Notes to Consolidated Financial Statements

(1) Summary of Significant Accounting Policies

(a) Description of Business

Six Flags Entertainment Corporation ("SFEC," and together with its subsidiaries, the "Company" or "Six Flags") owns 100% of the common stock of S.F. Holdings, Inc. ("SF Holdings") which owns 100% of the common stock of Six Flags Theme Parks Inc. ("SFTP").

Prior to April 1, 1998, Six Flags operated twelve "Six Flags" branded theme parks in eight locations throughout the United States. For all periods presented, nine of the theme parks, Six Flags Great Adventure and Wild Safari Animal Park (New York-Philadelphia), Six Flags Great America (Chicago-Milwaukee), Six Flags Magic Mountain and Six Flags Hurricane Harbor (Los Angeles), Six Flags AstroWorld and Six Flags Waterworld (Houston), Six Flags St. Louis (St. Louis) and Six Flags Hurricane Harbor (Dallas-Ft. Worth) were owned by Six Flags. Six Flags Fiesta Texas, located in San Antonio, Texas, was leased by a limited partnership of which a subsidiary of Six Flags is a general partner and manages the park. On October 30, 1998, Six Flags purchased the minority interest in the limited partnership and title to the park. Two parks - Six Flags Over Texas (Dallas-Ft. Worth) and Six Flags Over Georgia (Atlanta) (the "Partnership Parks") - are owned by limited partnerships of which the managing general partner was (prior to April 1, 1998) a wholly-owned subsidiary of Six Flags. On April 1, 1998, Premier Parks Inc. ("Premier") purchased all of the stock of SFEC (the "Acquisition"). At that time, Six Flags' interests in the Partnership Parks were transferred to Premier. See Note 3.

(b) Basis of Presentation

As discussed above, Premier purchased SFEC on April 1, 1998. In accordance with Securities & Exchange Commission Staff Accounting Bulletin No. 54 ("SAB No. 54"), SFEC has "pushed down" Premier's purchase price in revaluing the assets and liabilities of SFEC. According to the provisions of SAB No. 54, purchase transactions that result in an entity becoming substantially wholly-owned require a new basis of accounting for the purchased assets and liabilities. As a result of the purchase, SFEC recorded the following purchase price adjustments as of April 1, 1998 (amounts in thousands):

                                 Increase (Decrease)
                                 -------------------
Current assets                      $   (15,621)
Debt issuance costs                     (19,597)
Property and equipment                  322,183
Intangible assets                     1,006,606
Deposit and other assets                 14,299
Accrued liabilities                      26,599
Long-term debt                           51,592
Deferred income taxes                    64,820
Stockholder's equity                  1,164,859

SIX FLAGS ENTERTAINMENT CORPORATION

Notes to Consolidated Financial Statements

The consolidated financial statements of SFEC for the period from December 29, 1997 to March 31, 1998 (the 1998 Pre-Acquisition period) and as of December 28, 1997 and for the years ended December 28, 1997 and December 29, 1996 reflect the accounting basis used by SFEC prior to its acquisition by Premier. The financial statements of SFEC subsequent to April 1, 1998 (the 1998 Post-Acquisition period) reflect the accounting basis for the purchased assets and liabilities used by SFEC subsequent to its acquisition by Premier. The vertical line that separates the SFEC consolidated financial statements emphasizes that the new basis of accounting used by SFEC after the purchase by Premier is not comparable to the basis of accounting used by SFEC prior to the purchase by Premier.

Additionally, the accompanying notes to SFEC's consolidated financial statements disclose: (1) the relationship between Premier and SFEC;
(2) that SFEC does not guarantee any of Premier's debt, or pledge assets or stock as security for Premier's debt; and (3) that SFEC's ability to pay dividends is restricted by its and its subsidiaries' debt agreements.

The 1996 and 1997 fiscal years each consisted of 52 weeks. The 1998 fiscal year consisted of 53 weeks. The 1996 fiscal year ended on December 29, 1996, while the 1997 and 1998 fiscal years ended on December 28, 1997 and January 3, 1999, respectively.

The Company's accounting policies reflect industry practices and conform to generally accepted accounting principles.

The consolidated financial statements include the accounts of SFEC, its wholly-owned subsidiaries, limited partnerships and limited liability companies in which the Company beneficially owns 100% of the interests, and partnerships that the Company serves as sole general partner and owns a majority of the limited partnership interests. Intercompany transactions and balances have been eliminated in consolidation.

(c) Cash Equivalents

Cash equivalents of $33,188,000 and $9,651,000 at January 3, 1999 and December 28, 1997, respectively, consist of short-term highly liquid investments with a remaining maturity as of purchase date of three months or less, which are readily convertible into cash. For purposes of the consolidated statements of cash flows, the Company considers all highly liquid debt instruments with remaining maturities as of their purchase date of three months or less to be cash equivalents.

(d) Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market and primarily consist of products for resale including merchandise and food and miscellaneous supplies including repair parts for rides and attractions amounting to $8,051,000 as of December 28, 1997.

SIX FLAGS ENTERTAINMENT CORPORATION

Notes to Consolidated Financial Statements

(e) Advertising Costs

Production costs of commercials and programming are charged to operations in the year first aired. The costs of other advertising, promotion, and marketing programs are charged to operations in the year incurred.

Advertising and promotions expense was $35,900,000, $7,872,000, $61,100,000, and $64,600,000 during 1998 Post-Acquisition period, 1998 Pre-Acquisition period, 1997, and 1996, respectively.

(f) Debt Issuance Costs

The Company capitalizes costs related to the issuance of debt. The amortization of such costs is recognized as interest expense under a method approximating the interest method over the life of the respective debt issue.

(g) Depreciation and Amortization

Rides and attractions are depreciated using the straight-line method over 5-25 years. Buildings and improvements are depreciated over their estimated useful lives of approximately 30 years by use of the straight-line method. Furniture and equipment are depreciated using the straight-line method over 5-10 years.

Maintenance and repairs are charged directly to expense as incurred, while betterments and renewals are generally capitalized in the property accounts. When an item is retired or otherwise disposed of, the cost and applicable accumulated depreciation are removed and the resulting gain or loss is recognized.

(h) Investment in Theme Park Partnerships

Prior to acquisition by Premier, the Company managed two parks (the Partnership Parks) in which the Company did not own a controlling interest. On April 1, 1998, the Company transferred its investment in theme park partnerships to Premier in exchange for $46,000,000 in cash and payment of $165,686,000 of Company borrowings. See Note 13.

In 1997 and 1996, Six Flags accounted for its investment in theme park partnerships as co-ventures, i.e., the revenues and expenses (excluding partnership depreciation) were included in Six Flags' consolidated statements of operations and the net amounts distributed to the limited partners were deducted as expenses. Except for the limited partnership units purchased pursuant to the tender offers described in Note 6, Six Flags had no rights or title to the Partnership. Park assets or to the proceeds from any sale of the Partnership Parks' assets. Six Flags' 1997 consolidated balance sheet does not include any of the Partnership Parks' assets. The investment in theme park partnerships included in the 1997 consolidated balance sheet represented (i) Six Flags' interest in the estimated future cash flows from the operations of the Partnership Parks and was

SIX FLAGS ENTERTAINMENT CORPORATION

Notes to Consolidated Financial Statements

amortized over the life of the partnership agreements, and (ii) the value of limited partnership units purchased pursuant to the SFOG tender offer. The SFOT tender offer was made subsequent to December 28, 1997. These two parks contributed revenues of $176,794,000 and $151,987,000 to Six Flags in the fiscal years 1997 and 1996, respectively.

For the period from December 29, 1997 to March 31, 1998, the Company accounted for its investment in these two parks using the equity method of accounting. See Note 2. The equity method of accounting recognizes the Company's share of the activity of the Partnership Parks in the accompanying consolidated statements of operations in the caption "equity in operations of theme park partnerships." The equity method of accounting differs from the consolidation method of accounting used for the theme parks in which the Company owns a controlling interest. In the consolidation method of accounting, the activities of the consolidated parks are reflected in each revenue and expense caption rather than aggregated into one caption.

(i) Intangible Assets

Goodwill, which represents the excess of purchase price over fair value of net assets acquired, is amortized on the straight-line basis over the expected period to be benefited, generally 25 years. The Company assesses the recoverability of this intangible asset by determining whether the amortization of the goodwill balance over its remaining life can be recovered through undiscounted future operating cash flows of the acquisition. The amount of goodwill impairment, if any, is measured based on projected discounted future operating cash flows using a discount rate reflecting the Company's average borrowing rate.

The goodwill associated with acquisitions made by Six Flags prior to the Acquisition was being amortized on the straight-line basis over periods not exceeding 40 years.

(j) Long-Lived Assets

The Company reviews long-lived assets and certain identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset or group of assets to future net cash flows expected to be generated by the asset or group of assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

(k) Interest Expense Recognition

Interest on notes payable is generally recognized as expense on the basis of stated interest rates adjusted to reflect amortization of premiums or accretion of discounts. Such amortization or accretion is recognized over the term of the notes using the effective-interest method.

SIX FLAGS ENTERTAINMENT CORPORATION

Notes to Consolidated Financial Statements

(l) Income Taxes

Income taxes are accounted for under the asset and liability method as computed on a stand-alone basis. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Effective with the Acquisition, the Company and Premier entered into a tax sharing agreement, whereby the Company will pay to Premier the Company's portion of Premier's current tax expense.

(m) Investment Securities

Restricted-use investment securities at January 3, 1999 consist of U.S. Treasury securities. The securities which are scheduled to mature in 1999 are restricted to provide a redemption fund for Company indebtedness also maturing in 1999. The Company classifies its investment securities as held-to-maturity. Held-to-maturity securities are those securities in which the Company has the ability and intent to hold the security until maturity. Held-to-maturity securities are recorded at amortized cost, adjusted for the amortization or accretion of premiums or discounts. There are no other securities held by the Company.

Premiums and discounts are amortized or accreted over the life of the related held-to-maturity security as an adjustment to yield using the effective interest method. Dividend and interest income are recognized when earned.

(n) Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

(o) Reclassifications

Reclassifications have been made to certain amounts reported in 1997 and 1996 to conform with the 1998 presentation.

SIX FLAGS ENTERTAINMENT CORPORATION

Notes to Consolidated Financial Statements

(2) Accounting Changes

(a) Accounting for Investment in Theme Park Partnerships

Prior to the Acquisition by Premier, Six Flags, through two subsidiaries, was the general partner in two theme park limited partnerships. Six Flags accounted for the parks as co-ventures, i.e., the revenues and expenses (excluding partnership depreciation) were included in Six Flags' consolidated statements of operations and the net amounts distributed to the limited partners were deducted as operating expenses. Except for the limited partnership units purchased pursuant to the tender offers described in Note 6, Six Flags had no rights or title to the Partnership Parks' assets or to the proceeds from any sale of the Partnership Parks' assets. Six Flags' 1997 consolidated balance sheet does not include any of the Partnership Parks' assets.

On April 1, 1998, Six Flags changed its method of accounting for the Partnership Parks to the equity method of accounting as prescribed by Accounting Principles Board Opinion 18 and related interpretations. The change was applied retroactively to the beginning of Six Flags' 1998 fiscal year, and accordingly, the consolidated statements of operations for the 1998 Pre-Acquisition period reflects Six Flags' interests in the operations of the Partnership Parks on the equity method. Six Flags' interests in the Partnership Parks were transferred to Premier on April 1, 1998 and therefore, the consolidated statement of operations for the 1998 Post-Acquisition period ended January 3, 1999, does not include results of Premier's ownership interests in the Partnership Park partnerships. Six Flags changed its accounting for the Partnership Parks to reflect in operations revenues and costs and expenses of only those parks controlled by Six Flags through majority ownership. This accounting change had no cumulative effect on Six Flags' accumulated deficit as of December 28, 1997 and no effect on net loss for 1997 and 1996.

The unaudited pro forma effect assuming the equity method of accounting for the Partnership Parks was applied retroactively for all periods presented is as follows:

                                                     Year ended     Year ended
                                                    December 28,   December 29,
                                                        1997           1996
                                                    ------------   -----------
Revenues, as reported                               $708,666,000   680,876,000
Revenues, pro forma                                 $531,872,000   528,889,000
                                                    ============   ===========

Operating costs and expenses, as reported           $629,091,000   613,161,000
Operating costs and expenses, pro forma             $474,928,000   464,693,000
                                                    ============   ===========

Interest expense, net, as reported                  $ 84,430,000    76,530,000
Interest expense, net, pro forma                    $ 82,856,000    74,979,000
                                                    ============   ===========

                                                     Year ended     Year ended
                                                    December 28,   December 29,
                                                        1997           1996
                                                    ------------   -----------
Equity in operations of theme park partnerships,
  as reported                                        $        --            --
Equity in operations of theme park partnerships,
  pro forma                                          $21,057,000     1,968,000
                                                     ===========   ===========
Net loss, as reported                                $(3,708,000)  (15,249,000)
Net loss, pro forma                                  $(3,708,000)  (15,249,000)
                                                     ===========   ===========

(b) Accounting for Off-Season Expenses

On April 1, 1998, Six Flags changed its method of accounting for off-season expenses related to park operations. Prior to acquisition by Premier, Six Flags deferred interim period costs related to park operations and charged such costs to interim periods based on estimated annual revenues, substantially all of which were generated in the second and third quarters of the year. No costs were deferred at the end of a fiscal year.

The change was applied retroactively to the beginning of Six Flags' 1998 fiscal year to conform with Premier's accounting policy for off-season expenses. This accounting change had no cumulative effect on Six Flags' accumulated deficit as of December 28, 1997 and would not have had any effect on net loss for 1997 and 1996. The change had the effect of increasing the net loss for the 1998 Pre-Acquisition period by approximately $96,654,000.

(3) Acquisition of SFEC

On April 1, 1998, Premier acquired all of the outstanding capital stock of SFEC for $976,000,000, paid in cash. In addition, Premier repaid at closing, assumed or refinanced approximately $1,032,717,000 of Company debt (including approximately $285,000,000 in aggregate principal amount at maturity (carrying value of $321,167,000 as of January 3, 1999) of Six Flags 12 1/4 % Series A Senior Subordinated Discount Notes due 2005 (the "SFTP Notes") and approximately $164,703,000 accreted value at April 1, 1998 (carrying value of $182,377,000 as of January 3, 1999) of SFEC Zero Coupon Notes (the "Old SFEC Notes")). Premier funded the Acquisition with the proceeds of concurrent public offerings and bank facilities (including a new $472,000,000 credit facility of Six Flags (the "Six Flags Credit Facility") and $170,000,000 of 8 7/8% Senior Notes due 2006 of SFEC (the "SFEC Notes")). See Note 8. The proceeds of the SFEC Notes, together with cash contributed by Premier, were deposited in escrow and invested in restricted-use investments to provide for the repayment in full at or prior to maturity in December 1999 of the Old SFEC Notes. Pursuant to the Acquisition, Six Flags transferred to Premier all of its interests in the limited partnerships that own the Partnership

SIX FLAGS ENTERTAINMENT CORPORATION

Notes to Consolidated Financial Statements

Parks, for $46,000,000 in cash and Premier's payment of $165,686,000 of SFEC debt. Also in connection with the Acquisition, Premier and Warner Bros. Consumer Products Division entered into a long-term licensing agreement that gives Premier (and its subsidiaries, including Six Flags and Premier Parks Operations Inc.) the exclusive theme park usage rights in the U.S. and Canada (excluding the Las Vegas, Nevada metropolitan area) for all Warner Bros. and DC Comics animated cartoon and comic book characters.

     The following  summarized unaudited pro forma results of operations for the
     years  ended  January  3,  1999 and  December  28,  1997,  assume  that the
     Acquisition  and the related  financings  occurred as of December  30, 1996
     (the first day of the 1997 fiscal year).

                                           Year ended            Year ended
                                           January 3,           December 28,
                                              1999                 1997
                                           ----------           ------------
                                                     (Unaudited)
                                                    (In thousands)

          Total revenues                    $521,131              531,872
          Net loss                           (30,776)             (55,314)

(4)  Fair Value of Financial Instruments

     The recorded amounts for cash and cash  equivalents,  accounts  receivable,

receivable from affiliate, accounts payable and accrued liabilities approximate fair value because of the short maturity of these financial instruments. As of January 3, 1999, the fair value of the Company's restricted-use investments was approximately $184,930,000. The fair value was determined using quoted market prices. The fair value estimates, methods, and assumptions relating to the Company's debt financial instruments are discussed in Note 8.

(5) Property and Equipment

Property and equipment, at cost, are classified as follows:

                                              January 3,     December 28,
                                                 1999           1997
                                             ------------    -----------
Land                                         $ 94,945,000     50,582,000
Buildings and improvements                    334,249,000    263,475,000
Rides and attractions                         405,129,000    389,798,000
Equipment                                      59,415,000      9,033,000
Construction-in-process                        34,682,000     55,368,000
                                             ------------    -----------
Total                                         928,420,000    768,256,000
Less accumulated depreciation                  35,507,000    276,119,000
                                             ------------    -----------
                                             $892,913,000    492,137,000
                                             ============    ===========

SIX FLAGS ENTERTAINMENT CORPORATION

Notes to Consolidated Financial Statements

(6) Investment in Theme Park Partnerships

Six Flags Over Georgia

On March 18, 1997, Six Flags, Time Warner Inc. and Time Warner Entertainment Company, L.P. (TWE) completed arrangements pursuant to which a subsidiary of Six Flags (SFOG II) will manage the Six Flags Over Georgia Park through 2026. Under the agreements governing the new arrangements (the "Georgia Agreements"), the Six Flags Over Georgia Park is owned by a newly formed limited partnership ("Six Flags Over Georgia II") of which SFOG II is the managing general partner.

The key elements of these arrangements are as follows: (i) the limited partner (which is not affiliated with Six Flags) will receive minimum annual distributions of $18,500,000 commencing in 1997, increasing each year thereafter in proportion to increases in the cost of living; thereafter, SFOG II will be entitled to receive from available cash (after provision for reasonable reserves and after capital expenditures per annum of approximately 6% of prior year revenues) a management fee equal to 3% of the prior year's gross revenues; and, thereafter, any additional available cash will be distributed 95% to SFOG II and 5% to the limited partner; (ii) in the second quarter of 1997, a subsidiary of SFTP (the "SFTP-SFOG Subsidiary") and a subsidiary of SFEC (the "SFEC-SFOG Subsidiary") made a tender offer for partnership interests ("SFOG LP Units") in Six Flags Fund, Ltd. (L.P.), which owns 99% of the limited partner of Six Flags Over Georgia II, that valued the Six Flags Over Georgia Park at the greater of $250,000,000 or 8.0 times 1997 EBITDA of the Six Flags Over Georgia Park (the "SFOG Tender Offer Price"); (iii) commencing in 1998, and on an annual basis thereafter, the SFTP-SFOG Subsidiary and the SFEC-SFOG Subsidiary will offer to purchase additional SFOG LP Units at a price based on the greater of the SFOG Tender Offer Price or the EBITDA of the Six Flags Over Georgia Park for the prior four years (provided that no more than $50,000,000 of such SFOG LP Units will be acquired by the SFTP-SFOG Subsidiary); and (iv) in 2026, Six Flags and its affiliates will have the option to acquire the Six Flags Over Georgia Park at a price based on the Tender Offer Price, increased in proportion to the increase in the cost of living between December 1996 and December 2026. SFEC, SFTP, Time Warner Inc. and TWE have guaranteed certain of the obligations (including the minimum annual distributions noted in (i) above) of SFOG II and Six Flags Over Georgia II under the Georgia Agreements, and in consideration therefor, SFOG II agreed to assign to SFTP at least 90% of the cash distributions it received from time to time from Six Flags Over Georgia II. See Note 2.

On May 6, 1997, in connection with the closing of the tender offer described above, the SFTP-SFOG Subsidiary and the SFEC-SFOG Subsidiary purchased approximately 17% and 8%, respectively, of SFOG LP Units for approximately $42,400,000 and $20,300,000, respectively. The purchase of SFOG LP Units entitles each such purchaser the right to receive minimum annual distributions and any residual distributions (5% of available cash after the minimum annual distributions and management fee distributions) in proportion to the percentage amounts purchased. The purchase of SFOG LP Units

SIX FLAGS ENTERTAINMENT CORPORATION

Notes to Consolidated Financial Statements

by the SFTP-SFOG Subsidiary was financed through a drawdown on Six Flags' secured revolving line of credit available for acquisitions under the Credit Agreement and the purchase of SFOG LP Units by the SFEC-SFOG Subsidiary was financed through loans from TWE, which were subsequently refinanced with demand loans. See Note 7. Purchases of SFOG LP units in the 1998 tender offer were less than $25,000.

In connection with the purchase of the SFOG LP Units, approximately $49,800,000 of the excess of cost over net assets acquired associated with this investment was being amortized over 30 years. The net investment in SFOG LP Units was presented as part of the investment in theme park partnerships prior to the Acquisition. Accumulated amortization at December 28, 1997 amounted to $2,582,000.

Six Flags Over Texas

On November 24, 1997, Six Flags, Time Warner Inc. and TWE completed arrangements pursuant to which Six Flags Over Texas, Inc., a wholly-owned subsidiary of SFTP ("SFOT II"), will manage the Six Flags Over Texas Park through 2027. Under the agreements governing the new arrangements (the "Texas Agreements"), the Six Flags Over Texas Park will continue to be owned by Texas Flags Ltd., a limited partnership ("Six Flags Over Texas") of which SFOT II is the managing general partner.

The key elements of these arrangements are as follows: (i) the limited partner (which is not affiliated with Six Flags) will receive minimum annual distributions of $27,700,000 commencing in 1998, increasing each year thereafter in proportion to increases in the cost of living; thereafter, SFOT II will be entitled to receive from available cash (after provision for reasonable reserves and after capital expenditures per annum of approximately 6% of prior year revenues) a management fee equal to 3% of the prior year's gross revenues; and, thereafter, any additional available cash will be distributed 92.5% to SFOT and 7.5% to the limited partner;
(ii) in the first quarter of 1998, a subsidiary of SFTP (the "SFTP-SFOT Subsidiary") and a subsidiary of SFEC (the "SFEC-SFOT Subsidiary") commenced a tender offer for partnership interests ("SFOT LP Units") in Six Flags Over Texas, Ltd., which owns 99% of the limited partner of Six Flags Over Texas, that values the Six Flags Over Texas Park at the greater of $375,000,000 or 8.5 times 1998 EBITDA of the Six Flags Over Texas Park (the "SFOT Tender Offer Price"); (iii) commencing in 1999, and on an annual basis thereafter, the SFTP-SFOT Subsidiary and the SFEC-SFOT Subsidiary will offer to purchase additional SFOT LP Units at a price based on the greater of the SFOT Tender Offer price or the EBITDA of the Six Flags Over Texas Park for the prior four years; and (iv) in 2027, Six Flags and its affiliates will have the option to acquire the Six Flags Over Texas Park at a price based on the SFOT Tender Offer Price, increased in proportion to the increase in the cost of living between December 1997 and December 2027. SFEC, SFTP, Time Warner Inc. and TWE have guaranteed certain of the obligations (including the minimum annual distributions noted in (i) above) of SFOT under the Texas Agreements. See Note 2.

SIX FLAGS ENTERTAINMENT CORPORATION

Notes to Consolidated Financial Statements

In connection with the entering into the Texas Agreements, a subsidiary of SFEC loaned $10,725,000 to the Six Flags Over Texas Partnership during December 1997 as a prepayment of its obligations under the Texas Agreements. This amount has been included in the Company's investment in theme park partnerships as of December 28, 1997.

The tender offer for SFOT LP Units closed on March 12, 1998. Six Flags purchased approximately 33% of these units for approximately $117,984,000 through the SFEC-SFOT Subsidiary and financed the purchase of such units through loans.

The summarized results of the Partnership Parks for the period from December 29, 1997 to March 31, 1998 are as follows:

     Revenues                                                 $ 10,168,000
     Expenses:
       Operating expenses                                       18,435,000
       Selling, general and administrative                       2,859,000
       Costs of products sold                                      993,000
       Depreciation and amortization                             3,286,000
       Interest expense, net                                       640,000
                                                              ------------
                Total                                           26,213,000
                                                              ------------
     Net loss                                                 $(16,045,000)
                                                              ============

Changes in the  investment  in theme park  partnerships  for the year ended
December 28, 1997 are as follows:

     Balance at beginning of period                           $ 19,135,000
     Capital additions made by the theme parks                  16,147,000
     Operations, net of distributions to the limited partners   18,633,000
     Distributions to Six Flags                                (24,126,000)
     Amortization                                              (11,515,000)
                                                              ------------
                                                                18,274,000
                                                              ------------
     Purchase of SFOG limited partnership units                 62,678,000
     Amortization                                               (2,582,000)
                                                              ------------
                                                                60,096,000
                                                              ------------
     Advance to SFOT                                            10,725,000
                                                              ------------
                                                              $ 89,095,000
                                                              ============

As of the Acquisition,  the Company's investment in theme park partnerships
was  transferred  to  Premier  in  exchange  for  $46,000,000  in cash  and

Premier's payment of $165,686,000 of Company borrowings. See Note 13.

                                             Period from
                                             December 29,         Year ended
                                               1997 to           December 28,
                                            March 31, 1998           1997
                                            --------------       ------------
                                                        (Unaudited)
                                                       (in thousands)

     Revenues                                 $  23,403            531,872
     Net loss                                  (130,509)           (24,765)

(7)  Short-Term Borrowings

Short-term borrowings at January 3, 1999 and December 28, 1997 consist of the following:

                                                                 January 3,     December 28,
                                                                    1999            1997
                                                                 ----------     ------------
8.5% Note payable to Chase Bank, due March 31, 1998              $       --      19,778,000
7.2% Note payable to TWE, due March 31, 1998                             --      10,725,000
                                                                 ----------     ------------
                                                                 $       --      30,503,000
                                                                 ==========     ============

The proceeds from the note payable to Chase Bank were used to purchase approximately 8% of SFOG LP Units pursuant to the tender offer for such units. The proceeds from the TWE note payable were loaned to Six Flags Over Texas Partnership in connection with the Texas Agreements. See Note 6. The weighted average interest rate of short-term borrowings outstanding as of December 28, 1997 was 8.5%. These short-term borrowings were refinanced in March 1998 at the time of the financing of the initial tender offer for SFOT LP units through a $165,000,000 facility. The new facility was paid in full at the time of the Acquisition by Premier in exchange for the interests in the theme park partnerships previously owned by SFEC.

(Continued)

                                                                              January 3,        December 28,
                                                                                 1999              1997
                                                                            --------------      ------------
Long-term debt:
    Old Credit Agreement (a)                                                $           --      348,500,000
    SFEC Notes (b)                                                             170,000,000               --
    SFEC Zero Coupon Notes (b)                                                 182,877,000      161,074,000
    SFTP Senior Subordinated Notes (c)                                         321,167,000      269,925,000
    Credit Facility (d)                                                        409,750,000               --
    Other                                                                        1,050,000               --
                                                                            --------------      -----------
                                                                             1,084,844,000      779,499,000

Less current portion, in 1999 primarily the SFEC Zero
    Coupon Notes (carrying value of $182,877,000 as of
    January 3, 1999) which have been prefunded with                            184,370,000       26,130,000
    restricted-use investments.  See note (b)                               --------------      -----------
                                                                            $  900,474,000      753,369,000
                                                                            ==============      ===========

(a) In 1995, SFTP entered into a $600,000,000 credit agreement (the "Old Credit Agreement") with a group of lenders. The Old Credit Agreement consisted of a $345,000,000 Tranche A Senior Secured Term Loan Facility (the "Tranche A Term Facility"), a $130,000,000 Tranche B Senior Secured Term Loan Facility (the "Tranche B Term Facility") (together the "Term Facilities"), and a Senior Secured Revolving Credit Facility (the "Revolving Facility"). The Revolving Facility provided for revolving loans to SFTP and the issuance of letters of credit for the account of SFTP in an aggregate principal amount of up to $125,000,000, of which not more than $12,000,000 could be represented by letters of credit. The interest rates per annum applicable to the Tranche A Term Facility and Revolving Facility were LIBOR plus 2.50%, as adjusted semi-annually. The interest rate per annum applicable to the Tranche B Term Facility was LIBOR plus 3.00%, as adjusted semi-annually. The amounts outstanding under the Term Facilities were $307,500,000 at December 28, 1997. The amounts borrowed against the Revolving Facility as of December 28, 1997 were $41,000,000. As of December 28, 1997, the Company had $9,300,000 in letters of credit outstanding.

SFTP was required to pay a per annum fee equal to 2.50%, plus a fronting fee of 0.25%, of the aggregate face amount of outstanding letters of credit under the Revolving Facility and a per annum fee equal to 0.50% on the undrawn portion of the commitments in respect of the Revolving Facility.

In connection with the Acquisition, in April 1998, the Company satisfied all amounts then outstanding under the Old Credit Agreement and the Old Credit Agreement was terminated.

(Continued)

SIX FLAGS ENTERTAINMENT CORPORATION

Notes to Consolidated Financial Statements

(b) On April 1, 1998, SFEC issued $170,000,000 principal amount of SFEC Notes, which are senior obligations of SFEC. The SFEC Notes are guaranteed on a fully subordinated basis by Premier. The SFEC Notes require annual interest payments of approximately $15,100,000 (8 7/8% per annum) and, except in the event of a change of control of SFEC and certain other circumstances, do not require any principal payments prior to their maturity in 2006. The SFEC Notes are redeemable, at SFEC's option, in whole or in part, at any time on or after April 1, 2002, at varying redemption prices. The net proceeds of the SFEC Notes, together with other funds, were invested in restricted-use securities to provide for the repayment in full on or before December 15, 1999 of the SFEC Zero Coupon Notes (with a carrying value of $182,877,000 at January 3, 1999).

The indenture under which the SFEC Notes were issued limits the ability of SFEC and its subsidiaries to dispose of assets; incur additional indebtedness or liens; pay dividends; engage in mergers or consolidations; and engage in certain transactions with affiliates.

(c) The SFTP Senior Subordinated Notes were issued in an aggregate principal amount of $285,000,000 at a discount and effective in 1999 require interest payments of approximately $34,900,000 per annum (12 1/2% per annum). The first interest payment was paid in December 1998. Except in certain circumstances, no principal payments are required prior to their maturity in 2005. The SFTP Senior Subordinated Notes are guaranteed on a senior subordinated basis by the principal operating subsidiaries of SFTP. The Notes are redeemable, at SFTP's option, in whole or in part, at any time on or after June 15, 2000, at varying redemption prices. As a result of the application of purchase accounting, the carrying value of the SFTP Senior Subordinated Notes was increased to $318,500,000, which was the estimated fair value at the Acquisition date, April 1, 1998. The premium that resulted from the adjustment of the carrying value will be amortized as a reduction to interest expense over the remaining term of the SFTP Senior Subordinated Notes and will result in an effective interest rate of approximately 9 3/4%.

The indenture under which the SFTP Senior Subordinated Notes were issued limits the ability of SFTP and its subsidiaries to dispose of assets; incur additional indebtedness or liens; pay dividends; engage in mergers or consolidations; and engage in certain transactions with subsidiaries and affiliates.

(d) On April 1, 1998, SFTP entered into the Credit Facility, pursuant to which it had outstanding $409,750,000 at January 3, 1999. The Credit Facility includes (i) a $100,000,000 five-year revolving credit facility used to refinance Six Flags bank indebtedness as of April 1, 1998 and for working capital and other general corporate purposes (of which $38,000,000 was outstanding on January 3, 1999); and (ii) a $372,000,000 term loan facility (the "Term Loan Facility") which was fully drawn on January 3, 1999. Borrowings under the Term Loan Facility will mature on November 30, 2004. However, aggregate principal payments and reductions of $1,000,000 are required during each of the first, second, third and fourth years; aggregate principal payments of $25,000,000 and $40,000,000 are required in years five and six, respectively, and $303,000,000 at maturity. Borrowings under the Credit Facility are secured by substantially all of the assets of

(Continued)

SIX FLAGS ENTERTAINMENT CORPORATION

Notes to Consolidated Financial Statements

SFTP and its subsidiaries and a pledge of the stock of SFTP, and are guaranteed by such subsidiaries and SFEC.

The Credit Facility contains restrictive covenants that, among other things, limit the ability of SFTP and its subsidiaries to dispose of assets; incur additional indebtedness or liens; pay dividends, (except that, subject to covenant compliance, dividends will be permitted to allow SFEC to meet cash pay interest obligations with respect to the SFEC Notes); repurchase stock; make investments; engage in mergers or consolidations and engage in certain transactions with subsidiaries and affiliates. In addition, the Credit Facility requires that SFTP comply with certain specified financial ratios and tests.

Annual maturities of long-term debt during the five years subsequent to January 3, 1999, are as follows:

1999                     $  184,370,000
2000                          1,493,000
2001                          1,065,000
2002                          7,000,000
2003 and thereafter         890,916,000
                         --------------
                         $1,084,844,000
                         ==============

The following table reflects the condensed financial information of Premier (guarantor of the 8 7/8% SFEC Notes described in (b) above).

(in thousands)

Assets:                                                  Liabilities and stockholders' equity:
   Cash and cash equivalents             $  320,411         Current liabilities                        $   22,888
   Restricted-use investment securities      22,734                                                    ----------
   Other current assets                      38,067         Long-term debt                                550,896
                                         ----------
         Total current assets               381,212
                                                            Other long-term liabilities                       568
   Other assets                              21,757
                                                            Deferred income taxes                             217
   Restricted-use investments               111,576
                                                            Stockholders' equity                        1,626,565
   Investment in subsidiaries             1,432,883                                                    ----------

   Investment in theme park partnerships    226,324

   Property and equipment, net               23,758

   Intangible assets, net                     3,624
                                         ----------               Total liabilities and
         Total assets                    $2,201,134                   stockholders' equity             $2,201,134
                                         ==========                                                    ==========

(Continued)

Revenue                                  $      340      Cash flow information:
                                         ----------         Cash flows from operating activities       $  (17,367)
Operating costs and expenses:                                                                          ----------
   Selling, general and  administrative       9,351      Cash flows from investing activities:
   Noncash compensation                       5,687         Additions to property and  equipment          (23,970)
   Depreciation and amortization                166         Investment in theme park partnerships        (217,641)
                                         ----------
     Total operating costs and expenses      15,204         Acquisitions of theme park companies       (1,000,065)
                                         ----------
     Loss from operations                  (14,864)        Investment in subsidiaries                    (39,030)
                                         ----------
Other income (expense):                                     Purchase of restricted-use investments       (145,675)

   Interest expense                         (41,031)        Maturities of restricted-use
   Interest income                           20,593           investments                                  11,365
                                                                                                       ----------
   Equity in operations of theme park                                                                  (1,415,016)
     partnerships                            21,002                                                    ----------
                                         ----------
       Total other income (expense)             564      Cash flows from financing activities:
                                         ----------
       Loss before income                                   Proceeds from borrowings                      531,703
         taxes                              (14,300)        Net cash proceeds from issuance
Income tax benefit                           (5,918)          of stock                                  1,256,319
                                         ----------
                                                            Payment of preferred dividends                (11,644)
       Net loss                          $   (8,382)        Payment of debt issuance costs                (23,584)
                                         ==========                                                    ----------
                                                                                                        1,752,794
       Net loss applicable                                                                             ----------
         to common stock                 $  (25,848)        Increase in cash and cash equivalents      $  320,411
                                         ==========                                                    ==========

As discussed in (a) to (d), the long-term debt of the Company has been issued by both SFEC and by one of its subsidiaries, SFTP. SFEC does not guarantee the SFTP Senior Subordinated Notes. SFEC is a holding company with limited assets other than its investment in SFTP and the restricted-use investments that will be used to repay the SFEC Zero Coupon Notes. Additionally, SFEC does not have any operating income or operating cash flow outside of interest payments on the SFEC Notes. The vast majority of the SFEC consolidated assets, liabilities, operations and cash flows are those of SFTP. As such, condensed information of SFEC and of consolidated SFTP is not presented.

The debt indentures or credit facility agreements generally restrict the ability of the obligors to distribute assets to parent companies or in the case of SFEC to its stockholder. The following table discloses the amounts available for distribution (other than permitted payments in respect of shared administrative and other corporate expenses and tax sharing payments) at January 3, 1999 by each debt group based upon the most restrictive applicable limitation.

                                                Amount
                                              Available
                                            -------------
                                            (in thousands)

     SFEC                                    $   111,226
     SFTP                                          3,772

The  fair  value  of the  Company's  long-term  debt is  estimated  by

discounting the future cash flows of each instrument at rates currently offered to the Company for similar debt instruments of comparable maturities by the Company's investment bankers or based upon quoted market prices. The fair value of

(Continued)

SIX FLAGS ENTERTAINMENT CORPORATION

Notes to Consolidated Financial Statements

the Company's long-term debt as of January 3, 1999 and December 28, 1997 was approximately $1,084,702,000 and $822,100,000, respectively.

(9) Income Taxes

Income tax expense allocated to operations for the 1998 Post-Acquisition period, 1998 Pre-Acquisition period, 1997 and 1996 consists of the following:

                                 Current       Deferred        Total
                                 -------       --------        -----

Post-Acquisition 1998:
  U.S. federal                 $        --    29,972,000    29,972,000
  State and local                       --     4,541,000     4,541,000
                               -----------    ----------    ----------
                               $        --    34,513,000    34,513,000
                               ===========    ==========    ==========

Pre-Acquisition 1998:
  U.S. federal                 $        --            --            --
  State and local                       --            --            --
                               -----------    ----------    ----------
                               $        --            --            --
                               ===========    ==========    ==========

1997:
  U.S. federal                 $        --            --            --
  State and local                       --            --            --
                               -----------    ----------    ----------
                               $        --            --            --
                               ===========    ==========    ==========

1996:
  U.S. federal                 $        --     4,369,000     4,369,000
  State and local                       --       768,000       768,000
                               -----------    ----------    ----------
                               $        --     5,137,000     5,137,000
                               ===========    ==========    ==========


                                                               (Continued)

                                             1998           1998
                                             Post-          Pre-
                                          Acquisition   Acquisition
                                            Period         Period          1997           1996
                                          -----------   -----------      ---------      ---------
Computed "expected" federal income
  tax expense (benefit)                   $22,118,000   (50,281,000)    (1,298,000)    (3,539,000)
Amortization of goodwill                   10,480,000       777,000      2,866,000      2,287,000
Other, net                                     19,000       (60,000)      (327,000)        68,000
Carryover of net operating losses                  --    49,564,000     (1,241,000)     5,822,000
Effect of state and local income taxes,
  net of federal tax benefit                1,896,000            --             --        499,000
                                          -----------    ----------     ----------     ----------
                                          $34,513,000            --             --      5,137,000
                                          ===========    ==========     ==========     ==========

Substantially all of the Company's future taxable temporary differences (deferred tax liabilities) relate to the different financial accounting and tax bases resulting from the application of purchase method of accounting for business combinations and depreciation methods and periods for property and equipment. The Company's net operating loss carryforwards, alternative minimum tax carryforwards, accrued insurance expenses, and asset tax basis in excess of financial basis, represent future income tax deductions (deferred tax assets). The tax effects of these temporary differences as of January 3, 1999 and December 28, 1997, are presented below:

                                                  January 3,     December 28,
                                                    1999             1997
                                                 ------------    ------------

Deferred tax assets before valuation allowance   $123,993,000     103,138,000
Less valuation allowance                                   --     (15,921,000)
                                                 ------------    ------------
Net deferred tax assets                           123,993,000      87,217,000
Deferred tax liabilities                          223,326,000      87,217,000
                                                 ------------    ------------
Net deferred tax liability                       $ 99,333,000              --
                                                 ============    ============


                                                                     (Continued)

                                                          January 3,     December 28,
                                                            1999            1997
                                                         ------------    ------------
Deferred tax assets:
    Property and equipment - tax basis in excess of
       financial basis                                   $         --      55,467,000
    Net operating loss carryforwards                       89,025,000      43,071,000
    Other                                                  34,968,000       4,600,000
                                                         ------------    ------------
                                                         $123,993,000     103,138,000
                                                         ============    ============
Deferred tax liabilities:
    Property and equipment - financial basis in excess
       of tax basis                                      $217,515,000      33,736,000
    Deferral related to tax and fiscal year difference             --      46,225,000
    Other                                                   5,811,000       7,256,000
                                                         ------------    ------------
                                                         $223,326,000      87,217,000
                                                         ============    ============

Because most of the Company's Post-Acquisition depreciable assets' financial carrying amounts and tax basis differences will reverse before the expiration of the Company's net operating loss carryforwards and taking into account the Company's projections of future taxable income over the same period, management believes that the Company will more likely than not realize the benefits of these net future deductions. As a result, no valuation allowance is deemed necessary as of January 3, 1999.

As of January 3, 1999, the Company has approximately $236,000,000 of net operating loss carryforwards available for federal income tax purposes which expire through 2013. Additionally, the Company has approximately $4,728,000 of alternative minimum tax credits which have no expiration date.

The Company has experienced an ownership change within the meaning of Internal Revenue Code Section 382 and the regulations thereunder as a result of the Acquisition by Premier. Due to this ownership change, no more than $49,200,000 of such net operating loss carryforwards may be used to offset taxable income in any year. Furthermore, the amount of such NOLs that can be used is limited to the cumulative taxable income of Six Flags. Notwithstanding these limitations, management believes that it is more likely than not that all of the Company's net operating loss carryforwards will be utilized by the Company before their expiration.

(Continued)

SIX FLAGS ENTERTAINMENT CORPORATION

Notes to Consolidated Financial Statements

(10) Stockholders' Equity

(a) Pre-Acquisition Capital Structure

Prior to the Acquisition, SFEC's outstanding equity consisted of 5,100,000 shares of Class A Convertible Preferred Stock, par value of $.01 per share, 4,900,000 shares of Class B Convertible Preferred Stock, par value of $.01 per share, 51 shares of Class A Common Stock, par value $.01 per share ("Class A Common Stock"), and 49 shares of Class B Common Stock, par value $.01 per share ("Class B Common Stock"). The Class A Convertible Preferred Stock had a liquidation preference per share of $40 plus accrued and unpaid dividends to the liquidation date. Dividends accrued on the outstanding shares of Class A Convertible Preferred Stock on a daily basis at the rate of 12% per annum, compounded semi-annually on December 1 and June 1 of each year. Accrued and unpaid dividends for the Class A Convertible Preferred Stock were $69,500,000 at December 28, 1997. The Class B Convertible Preferred Stock had a liquidation preference per share of $40. No dividends accrued on the Class B Convertible Preferred Stock. SFEC's Class A Convertible Preferred Stock and Class A Common Stock were further divided into shares of voting stock (known as Class A-1 Convertible Preferred Stock and Class A-1 Common Stock, respectively) and non-voting stock (known as Class A-2 Convertible Preferred Stock and Class A-2 Common Stock, respectively). The non-voting shares of each such class were created for the benefit of certain regulated entities (each a "Regulated Holder") whose ability to own voting stock was restricted. Shares of Class A-1 Convertible Preferred Stock and Class A-1 Common Stock could have been exchanged by a Regulated Holder on a share-for-share basis for non-voting shares of such class. Shares of Class A-2 Convertible Preferred Stock and Class A-2 Common Stock could have been exchanged on a share-for-share basis for voting shares of each such class if such shares were held by a person other than by a Regulated Holder. Except for voting rights specifically accorded to a particular class under Delaware law, the shares of Class A-1 Common Stock and Class B Common Stock voted together as a single class on matters requiring stockholder action.

Six Flags entered into an Employment Agreement ("the Agreement") with an Executive (the "Executive") whereby SFEC agreed to reserve for issuance a certain number of shares of Class B Common Stock (the "Reserved Shares"), as defined in the Agreement. The Reserved Shares were to become vested on December 31, 2000, subject to the Executive's employment having continued through such date or prior thereto if certain events occurred as defined in the Agreement, including change-of-control provisions. Six Flags has recognized compensation expense related to the Reserved Shares during the 1998 Pre-Acquisition period, 1997, and 1996.

Under the Agreement, the Executive was also granted options to purchase shares of SFEC's Class B Common Stock. Included was an option to purchase an additional 163,936 shares of SFEC's Class B Common Stock (the "Tranche 1 Option"), and a second option to purchase an additional 327,872 shares of SFEC's Class B Common Stock (the "Tranche 2 Option"). The exercise price of the Tranche 1 Option was based on a September 1995 exercise price of $40.64 per share, increasing at a cumulative annual rate of 10%. The exercise price of the Tranche 2 Option was based on a September 1995 exercise price of $40.94 per share increasing at a cumulative

(Continued)

SIX FLAGS ENTERTAINMENT CORPORATION

Notes to Consolidated Financial Statements

annual rate of 15%. On each September 15 while the Executive was employed under the Agreement, the number of shares of SFEC's Class B Common Stock reserved for issuance under the terms of the Tranche 1 Option decreased by 5,858.9 shares. At the same time, the Executive was granted a like number of additional Reserved Shares. In addition, SFEC granted additional options for the purchase of 327,872 shares of SFEC's Class B Common Stock to members of management of Six Flags and its subsidiaries. The terms of these options were similar to the Tranche 1 Option and Tranche 2 Option described above.

The options were to become exercisable only if there was a triggering event, as defined in the stock option plan agreement. Accordingly, prior to the triggering event, these stock options had been treated as if they were unissued due to the uncertainty regarding the Executive's and other management employees' ability to exercise such options. As a result of the Acquisition causing the options and the Reserved Shares to vest, Six Flags recognized $46,061,000 of compensation expense associated with the options and the Reserved Shares during the 1998 Pre-Acquisition period.

(b) Post-Acquisition Capital Structure

As a component of the Acquisition, the capitalization of SFEC was modified. Post-Acquisition, SFEC's capital structure consists of 1,000 shares of $.05 common stock. All 1,000 shares of common stock have been issued, with all of the shares owned by Premier. All previously outstanding SFEC shares were retired.

(11) Pension Benefits

Six Flags maintains a noncontributory, defined benefit pension plan (the "Benefit Plan"). The Benefit Plan covers substantially all of Six Flags' full-time employees. Subsequent to January 3, 1999, the Benefit Plan was extended to cover substantially all of Premier's full-time employees. The Benefit Plan permits normal retirement at age 65, with early retirement at ages 55 through 64 upon attainment of ten years of credited service. The early retirement benefit is reduced for benefits commencing before age 62. Benefit Plan benefits are calculated according to a benefit formula based on age, average compensation over the highest consecutive five-year period during the employee's last ten years of employment and years of service. Benefit Plan assets are invested primarily in common stock and mutual funds. The Benefit Plan does not have significant liabilities other than benefit obligations. Under the Company's funding policy, contributions to the Benefit Plan are determined using the projected unit credit cost method. This funding policy meets the requirements under the Employee Retirement Income Security Act of 1974.

(Continued)

                                                                            Period from           Period from
                                                                           April 1, 1998          December 29,
                                                                                to                  1997 to
                                                                            January 3,              March 31,
                                                                               1999                  1998                   1997
                                                                           ------------           -----------            -----------
Change in benefit obligation:
    Benefit obligation, beginning of period                                $ 68,712,000            68,912,000            58,702,000
    Service cost                                                              2,444,000               801,000             3,025,000
    Interest cost                                                             3,808,000             1,261,000             4,858,000
    Actuarial (gain) loss                                                       757,000            (1,987,000)            3,444,000
    Benefits paid                                                            (1,063,000)             (275,000)           (1,117,000)
                                                                           ------------           -----------            -----------
    Benefit obligation, end of period                                        74,658,000            68,712,000            68,912,000
                                                                           ------------           -----------            -----------
Change in plan assets:
    Fair value of assets, beginning of period                                85,236,000            77,024,000            60,471,000
    Actual return on plan assets                                              3,097,000             8,488,000            13,584,000
    Employer contributions                                                           --                    --             4,086,000
    Benefits paid                                                            (1,063,000)             (276,000)           (1,117,000)
                                                                           ------------           -----------            -----------
    Fair value of assets, end of period                                      87,270,000            85,236,000            77,024,000
                                                                           ------------           -----------            -----------
Plan assets in excess of benefit obligations                                 12,612,000            16,524,000             8,112,000

Unrecognized net actuarial (gain) loss                                        3,317,000           (16,349,000)           (7,943,000)

Unrecognized prior service cost                                                      --            (1,046,000)           (1,090,000)
                                                                           ------------           -----------            -----------
Prepaid (accrued) benefit cost (included in deposits
    and  other  assets  as  of  January 3, 1999,  other
    long-term liabilities as of December 28, 1997)                         $ 15,929,000              (871,000)             (921,000)
                                                                           ============           ===========            ===========

Net pension expense of the Benefit Plan for the 1998 Post-Acquisition period, the 1998 Pre-Acquisition period, 1997, and 1996 included the following components:

                                           Period from           Period from
                                          April 1, 1998          December 29,
                                               to                  1997 to
                                         January 3, 1999        March 31, 1998              1997                  1996
                                         ---------------        --------------           ---------             ---------
Service cost                               $ 2,444,000               801,000             3,025,000             3,133,000
Interest cost                                3,808,000             1,261,000             4,858,000             4,436,000
Expected return on assets                   (5,657,000)           (1,740,000)           (5,496,000)           (4,565,000)
Amortization of:
  Prior service cost                                --               (44,000)             (176,000)             (176,000)
  Actuarial gain (loss)                             --               (53,000)                   --                33,000
                                           -----------            ----------             ---------             ---------
Net periodic cost                          $   595,000               225,000             2,211,000             2,861,000
                                           ===========            ==========             =========             =========

(Continued)

                                             Period from        Period from
                                            April 1, 1998       December 29,
                                                 to               1997 to
                                           January 3, 1999     March 31, 1998           1997            1996
                                           ---------------     --------------           ----            ----
Weighted average discount rate                 6.75%               7.25%                7.25%           7.75%
Long-term rate of return                       9.00%               9.00%                9.00%           9.00%
Future compensation levels                     4.50%               5.00%                5.00%           6.00%

(12) 401(k) Plan

The Company has a qualified, contributory 401(k) plan (the "Six Flags Savings Plan"). Under the provisions of the Six Flags Savings Plan, employees of Six Flags completing one year of service (minimum 1,000 hours) and attaining age 21 are eligible to participate and may contribute up to 6% of compensation as a tax deferred basic contribution. Each participant may also elect to make additional contributions of up to 10% of compensation (up to 4% tax deferred). Tax deferred contributions to the savings plan may not exceed amounts defined by the Internal Revenue Service ($10,000 for 1998; $9,500 for 1997). Both the basic and additional contributions are at all times vested. Six Flags, at its discretion, may make matching contributions of up to 100% of its employees' basic contributions. Six Flags recognized contribution expense of $743,000, $247,000, $900,000, and $700,000 for the 1998 Post-Acquisition period, 1998 Pre-Acquisition period, 1997 and 1996, respectively. Six Flags' matching contributions to the savings plan are made in the first quarter of the succeeding year. During the first quarter of 1999, the Six Flags Savings Plan was merged into Premier's existing 401(k) plan.

(13) Related Party Transactions

Transactions with Time Warner Entertainment Company, L.P. and Affiliates prior to April 1, 1998

On December 31, 1997, TWE contributed $4,000,000 to Six Flags. This capital is reflected as an affiliate receivable as of December 28, 1997.

On May 5, 1997, TWE loaned $19,500,000 to a subsidiary of Six Flags. The proceeds from this affiliate loan were used to purchase approximately 8% of SFOG LP Units pursuant to the tender offer for such units. On December 23, 1997, this affiliate loan, along with accrued interest, was refinanced with proceeds of a note payable to Chase Bank. On November 24, 1997, TWE loaned $10,725,000 to another Six Flags subsidiary. The proceeds of this affiliate loan were loaned to the Six Flags Over Texas Partnership in connection with the Texas Agreements. This loan was refinanced in March 1998 by a $165,000,000 credit facility with Chase Bank.

(Continued)

SIX FLAGS ENTERTAINMENT CORPORATION

Notes to Consolidated Financial Statements

In 1996 and 1997, Six Flags reimbursed TWE and its affiliates $4,400,000 and $2,600,000, respectively, for royalties on merchandise, advertising and other expenses.

During 1995, Six Flags entered into a license agreement (the "License Agreement") pursuant to which it obtained the exclusive right for a term of 55 years to theme park use in the United States and Canada (excluding the Las Vegas, Nevada metropolitan area) of all animated, cartoon and comic book characters that Warner Bros. and DC Comics have the right to license for such use during the term of the agreement, including all characters which, prior to the effectiveness of the License Agreement, already had been licensed by Warner Bros. and DC Comics to Six Flags for use in connection with Six Flags' theme parks.

Under the License Agreement, Six Flags pays an annual license fee of $500,000 for each of the first ten years of the license term. Thereafter, the license fee will be subject to periodic scheduled increases and will be payable on a per-theme park basis. The annual license fees will also be increased by amounts equal to any third-party payments which may be payable by Warner Bros. or DC Comics as a result of the use of any licensed character by Six Flags.

Six Flags entered into an amendment to the License Agreement ("Amendment No. 1") which provided the exclusive right for a period of three years ending December 31, 1998, to theme park use of elements contained in released versions of certain theatrical motion pictures and television shows, along with usage of the "Warner Bros. Backlot Logo" (the "Logo Usage"). Each separate motion picture, television series and/or Logo Usage may be utilized only in connection with live shows within Six Flags' parks. Six Flags was charged $400,000 in total for the years 1996 and 1997 and was charged $150,000 in 1998 for the rights granted pursuant to Amendment No. 1.

In addition to the annual license fees described above, Six Flags is also required to pay royalties on sales of products incorporating the licensed characters at standard royalty rates for such products, subject to increase from time to time. Warner Bros. will be entitled to terminate the License Agreement prior to the expiration of the stated term if Six Flags, at any time during the term, is directly or indirectly controlled by a person that derives significant revenues from the production or distribution of motion pictures or engages in certain other businesses competitive with TWE.

Six Flags also entered into a license agreement with TWE pursuant to which TWE granted Six Flags a 25-year license to use the trademarks and service marks relating to the "Home Box Office" and "HBO" names and the "HBO" logo for use in connection with operation of restaurants in Six Flags' theme parks. The TWE license is royalty-free for the first ten years of its term. Thereafter, annual royalties will be established every five years. Six Flags also entered into an agreement entitling Six Flags (i) to use the name "Time Warner" in connection with operating a retail merchandise outlet with the name "Time Warner Studio Store" at Six Flags' theme parks and for establishing a themed area in each of Six Flags' theme parks to be called "Time Warner Studios" and (ii) to stage a concert series in Six Flags' theme parks under the name "Warner Music Rock Review." Six Flags also entered into a license agreement with the Sports Illustrated division of Time Warner pursuant to which Time Warner granted Six Flags a ten-year royalty-free license to use the "Sports Illustrated" and "Sports Illustrated for Kids" trademarks and service marks in connection with the operation of a sports festival at Six

(Continued)

SIX FLAGS ENTERTAINMENT CORPORATION

Notes to Consolidated Financial Statements

Flags' theme parks. The licensor under each of these additional license agreements has the right to terminate the license granted thereby if, during the stated term of any such license agreement, the Warner Bros. License Agreement is terminated for any reason. The licensor also has the right under certain circumstances to suspend the right of any Six Flags' theme parks to use the licenses granted thereby if the license is not sufficiently utilized in such theme park.

The License Agreement and Amendment No. 1 thereto described above were superceded by the License Agreement entered into in connection with the Acquisition to include the parks owned and operated by Premier Parks Operations Inc. As it relates to Six Flags, the terms of the new License Agreement are substantially the same as those described above.

Transactions with Premier Parks Inc. and Affiliates Subsequent to March 31, 1998

In connection with the Acquisition, SFEC, Premier and Premier Parks Operations Inc., also a direct subsidiary of Premier that owns or controls 19 parks ("PPO"), entered into a shared services agreement pursuant to which certain corporate, administrative and other general services provided by Premier are charged to SFEC and PPO, either on the basis of their respective revenues or on other relative bases. Allocation of these charges are reflected in the accompanying consolidated financial statements.

Additionally, as of the Acquisition date, Six Flags transferred its ownership interests in the Six Flags Over Texas and Six Flags Over Georgia partnerships to Premier for total consideration of $211,686,000 (which consisted of $208,082,000 related to the interest in the Partnership Parks and $3,604,000 as a capital contribution used to retire the remaining Company borrowings associated with the purchase of the units of the Partnership Parks). On the same date, Premier contributed $10,750,000 to Six Flags to establish the restricted-use investment associated with the SFEC Zero Coupon Notes. Throughout the remainder of the year, Premier contributed an additional $18,113,000 to Six Flags for various corporate uses.

(14) Commitments and Contingencies

Total rental expense, including office space and park sites, was approximately $4,751,000, $1,867,000, $9,700,000 and $8,500,000 for the 1998 Post-Acquisition period, 1998 Pre-Acquisition period, 1997 and 1996, respectively.

In December 1998, a final judgment of $197,300,000 in compensatory damages was entered against SFEC, SFTP, Six Flags Over Georgia, Inc. and TWE, and a final judgment of $245,000,000 in punitive damages was entered against TWE and of $12,000,000 in punitive damages was entered against the referenced Six Flags entities. TWE has indicated that it intends to appeal the judgments. The judgments arose out of a case entitled Six Flags Over Georgia, L.L.C. et al v. Time Warner Entertainment Company, L.P., et al based on certain disputed partnership affairs prior to the Acquisition at Six Flags Over Georgia, including alleged breaches of fiduciary duty. The sellers in the Acquisition, including Time Warner, Inc., have agreed to indemnify the Company from any and all liabilities arising out of this litigation.

(Continued)

The Company is party to various legal actions  arising in the normal course
of  business.  Matters  that are  probable  of  unfavorable  outcome to the
Company and which can be reasonably  estimated  are accrued.  Such accruals

are based on information known about the matters, the Company's estimates of the outcomes of such matters and its experience in contesting, litigating and settling similar matters. None of the actions are believed by management to involve amounts that would be material to consolidated financial condition, operations, or liquidity after consideration of recorded accruals.

(15) Business Segments

Both previous and current management managed the Company's operations on an individual park location basis. Discrete financial information is maintained for each park and provided to Company management for review and as a basis for decision-making. The primary performance measure used to allocate resources is earnings before interest, tax expense, depreciation, and amortization (EBITDA). All of the Company's parks provide similar products and services through a similar process to the same class of customer through a consistent method. As such, the Company has only one reportable segment - operation of theme parks. The following table presents segment financial information and a reconciliation of the primary segment performance measure to income (loss) before income taxes. Park level expenses exclude all non-cash operating expenses, principally depreciation and amortization.

                                               Period from       Period from
                                              April 1, 1998      December 29,
                                                    to             1997 to
                                             January 3, 1999    March 31, 1998      1997          1996
                                             ---------------    --------------     -------       -------
                                                                        (in thousands)
Theme park revenues                             $ 497,728           33,571         707,578       680,796
Theme park cash expenses                          292,356           82,280         505,903       504,767
                                                ---------         --------         -------       -------
Aggregate park EBITDA                             205,372          (48,709)        201,675       176,029

Amortization of investment in
  theme park partnerships                              --             (393)             --            --
Unallocated net expenses, including
  corporate                                       (11,623)         (54,422)        (36,460)      (22,194)
Depreciation and amortization                     (71,896)         (17,629)        (84,493)      (87,417)
Interest expense, net                             (58,658)         (22,508)        (84,430)      (76,530)
                                                ---------         --------         -------       -------
Income (loss) before income taxes               $  63,195         (143,661)         (3,708)      (10,112)
                                                =========         ========         =======       =======
Theme park revenues                             $ 497,728           33,571         707,578       680,796
Theme park revenues from parks
  accounted for under the equity
  method                                               --          (10,168)             --            --
Other revenues                                         --               --           1,088            80
                                                ---------         --------         -------       -------
                                                $ 497,728           23,403         708,666       680,876
                                                =========         ========         =======       =======

(Continued)