stock and PIERS, you should consider carefully all of the risks described below as well as the other information included or incorporated by reference in this Proxy Statement. The risks described below are not intended to represent a complete list of the general or specific risks that may affect holders of Common Stock and holders of PIERS. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business. If any of the following risks and uncertainties actually occurs, our business, financial condition and results of operations could be harmed substantially.

Risks Relating to the Restructuring Plan

If the Restructuring Plan is not successful, we will consider all other restructuring alternatives available to us at that time. Any alternative reorganization would likely be on terms less favorable to holders of the Common Stock and holders of the PIERS than the terms of the Restructuring Plan and holders of the Common Stock and holders of the PIERS would not likely receive any distributions in a chapter 11 proceeding.

        If the Restructuring Plan is not successful, we will consider all other restructuring alternatives available to us at that time, which may include the commencement of a chapter 11 proceeding with or without a pre-arranged plan of reorganization. There can be no assurance that any alternative out-of-court restructuring arrangement or plan will be pursued or accomplished. Any alternative reorganization would likely be on terms less favorable to holders of the Common Stock and holders of the PIERS than the terms of the Restructuring Plan and holders of the Common Stock and holders of the PIERS would not likely receive any distributions in a chapter 11 proceeding.

        If we fail to consummate the Restructuring Plan in a timely manner, any alternative we pursue, whether in or out of court, would likely take substantially longer to consummate than the Restructuring Plan, and any chapter 11 proceeding would also require confirmation by the bankruptcy court and would be subject to contested issues and objections from certain stakeholders, which would result in further delay. Any material delay in the confirmation of a chapter 11 proceeding, or the threat of rejection of any plan by the bankruptcy court, would not only add substantial expense and uncertainty to the process, but also would adversely affect our operations during this period since our operations depend, in substantial part, upon the support of a large group of licensors, lessors, vendors, suppliers, guests, sponsors and employees. Moreover, such a time consuming and disruptive proceeding would have a negative impact on our cash flows due to a likely reduction in trade credit terms and a likely decrease in customer attendance, including daily attendees to our parks and purchasers of advance and group tickets and season passes, all of whom could be concerned regarding our viability.

        Any chapter 11 filing would have adverse effects on our business and operations. The filing of a chapter 11 case would create uncertainties about our business future, which could cause (i) suppliers to attempt to cancel our contracts or restrict ordinary credit terms, require upfront payments or financial assurances of performance or refrain entirely from shipping goods, (ii) employees to become distracted from performance of their duties or more easily attracted to other career opportunities, (iii) a reduction in sponsorship and international development revenues and (iv) our guests to consider spending their discretionary dollars on other entertainment alternatives during the current economic crisis. There is a risk that the fear of the commencement of a chapter 11 proceeding, in light of the deterioration in the U.S. economy, could cause investors in the Partnership Parks to "put" a greater amount of their investments to SFI than they otherwise would. Depending upon the magnitude of the puts, we may be required to seek financing for this obligation. There can be no assurance that any such financing could be obtained or the terms thereof. If we were unable to fund the puts, we could be required to forfeit the Partnership Parks to Time Warner or negotiate an alternative arrangement with them. If we are unable to fund the puts we receive or negotiate an acceptable arrangement with Time

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Warner, we could be required to file a chapter 11 proceeding before the conclusion of the Restructuring Plan.

        In addition, if we file a chapter 11 proceeding, there is a risk that our counterparties would object to our assumption of executory contracts (including our important licenses and intellectual property), and if those counterparties succeed, we would lose the benefits of these agreements. We believe that many of these contracts, including, without limitation, our license agreements for the Warner Bros., DC Comics, Hanna-Barbara and Thomas the Tank Engine and Friends characters, as well as The Wiggles and our sponsorship agreements, are important to the operation of our parks and the guest experience at those parks, and that our international development agreements, including with Tatweer and Oryx, are important to the future growth and development of our brand. In addition, we could lose our approximate 41% interest in Six Flags Great Escape Lodge & Indoor Waterpark. As with any judicial proceeding, there are also risks of unavoidable delay with the confirmation of a plan of reorganization and there are risks of objections from certain stakeholders, including the holders of the SFO 2016 Senior Notes, the SFI Notes, the SFI Convertible Notes, the PIERS and the Common Stock and any lenders that vote to reject the plan of reorganization, that would further delay the process and potentially cause the plan of reorganization to be rejected by the bankruptcy court. In addition, although we intend to seek to reinstate our Credit Agreement in any chapter 11 plan that we pursue, it is likely that, due to the favorable terms and pricing contained in our Credit Agreement, the lenders thereunder may seek to terminate, and prevent the reinstatement of our Credit Agreement. If they were successful, we do not believe we would be able to obtain a replacement facility having terms as favorable as the Credit Agreement due to current market conditions.

        If we are not able to consummate an out-of-court restructuring or commence a chapter 11 proceeding with a pre-arranged plan, we would likely become subject to a "free fall" proceeding, which would be lengthy, costly and highly disruptive, and have a more pronounced adverse effect on our business than a chapter 11 filing made pursuant to a pre-arranged plan. A "free fall" proceeding would likely involve contested issues with our multiple creditors, including our lessors, parties to supply contracts, parties to all of our license agreements and the numerous other contractual arrangements to which we are a party. Moreover, in such a proceeding, unless we are able to reinstate our Credit Agreement, we do not believe we would be able to obtain a replacement credit facility having terms as favorable as the Credit Agreement. A non-prearranged proceeding could also cause critical members of our senior management team to pursue other opportunities. As a result, it is likely that holders of Common Stock and holders of PIERS would not receive any distributions under a "free fall" proceeding.

We may be required to file a chapter 11 proceeding before the conclusion of the Restructuring Plan depending on the magnitude of Partnership Parks puts we receive before April 28, 2009.

        The parties to our Partnership Parks Agreements are entitled to "put" certain of their investments in these parks to SFI for repurchase. The put period for 2009 expires on April 28, 2009. Time Warner has guaranteed our put obligations under the Partnership Parks Agreements if we fail to meet such obligations. For 2009, the maximum amount of the contingent put obligation is $335.2 million, consisting of $188.6 million and $146.6 million for Six Flags Over Texas and Six Flags Over Georgia, respectively, representing approximately 50% and 59% of the ownership units of Six Flags Over Texas and Six Flags Over Georgia, respectively. There is a risk that the fear of the commencement of a chapter 11 proceeding, in light of the deterioration in the U.S. economy, could cause investors in the Partnership Parks to "put" a greater amount of their investments to SFI than they otherwise would. As of April 22, 2009, we have received put notices from holders of units with an aggregate put price of approximately $24.6 million, but we expect to receive additional puts prior to the expiration of the put period. Depending upon the magnitude of the puts, we may be required to seek financing for this obligation. There can be no assurance that any such financing could be obtained or the terms thereof.

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If we were unable to fund the puts, we could be required to forfeit the Partnership Parks to Time Warner or negotiate an alternative arrangement with them. If we are unable to fund the puts we receive or negotiate an acceptable arrangement with Time Warner, we could be required to file a chapter 11 proceeding before the conclusion of the Restructuring Plan. Any such proceeding could be a "free fall" proceeding subject to the additional risks associated with such a proceeding.

Even if the Restructuring Plan is successful, we will continue to face risks.

        The Restructuring Plan contemplates, among other things, the exchange of Common Stock for the outstanding SFI Notes and the SFI Convertible Notes, and the conversion of the PIERS into Common Stock. The Restructuring Plan is generally designed to reduce the amount of our indebtedness and cash interest expense and improve our liquidity as well as our financial and operational flexibility in order to generate long-term growth. Even if the Restructuring Plan is consummated, we will continue to face a number of risks, including certain risks that are beyond our control, such as changes in economic conditions, changes in our industry, changes in consumer demand for, and acceptance of, our parks and products, inflation in energy and other costs and purchase obligations contained in the Partnership Parks Agreements. As a result of these risks and others, there is no guarantee that the Restructuring Plan will achieve our stated goals.

We may not consummate the Restructuring Plan.

        The Restructuring Plan may not be carried out if the Minimum Tender Condition and other conditions described herein are not met or the Board determines that the Restructuring Plan is not in our best interest. Any alternative reorganization could include an arrangement in or out-of-court and would likely be on terms less favorable to holders of Common Stock and holders of PIERS than the terms of the Restructuring Plan. If a protracted or non-orderly reorganization were to occur, such a chapter 11 proceeding would add substantial expense and uncertainty to the process and would adversely affect our operations during this period since our operations depend, in substantial part, upon the support of a large group of licensors, lessors, vendors, suppliers, guests sponsors and employees. Such a time consuming and disruptive proceeding would have a negative impact on our cash flows due to a likely reduction in trade credit terms and a likely decrease in customer attendance. As a result, it is likely that holders of Common Stock and holders of PIERS would not receive any distributions under an alternative restructuring plan.

Failure to consummate the Restructuring Plan or alternative restructuring plans would likely significantly impair our ability to continue as a viable business.

        We are highly leveraged and have substantial indebtedness, much of which will become due in the next few years, and significant associated debt service requirements. As of December 31, 2008, we had approximately $2.37 billion of indebtedness outstanding, excluding the PIERS that are mandatorily redeemable, to the extent of assets legally available therefor, on August 15, 2009 for 100% of the liquidation preference, plus accrued and unpaid dividends. The following table shows our estimated

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debt and other obligations and estimated capital expenditures in 2009 and 2010, excluding operating obligations whose costs are included in Adjusted EBITDA:

(1)

Does not include real estate and operating leases or distributions related to the Partnership Parks which are included in Adjusted EBITDA. Our Partnership Parks Agreements require minimum annual distributions of approximately $60.7 million in 2009, which grows by the Consumer Price Index (assumed to be an annual inflation rate of 3% herein) to approximately $62.5 million in 2010 of which we would be entitled to receive approximately $20.0 million and $20.6 million in 2009 and 2010, respectively. The parties to our Partnership Parks Agreements are entitled to "put" certain of their investments in these parks to SFI for repurchase. Such amounts are not included in the foregoing table. The put period for 2009 expires on April 28, 2009. For 2009, the maximum amount of the contingent put obligation is $335.2 million, consisting of $188.6 million and $146.6 million for Six Flags Over Texas and Six Flags Over Georgia, respectively, representing approximately 50% and 59% of the ownership units of Six Flags Over Texas and Six Flags Over Georgia, respectively. There is a risk that the fear of the commencement of a chapter 11 proceeding, in light of the deterioration in the U.S. economy, could cause investors in the Partnership Parks to "put" a greater amount of their investments to SFI than they otherwise would. As of April 22, 2009, we have received put notices from holders of units with an aggregate put price of approximately $24.6 million, but we expect to receive additional puts prior to the expiration of the put period.

Also excluded from the table are purchase obligations associated with costs that are ultimately included in Adjusted EBITDA, such as insurance, inventory, media and advertising commitments, estimated license fees to Warner Bros. and supplies, as well as liabilities related to discontinued operations, such as tax indemnifications and the ground lease in New Orleans. The table also excludes unaccrued contingent liabilities, such as $32.5 million of limited guarantees related to SFI's guarantee on a term loan secured by the hotel and indoor water park adjacent to The Great Escape park and the limited rent guarantee associated with the April 2007 sale of seven parks to PARC 7F-Operations Corporation.

(2)

Includes capital lease obligations. Payments are shown at principal amount.

(3)

Amount shown includes accrued dividends of approximately $31.3 million, including $20.8 million of accrued dividends previously deferred as of March 31, 2009.

(4)

Assumes average outstanding balance for the revolving credit facilities of $244.2 million, with an assumed 5% interest rate.

(5)

Of the expected capital expenditures, assuming revenues for 2009 and 2010 at 2008 levels, we would need to spend approximately $50,000 and $2.3 million at Six Flags Over Texas in 2009 and 2010, respectively to satisfy our partnership requirement. We would not need to spend any money on capital expenditures at our Atlanta parks as we are well within our partnership requirements. Additionally, we are obligated to make approximately CAD$13.4 million of capital expenditures at our park in Montreal, Canada, through 2011. However, the vast majority of our capital expenditures in 2009 and beyond will be made on a discretionary basis, although such expenditures are important to the parks' ability to sustain and grow revenues.

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        We have not declared quarterly dividends on the PIERS for the quarters ending June 30, 2008, September 30, 2008, December 31, 2008 and March 31, 2009. These amounts are being accrued.

        Given the currently negative conditions in the economy generally and the credit markets in particular, there is substantial uncertainty, in the absence of the successful consummation of the Restructuring Plan, or an alternative restructuring plan, that we will be able to effect a refinancing of our debt in the next few years and the PIERS on or prior to their mandatory redemption date on August 15, 2009, and meet our other obligations. As a result of the foregoing, we have explored various restructuring alternatives designed to reduce our leverage and improve our liquidity and financial and operational flexibility. Accordingly, we believe the consummation of the Restructuring Plan, of which the proposals for the Reverse Split, the capital decrease, the Equity Incentive Plan and the PIERS Amendments described herein are each an integral part, or an alternative restructuring plan, is critical to our continued viability.

A long and protracted restructuring could disrupt our business and divert the attention of our management from operation of our business and implementation of our business plan.

        If we fail to consummate the Restructuring Plan on a timely basis, any alternative we may pursue, whether in or out-of-court, would likely take substantially longer to consummate than the Restructuring Plan. A protracted restructuring would disrupt our business and would divert the attention of our management from the operation of our business and implementation of our business plan.

        The uncertainty surrounding a prolonged restructuring would also have other adverse effects on us. For example, it would also adversely affect:

•

our ability to raise additional capital;



•

our ability to capitalize on business opportunities and react to competitive pressures;



•

our ability to attract and retain employees;



•

our liquidity;



•

our relationships with guests, sponsors and key suppliers;



•

our ability to enter into long-term contracts with customers;



•

how our business is viewed by guests, regulators, investors, lenders and credit ratings agencies;



•

the amount of collateral required in the transaction of our business; and



•

our enterprise value.

We may be required to recognize cancellation of indebtedness income and our ability to utilize our net operating loss carryforwards may be limited if we successfully consummate the Restructuring Plan or a bankruptcy plan of reorganization.

        We will have cancellation of indebtedness ("COD") income if we consummate the Restructuring Plan and the value of the Common Stock issued in exchange for the SFI Notes and the SFI Convertible Notes is less than the adjusted issue price of the SFI Notes and the SFI Convertible Notes. This COD income will be excluded from taxable income, however, if the debt restructuring occurs pursuant to a bankruptcy plan of reorganization or, if not, to the extent we are insolvent, as determined under the Internal Revenue Code of 1986, as amended (the "Code"), immediately before the restructuring. If COD income is excluded from our taxable income, we must reduce our favorable tax attributes, including our net operating loss carryforwards ("NOLs"), by the amount of COD income that is excluded. To the extent we are made solvent by a debt restructuring outside of bankruptcy, the COD income would be taxable income, which may be offset with our NOLs for regular tax purposes.

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However, for alternative minimum tax ("AMT") purposes, only 90% of our taxable income may be offset with NOLs. Therefore, 10% of our AMT income, including any taxable COD income, cannot be offset with NOLs and will be subject to AMT.

        Federal legislation was recently enacted that allows an eligible taxpayer to elect to defer COD income arising from an exchange of stock for debt that occurs in 2009 or 2010. If this election is made, the taxpayer can defer tax on the COD income for five taxable years (in the case of COD income arising in 2009) or four taxable years (in the case of COD income arising in 2010), and then recognize 20% of the COD income in each of the next five taxable years beginning with 2014. If this election is made, the COD exclusions for a debt restructuring in bankruptcy or to the extent of insolvency would not apply.

        Further, our ability to utilize our NOLs will be limited by Section 382 of the Code, because the exchange of the SFI Notes and the SFI Convertible Notes for Common Stock pursuant to the Restructuring Plan is expected to cause an ownership change under the Code. As a result, an annual limitation will be imposed on the amount of our pre-ownership change NOLs that may be utilized to offset future taxable income. This annual limitation generally will be equal to the value of our stock immediately before the ownership change (or, if the ownership change occurs pursuant to a bankruptcy reorganization and an election is made, the value of our stock immediately after the ownership change), in either case, subject to certain reductions, multiplied by the "long-term tax-exempt rate" for the month in which the ownership change occurs. This rate (approximately 4.6% for ownership changes during May 2009, referred to below as the "Section 382 Rate") is published monthly by the Internal Revenue Service ("IRS"). Any portion of the annual limitation that is not used in a particular year may be carried forward and used in subsequent years.

        The annual limitation is increased by certain built-in income and gains recognized (or treated as recognized) during the five years following an ownership change (up to the total amount of built-in income and gain that existed at the time of the ownership change). Built-in income for this purpose includes the amount by which our tax depreciation expense during this five year period is less than it would be if our assets had a tax basis on the date of the ownership change equal to their fair market value. Because most of our assets are theme park assets, which are depreciated on an accelerated basis over a seven-year recovery period, we expect any NOL limitation for the five years following an ownership change to be substantially increased by built-in income and to result in a carryforward of excess limitation to future periods. Nevertheless, because the value of our outstanding Common Stock is currently low, any annual limitation resulting from an ownership change will be correspondingly low and, even after being increased by built-in income, the cumulative limitation is expected to be substantially less than the amount of our NOLs. A significant amount of our NOLs is therefore expected to expire unused as a result of an ownership change.

        More favorable rules may apply when an ownership change occurs pursuant to a bankruptcy plan of reorganization. In such case, a special bankruptcy exception (the "Bankruptcy Exception") may apply under which there would be no annual limitation on the use of our NOLs, but instead, our NOLs would be reduced by the interest we deducted on the SFI Notes and the SFI Convertible Notes exchanged for Common Stock during the pre-consummation portion of the taxable year the bankruptcy plan is consummated and the three preceding taxable years. However, if the Bankruptcy Exception applies and a second ownership change occurs during the two years following consummation, all of our NOLs at the time of the second ownership change would be effectively eliminated. The Bankruptcy Exception would apply if our stockholders and qualified creditors receive (as a result of being stockholders and qualified creditors) stock representing at least 50 percent of the value and voting power of our stock after consummation of the bankruptcy plan. Even if we do not qualify for the Bankruptcy Exception or elect for it not to apply, the annual NOL limitation on the use of NOLs after an ownership change that occurs pursuant to a bankruptcy reorganization is computed in a more favorable way. Rather than multiplying the Section 382 Rate by the value of our stock immediately

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before consummation, the Section 382 Rate would be multiplied by the value of our stock immediately after consummation (or if less, the value of our assets immediately before consummation).

Risks for Holders of Common Stock and Holders of PIERS

We will require a significant amount of cash to service our indebtedness and to fund capital expenditures and other obligations after completion of the Restructuring Plan. Our ability to generate cash depends on many factors beyond our control.

        After completion of the Restructuring Plan, we expect to have approximately $1.5 billion of outstanding indebtedness on a pro forma basis. Our ability to make scheduled payments of principal of, or to pay the interest on, or to refinance, our indebtedness, or to fund planned capital expenditures will depend on our future performance, which, to a large extent, is subject to general economic conditions, financial, competitive, legislative, regulatory, political, business and other factors that are beyond our control. If the Restructuring Plan is completed, we will still be required to service our remaining outstanding indebtedness, including under our Credit Agreement and our SFO 2016 Senior Notes, and any SFI Notes and SFI Convertible Notes that do not participate in the Restructuring Plan, and to satisfy the following additional obligations with respect to the Partnership Parks:

•

We must make annual distributions to our partners in the Partnership Parks, which will amount to approximately $60.7 million in 2009 (of which we will receive approximately $20.0 million in 2009 as a result of our ownership interest in the parks) with similar amounts (adjusted for changes in cost of living) payable in future years.



•

We must spend a minimum of approximately 6% of each park's annual revenues over specified periods for capital expenditures.



•

Each year we must offer to purchase a specified maximum number of partnership units from our partners in the Partnership Parks, which number accumulates to the extent units are not tendered. Since only an immaterial number of units have been tendered in the annual offerings to purchase, the maximum number of units that we could be required to purchase in 2009 would result in an aggregate payment by us of approximately $335.2 million. The annual incremental unit purchase obligation (without taking into account accumulation from prior years) aggregates approximately $31.1 million for both parks based on current purchase prices. As we purchase additional units, we are entitled to a proportionate increase in our share of the minimum annual distributions.

        We expect to use cash flow from the operations at these parks to satisfy our annual distribution and capital expenditure obligations with respect to these parks before we use any of our other funds. The two partnerships generated approximately $37.9 million of aggregate net cash provided by operating activities after capital expenditures during 2008 (net of advances from the general partner). The obligations relating to Six Flags Over Georgia continue until 2027 and those relating to Six Flags Over Texas continue until 2028.

        Based on estimated interest rates for floating-rate debt and after giving effect to applicable interest rate hedging arrangements we entered into in February 2008, annual cash interest payments for 2009 on non-revolving credit debt outstanding at December 31, 2008 and anticipated levels of working capital revolving borrowings for 2009 will aggregate approximately $105 million net of interest income on a pro forma basis, assuming all of the SFI Notes and the SFI Convertible Notes are tendered in the Restructuring Plan. None of the facilities under the Credit Agreement mature before March 2013, except that $8.5 million of principal amortizes each year. At December 31, 2008, we had approximately $210.3 million of cash and cash equivalents. As of December 31, 2008, we had no credit available for borrowings under our Credit Agreement.

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        We have guaranteed on a limited basis the payment of a $33.0 million term loan incurred by HWP Development LLC (a joint venture in which we own an approximate 41% interest) for the purpose of refinancing the construction and development of a hotel and indoor water park project located adjacent to The Great Escape park near Lake George, New York, which opened in February 2006. At December 31, 2008, approximately $32.7 million was outstanding under the term loan. In the event we are required to fund amounts under the guarantee, our joint venture partners must reimburse us for their respective pro rata share or have their joint venture ownership diluted or forfeited. Our guarantee will be released five years following full payment and discharge of the term loan, which matures on December 16, 2017.

        Although we are contractually committed to make approximately CAD$13.4 million of capital and other expenditures at La Ronde no later than May 1, 2011, the vast majority of our capital expenditures in 2009 and beyond will be made on a discretionary basis. We spent $90.3 million (net of property insurance recoveries) on capital expenditures for all of our continuing operations in the 2008 calendar year and we plan on spending approximately $105 million on capital expenditures in 2009.

        Our high level of debt, stockholders' deficit and other obligations could have important negative consequences to us and investors in our securities. These include:

•

We may not be able to satisfy all of our obligations, including, but not limited to, our obligations under the instruments governing our outstanding debt, which would cause a cross-default or cross-acceleration on most of our other debt.



•

We could have difficulties obtaining the necessary financing in the future for working capital, capital expenditures, debt service requirements, Partnership Park obligations, refinancings or other purposes.



•

We will have to use a significant part of our cash flow to make payments on our debt and to satisfy the other obligations set forth above, which reduces the capital available for operations and expansion.



•

Adverse economic or industry conditions may have more of a negative impact on us.

        We cannot be sure that cash generated from our parks will be as high as we expect or that our expenses will not be higher than we expect. Because a large portion of our expenses are fixed in any given year, our operating cash flow margins are highly dependent on revenues, which are largely driven by attendance levels, in-park spending and sponsorship and licensing activity. Although the Restructuring Plan, if successful, is expected to significantly lower our leverage, if cash generated from our parks is not sufficient, we may need to refinance all or some of our remaining debt and other obligations or secure new financing. If we are unable to obtain financing in the future, or to do so on favorable terms, it would have a negative effect on our operations and our liquidity. If we are unable to satisfy our obligations, we will be forced to adopt an alternative strategy that may include actions such as selling assets, restructuring or refinancing indebtedness or seeking equity capital. We have agreed in our Credit Agreement and in our SFO 2016 Senior Notes to limit the amount of additional debt we will incur.

        Due to the seasonal nature of our business, we are largely dependent upon our revolving facilities totaling $275.0 million to fund off-season expenses. Our ability to borrow under the revolving facilities is dependent upon compliance with certain conditions, including a senior secured leverage ratio and the absence of any material adverse change. If we were to become unable to borrow under the revolving facilities, we would likely be unable to pay in full our off-season obligations and may be unable to meet our repurchase obligations (if any) with respect to repurchases of partnership units in the Partnership Parks. The working capital revolving credit facility expires in March 2013.

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The market price of the Common Stock could decrease as a result of the impact of the significant increase in the number of our outstanding shares that may result from the issuance of shares of Common Stock in the Restructuring Plan, including pursuant to the Exchange Offers and upon the conversion of the PIERS, and from additional exchanges we may pursue in the future.

        As of December 31, 2008, assuming a 1-for-100 reverse stock split, we would have had approximately 977,000 outstanding shares of Common Stock, all of which are transferable without restriction or further registration under the Securities Act, except for any shares held by our affiliates. As of that date, assuming a 1-for-100 reverse stock split, we also had outstanding options held by management and directors to purchase approximately 70,000 shares of our Common Stock and under our current option plans we may issue options to purchase approximately an additional 36,000 shares of our Common Stock. Assuming that all of the SFI Notes and SFI Convertible Notes are exchanged for Common Stock in the Exchange Offers, we would issue approximately             million shares of Common Stock in the Exchange Offers on a post Reverse Split basis. Moreover, assuming that all outstanding PIERS are converted into Common Stock pursuant to the PIERS Amendments, we would issue approximately             million additional shares of Common Stock as part of the Restructuring Plan. The impact of the issuance of a significant amount of Common Stock may place substantial downward pressure on the market price of our Common Stock.

        The Common Stock issued pursuant to the Restructuring Plan is expected to be freely tradable and will not constitute "restricted securities" as defined in Rule 144 of the Securities Act and may generally be resold by a holder who is not (i) an "affiliate" of SFI within the meaning of Rule 144 of the Securities Act or (ii) a broker-dealer without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Common Stock was acquired in the ordinary course of such holders' business and such holders have no arrangement or understanding with any person to participate in the distribution of Common Stock.

        As part of the Restructuring Plan, we are also adopting the Equity Incentive Plan, pursuant to which we may issue additional options, restricted stock and other equity-based compensation up to 12% of our outstanding Common Stock following the consummation of the Restructuring Plan on an as converted basis, including the shares in the Equity Incentive Plan.

        The sale or expectation of sales of a large number of shares of Common Stock in the public market might negatively affect the market price of our Common Stock.

Restrictive covenants in the terms of our financings may reduce our operations and financial flexibility, which may prevent us from capitalizing on business opportunities.

        Our Credit Agreement and the SFO 2016 Senior Notes contain a number of operating and financial covenants restricting Six Flags Theme Parks Inc.'s, SFO's and its subsidiaries' ability to, among other things:

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incur additional indebtedness;



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create liens on our assets;



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pay dividends or distributions on, or redeem or repurchase, our capital stock;



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make investments;



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transfer or sell assets;



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guarantee debt;



•

restrict dividends and other payments to us;

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consolidate, merge or transfer all or substantially all of our assets and the assets of our subsidiaries; and



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engage in unrelated businesses.

        In addition, under our Credit Agreement, SFI and its subsidiaries are required to comply in certain circumstances with a senior secured leverage ratio and a leverage ratio. If we breach any of the covenants contained in our Credit Agreement or the indenture of the SFO 2016 Senior Notes, the principal of, and accrued interest on, the applicable debt could become due and payable. In addition, that default could constitute a cross-default under the instruments governing our other indebtedness. If a cross-default occurs, the maturity of almost all of our indebtedness could be accelerated and become immediately due and payable. If that happens, we would not be able to satisfy our debt obligations, which would have a substantial material adverse effect on our ability to continue as a going concern. We cannot assure you that we will be able to comply with these restrictions in the future or that our compliance would not cause us to forego opportunities that might otherwise be beneficial to us.

If the Restructuring Plan is consummated, but not all of the SFI Notes and SFI Convertible Notes are validly tendered (and not validly revoked) in Restructuring Plan, we will continue to have SFI Notes and SFI Convertible Notes outstanding following consummation of the Restructuring Plan and such holders who do not participate in the Restructuring Plan will be entitled to receive interest on such SFI Notes and SFI Convertible Notes, as applicable, and payment of principal at maturity. The next maturity of principal of SFI Notes is February 2010, when the SFI 2010 Notes mature.

        It is a condition to the consummation of the Restructuring Plan that holders of at least 95% (or such lesser amount as consented by us) of the total outstanding principal amount of each Issue of the SFI Notes tender their SFI Notes in the SFI Note Exchange by the Withdrawal Deadline and holders of at least 95% (or such lesser amount as consented to by us) of the total outstanding principal amount of the SFI Convertible Notes tender their SFI Convertible Notes in the SFI Convertible Note Exchange by the Withdrawal Deadline and not validly revoke or withdraw such tenders on or prior to the expiration date. There can be no assurance that holders of such percentages will validly tender and not validly revoke their SFI Notes and their SFI Convertible Notes, or that we will waive this condition, and consummate the Restructuring Plan with a lower percentage of validly tendered SFI Notes and SFI Convertible Notes. The as adjusted capitalization included in this Proxy Statement under "Capitalization" was prepared on the assumption that 100% of the SFI Notes and the SFI Convertible Notes would be tendered in the Restructuring Plan. In addition, holders of SFI Notes and SFI Convertible Notes who do not participate in the Restructuring Plan will be entitled to receive interest on such SFI Notes and SFI Convertible Notes and payment with respect to the principal amount of such SFI Notes and the SFI Convertible Notes at maturity. The next maturity of principal of SFI Notes is February 2010, when the SFI 2010 Notes mature.

We have not paid cash dividends on our Common Stock and do not currently anticipate doing so in the foreseeable future.

        We have not paid cash dividends to date on our Common Stock and do not currently anticipate paying any cash dividends on our Common Stock in the foreseeable future. The terms of the Credit Agreement and the SFO 2016 Senior Notes restrict our ability to pay cash dividends on our Common Stock and repurchase shares of our Common Stock.

Changes in our credit ratings may adversely affect the price of our Common Stock and negatively impact our ability to refinance our remaining debt.

        Credit rating agencies continually review their ratings for the companies they follow, including us. In March 2009, Moody's Investors Service downgraded (i) our corporate family rating to "Ca" from

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"Caa2," (ii) our probability of default to "Ca" from "Caa2" and (iii) the debt rating of the facility under the Credit Agreement to "Caa1" from "B2." In April 2009, Standard & Poor's Ratings Service downgraded (i) our corporate credit rating to "D" from "CCC" and (ii) our debt rating of the Credit Agreement to "CCC+" from "B." Both rating agencies have placed our ratings on "negative outlook." A further negative change in our ratings or the perception that such a change could occur, which would be likely to occur if we were to commence a chapter 11 proceeding, may further adversely affect the market price of our securities, including our Common Stock and public debt.

We are a holding company and access to the cash flow of most of our subsidiaries is limited.

        We are a holding company whose primary assets consist of shares of stock or other equity interests in our subsidiaries, and we conduct substantially all of our current operations through our subsidiaries. Almost all of our income is derived from our subsidiaries. Accordingly, we will be dependent on dividends and other distributions from our subsidiaries to generate the funds necessary to meet our obligations, including the payment of principal and interest on our indebtedness. We had $210.3 million of cash and cash equivalents on a consolidated basis at December 31, 2008, of which $4.4 million was held at the holding company level.

        Other than our holdings in the Partnership Parks, all of our current operations are conducted by subsidiaries of SFO, our principal direct wholly-owned subsidiary. We may, in the future, transfer other assets to SFO or other entities owned by us. The Credit Agreement and SFO 2016 Senior Notes limit the ability of SFO to pay dividends or make other distributions to us. SFO may not make cash distributions to us unless it is in compliance with the covenants set forth in the Credit Agreement and SFO 2016 Senior Notes and it is not otherwise in default thereunder. If it is in compliance, SFO is permitted to make dividends to us in certain circumstances.

Anti-takeover provisions in our corporate documents and the law of the State of Delaware as well as change of control provisions in certain of our debt and other agreements could delay or prevent a change of control, even if that change would be beneficial to holders of Common Stock or PIERS or have a materially negative impact on our business.

        Certain provisions in our Certificate of Incorporation and in our debt instruments and those of our subsidiaries may have the effect of deterring transactions involving a change in control of us, including transactions in which holders of Common Stock and holders of PIERS might receive a premium for their shares.

        Our Certificate of Incorporation will provide for the issuance of up to 5,000,000 shares of preferred stock with such designations, rights and preferences as may be determined from time to time by the Board. The authorization of preferred shares empowers the Board, without further stockholder approval, to issue preferred shares with dividend, liquidation, conversion, voting or other rights superior to and/or in preference of the voting power or other rights of the holders of our Common Stock. If issued, the preferred stock could also dilute the holders of our Common Stock and could be used to discourage, delay or prevent a change of control of us.

        So long as our Common Stock is held of record by more than 2,000 holders or we are listed on a national securities exchange, we are also subject to the anti-takeover provisions of the General Corporation Law of the state of Delaware, which could have the effect of delaying or preventing a change of control in some circumstances. Furthermore, upon a change of control, the holders of substantially all of our outstanding indebtedness are entitled at their option to be repaid in cash. These provisions may have the effect of delaying or preventing a change of control. All of these factors could materially adversely affect the price of our Common Stock.

        On December 2, 2008, the Board adopted a stockholder rights plan (the "Rights Plan") and declared a dividend distribution of one stock purchase right (a "Right") for each outstanding share of

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Common Stock. The distribution was paid on December 17, 2008 to stockholders of record as of the close of business on December 17, 2008. Each Right, if and when it becomes exercisable, entitles the holder to buy one one-thousandth (1/1000) of a share of our preferred stock, designated as Series A Junior Preferred Stock, at a price of $1.25 per 1/1000 of a share subject to adjustment (the "Exercise Price"). If any person or group becomes the beneficial owner of fifteen percent (15%) or more of our Common Stock at any time after the date of the Rights Plan (with certain limited exceptions), then each Right not owned by such person or group will entitle its holder to purchase, at the Exercise Price, shares of our Common Stock or, in certain circumstances, common stock of the acquiring person, having a market value of twice the Exercise Price. Our Rights Plan could discourage, delay or prevent a change of control of us. The description and terms of the Rights are set forth in a rights agreement (the "Rights Agreement") between us and The Bank of New York Mellon ("Rights Agent").

        In addition, our Credit Agreement, the indentures governing the SFI Notes, the SFI Convertible Notes and the SFO 2016 Senior Notes and the PIERS Certificate of Designation contain provisions pursuant to which it would be an event of default under our Credit Agreement and we would be required to offer to repurchase the SFI Notes, the SFI Convertible Notes, the SFO 2016 Senior Notes and, to the extent of assets lawfully available therefor, the PIERS if any "person" becomes the beneficial owner of more than 35% of our Common Stock. This could deter certain parties from seeking to acquire us and if any "person" were to become the beneficial owner of more than 35% of our Common Stock prior to the consummation of the Restructuring Plan, we would not be able to repay or repurchase such indebtedness and PIERS and may not be able to complete the Restructuring Plan in its current form, or at all, and we could be subject to a non-prearranged proceeding. Furthermore, if any holder of SFI Notes, SFI Convertible Notes or PIERS were to become the beneficial owner of more than 35% of our Common Stock in the Restructuring Plan, it would be an event of default under our Credit Agreement and we would be required to repurchase the SFI Notes, the SFI Convertible Notes and the SFO 2016 Senior Notes at 101%, plus accrued and unpaid interest and, to the extent of assets lawfully available therefor, the PIERS at 100% of the liquidation preference, plus accrued and unpaid dividends thereon. We do not believe we would be able to repay, repurchase or refinance all of such indebtedness and the PIERS and could become subject to a non-prearranged proceeding.

        We have the exclusive right to use certain Warner Bros. and DC Comics characters in our theme parks in the United States (except in the Las Vegas metropolitan area), Canada, Mexico and other countries. Warner Bros. can terminate these licenses under certain circumstances, including the acquisition of us by persons engaged in the movie or television industries. This could deter certain parties from seeking to acquire us.

Risks Related to a Chapter 11 Proceeding

A chapter 11 filing to implement a bankruptcy will adversely impact our business.

        As with any judicial proceeding, there are risks of unavoidable delay with a chapter 11 proceeding and there are risks of objections from certain stakeholders, including the holders of the SFO 2016 Senior Notes, the SFI Notes, the SFI Convertible Notes, the PIERS and the Common Stock and any lenders that vote to reject a chapter 11 plan. Any material delay in the confirmation of a chapter 11 proceeding, or the threat of rejection of any plan by the bankruptcy court, would not only add substantial expense and uncertainty to the process, but also would adversely affect our operations during this period since our operations depend, in substantial part, upon the support of a large group of licensors, lessors, vendors, suppliers, guests, sponsors and employees. Moreover, the mere filing of a "bankruptcy case," even one pursuant to a pre-arranged plan, would have adverse effects on our business and operations.

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        Any chapter 11 filing would have adverse effects on our business and operations. The filing of a chapter 11 case would create uncertainties about the future of our business, which could cause (i) suppliers to attempt to cancel our contracts or restrict ordinary credit terms, require upfront payments or financial assurances of performance or refrain entirely from shipping goods, (ii) employees to become distracted from performance of their duties or more easily attracted to other career opportunities, (iii) a reduction in sponsorship and international development revenues and (iv) our guests to consider spending their discretionary dollars on other entertainment alternatives during the current economic crisis. There is also a risk that the fear of the commencement of a chapter 11 proceeding, in light of the deterioration in the U.S. economy, could cause investors in the Partnership Parks to "put" a greater amount of their investments to SFI than they otherwise would. Depending upon the magnitude of the puts, we may be required to seek financing for this obligation. There can be no assurance that any such financing could be obtained or the terms thereof. If we were unable to fund the puts, we could be required to forfeit the Partnership Parks to Time Warner or negotiate an alternative arrangement with them. If we are unable to fund the puts we receive or negotiate an acceptable arrangement with Time Warner, we could be required to file a chapter 11 proceeding before the conclusion of the Restructuring Plan. Also, pursuant to our interest rate swap arrangements, a chapter 11 filing could result in the acceleration of our payments thereunder, which depending upon then existing interest rates could result in a substantial payment to the counterparty. Some of these concerns and effects typically become more acute when a chapter 11 case continues for a protracted period without indication of how or when the case may be completed.

Our business may be negatively affected if we are unable to assume our executory contracts.

        We expect that any prearranged plan we pursue will provide for the assumption of most, if not all, of our executory contracts and real property leases, except for leases that may be rejected. In assuming these executory contracts and leases, we expect to seek to preserve the benefit and value to us of these agreements. In certain situations, including with respect to many of our important licenses and intellectual property, counterparties will have the opportunity to object to our assumption of these executory contracts. Accordingly, if we file a prearranged plan, there is a risk that our counterparties may object to our assumption of executory contracts (including our important licenses and intellectual property), and if those counterparties succeed, we would lose the benefits of these agreements. We believe that many of these contracts, including, without limitation, our license agreements for the Warner Bros., DC Comics, Hanna-Barbara and Thomas the Tank Engine and Friends characters, as well as The Wiggles and our sponsorship agreements, are important to the operation of our twenty parks and the guest experience at those parks, and that our international development agreements, including with Tatweer and Oryx, are important to the future growth and development of our brand. In addition, we could lose our approximate 41% interest in Six Flags Great Escape Lodge & Indoor Waterpark. In addition, although we intend to seek to reinstate our Credit Agreement in any chapter 11 proceeding that we pursue, it is likely that, due to the favorable terms and pricing contained in our Credit Agreement, the lenders thereunder may seek to terminate, and prevent the reinstatement of our Credit Agreement. If they were successful, we do not believe we would be able to obtain a replacement facility having terms as favorable as the Credit Agreement due to current market conditions.

        If the bankruptcy court finds that any prearranged plan we pursue cannot be implemented, we would likely become subject to a "free fall" proceeding. In this situation, we would be compelled to assume, assume and assign, or reject our executory contracts and real property leases during the course of the proceeding. Not only is this process extremely costly, time consuming and distracting, but we would also face material risk that we would not be able to assume certain of these agreements, requiring the rejection of executory contracts and real property leases critical to our operations. Under chapter 11, we would be required to make the determination of whether to assume, assume and assign, or reject all of our real property leases within 210 days. These time constraints would prove difficult for

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us to achieve and could result in us making less favorable decisions than could be made in a more orderly process.

Any plan we pursue may not become effective.

        Even if we pursue a chapter 11 filing and all classes of claims and interest accept or are deemed to accept our plan, there can be no assurance that the plan will be confirmed by the U.S. Bankruptcy Court, which may decline to confirm the plan if certain standards are not satisfied. Section 1129 of the U.S. Bankruptcy Code, which sets forth the standards for confirmation, requires, among other things, that (i) it is not likely that the confirmation of a plan of reorganization will be followed by the need for further financial reorganization or a liquidation not provided for in the plan, and (ii) the value of distributions to dissenting holders of claims and interests will not be less than the value of such distributions if we were liquidated under chapter 7 of the U.S. Bankruptcy Code. There can be no assurance that the U.S. Bankruptcy Court will approve any plan we pursue. If the U.S. Bankruptcy Court concludes that the requirements of Section 1129 of the U.S. Bankruptcy Code have not been met, we could be required to repeat one or all of the steps in the process of seeking votes to accept or reject our plan or to restart the process from the beginning by filing another plan and disclosure statement, seeking approval from the U.S. Bankruptcy Court of the disclosure statement, soliciting votes from creditors, and seeking U.S. Bankruptcy Court confirmation of the new plan.

A chapter 11 filing made otherwise than pursuant to a pre-arranged plan would have a more pronounced adverse effect on our business than a chapter 11 filing made pursuant to a pre-arranged plan.

        If the Restructuring Plan is not consummated and we determine, or the bankruptcy court finds, that a pre-arranged plan cannot be implemented, we would likely become subject to a "free fall" proceeding, which would be a lengthy, costly and highly disruptive proceeding, and have a more pronounced adverse effect on our business than a chapter 11 filing made pursuant to a pre-arranged plan. A "free fall" proceeding would likely involve contested issues with our multiple creditors, including our lessors, parties to supply contracts, parties to all of our license agreements and the numerous other contractual arrangements to which we are a party. We believe that many of these contracts, including, without limitation, our license agreements for the Warner Bros., DC Comics, Hanna-Barbara and Thomas the Tank Engine and Friends characters, as well as The Wiggles and our sponsorship agreements, are important to the operation of our twenty parks and the guest experience at those parks, and that our international development agreements, including with Tatweer and Oryx, are important to the future growth and development of our brand. Moreover, in such a proceeding, unless we are able to reinstate our Credit Agreement, we do not believe we would be able to obtain a replacement credit facility having terms as favorable as the Credit Agreement. A non-prearranged proceeding could also make it more likely that critical members of our senior management team would pursue other opportunities. Moreover, such a time consuming and disruptive chapter 11 proceeding would result in significantly increased costs and have a negative impact on our cash flows due to a likely reduction in trade credit terms and increase the possibility of a decrease in customer attendance, including daily attendees to our parks and purchasers of advance and group tickets and season passes, all of whom could be concerned regarding our viability. As a result, it is likely that holders of Common Stock and holders of PIERS would not receive any distributions under a pre-arranged plan.

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Risks Relating to Our Business

We have a history of net losses, an accumulated stockholders' deficit and pending obligations for which we do not currently have sufficient liquidity. Accordingly, we have stated in our financial statements incorporated by reference herein that there is substantial doubt about our ability to continue as a going concern unless a successful restructuring occurs.

        We have had a history of net losses. Our net losses are principally attributable to insufficient revenue to cover our relatively high percentage of fixed costs, including the interest costs on our debt and our depreciation expense. We also have an accumulated stockholders' deficit of $443.8 million at December 31, 2008. Additionally, our PIERS are required to be redeemed in August 2009, at which time we will be required to redeem (to the extent of assets legally available therefor) all of the PIERS for cash at 100% of the liquidation preference ($287.5 million), plus accrued and unpaid dividends ($31.3 million assuming dividends are accrued and not paid through the mandatory redemption date). Given the current negative conditions in the economy generally and the credit markets in particular, there is substantial uncertainty that we will be able to effect a refinancing of our debt in the next few years and the PIERS on or prior to their mandatory redemption date on August 15, 2009.

        If we are unable to refinance or restructure the PIERS at or prior to their mandatory redemption date, such failure would constitute a default under our Credit Agreement, which would permit the lenders to accelerate the obligations thereunder. If the lenders were to accelerate the amounts due under the Credit Agreement, a cross-default would also be triggered under our public debt indentures, which would likely result in most or all of our long-term debt becoming due and payable. In that event, we would be unable to fund these obligations. Such a circumstance would have a material adverse effect on our operations and the interests of our creditors and stockholders. Accordingly, we have stated in our financial statements incorporated by reference herein that there is substantial doubt about our ability to continue as a going concern unless a successful restructuring occurs.

        We believe the consummation of the Restructuring Plan, or an alternative restructuring plan, is critical to our continued viability. Any restructuring will likely be subject to a number of conditions, many of which will be outside of our control, including the agreement of our PIERS holders, creditors and other parties, and may limit our ability to utilize our net operating loss carry forwards if there is an ownership change, which is likely. We can make no assurances that the Restructuring Plan or any alternative out-of-court restructuring that we pursue will be successful, or what the terms thereof would be or what, if anything, our existing debt and equity holders would receive in any restructuring, which will depend on our enterprise value, although we believe that any restructuring would be highly dilutive to our existing equity holders and certain debt holders. In addition, we can make no assurances with respect to what the value of our debt and equity will be following the consummation of any restructuring. Our auditors, KPMG LLP, have also included an explanatory paragraph in their opinion on our consolidated financial statements incorporated by reference herein that there is substantial doubt about our ability to continue as a going concern.

        We may be compelled to seek an in-court solution in the form of a filing under chapter 11 if we are unable to successfully consummate the Restructuring Plan, negotiate an alternative timely out-of-court restructuring agreement with our PIERS holders, common stockholders and creditors, or we are unable to fund or finance the "puts" we may receive from investors in the Partnership Parks. Such a court filing would likely occur prior to the mandatory redemption date of the PIERS on August 15, 2009 or well in advance of such date, if we were to conclude at such time that an out-of-court solution is not feasible or advantageous.

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The global financial crisis and recession may have an adverse impact on our business and financial condition that we currently cannot predict.

        The global financial crisis and recession may have an adverse impact on our business and our financial condition. The current negative economic conditions affect our guests' levels of discretionary spending. A decrease in discretionary spending due to decreases in consumer confidence in the economy or us, a continued economic slowdown or further deterioration in the economy could adversely affect the frequency with which our guests choose to attend our theme parks and the amount that our guests spend on our products when they visit. This would lead to a decrease in our revenues, operating income and cash flows.

        Additionally, the global financial crisis and recession could impact our ability to obtain supplies, services and credit as well as the ability of third parties to meet their obligations to us, including, for example, payment of claims by our insurance carriers and/or the funding of our line of credit by the participating lenders in the Credit Agreement.

        Although we believe that we have sufficient liquidity to operate until the mandatory redemption of the PIERS in August 2009, a significant decrease in revenues and cash flows due to the impact of our financial condition and the overall economy or an increase in unanticipated cash obligations, such as the Partnership Parks puts, could result in us having an unanticipated cash shortfall, which could compel us to file under chapter 11 before we have completed our efforts to obtain an out-of-court restructuring. Such a circumstance would likely cause a "free fall" proceeding, which would have a material adverse effect on our business.

Factors impacting attendance, including local conditions, events, natural disasters, disturbances and terrorist activities, can adversely impact park attendance.

        Lower attendance at our parks may be caused by various local conditions, events, weather or natural disasters. In addition, since some of our parks are near major urban areas and appeal to teenagers and young adults, there may be disturbances at one or more parks which negatively affect our image. This may result in a decrease in attendance at the affected parks. We work with local police authorities on security-related precautions to prevent these types of occurrences. We can make no assurance, however, that these precautions will be able to prevent any disturbances.

        Our business and financial results were adversely impacted by the terrorist activities occurring in the United States on September 11, 2001. Terrorist alerts and threats of future terrorist activities may continue to adversely affect attendance at our parks. We cannot predict what effect any further terrorist activities that may occur in the future may have on our business and results of operations.

There is a risk of accidents occurring at our parks or competing parks which may reduce attendance and negatively impact our operations.

        Almost all of our parks feature "thrill rides." While we carefully maintain the safety of our rides, there are inherent risks involved with these attractions. An accident or an injury (including water-borne illnesses on water rides) at any of our parks or at parks operated by our competitors, particularly accidents or injuries that attract media attention, may reduce attendance at our parks, causing a decrease in revenues.

        We maintain insurance of the type and in amounts that we believe are commercially reasonable and that are available to businesses in our industry. We maintain multi-layered general liability policies that provide for excess liability coverage of up to $100.0 million per occurrence. For incidents occurring at our domestic parks after November 15, 2003, our self-insured retention is $2.5 million per occurrence. For incidents at those parks during the twelve months prior to that date, the retention was $2.0 million per occurrence. For incidents during the twelve months ended November 15, 2002, the

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retention was $1.0 million per occurrence. For most prior incidents, our policies did not provide for a self-insured retention. The self-insured retention relating to our international parks is nominal with respect to all applicable periods. Our general liability policies cover the cost of punitive damages only in certain jurisdictions in which a claim occurs. Our current insurance policies expire on December 31, 2009. We cannot predict the level of the premiums that we may be required to pay for subsequent insurance coverage, the level of any self-insurance retention applicable thereto, the level of aggregate coverage available or the availability of coverage for specific risks.

Adverse weather conditions can adversely impact attendance at our parks.

        Because most of the attractions at our theme parks are outdoors, attendance at our parks is adversely affected by bad weather and forecasts of bad weather. The effects of bad weather on attendance can be more pronounced at our water parks. Bad weather and forecasts of bad or mixed weather conditions can reduce the number of people who come to our parks, which negatively affects our revenues. Although we believe that our ownership of many parks in different geographic locations reduces the effect that adverse weather can have on our consolidated results, we believe that our operating results in certain years were adversely affected by abnormally hot, cold and/or wet weather in a number of our major U.S. markets. In addition, since a number of our parks are geographically concentrated in the eastern portion of the United States, a weather pattern that affects that area could adversely affect a number of our parks. Also, bad weather and forecasts of bad weather on weekend days have greater negative impact than on weekdays because weekend days are typically peak days for attendance at our parks.

Our operations are seasonal.

        Our operations are seasonal. Approximately 83% of our annual park attendance and revenue occurs during the second and third calendar quarters of each year. As a result, when conditions or events described in the above risk factors occur during our operating season, particularly during the peak season of July and August, there is only a limited period of time during which the impact of those conditions or events can be mitigated. Accordingly, such conditions or events may have a disproportionately adverse effect on our revenues and cash flow. In addition, most of our expenses for maintenance and costs of adding new attractions are incurred when the parks are closed in the mid to late autumn and winter months. For this reason, a sequential quarter to quarter comparison is not a good indication of our performance or of how we will perform in the future.

We face substantial competition from numerous entertainment alternatives.

        Our parks compete with other theme, water and amusement parks and with other types of recreational facilities and forms of entertainment, including movies, sports attractions and vacation travel. Our business is also subject to factors that affect the recreation and leisure time industries generally, such as general economic conditions, including relative fuel prices, and changes in consumer spending habits. The principal competitive factors of a park include location, price, the uniqueness and perceived quality of the rides and attractions, the atmosphere and cleanliness of the park and the quality of its food and entertainment.

If we are unable to protect our guests' credit card data, we could be exposed to data loss, litigation and liability, and our reputation could be significantly harmed.

        In connection with credit card sales, we transmit confidential credit card information securely over public networks and store it in our data warehouse. Third parties may have the technology or know-how to breach the security of this guest information, and our security measures may not effectively prohibit others from obtaining improper access to this information. If a person is able to circumvent our security measures, he or she could destroy or steal valuable information or disrupt our

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operations. Any security breach could expose us to risks of data loss, litigation and liability and could seriously disrupt our operations and any resulting negative publicity could significantly harm our reputation.

Increased costs of labor, pension, post-retirement and medical and other employee health and welfare benefits may reduce our results of operations.

        Labor is a primary component in the cost of operating our business. We devote significant resources to recruiting and training our managers and employees. Increased labor costs, due to competition, increased minimum wage or employee benefit costs or otherwise, would adversely impact our operating expenses. In addition, our success depends on our ability to attract, motivate and retain qualified employees to keep pace with our needs. If we are unable to do so, our results of operations may be adversely affected.

        With approximately 2,000 full-time employees, our results of operations are also substantially affected by costs of retirement and medical benefits. In recent years, we have experienced significant increases in these costs as a result of macro-economic factors beyond our control, including increases in health care costs, declines in investment returns on pension plan assets and changes in discount rates used to calculate pension and related liabilities. At least some of these macro-economic factors may continue to put upward pressure on the cost of providing pension and medical benefits. Although we have actively sought to control increases in these costs, there can be no assurance that we will succeed in limiting cost increases, and continued upward pressure, including as a result of any new legislation, could reduce the profitability of our businesses.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION

        This Proxy Statement and the documents incorporated by reference herein contain "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "anticipates," "intends," "plans," "seeks," "believes," "estimates," "expects" and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements we make regarding the adequacy of cash flows from operations, available cash and available amounts under our credit facility to meet our future liquidity needs, our expectations related to refinancing all or a portion of our existing debt on or prior to maturity or consummating the Restructuring Plan, our continued viability, our operations and results of operations.

        Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict, including, among others, our ability to successfully consummate the Restructuring Plan, our financial condition upon the consummation of the Restructuring Plan and our success in implementing our business strategy. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore that you should not rely on any of these forward-looking statements as statements of historical fact or as guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national or global political, economic, business, competitive, market and regulatory conditions and include the following:

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the willing participation of a substantial portion of our debt, and the approval of our holders of Common Stock and PIERS of the Restructuring Plan;



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factors impacting attendance, such as local conditions, events, disturbances and terrorist activities;



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accidents occurring at our parks;



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adverse weather conditions;



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competition with other theme parks and other entertainment alternatives;



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changes in consumer spending patterns;



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pending, threatened or future legal proceedings; and



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the other factors that are described in "Risk Factors."

        For a description of risks relating to us and our business, see "Risk Factors" beginning on page 26. Any forward-looking statement made by us, or incorporated by reference, in this Proxy Statement speaks only as of the date of this Proxy Statement or the document in which it is included, as the case may be. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.

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CAPITALIZATION

        The following table sets forth as of December 31, 2008:

•

our actual capitalization; and



•

our capitalization after giving pro forma effect, assuming that 100% of our outstanding SFI 2010 Notes, SFI 2013 Notes, SFI 2014 Notes, SFI Convertible Notes and PIERS are exchanged for, and automatically converted into, Common Stock pursuant to the Restructuring Plan, as if it had occurred on December 31, 2008.

        This table should be read in conjunction with "Summary Consolidated Historical Financial Data" and "Unaudited Pro Forma Consolidated Financial Data" on pages 20 and 47, respectively, and "Management's Discussion and Analysis of Financial Condition and Results of Operations," incorporated by reference to our Annual Report on Form 10-K for the year ended December 31, 2008.

(1)

The above as adjusted column does not reflect any costs of the Restructuring Plan, including legal and other services.

(2)

Represents cash which has been deposited in escrow in favor of Time Warner to secure certain obligations to our partners at the Partnership Parks and cash deposited in escrow to backstop a letter of credit issued to the city of Montreal related to the lease of our park in Canada.

(3)

Actual balance includes $837.3 million outstanding under the $850.0 million term loan and $244.2 million outstanding under the $275.0 million working capital revolving credit portion of this facility.

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(4)

As adjusted amount reflects the assumed exchange of Common Stock for $131.1 million aggregate principal amount of the SFI 2010 Notes, $142.4 million aggregate principal amount of the SFI 2013 Notes, $314.8 million aggregate principal amount of the SFI 2014 Notes, and $280.0 million aggregate principal amount of the SFI Convertible Notes.

(5)

Of the December 31, 2008 actual balances, $870.0 million of long-term debt (excluding current maturities) was issued by SFI, $413.2 million (includes $13.2 million of debt premium related to the SFI 2010 Notes portion of the 2008 Debt Exchange because this portion of the exchange was not deemed to be a substantial modification) was issued by SFO and $829.1 million was issued by SFO's subsidiaries.

(6)

Includes $2.1 million outstanding under a capital lease relating to our Six Flags Over Texas park and $0.3 million outstanding under a capital lease with Papa John's.

(7)

The table presents stockholders' equity as a single line item. The impact of the Restructuring Plan on the components of stockholders' equity, such as Common Stock, capital in excess of par value and retained earnings/accumulated deficit will be driven by the fair value of the Common Stock issued in the Restructuring Plan.

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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA

        The following unaudited pro forma consolidated financial data as of and for the year ended December 31, 2008 have been derived by the application of pro forma adjustments to our historical consolidated financial statements incorporated by reference in this Proxy Statement. The unaudited pro forma consolidated balance sheet as of December 31, 2008 gives effect to the Restructuring Plan, excluding fees and expenses, assuming that 100% of our outstanding SFI 2010 Notes, SFI 2013 Notes, SFI 2014 Notes, SFI Convertible Notes and PIERS are exchanged for, and automatically converted into, Common Stock pursuant to the Restructuring Plan, as if it had occurred on the date of the consolidated balance sheet. The unaudited pro forma consolidated statements of operations for the year ended December 31, 2008 give effect to the Restructuring Plan, the 2008 Debt Exchange as if each had occurred on January 1, 2008.

        The historical consolidated financial data include certain reclassifications to conform to our current presentation. The pro forma consolidated financial data are presented for illustrative purposes only and are not necessarily indicative of the financial position or results of operations that actually would have been reported had the Restructuring Plan and the 2008 Debt Exchange been completed, nor is it indicative of our future financial position or results of operations.

        The pro forma consolidated financial data do not purport to represent what our consolidated financial position or results of operations would have actually been had the Restructuring Plan and the 2008 Debt Exchange in fact been completed on the assumed dates, or to project our results of operations for any future period. The pro forma consolidated financial data are unaudited and based on assumptions that we believe are reasonable and should be read in conjunction with "Summary Consolidated Historical Financial Data" and "Capitalization" on pages 20 and 45, respectively, and our consolidated financial statements and related notes from our Annual Report on Form 10-K for the year ended December 31, 2008 incorporated by reference in this Proxy Statement. The pro forma consolidated financial data assume that 100% of our outstanding SFI 2010 Notes, SFI 2013 Notes, SFI 2014 Notes, SFI Convertible Notes and PIERS are exchanged for or converted into Common Stock pursuant to the Restructuring Plan.

        The pro forma consolidated financial data excludes the effects of non-recurring adjustments relating to the Restructuring Plan and the 2008 Debt Exchange, including the following:

        (1)   The Pro Forma Consolidated Financial Data does not include the impact of the Restructuring Plan on our deferred tax asset and valuation allowance, which would be affected by the debt extinguishment gain, changes in our expectations regarding the ability to utilize tax planning strategies and the impact of the Exchange Offers on our NOLs. We anticipate that our existing NOLs would substantially offset the impact of the debt extinguishment gain on our 2009 income tax expense.

        (2)   The Pro Forma Condensed Consolidated Balance Sheet presents stockholders' equity as a single line item. The impact of the Restructuring Plan on the components of stockholders' equity, such as Common Stock, capital in excess of par value and retained earnings/accumulated deficit will be driven by the fair value of the Common Stock issued in the Restructuring Plan.

        (3)   The Pro Forma Consolidated Statement of Operations for the year ended December 31, 2008 does not include debt extinguishment gains or conversion losses, including the debt extinguishment gain that would result from the Restructuring Plan.

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Unaudited Pro Forma Consolidated Balance Sheet
As of December 31, 2008
(in thousands)

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UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS
For the year ended December 31, 2008
(in thousands)

(1)

Adjustment to reflect the impact of the Restructuring Plan as if it occurred at the beginning of the period.

(2)

Adjustment to reflect the impact of the 2008 Debt Exchange as if it had occurred at the beginning of the period.

(3)

Adjustment to remove the non-recurring gain from the 2008 Debt Exchange.

(4)

Income tax effect of pro forma adjustments assumed to be $0, as we have substantial net operating losses carried forward from previous periods.

(5)

Adjustments to remove the $15.0 million loss related to our interest rate swaps that no longer met the SFAS 133 probability test and the $110.8 million tax valuation allowance related to our determination that our tax planning strategy was no longer feasible. Both of these adjustments were related to the substantial doubt about our ability to continue as a going concern which would not have been the conclusion we would have reached if the Restructuring Plan had occurred at January 1, 2008.

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ACCOUNTING TREATMENT OF RESTRUCTURING PLAN

Stockholders' Equity and Debt Extinguishment

        The exchange of the SFI Notes for Common Stock will generate a debt extinguishment gain to the extent the fair value of the Common Stock exceeds the sum of the carrying amount of the extinguished SFI Notes plus an allocable share of transaction costs. The conversion of the PIERS into Common Stock will affect the components of stockholders' equity, but will not affect the statement of operations, excluding a potential impact on earnings per share. To the extent that the number of shares of Common Stock issued in the SFI Convertible Note Exchange exceeds the number of shares that could have been converted under the original terms of the SFI Convertible Notes, the SFI Convertible Note Exchange will be expensed on the statement of operations to the extent of the fair value of the excess number of shares issued. The offset to the liability and the expense from the induced conversion would be a credit to paid-in capital. If the number of shares of Common Stock issued in the SFI Convertible Note Exchange is less than the number of shares that could have been converted under the original terms of the Convertible Notes, the SFI Convertible Note Exchange will result in a debt extinguishment gain to the extent that the fair value of the issued shares allocable to the liability for SFI Convertible Notes is less than their original carrying amount.

Goodwill Impairment Testing

        SFI tests goodwill, at least annually, by comparing the fair value of our sole parks reporting unit to the carrying amount. To the extent the fair value exceeds the carrying amount, no impairment is indicated. As of December 31, 2008, the fair market value of SFI's outstanding Common Stock exceeded the negative carrying amount of SFI's stockholders' deficit. Accordingly, no impairment was indicated.

        However, the Restructuring Plan will result in an increase in stockholders' equity that could exceed the fair market value of SFI's outstanding Common Stock. If such an indicator of impairment was triggered, we would be required to allocate the fair value of the reporting unit to all of the assets and liabilities in a manner similar to a purchase price allocation. The residual fair value after this allocation would be the fair value of the reporting unit's goodwill. To the extent the carrying amount of the reporting unit's goodwill exceeded its fair value, a non-cash goodwill impairment charge would be recognized for the period.

Deferred Income Taxes

        SFI's 2008 consolidated financial statements included disclosure of a substantial doubt related to SFI's ability to continue as a "going concern," as the Restructuring Plan was not completed prior to the release of SFI's consolidated financial statements. As a result, SFI recorded a non-cash income tax charge to its statement of operations and an increase in its valuation allowance for deferred tax assets, as SFI was not be able to assume the ability to conduct future tax planning strategies under the guidance of Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes." Upon completion of the Restructuring Plan or an alternative restructuring plan, SFI will reevaluate its ability to conduct future tax planning strategies to maximize the carryover benefit of net operating losses, which might result in an income tax benefit to the statement of operations at that time and a reduction to SFI's valuation allowance for deferred tax assets. However, the Restructuring Plan will impact SFI's deferred tax assets attributable to its net operating losses in other significant ways.

Fresh-Start Reporting

        If we restructure under chapter 11, our financial statements would be subject to the accounting prescribed by Statement of Position No. 90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code." If our existing stockholders end up with less than 50% of our voting shares after we emerge from chapter 11, we would apply "Fresh-Start Reporting," in which our assets and liabilities would be recorded at their estimated fair value using the principles of purchase accounting contained in Statement of Financial Accounting Standards No. 141R, "Business Combinations," with the difference between our estimated fair value and our identifiable assets and liabilities being recognized as goodwill.

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DESCRIPTION OF INDEBTEDNESS AFTER THE RESTRUCTURING PLAN

        Assuming that 100% of our outstanding SFI 2010 Notes, SFI 2013 Notes, SFI 2014 Notes and SFI Convertible Notes are exchanged for Common Stock pursuant to the Restructuring Plan, SFI expects to have the following indebtedness following the Restructuring Plan.

Credit Agreement

        On May 25, 2007, we entered into the Credit Agreement, which provides for the following: (i) an $850.0 million term loan maturing on April 30, 2015 $837.3 of which was outstanding at December 31, 2008); (ii) a revolving facility totaling $275.0 million ($244.2 million of which was outstanding at December 31, 2008 (excluding letters of credit in the amount of $29.4 million on such date)), and (iii) an uncommitted optional term loan tranche of up to $300.0 million. In October 2008, we borrowed $244.2 million under the revolving facility portion of the Credit Agreement to ensure we would have sufficient liquidity to fund our off-season expenditures given difficulties in the global credit markets. The interest rate on borrowings under the Credit Agreement can be fixed for periods ranging from one to twelve months, subject to certain conditions. At our option, the interest rate is based upon specified levels in excess of the applicable base rate or LIBOR. At December 31, 2008, the weighted average interest rate for borrowings under the term loan was 5.5%. Commencing on December 31, 2007, Six Flags Theme Parks Inc., the primary borrower under the Credit Agreement and an indirect wholly owned subsidiary of SFI, is required to make quarterly principal repayments on the term loan in the amount of $2.125 million with all remaining principal due on April 30, 2015. The utilization of the revolving facility is available until March 31, 2013.

        The Credit Agreement contains customary representations and warranties and affirmative and negative covenants, including, but not limited to, a financial covenant related to the maintenance of a minimum senior secured leverage ratio in the event of utilization of the revolving facility and certain other events, as well as limitations on the ability to dispose of assets, incur additional indebtedness or liens, make restricted payments, make investments and engage in mergers or consolidations. We were in compliance with our financial covenants at December 31, 2008, and the Credit Agreement will remain unimpaired following the Restructuring Plan.

Six Flags Operations Inc. 12¹/4% Senior Notes due 2016

        On June 16, 2008, we completed a private debt exchange in which we issued $400.0 million of the SFO 2016 Senior Notes, which are guaranteed by SFI, in exchange for (i) $149.2 million of our SFI 2010 Notes, (ii) $231.6 million of our SFI 2013 Notes and (iii) $149.9 million of our SFI 2014 Notes. The benefits of completing this transaction included reducing debt principal by approximately $130.6 million, extending our debt maturities (including a majority of our nearest term debt maturity in 2010) and decreasing our annual cash interest expense. The SFO 2016 Senior Notes mature on July 15, 2016 and bear interest at the rate of 12¹/4% per annum. The indenture governing the SFO 2016 Senior Notes contains negative covenants, which may significantly limit or prohibit us from engaging in certain types of transactions, including, among other things, incurring additional indebtedness, creating liens on our assets, paying dividends, selling assets, engaging in mergers or acquisitions and making investments. We do not currently anticipate restructuring the SFO 2016 Senior Notes.

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DESCRIPTION OF CAPITAL STOCK FOLLOWING THE RESTRUCTURING PLAN

        As of December 31, 2008, our authorized capital stock consisted of two classes of capital stock: 210,000,000 shares of Common Stock and 5,000,000 shares of preferred stock. Of the authorized preferred stock, 115,000 shares were issued in connection with the PIERS and 210,000 shares were designated as Series A Junior Preferred Stock pursuant to the Rights Agreement. Assuming a 1-for-100 reverse stock split of our Common Stock, as of such date, we would have outstanding approximately 977,000 shares of Common Stock and 115,000 shares of Convertible Preferred Stock, representing 11.5 million PIERS.

        Prior to consummation of the Restructuring Plan, our Certificate of Incorporation will be amended so that following the Restructuring Plan our authorized capital stock shall consist of 50,000,000 shares of Common Stock and 5,000,000 shares of preferred stock.

        Following the Restructuring Plan, assuming all PIERS are automatically converted into Common Stock pursuant to the PIERS Amendments, the capital stock of SFI will include the following:

Description of Common Stock

        Holders of Common Stock are entitled to one vote per share on all matters submitted to a vote of stockholders. Subject to preferences that may apply to any series of preferred stock that we may designate and issue, the holders of Common Stock are entitled to receive ratably any dividends that may be declared by the Board. If we are liquidated, dissolved or wound up, we must first pay all amounts we owe to our creditors and then pay the full amounts required to be paid to holders of any shares of our preferred stock then outstanding before we may make any payments to holders of shares of Common Stock. All holders of shares of Common Stock are entitled to share ratably in any assets available for distribution to them, after all of our creditors have been satisfied and we have paid the liquidation preferences of any of our outstanding preferred stock. Holders of Common Stock have no preemptive rights or rights to convert their Common Stock into any other securities. The Common Stock is neither redeemable nor subject to call. No sinking fund provisions apply to the Common Stock. All outstanding shares of Common Stock are fully paid and non-assessable. The terms will not be altered as a result of the consummation of the Restructuring Plan..

        SFI's Common Stock traded on the New York Stock Exchange, Inc. (the "NYSE") under the symbol "SIX" through April 17, 2009, when it was delisted from the NYSE due to SFI's failure to meet the NYSE's continued quantitative listing criteria. The last trading price of the Common Stock on the NYSE was $0.13 on April 17, 2009. The Common Stock has traded in the over-the-counter market since April 20, 2009. The last quotation of the Common Stock in the over-the-counter market was $0.17 on April 23, 2009.

Preferred Stock Purchase Rights

        On December 2, 2008, the Board adopted the Rights Plan and declared a dividend distribution of one Right for each outstanding share of Common Stock. The distribution was paid on December 17, 2008 to stockholders of record as of the close of business on December 17, 2008. Each Right, if and when it becomes exercisable, entitles the holder to buy one one-thousandth (1/1000) of a share of Series A Junior Preferred Stock (the "Preferred Stock") for the Exercise Price. If any person or group becomes the beneficial owner of fifteen percent (15%) or more of our Common Stock at any time after the date of the Rights Plan (with certain limited exceptions), then each Right not owned by such person or group will entitle its holder to purchase, at the Exercise Price, shares of our Common Stock or, in certain circumstances, common stock of the acquiring person, having a market value of twice the Exercise Price. Our Rights Plan could discourage, delay or prevent a change of control of us. The description and terms of the Rights are set forth in the Rights Agreement between the Rights Agent and us.

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        The Rights will automatically trade with the Common Stock. The Rights will not be exercisable except under certain conditions.

        The Rights, unless earlier redeemed by the Board, become exercisable upon the close of business on the day (the "Distribution Date") which is the earlier of (i) the tenth day following a public announcement that a person or group of affiliated or associated persons, with certain exceptions set forth below, has acquired beneficial ownership of 15% or more of our outstanding voting stock (an "Acquiring Person") and (ii) the tenth business day (or such later date as may be determined by the Board prior to such time as any person or group of affiliated or associated persons becomes an Acquiring Person) after the date of the commencement or announcement of a person's or group's intention to commence a tender or exchange offer the consummation of which would result in the ownership of 15% or more of our outstanding voting stock (even if no shares are actually purchased pursuant to such offer). An Acquiring Person does not include (A) us, (B) any subsidiary of ours, (C) any employee benefit plan or employee stock plan of ours or of any subsidiary of ours, or any trust or other entity organized, appointed, established or holding Common Stock for or pursuant to the terms of any such plan or (D) any person or group whose ownership of 15% or more of our shares of voting stock then outstanding results solely from (i) any action or transaction or transactions approved by the Board before such person or group became an Acquiring Person or (ii) a reduction in the number of issued and outstanding shares of our voting stock pursuant to a transaction or transactions approved by the Board (provided that any person or group that does not become an Acquiring Person by reason of clause (i) or (ii) above shall become an Acquiring Person upon acquisition of an additional 1% of our voting stock unless such acquisition of additional voting stock will not result in such person or group becoming an Acquiring Person by reason of such clause (i) or (ii)).

        The Rights are not exercisable until the Distribution Date. The Rights will expire at the close of business on December 2, 2018, unless earlier redeemed by us. The number of shares of Preferred Stock issuable upon exercise of the Rights is subject to certain adjustments from time to time in the event of a stock dividend on, or a subdivision or combination of, the Common Stock. The Exercise Price for the Rights is subject to adjustment in the event of extraordinary distributions of cash or other property to holders of Common Stock.

        The Preferred Stock is non-redeemable and, unless otherwise provided in connection with the creation of a subsequent series of preferred stock, subordinate to any other series of our preferred stock. The Preferred Stock may not be issued except upon exercise of Rights. Each share of Preferred Stock will be entitled to receive when, as and if declared, a quarterly dividend in an amount equal to the greater of $1.00 per share and 1000 times the cash dividends declared on the Common Stock. In addition, the Preferred Stock is entitled to 1000 times any non-cash dividends (other than dividends payable in equity securities) declared on the Common Stock, in like kind. In the event of liquidation, the holders of Preferred Stock will be entitled to receive for each share, a liquidation payment in an amount equal to the greater of $1,250 or 1000 times the payment made per share of Common Stock. Each share of Preferred Stock will have 1000 votes, voting together with the Common Stock. In the event of any merger, consolidation or other transaction in which Common Stock is exchanged, each share of Preferred Stock will be entitled to receive 1000 times the amount received per share of Common Stock. The rights of Preferred Stock as to dividends, liquidation and voting are protected by anti-dilution provisions.

        Because of the nature of the Preferred Stock's dividend, liquidation and voting rights, the value of the one one-thousandth interest in a share of Preferred Stock purchasable upon exercise of each Right should approximate the value of one share of Common Stock.

        In the event that any person or group of affiliated or associated persons becomes an Acquiring Person, each holder of a Right, other than Rights beneficially owned by the Acquiring Person (which will thereupon become void), will thereafter have the right to receive upon exercise of a Right and

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payment of the Purchase Price, that number of shares of Common Stock having a market value of two times the Exercise Price.

        In the event that, after a person or group has become an Acquiring Person, we are acquired in a merger or other business combination transaction or 50% or more of our consolidated assets or earning power are sold, proper provision will be made so that each holder of a Right (other than Rights beneficially owned by an Acquiring Person which will have become void) will thereafter have the right to receive, upon the exercise thereof at the then-current exercise price of the Right, that number of shares of common stock of the person with whom we have engaged in the foregoing transaction (or its parent), which number of shares at the time of such transaction will have a market value of two times the Exercise Price.

        At any time after any person or group becomes an Acquiring Person and prior to the acquisition by such person or group of 50% or more of the outstanding shares of Common Stock or the occurrence of an event described above, the Board may exchange the Rights (other than Rights owned by such person or group which will have become void), in whole or in part, at an exchange ratio of one share of Common Stock, or a fractional share of Preferred Stock (or of a share of a similar class or series of SFI's preferred stock having similar rights, preferences and privileges) of equivalent value, per Right (subject to adjustment).

        With certain exceptions, no adjustment in the Exercise Price will be required until cumulative adjustments require an adjustment of at least 1% in such Exercise Price. No fractional shares of Preferred Stock will be issued (other than fractions which are integral multiples of one one-thousandth of a share of Preferred Stock, which may, at our election, be evidenced by depositary receipts) and in lieu thereof, an adjustment in cash will be made based on the market price of the Preferred Stock on the last trading day prior to the date of exercise.

        We may redeem the then outstanding Rights in whole, but not in part, at any time prior to the close of business on the earlier of (i) the time a person has become an Acquiring Person or (ii) the final expiration date, at a price of $.01 per Right ("Redemption Price"). Immediately upon the effective time of the action of the Board authorizing redemption of the Rights, the right to exercise the Rights will terminate and the only right of the holders of the Rights will be to receive the Redemption Price.

        For as long as the Rights are then redeemable, we may, except with respect to the Redemption Price or Final Expiration Date, amend the Rights in any manner, including an amendment to extend the time period in which the Rights may be redeemed. At any time when the Rights are not then redeemable, we may amend the Rights in any manner that does not materially adversely affect the interests of holders of the Rights as such.

        Until a Right is exercised, the holder, as such, will have no rights as a stockholder of SFI, including, without limitation, the right to vote or to receive dividends.

        The Rights have certain anti-takeover effects. The Rights will cause substantial dilution to a person or group who attempts to acquire us on terms not approved by the Board. The Rights should not interfere with any merger or other business combination approved by the board since they may be redeemed by us at $.01 per Right at any time until a person or group has obtained beneficial ownership of 15% or more of the voting stock.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        The following table sets forth certain information as of April 1, 2009 (except as noted below) as to Common Stock beneficially owned by (a) each of SFI's current directors and nominees to serve as directors, (b) each of the named executive officers listed in the Summary Compensation Table, (c) all current directors, nominees to serve as directors and executive officers of SFI as a group and (d) each person who, to the best of SFI's knowledge, beneficially owned on that date more than 5% of the outstanding Common Stock. To the best of our knowledge, none of SFI's current directors, nominees to serve as directors or executive officers beneficially own any PIERS. Unless otherwise indicated, the address for each of the beneficial owners in the table below is c/o Six Flags, Inc., 1540 Broadway, New York, NY 10036.