UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2008
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from                         to
 Commission File Number 000-50132
 
 Sterling Chemicals, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware(State or other jurisdiction of 
incorporation or organization)
    
    76-0502785(I.R.S. Employer Identification No.)333 Clay Street, Suite 3600
Houston, Texas 77002-4109(Address of principal executive offices)
    
    (713-650-3700)(Registrants telephone number,
including area code)
 Securities registered pursuant to Section 12(b) of the Act: None
 Securities registered pursuant to Section 12(g) of the Act:
 
 o þ
 o þ
 þ o
 þ
  Large accelerated filer oAccelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company þ  o þ




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TABLE OF CONTENTS
 PagePART IItem 1.
    
    Business
    
    
    2Item 1A.
    
    Risk Factors
    
    
    11Item 2.
    
    Properties
    
    
    16Item 3.
    
    Legal Proceedings
    
    
    16Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    18PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    19Item 6.
    
    Selected Financial Data
    
    
    21Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    23Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    37Item 8.
    
    Financial Statements and Supplementary Data
    
    
    38Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
    
    
    74Item 9A (T).
    
    Controls and Procedures
    
    
    74PART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    76Item 11.
    
    Executive Compensation
    
    
    76Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    76Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    76Item 14.
    
    Principal Accountant Fees and Services
    
    
    76PART IVItem 15.
    
    Exhibits and Consolidated Financial Statement Schedules
    
    
    77
 1




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Forward-Looking Statements
   Document Summaries
  
 PART I
  
 Item 1. Busines s
    2




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Year ended December 31,2008
    
    2007
    
    2006Revenues
    
    $
    26,591
    
    
    $
    681,513
    
    
    $
    524,664Gross loss
    
    
    (7,654
    )
    
    
    (3,808
    )
    
    
    (2,641
    )
  Business Strategy
  
    
    operating our facilities in a safe, reliable and environmentally responsible
manner;
    
    effectively utilizing our available capacity;
    
    maintaining superior expense and capital expenditure management;
    
    expanding our capacity through low cost investments;
    
    flawlessly executing our contract management and administration;
 3




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
    
    monetizing our unutilized assets and infrastructure;
    
    capturing economic merger and acquisition opportunities;
    
    optimizing our capital structure and use of tax credits and governmental
subsidies;
    
    maintaining top-quality human resource management, development and utilization;
and
    
    generating leading shareholder returns.
 Operating Our Facilities Safely, Reliably and in an Environmentally Responsible Manner
  Profitably Grow Our Business.
    Industry Overview
 Acetic Acid.
 4




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Plasticizers.
 Product Summary
  Sterling Product
    
    Intermediate(Capacity)
    
    Products
    
    Primary End Products
    
    Raw Materials
    
    Major CompetitorsAcetic Acid
(1.1 billion
pounds per year)
    
    Vinyl acetate
monomer,
terephthalic acid,
and acetate solvents
    
    Adhesives, PET bottles,
fibers and surface coatings
    
    Methanol and Carbon
Monoxide
    
    Celanese AG, Eastman
Chemical Company and
LyondellBasell
Chemical CompanyPlasticizers
(200 million pounds per
year of phthalate esters)
    
    Flexible polyvinyl
chloride, or PVC
    
    Flexible plastics, such as
shower curtains and liners,
floor coverings, cable
insulation, upholstery and
plastic molding
    
    Oxo-Alcohols
and Phthalic Anhydride
    
    ExxonMobil Corporation,
Eastman Chemical
Company and BASF
Corporation
 Products
 Acetic Acid.
 5




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Acetic Acid-BP Chemicals
 Plasticizers. Plasticizers-BASF
 Sales and Marketing
  
    
    lower our selling, general and administrative expenses;
    
    reduce our working capital requirements;
    
    insulate the financial results from our plasticizers operations from the effects of
declining markets and changes in raw materials prices; and
    
    in some cases, gain access to certain improvements in manufacturing process technology.
 Contracts
  Acetic Acid-BP Chemicals
   
    
    the term of our Acetic Acid Production Agreement was extended from July 31, 2016 until
December 31, 2031, subject to an early termination right that may be exercised by BP
Chemicals as of December 31, 2026;
    
    after an adjustment period during 2008, BP Chemicals will pay us estimated profit
sharing payments quarterly, rather than the set quarterly advancement provided in our Old
Acetic Acid Production Agreement that resulted in large true-ups for profit sharing
payments at the end of each year;
    
    the ability of BP Chemicals to unilaterally shut down our acetic acid plant under our
Old Acetic Acid Production Agreement was removed;
 6




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
    
    we have the right to produce and sell acetic acid for our own account if BP Chemicals
purchases fall below specified levels for an extended period of time for reasons other than
our production issues;
    
    some indirect expenses for both parties have been excluded from the reimbursement and
profit sharing provisions, with each party entitled to retain for its own account any cost
savings realized in those areas but also solely responsible for any increases in those
costs; and
    
    after the expiration or termination of our Acetic Acid Production Agreement:
 
    
    at our request, BP Chemicals must continue to supply us with catalyst
if it is still in the catalyst supply business;
    
    we pay BP Chemicals for undepreciated capital only if the expiration or
termination is caused by us; and
    
    if our acetic acid plant is permanently shut down shortly thereafter,
BP Chemicals is required to pay a portion of any shut down expenses and a share of
our residual fixed costs for the following five years (unless the expiration or
termination is caused by us).
   Plasticizers-BASF
    7




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Raw Materials and Energy Resources
  Acetic Acid.
 Plasticizers.
 Technology and Licensing
    8




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Competition
  Environmental, Health and Safety Matters
      9




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Employees
  Insurance
   10




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Access to Filings
 http://www.sterlingchemicals.com
 
 Item 1A. Risk Factors
  Risks Related to Our Business
 Each of our products is sold to only one customer.
  Our ability to realize increases in our acetic acid production capacity that could be made possible
through low-cost, incremental capacity expansions is dependent on the availability of sufficient,
economic quantities of carbon monoxide.
  We depend upon the continued operation of a single site for all of our production.
  11




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Our operations involve risks that may increase our operating costs, which could reduce our
profitability.
  
    
    severe weather and natural disasters;
    
    mechanical failures, unscheduled downtimes, labor difficulties and transportation
interruptions;
    
    environmental remediation complications;
    
    chemical spills and discharges or releases of toxic or hazardous substances or gases;
and
    
    pipeline or storage tank leaks and ruptures, explosions and fires.
  Volatility in asset values and liability costs related to our pension plans may reduce our
profitability and adversely impact current funding levels.
  Our operations are subject to operating hazards and unforeseen interruptions for which we may not
be adequately insured.
   12




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New regulations concerning the transportation of hazardous chemicals and the security of chemical
manufacturing facilities could result in higher operating costs.
  We are subject to many environmental and safety regulations that may result in significant
unanticipated costs or liabilities or cause interruptions in our operations.
   Approximately 37% of our employees are covered by a collective bargaining agreement that expires on
May 1, 2012. Disputes with the Union representing these employees or other labor relations issues
may negatively affect our business.
  A failure to retain or attract key employees could adversely affect our business.
  13




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Transactions consummated pursuant to our plan of reorganization could result in the imposition of
material tax liabilities.
  We may not successfully develop our under-utilized infrastructure at our Texas City facility.
  We may not successfully complete acquisitions that we are pursuing or any future acquisitions may
present unforeseen integration obstacles or costs, increase our leverage or negatively impact our
performance.
  
    
    potential disruption of our ongoing business and distraction of management;
    
    unexpected loss of key employees or customers of an acquired business;
    
    conforming an acquired business standards, processes, procedures or controls with our
operations;
    
    coordinating new product and process development;
    
    hiring additional management or other critical personnel;
    
    encountering unknown contingent liabilities which could be material; and
    
    increasing the scope, geographic diversity and complexity of our operations.
  We are unable to predict the impact of the recent downturn in the credit markets and the resulting
costs or constraints in obtaining financing on our business and financial results.
 14




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Risks Relating to Our Indebtedness
 Our leverage and debt service obligations may adversely affect our cash flow and our ability to
make payments on our indebtedness.
 1 4
 
    
    require us to dedicate a substantial portion of our cash flow from operations to service
our existing debt service obligations, thereby reducing the availability of our cash flow
to fund working capital, capital expenditures and other general corporate expenditures;
    
    increase our vulnerability to adverse general economic or industry conditions and limit
our flexibility in planning for, or reacting to, competition or changes in our business or
our industry;
    
    limit our ability to obtain additional financing;
    
    place restrictions on our ability to make certain payments or investments, sell assets,
make strategic acquisitions, engage in mergers or other fundamental changes and exploit
business opportunities; and
    
    place us at a competitive disadvantage relative to competitors with lower levels of
indebtedness in relation to their overall size or less restrictive terms governing their
indebtedness.
  Any failure to meet our debt obligations could harm our business, financial condition, results of
operations or cash flows.
  15




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Risks Relating to the Ownership of Our Common Stock
 Our common stock is thinly traded. There is no active trading market for our common stock and an
active trading market may not develop.
  We have a significant stockholder which has the ability to control our actions.
  Our Series A Preferred Stock pays a quarterly stock dividend that is dilutive to the holders of our
common stock.
  
 Item 2. Properties
  
 Item 3. Legal Proceedings
  16




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Acetic Acid-BP Chemicals
  th
  17




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Item 4. Submission of Matters to a Vote of Security Holders
  18




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PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
  First
    
    Second
    
    Third
    
    FourthQuarter
    
    Quarter
    
    Quarter
    
    Quarter2008
    
    
    High
    
    $
    21.00
    
    
    $
    17.00
    
    
    $
    17.25
    
    
    $
    17.25Low
    
    $
    14.95
    
    
    $
    13.00
    
    
    $
    9.00
    
    
    $
    8.902007
    
    
    High
    
    $
    12.75
    
    
    $
    26.00
    
    
    $
    24.75
    
    
    $
    23.00Low
    
    $
    8.55
    
    
    $
    10.98
    
    
    $
    17.25
    
    
    $
    17.00
  Dividend Policy
  Equity Compensation Plan
   
    
    increase the number of shares of our common stock available for issuance by
1,000,000 shares;
    
    increase the maximum number of shares of our common stock with respect to which
benefits may be
 19




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granted or measured to any participant by 1,000,000 shares;
 
    
    include additional business criteria on which performance based-awards granted
under the plan will be based;
    
    provide guidance as to how such business criteria shall be applied;
    
    extend the duration of the plan from December 12, 2012 to December 31, 2018;
    
    provide that no amendment of the plan may be made without the approval of our
stockholders if, among other things, such amendment will increase the aggregate number
of shares of our common stock that may be delivered through stock options under the
plan and approval by our stockholders is necessary to comply with any applicable tax or
regulatory requirements; and
    
    make such other non-material changes as it deemed appropriate.
   Number ofsecuritiesremaining availablefor future issuanceunder equityWeighted-average
    
    compensation plansNumber of securities to
    
    exercise price of
    
    (excludingbe issued upon exercise
    
    outstanding
    
    securitiesof outstanding options,
    
    options, warrants
    
    reflected in firstPlan Category
    
    warrants and rights
    
    and rights
    
    columnEquity compensation
plans approved by
security
holders(1)
    
    
    347,500
    
    
    $
    31.60
    
    
    
    16,414Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    347,500
    
    
    $
    31.60
    
    
    
    16,414
 
 (1)
    
    Our Existing 2002 Stock Plan was authorized and established under our Plan of
Reorganization, which became effective on December 19, 2002. Our Plan of Reorganization
provided that, without any further act or authorization, confirmation of our Plan of
Reorganization and entry of the confirmation order was deemed to satisfy all applicable
federal and state law requirements and all listing standards of any securities exchange for
approval by the board of directors or the stockholders of our Existing 2002 Stock Plan. No
additional stockholder approval of our Existing 2002 Stock Plan has been obtained. Performance Graph
  20




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##### 



COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
 
 
 *
    
    $100 invested on 12/31/03 in stock & index-including

reinvestment of dividends.

Fiscal year ending December 31.Copyright © 2009 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved. 
 Item 6. Selected Financial Data
  Year ended
    
    Year ended
    
    Year ended
    
    Year ended
    
    Year endedDecember
    
    December
    
    December
    
    December
    
    December31, 2008
    
    31, 2007
    
    31, 2006
    
    31, 2005
    
    31, 2004(In Thousands, Except Per Share Data)Operating Data:Revenues
    
    $
    161,452
    
    
    $
    129,813
    
    
    $
    141,259
    
    
    $
    128,098
    
    
    $
    125,624Gross profit
    
    
    30,298
    
    
    
    13,382
    
    
    
    13,846
    
    
    
    7,844
    
    
    
    10,886Loss from continuing operations
    
    
    (102
    )
    
    
    (7,713
    )
    
    
    (2,194
    )
    
    
    (5,856
    )
    
    
    (42,212
    )Loss from discontinued
operations(1) (2)
    
    
    (8,262
    )
    
    
    (11,215
    )
    
    
    (103,465
    )
    
    
    (23,712
    )
    
    
    (20,432
    )Per Share Data:Net loss from continuing operations
attributable to
common stockholders
    
    
    (6.31
    )
    
    
    (8.93
    )
    
    
    (4.94
    )
    
    
    (8.08
    )
    
    
    (19.85
    )
 21




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Year ended
    
    Year ended
    
    Year ended
    
    Year ended
    
    Year endedDecember
    
    December
    
    December
    
    December
    
    December31, 2008
    
    31, 2007
    
    31, 2006
    
    31, 2005
    
    31, 2004(In Thousands, Except Per Share Data)Net loss attributable to common
stockholders
    
    $
    (9.23
    )
    
    $
    (12.90
    )
    
    $
    (41.52
    )
    
    $
    (16.46
    )
    
    $
    (27.08
    )Cash dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Ratio of earnings to fixed
charges(3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance Sheet Data:Working capital(4)
    
    $
    144,930
    
    
    $
    166,264
    
    
    $
    99,110
    
    
    $
    208,179
    
    
    $
    248,166Total assets
    
    
    261,946
    
    
    
    306,444
    
    
    
    245,823
    
    
    
    386,594
    
    
    
    473,553Long-term debt
    
    
    150,000
    
    
    
    150,000
    
    
    
    100,579
    
    
    
    100,579
    
    
    
    100,579Redeemable preferred stock(5)
    
    
    117,607
    
    
    
    99,866
    
    
    
    82,316
    
    
    
    70,542
    
    
    
    53,559Stockholders equity (deficiency in
assets)(6)
    
    
    (141,525
    )
    
    
    (74,087
    )
    
    
    (48,575
    )
    
    
    58,045
    
    
    
    107,813
 
 (1)
    
    During 2007 we announced that we were exiting the styrene business. During 2006,
we recorded a $127.7 million impairment charge to our styrene assets and a related deferred
tax benefit of $45 million. This tax benefit was offset by deferred tax expense of $28
million in connection with the recording of a valuation allowance against our deferred tax
assets. During 2004, we recorded a $48.5 million goodwill impairment charge. Also during
2004, we recorded a pension curtailment gain of $13 million.(2)
    
    During 2005, we announced that we were exiting the acrylonitrile business and
related derivatives operations. During 2004, we recorded a $22 million pre-tax impairment
charge related to our acrylonitrile long-lived assets.(3)
    
    Additional pre-tax earnings needed to achieve a 1:1 ratio for the years ended
December 31, 2008, 2007, 2006, 2005 and 2004 were $0.2 million, $11.8 million, $2.6 million,
$8.8 million and $42.3 million, respectively.(4)
    
    Working capital as of December 31, 2008, 2007, 2006, 2005 and 2004 includes net
assets (liabilities) of discontinued operations of $(12.3) million, $60.2 million, $88.3
million, $181.6 million and $290.1 million, respectively.(5)
    
    Our Series A Convertible Preferred Stock is not currently redeemable or probable
of redemption. If our Series A Convertible Preferred Stock had been redeemed as of December
31, 2008, the redemption amount would have been approximately $61.7 million. The liquidation
value of the outstanding shares of our Series A Convertible Preferred Stock as of December 31,
2008 was $77.3 million.(6)
    
    The balance as of December 31, 2006 includes a change in stockholders equity
(deficiency in assets) of $6.8 million (net of tax) due to the adoption of Statement of
Financial Accounting Standards No. 158, Employers Accounting for Defined Benefit Pension and
Other Postretirement Plans. 22




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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
 Business
       23




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Acetic Acid.
     
    
    the term of our Acetic Acid Production Agreement was extended from July 31, 2016
until December 31, 2031, subject to an early termination right that may be
exercised by BP Chemicals as of December 31, 2026;
    
    after an adjustment period during 2008, BP Chemicals pays us estimated profit
sharing payments quarterly, rather than the set quarterly advancement provided in
our Old Acetic Acid Production Agreement that resulted in large true-ups for
profit sharing payments at the end of each year;
    
    the ability of BP Chemicals to unilaterally shut down our acetic acid plant under
our Old Acetic Acid Production Agreement was removed;
    
    we have the right to produce and sell acetic acid for our own account if BP
Chemicals purchases fall below specified levels for an extended period of time
for reasons other than our production issues;
    
    some indirect expenses for both parties were excluded from the reimbursement and
profit sharing
 24




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provisions,with each party entitled to retain for its own account
any costs savings realized in those areas but also solely responsible for any
increases in those costs; and
    
    after the expiration or termination of our Acetic Acid Production Agreement:
 
    
    at our request, BP Chemicals must
continue to supply us with catalyst
if it is still in the catalyst supply
business;
    
    we pay BP Chemicals for undepreciated
capital only if the expiration or
termination is caused by us; and
    
    if our acetic acid plant is
permanently shut down shortly
thereafter, BP Chemicals is required
to pay a portion of any shut down
expenses and a share of our residual
fixed costs for the following five
years (unless the expiration or
termination is caused by us).
  Plasticizers.
    25




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Discontinued Operations
  26




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Results of Operations
  Year ended December 31,2008
    
    2007
    
    2006(Dollars in Thousands)Revenues
    
    $
    161,452
    
    
    $
    129,813
    
    
    $
    141,259Gross profit
    
    
    30,298
    
    
    
    13,382
    
    
    
    13,846Loss from continuing
operations
:
    
    
    (102
    )
    
    
    (7,713
    )
    
    
    (2,194
    )
 Comparison of 2008 to 2007
 Revenues and loss from continuing operations
   27




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Selling, general & administrative expenses
  Impairment of long-lived assets
   Other (income) expense
  Interest income
  28




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Provision (benefit) for income taxes
  Loss from discontinued operations, net of tax
  Comparison of 2007 to 2006
 Revenues and loss from continuing operations
    Selling, general & administrative expenses
  Other (income) expense
  29




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##### 



Interest and debt related expenses
  Interest income
  Provision (benefit) for income taxes
  Loss from discontinued operations, net of tax
  Liquidity and Capital Resources
 1 4 1 4
  30




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##### 



i.e.
  31




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##### 



Working Capital
  Cash Flow
    Capital Expenditures
   Pensions
  Contractual Cash Obligations
  32




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##### 



Less than 1year(1)
    
    1-3 years
    
    4-5 years
    
    More than 5 years
    
    Total(Dollars in Thousands)Secured Notes
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    150,000
    
    
    $
    150,000Interest payments on debt
    
    
    15,375
    
    
    
    46,125
    
    
    
    30,750
    
    
    
    3,844
    
    
    
    96,094Operating leases(2)
    
    
    8,099
    
    
    
    24,297
    
    
    
    16,198
    
    
    
    12,968
    
    
    
    61,562Purchase obligations(3)
    
    
    27,330
    
    
    
    70,797
    
    
    
    42,798
    
    
    
    34,619
    
    
    
    175,544Pension and other postretirement
benefits(4)
    
    
    1,001
    
    
    
    27,111
    
    
    
    17,951
    
    
    
    11,312
    
    
    
    57,375Total(5) (6)
    
    
    51,805
    
    
    
    168,330
    
    
    
    107,697
    
    
    
    212,743
    
    
    $
    540,575
 
 (1)
    
    Payment obligations under our revolving credit facility are not presented because
there were no outstanding borrowings as of December 31, 2008, and interest payments fluctuate
depending on the interest rate and outstanding balance under our revolving credit facility at
any point in time.(2)
    
    We have an operating lease with Praxair through July 31, 2016, which requires minimum
purchases of carbon monoxide and a fixed facility fee that total $7.8 million annually. In
addition, we have an operating lease for our Houston, Texas corporate offices that expires on
September 30, 2013, for
approximately $0.3 million per year.(3)
    
    For the purposes of this table, we have considered contractual obligations for the
purchase of goods or services as agreements involving more than $1 million that are
enforceable and legally binding and that specify all significant terms, including: fixed or
minimum quantities to be purchased, fixed, minimum or variable price provisions and the
approximate timing of the transaction. Most of the purchase obligations identified include
variable pricing provisions. We have estimated the future prices of these items, utilizing
forward curves where available. The pricing estimated for use in this table is subject to
market risk.(4)
    
    Our future contributions to our pension plans according to minimum funding
requirements imposed by laws governing employee benefit plans are expected to
be $0.2 million in 2009, $8.3 million in 2010 and $8.2 million for each year beginning with
2011 through 2015. Our pension expense for 2009 is expected to be $4.7 million.(5)
    
    Our Series A Convertible Preferred Stock is excluded from our contractual cash
obligations as it is not currently redeemable or probable of redemption. If our Series A
Convertible Preferred Stock had been redeemable as of December 31, 2008, the redemption amount
would have been approximately $61.7 million. The liquidation value of our Series A
Convertible Preferred Stock as of December 31, 2008 was $77.3 million.(6)
    
    Unrecognized tax benefits are not included in the table due to the high degree of
uncertainty associated with the realization of our net operating loss carryforward. Critical Accounting Policies, Use of Estimates and Assumptions
  Revenue Recognition
  Acetic Acid.
 33




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##### 



Plasticizers.
 Deferred revenue.
 Inventories
  Preferred stock dividends
  2008
    
    2007
    
    2006Risk-free interest rate
    
    
    1.6
    %
    
    
    3.5
    %
    
    
    4.7
    %Volatility
    
    
    63.6
    %
    
    
    55.5
    %
    
    
    46.2
    %Dividend yield
    
    
    
    
    
    
    
    
    
    
    Expected term
    
    
    5.0
    
    
    
    5.0
    
    
    
    5.0
 Long-Lived Assets
  34




---



##### 



Income Taxes
  Employee Benefit Plans
    Plant Turnaround Costs
  35




---



##### 



New Accounting Standards
        36




---



##### 



Item 7A. Quantitative and Qualitative Disclosures About Market Risk
  Fair ValueExpected Maturity Dates
    
    
    
    
    
    December 31,2009
    
    2010
    
    2011
    
    2012
    
    2013
    
    Thereafter
    
    Total
    
    2008(Dollars in Thousands)LiabilitySecured Notes
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150,000
    
    
    
    
    $
    150,000
    
    
    $
    132,000
  37




---



##### 



Item 8. Financial Statements and Supplementary Data
 38




---



##### 



INDEX TO HISTORICAL CONSOLIDATED FINANCIAL STATEMENTS
 INDEX TO FINANCIAL STATEMENTS
 Sterling Chemicals, Inc.
 Audited Financial StatementsReport of Independent Registered Public Accounting Firm (successor auditor)
    
    
    40Report of Independent Registered Public Accounting Firm (predecessor auditor)
    
    
    41Consolidated Statements of Operations for the years ended December 31, 2008, 2007 and 2006
    
    
    42Consolidated Balance Sheets as of December 31, 2008 and 2007
    
    
    43Consolidated Statements of Changes in Stockholders Equity (Deficiency in Assets) for the
years ended December 31, 2008, 2007 and 2006
    
    
    44Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006
    
    
    45Notes to Consolidated Financial Statements
    
    
    46
 39




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
       
 40




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
       
 41




---



##### 



STERLING CHEMICALS, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Share Data)
 Year Ended December 31,2008
    
    
    2007
    
    
    2006Revenues
    
    $
    161,452
    
    
    $
    129,813
    
    
    $
    141,259Cost of goods sold
    
    
    131,154
    
    
    
    116,431
    
    
    
    127,413Gross profit
    
    
    30,298
    
    
    
    13,382
    
    
    
    13,846Selling, general and administrative expenses
    
    
    12,331
    
    
    
    8,679
    
    
    
    7,073Impairment of long-lived assets
    
    
    7,403
    
    
    
    
    
    
    
    Interest and debt related expenses
    
    
    17,175
    
    
    
    17,313
    
    
    
    10,680Interest income
    
    
    (4,408
    )
    
    
    (1,607
    )
    
    
    (601
    )Other (income) expense
    
    
    (2,030
    )
    
    
    839
    
    
    
    (724
    )Loss from continuing operations before income tax
    
    
    (173
    )
    
    
    (11,842
    )
    
    
    (2,582
    )Benefit for income taxes
    
    
    (71
    )
    
    
    (4,129
    )
    
    
    (388
    )Loss from continuing operations
    
    
    (102
    )
    
    
    (7,713
    )
    
    
    (2,194
    )Loss from discontinued operations, net of tax
    
    
    (8,262
    )
    
    
    (11,215
    )
    
    
    (103,465
    )Net loss
    
    
    (8,364
    )
    
    
    (18,928
    )
    
    
    (105,659
    )Preferred stock dividends
    
    
    17,741
    
    
    
    17,550
    
    
    
    11,774Net loss attributable to common stockholders
    
    $
    (26,105
    )
    
    $
    (36,478
    )
    
    $
    (117,433
    )Loss per share of common stock attributable to
common stockholders, basic and diluted:Loss from continuing operations
    
    $
    (6.31
    )
    
    $
    (8.93
    )
    
    $
    (4.94
    )Loss from discontinued operations
    
    
    (2.92
    )
    
    
    (3.97
    )
    
    
    (36.58
    )Net loss per share, basic and diluted
    
    $
    (9.23
    )
    
    $
    (12.90
    )
    
    $
    (41.52
    )Weighted average shares outstanding:Basic and diluted
    
    
    2,828,460
    
    
    
    2,828,460
    
    
    
    2,828,460
  42




---



##### 



STERLING CHEMICALS, INC. AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, Except Share Data)
 December 31,2008
    
    
    2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    156,126
    
    
    $
    100,183Accounts receivable, net of allowance of $18 and $39, respectively
    
    
    22,080
    
    
    
    29,157Inventories, net
    
    
    5,221
    
    
    
    5,044Prepaid expenses and other current assets
    
    
    2,704
    
    
    
    3,129Deferred tax asset
    
    
    
    
    
    
    5,029Assets of discontinued operations
    
    
    166
    
    
    
    71,754Total current assets
    
    
    186,297
    
    
    
    214,296Property, plant and equipment, net
    
    
    67,811
    
    
    
    77,677Other assets, net
    
    
    7,838
    
    
    
    14,471Total assets
    
    $
    261,946
    
    
    $
    306,444LIABILITIES AND STOCKHOLDERS DEFICIENCY IN ASSETSCurrent liabilities:Accounts payable
    
    $
    8,915
    
    
    $
    13,715Accrued liabilities
    
    
    20,008
    
    
    
    22,789Liabilities of discontinued operations
    
    
    12,444
    
    
    
    11,528Total current liabilities
    
    
    41,367
    
    
    
    48,032Long-term debt
    
    
    150,000
    
    
    
    150,000Deferred tax liability
    
    
    
    
    
    
    5,029Deferred credits and other liabilities
    
    
    59,103
    
    
    
    26,168Long-term liabilities of discontinued operations
    
    
    35,394
    
    
    
    51,436Commitments and contingencies (Note 9)Redeemable preferred stock
    
    
    117,607
    
    
    
    99,866Stockholders equity:Common stock, $.01 par value (shares authorized 20,000,000;
shares issued and outstanding 2,828,460)
    
    
    28
    
    
    
    28Additional paid-in capital
    
    
    123,740
    
    
    
    141,174Accumulated deficit
    
    
    (240,906
    )
    
    
    (232,542
    )Accumulated other comprehensive (loss) income
    
    
    (24,387
    )
    
    
    17,253Total stockholders deficiency in assets
    
    
    (141,525
    )
    
    
    (74,087
    )Total liabilities and stockholders deficiency in assets
    
    $
    261,946
    
    
    $
    306,444
  43




---



##### 



STERLING CHEMICALS, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF
CHANGES IN STOCKHOLDERS EQUITY (DEFICIENCY IN ASSETS)
(Amounts in Thousands)
 AccumulatedCommon Stock
    
    
    Additional
    
    
    
    
    
    
    OtherPaid-In
    
    
    Accumulated
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Income (Loss)
    
    
    TotalBalance, December 31, 2005
    
    
    2,828
    
    
    $
    28
    
    
    $
    170,311
    
    
    $
    (107,955
    )
    
    $
    (4,339
    )
    
    $
    58,045Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (105,659
    )
    
    
    Other comprehensive loss:Benefit adjustment, net of tax of $2,249
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,903Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (101,756
    )SFAS 158 adoption, net of tax of $3,719
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,756
    
    
    
    6,756Preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    (11,774
    )
    
    
    
    
    
    
    
    
    
    
    (11,774
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    154
    
    
    
    
    
    
    
    
    
    
    
    154Balance, December 31, 2006
    
    
    2,828
    
    
    $
    28
    
    
    $
    158,691
    
    
    $
    (213,614
    )
    
    $
    6,320
    
    
    $
    (48,575
    )Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,928
    )
    
    
    Other comprehensive loss:Benefit adjustment, net of tax of $5,887
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,933Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,995
    )Preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    (17,550
    )
    
    
    
    
    
    
    
    
    
    
    (17,550
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    33
    
    
    
    
    
    
    
    
    
    
    
    33Balance, December 31, 2007
    
    
    2,828
    
    
    $
    28
    
    
    $
    141,174
    
    
    $
    (232,542
    )
    
    $
    17,253
    
    
    $
    (74,087
    )Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,364
    )
    
    
    Other comprehensive loss:Benefit adjustment, net of
tax of zero
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (41,640
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (50,004
    )Preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    (17,741
    )
    
    
    
    
    
    
    
    
    
    
    (17,741
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    307
    
    
    
    
    
    
    
    
    
    
    
    307Balance, December 31, 2008
    
    
    2,828
    
    
    $
    28
    
    
    $
    123,740
    
    
    $
    (240,906
    )
    
    $
    (24,387
    )
    
    $
    (141,525
    )
  44




---



##### 



STERLING CHEMICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
 Year Ended December 31,2008
    
    
    2007
    
    
    2006Cash flows from operating activities:Net loss
    
    $
    (8,364
    )
    
    $
    (18,928
    )
    
    $
    (105,659
    )Adjustments to reconcile net loss to net cash provided by (used
in) operating activities:Blend gas deferred payments
    
    
    (2,653
    )
    
    
    
    
    
    
    Bad debt benefit
    
    
    (5
    )
    
    
    (213
    )
    
    
    (571
    )Benefit plans curtailment loss
    
    
    1,197
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    9,602
    
    
    
    10,908
    
    
    
    30,476Interest amortization
    
    
    1,347
    
    
    
    933
    
    
    
    400Unearned income amortization
    
    
    (13,036
    )
    
    
    (1,064
    )
    
    
    Impairment of long-lived assets
    
    
    7,403
    
    
    
    4,288
    
    
    
    127,653Lower-of-cost-or-market adjustment
    
    
    351
    
    
    
    1,363
    
    
    
    Deferred tax benefit
    
    
    
    
    
    
    
    
    
    
    (8,438
    )Gain on disposal of property, plant and equipment
    
    
    
    
    
    
    (182
    )
    
    
    (4,917
    )Other
    
    
    307
    
    
    
    1,066
    
    
    
    154Change in assets/liabilities:Accounts receivable
    
    
    62,911
    
    
    
    (21,630
    )
    
    
    (4,514
    )Inventories
    
    
    15,181
    
    
    
    39,933
    
    
    
    (22,608
    )Prepaid expenses and other current assets
    
    
    425
    
    
    
    86
    
    
    
    1,673Other assets
    
    
    4,897
    
    
    
    (2,160
    )
    
    
    (2,105
    )Accounts payable
    
    
    (5,083
    )
    
    
    (21,933
    )
    
    
    (4,140
    )Accrued liabilities
    
    
    (1,865
    )
    
    
    18,106
    
    
    
    (10,314
    )Other liabilities
    
    
    (10,255
    )
    
    
    33,754
    
    
    
    (11,298
    )Net cash provided by (used in) operating activities
    
    
    62,360
    
    
    
    44,327
    
    
    
    (14,208
    )Cash flows used in investing activities:Capital expenditures for property, plant and equipment
    
    
    (6,417
    )
    
    
    (6,411
    )
    
    
    (11,547
    )Insurance proceeds relating to property, plant and equipment
    
    
    
    
    
    
    
    
    
    
    1,960Cash used for dismantling
    
    
    
    
    
    
    
    
    
    
    (669
    )Net proceeds from the sale of property, plant and equipment
    
    
    
    
    
    
    182
    
    
    
    2,957Net cash used in investing activities
    
    
    (6,417
    )
    
    
    (6,229
    )
    
    
    (7,299
    )Cash flows provided by financing activities:Repayment of Old Secured Notes
    
    
    
    
    
    
    (100,579
    )
    
    
    Proceeds from the issuance of Secured Notes
    
    
    
    
    
    
    150,000
    
    
    
    Debt issuance costs
    
    
    
    
    
    
    (8,026
    )
    
    
    Net cash provided by financing activities
    
    
    
    
    
    
    41,395
    
    
    
    Net increase (decrease) in cash and cash equivalents
    
    
    55,943
    
    
    
    79,493
    
    
    
    (21,507
    )Cash and cash equivalents beginning of year
    
    
    100,183
    
    
    
    20,690
    
    
    
    42,197Cash and cash equivalents end of year
    
    $
    156,126
    
    
    $
    100,183
    
    
    $
    20,690Supplemental disclosures of cash flow information:Interest paid
    
    $
    15,849
    
    
    $
    13,045
    
    
    $
    11,109Interest income received
    
    
    4,408
    
    
    
    1,607
    
    
    
    601Cash paid for income taxes
    
    
    313
    
    
    
    299
    
    
    
    60
  45




---



##### 



STERLING CHEMICALS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Basis of Presentation and Summary of Significant Accounting Policies
  Principles of Consolidation
  Cash and Cash Equivalents
  Allowance for Doubtful Accounts
  Inventories
  46




---



##### 



Property, Plant and Equipment
  Plant Turnaround Costs
  Long-Lived Assets
     47




---



##### 



Other Assets
  Debt Issue Costs
  Income Taxes
  Environmental Costs
  Revenue Recognition
  Acetic Acid.
 Plasticizers.
 Deferred revenue.
 48




---



##### 



Preferred Stock Dividends
  Earnings (Loss) Per Share
  Disclosures about Fair Value of Financial Instruments
  Accounting Estimates
  Reclassifications
  49




---



##### 



2. Discontinued Operations
    December 31,
    
    
    December 31,2008
    
    
    2007(Dollars in thousands)Assets of discontinued operations:Accounts receivable, net
    
    $
    166
    
    
    $
    55,995Inventories
    
    
    
    
    
    
    15,709Other assets
    
    
    
    
    
    
    50Total
    
    $
    166
    
    
    $
    71,754Liabilities of discontinued operations:Accounts payable
    
    $
    
    
    
    $
    3,363Accrued liabilities(1)
    
    
    12,444
    
    
    
    8,165Deferred credits and other liabilities(1)
    
    
    35,394
    
    
    
    51,436Total
    
    $
    47,838
    
    
    $
    62,964
 
 (1)
    
    As of December 31, 2008, includes $47.8 million of deferred income for the NOVA
supply agreement that is being amortized over the contractual non-complete period of five years
using the straight-line method. Accrued liabilities include the current portion of $12.4 million
and deferred credits and other liabilities include the long-term portion of $35.4 million.  Year Ended December 31,2008
    
    
    2007
    
    
    2006(Dollars in Thousands)Revenues
    
    $
    26,591
    
    
    $
    681,513
    
    
    $
    524,922Loss before income taxes
    
    
    (8,262
    )
    
    
    (12,589
    )
    
    
    (117,703
    )
 50




---



##### 



3. Detail of Certain Balance Sheet Accounts
 December 31,2008
    
    
    2007(Dollars in Thousands)Inventories:Raw materials
    
    $
    1,149
    
    
    $
    1,048Stores and supplies (net of obsolescence reserve of $1,380 and $1,472, respectively)
    
    
    4,072
    
    
    
    3,996$
    5,221
    
    
    $
    5,044Property, plant and equipment, net:Land
    
    $
    7,149
    
    
    $
    7,149Buildings
    
    
    4,824
    
    
    
    4,809Plant and equipment
    
    
    122,563
    
    
    
    121,900Construction in progress
    
    
    6,448
    
    
    
    2,470Less: accumulated depreciation
    
    
    (73,173
    )
    
    
    (58,651
    )$
    67,811
    
    
    $
    77,677Other assets, net:Investments
    
    $
    511
    
    
    $
    5,483Debt issuance costs
    
    
    6,615
    
    
    
    7,673Other
    
    
    712
    
    
    
    1,315$
    7,838
    
    
    $
    14,471Accrued liabilities:Employee compensation and benefits
    
    $
    4,885
    
    
    $
    6,425Deferred income
    
    
    2,965
    
    
    
    3,719Interest payable
    
    
    4,368
    
    
    
    4,036Property taxes
    
    
    2,193
    
    
    
    3,089Advances from customers
    
    
    3,572
    
    
    
    3,726Other
    
    
    2,025
    
    
    
    1,794$
    20,008
    
    
    $
    22,789Deferred credits and other liabilities:Accrued postretirement, pension and post employment benefits
    
    $
    51,319
    
    
    $
    16,067Deferred income
    
    
    5,165
    
    
    
    7,653Advances from customers
    
    
    1,000
    
    
    
    1,000Other
    
    
    1,619
    
    
    
    1,448$
    59,103
    
    
    $
    26,168
 51




---



##### 



4. Valuation and Qualifying Accounts
  December 31,2008
    
    
    2007
    
    
    2006Continuing OperationsAllowance for doubtful accounts:Balance at beginning of year
    
    $
    (39
    )
    
    $
    
    
    
    $
    (2
    )Add: bad debt (expense) benefit
    
    
    5
    
    
    
    (39
    )
    
    
    (13
    )Deduct: written-off accounts
    
    
    16
    
    
    
    
    
    
    
    15Balance at end of year
    
    $
    (18
    )
    
    $
    (39
    )
    
    $
    Reserve for inventory obsolescence:Balance at beginning of year
    
    $
    1,472
    
    
    $
    2,149
    
    
    $
    2,573Add: obsolescence accrual
    
    
    36
    
    
    
    163
    
    
    
    81Deduct: disposal of inventory
    
    
    (128
    )
    
    
    (840
    )
    
    
    (505
    )Balance at end of year
    
    $
    1,380
    
    
    $
    1,472
    
    
    $
    2,149Discontinued OperationsAllowance for doubtful accounts:Balance at beginning of year
    
    $
    
    
    
    $
    (367
    )
    
    $
    (951
    )Add: bad debt (expense) benefit
    
    
    
    
    
    
    252
    
    
    
    584Deduct: written-off accounts
    
    
    
    
    
    
    115
    
    
    
    Balance at end of year
    
    $
    
    
    
    $
    
    
    
    $
    (367
    )
 5. Long-Term Debt
 1 4 1 4
  52




---



##### 



Debt Maturities
  53




---



##### 



6. Income Taxes
  Year Ended December 31,2008
    
    
    2007
    
    
    2006(Dollars in Thousands)Benefit for income taxes at statutory rates
    
    $
    (60
    )
    
    $
    (8,551
    )
    
    $
    (42,100
    )Non-deductible expenses
    
    
    19
    
    
    
    23
    
    
    
    19State income taxes
    
    
    
    
    
    
    13
    
    
    
    (1,262
    )Change in valuation allowance
    
    
    (24
    )
    
    
    3,021
    
    
    
    27,621Other
    
    
    (6
    )
    
    
    (9
    )
    
    
    1,096Effective tax benefit
    
    $
    (71
    )
    
    $
    (5,503
    )
    
    $
    (14,626
    )
  Year Ended December 31,2008
    
    
    2007
    
    
    2006(Dollars in Thousands)Tax benefit  continuing operations
    
    $
    (71
    )
    
    $
    (4,129
    )
    
    $
    (388
    )Tax benefit  discontinued operations
    
    
    
    
    
    
    (1,374
    )
    
    
    (14,238
    )Total tax benefit
    
    $
    (71
    )
    
    $
    (5,503
    )
    
    $
    (14,626
    )
  Year Ended December 31,2008
    
    
    2007
    
    
    2006(Dollars in Thousands)Current federal
    
    $
    (71
    )
    
    $
    364
    
    
    $
    299Deferred federal
    
    
    
    
    
    
    (5,887
    )
    
    
    (13,685
    )Current and deferred state
    
    
    
    
    
    
    20
    
    
    
    (1,240
    )Total tax benefit
    
    $
    (71
    )
    
    $
    (5,503
    )
    
    $
    (14,626
    )
  December 31,2008
    
    
    2007(Dollars in Thousands)Deferred tax assets:Accrued liabilities
    
    $
    1,163
    
    
    $
    1,496Accrued postretirement cost
    
    
    1,048
    
    
    
    2,236Accrued pension cost
    
    
    14,096
    
    
    
    Tax loss and credit carry forwards
    
    
    25,691
    
    
    
    26,846State deferred taxes
    
    
    185
    
    
    
    98Unearned revenue
    
    
    23,194
    
    
    
    23,656Other
    
    
    670
    
    
    
    719Total deferred tax assets
    
    $
    66,047
    
    
    $
    55,051Deferred tax liabilities:Property, plant and equipment
    
    $
    (13,596
    )
    
    $
    (17,609
    )Accrued liabilities
    
    
    
    
    
    
    Accrued pension cost
    
    
    
    
    
    
    (1,277
    )Subtotal
    
    
    (13,596
    )
    
    
    (18,886
    )Less: valuation allowance
    
    
    (52,451
    )
    
    
    (36,165
    )Total deferred tax liabilities
    
    
    (66,047
    )
    
    
    (55,051
    )Net deferred tax assets
    
    $
    
    
    
    $
    
 54




---



##### 



Balance, January 1, 2007
    
    $
    3,685Additions for tax positions of the current year
    
    
    Additions for tax positions of prior years
    
    
    Reductions for tax positions of prior years forChanges in judgment
    
    
    Settlements during the period
    
    
    Lapses of applicable statute of limitation
    
    
    Balance, December 31, 2007
    
    $
    3,685Balance, January 1, 2008
    
    $
    3,685Additions for tax positions of the current year
    
    
    Additions for tax positions of prior years
    
    
    Reductions for tax positions of prior years forChanges in judgment
    
    
    18Settlements during the period
    
    
    Lapses of applicable statute of limitation
    
    
    Balance, December 31, 2008
    
    $
    3,703
  55




---



##### 



7. Employee Benefits
  Retirement Benefit Plans
   As of December 31,2008
    
    
    2007Equities
    
    
    56
    %
    
    
    63
    %Bonds
    
    
    30
    %
    
    
    26
    %Other
    
    
    14
    %
    
    
    11
    %Total
    
    
    100
    %
    
    
    100
    %
  December 31,2008
    
    
    2007(Dollars in Thousands)Change in projected benefit obligation:Benefit obligation at beginning of year
    
    $
    123,165
    
    
    $
    126,135Service cost
    
    
    
    
    
    
    228Interest cost
    
    
    7,188
    
    
    
    7,096Actuarial gain
    
    
    (1,575
    )
    
    
    (2,196
    )Curtailment loss (gain)
    
    
    907
    
    
    
    (19
    )Benefits paid
    
    
    (8,518
    )
    
    
    (8,079
    )Benefit obligation at end of year
    
    $
    121,167
    
    
    $
    123,165
 December 31,2008
    
    
    2007(Dollars in Thousands)Change in plan assets:Fair value at beginning of year
    
    $
    118,383
    
    
    $
    109,654Actual return on plan assets
    
    
    (35,247
    )
    
    
    10,695Employer contributions
    
    
    3,189
    
    
    
    6,113Benefits paid
    
    
    (8,518
    )
    
    
    (8,079
    )Fair value at end of year
    
    $
    77,807
    
    
    $
    118,383Funded status
    
    $
    (43,360
    )
    
    $
    (4,782
    )
 December 31,2008
    
    
    2007(Dollars in Thousands)Amounts recognized in the balance sheet consist of:Current liabilities
    
    $
    (212
    )
    
    $
    (163
    )Non-current liabilities
    
    
    (43,148
    )
    
    
    (4,619
    )Net amount recognized in financial position
    
    $
    (43,360
    )
    
    $
    (4,782
    )
 56




---



##### 



December 31,2008
    
    
    2007(Dollars in Thousands)Amount recognized in accumulated other
comprehensive (loss) income consists of
(pre-tax):Net (loss) gain
    
    $
    (38,098
    )
    
    $
    3,895Net amount recognized in accumulated other
comprehensive (loss) income(1)
    
    $
    (38,098
    )
    
    $
    3,895
 
 (1)
    
    $3.5 million of actuarial loss in accumulated other comprehensive
loss as of December 31, 2008 is expected to be recognized
as a component of net pension costs during 2009. December 31,2008
    
    
    2007Weighted-average assumptions to determine benefit obligations:Discount Rate
    
    
    6.25
    %
    
    
    6.00
    %Rates of increase in salary compensation level
    
    
    
    
    
    
    
     Year Ended December 31,2008
    
    
    2007
    
    
    2006(Dollars in Thousands)Components of net pension costs:Service cost-benefits earned during the year
    
    $
    
    
    
    $
    228
    
    
    $
    593Interest on prior years projected benefit obligation
    
    
    7,188
    
    
    
    7,096
    
    
    
    7,610Expected return on plan assets
    
    
    (8,352
    )
    
    
    (8,246
    )
    
    
    (7,767
    )Net amortization of actuarial loss
    
    
    31
    
    
    
    13
    
    
    
    13Curtailment loss (gain)
    
    
    907
    
    
    
    (19
    )
    
    
    Net pension (benefit) costs
    
    $
    (226
    )
    
    $
    (928
    )
    
    $
    449
 December 31,2008
    
    
    2007(Dollars in Thousands)Changes in plan assets and benefit
obligations recognized in accumulated
other comprehensive (loss) income (pre-tax):Net (loss) gain
    
    $
    ( 38,098
    )
    
    $
    4,645Amortization of loss
    
    
    
    
    
    
    13Total
    
    $
    (38,098
    )
    
    $
    4,658
 December 31,2008
    
    2007
    
    2006Weighted-average assumptions to determine net periodic benefit cost:Discount Rate
    
    
    6.00
    %
    
    
    5.50
    %
    
    
    5.75
    %Rates of increase in salary compensation level
    
    
    
    
    
    
    
    
    
    
    Expected long-term rate of return on plan assets
    
    
    7.50
    %
    
    
    7.50
    %
    
    
    7.50
    %
 57




---



##### 



Postretirement Benefits Other Than Pensions
       December 31,2008
    
    
    2007(Dollars in Thousands)Change in projected benefit obligation:Benefit obligation at beginning of year
    
    $
    11,019
    
    
    $
    25,942Service cost
    
    
    55
    
    
    
    119Interest cost
    
    
    575
    
    
    
    1,198Curtailments/plan amendments
    
    
    290
    
    
    
    (13,291
    )Actuarial gain
    
    
    (2,518
    )
    
    
    (487
    )Benefits paid
    
    
    (1,277
    )
    
    
    (2,462
    )Benefit obligation at end of year
    
    $
    8,144
    
    
    $
    11,019Plan assets
    
    $
    
    
    
    $
    Funded status
    
    $
    (8,144
    )
    
    $
    (11,019
    )
 December 31,2008
    
    
    2007(Dollars in Thousands)Amounts recognized in the balance sheet consist of:Current liabilities
    
    $
    (789
    )
    
    $
    (1,294
    )Non-current liabilities
    
    
    (7,355
    )
    
    
    (9,725
    )Net amount recognized in financial position
    
    $
    (8,144
    )
    
    $
    (11,019
    )
 58




---



##### 



December 31,2008
    
    
    2007(Dollars in Thousands)Amounts recognized in accumulated other comprehensive income (loss)
consist of (pre-tax):Net gain (loss)
    
    $
    391
    
    
    $
    (2,128
    )Plan amendment/prior service costs
    
    
    22,686
    
    
    
    24,852Net amount recognized in accumulated other comprehensive income (loss)
    
    $
    23,077
    
    
    $
    22,724
 Year Ended December 31,2008
    
    2007Discount rate used to determine benefit obligations
    
    
    6.25
    %
    
    
    6.00
    %
  Year Ended December 31,2008
    
    
    2007
    
    
    2006(Dollars in Thousands)Components of net plan costs:Service cost
    
    $
    55
    
    
    $
    119
    
    
    $
    174Interest cost
    
    
    575
    
    
    
    1,198
    
    
    
    1,463Net amortization:Actuarial loss
    
    
    
    
    
    
    1
    
    
    
    99Plan amendment/prior service costs
    
    
    (2,165
    )
    
    
    (1,617
    )
    
    
    (1,434
    )Curtailment and special termination benefits
    
    
    
    
    
    
    
    
    
    
    Net plan (benefit) costs
    
    $
    (1,535
    )
    
    $
    (299
    )
    
    $
    302Discount rate used to determine periodic cost
    
    
    6.00
    %
    
    
    5.75
    %
    
    
    5.75
    %
 December 31,2008
    
    
    2007(Dollars in Thousands)Changes in benefit obligations recognized in
accumulated other comprehensive (loss)
income (pre-tax):Net gain
    
    $
    2,519
    
    
    $
    1,567Amortization of prior service cost
    
    
    (2,165
    )
    
    
    (1,617
    )Plan amendment
    
    
    
    
    
    
    12,212Total
    
    $
    354
    
    
    $
    12,162
 59




---



##### 



1% Increase
    
    1% Decrease(Dollars in Thousands)Effect on total of service and interest cost components
    
    $
    22
    
    
    $
    (20
    )Effect on post-retirement benefit obligation
    
    
    358
    
    
    
    (321
    )
  OtherPension
    
    PostretirementPlan
    
    Benefits PlanIncrease (decrease) in liabilities
    
    $
    87
    
    
    $
    (10,562
    )Increase (decrease) in accumulated other comprehensive income
    
    
    (56
    )
    
    
    6,812Increase (decrease) in deferred income tax liabilities
    
    
    (31
    )
    
    
    3,750
 Estimated Future Benefits Payable
  OtherPensions-
    
    Pensions-
    
    Pensions-
    
    Postretirementhourly
    
    salaried
    
    other
    
    Benefits
    
    Total2009
    
    $
    3,397
    
    
    $
    4,784
    
    
    $
    212
    
    
    $
    789
    
    
    $
    9,1822010
    
    
    3,149
    
    
    
    4,842
    
    
    
    205
    
    
    
    828
    
    
    
    9,0242011
    
    
    3,071
    
    
    
    4,937
    
    
    
    199
    
    
    
    816
    
    
    
    9,0232012
    
    
    3,062
    
    
    
    5,038
    
    
    
    193
    
    
    
    837
    
    
    
    9,1302013
    
    
    3,120
    
    
    
    5,123
    
    
    
    187
    
    
    
    825
    
    
    
    9,2552014-2018
    
    
    16,545
    
    
    
    27,022
    
    
    
    896
    
    
    
    3,928
    
    
    
    48,391
 Savings and Investment Plan
  60




---



##### 



Bonus Plan and Gain Sharing Plan
  Key Employee Protection Plan
      61




---



##### 



Severance Pay Plan
    Employment Agreement
  8. Stock-Based Compensation
   62




---



##### 



2008Expected life (years)
    
    
    7.5Expected volatility
    
    
    54.3
    %Expected dividend yield
    
    
    Risk-free interest rate
    
    
    3.5
    %
 ,
   December 31, 2008
    
    December 31, 2007
    
    December 31, 2006Weighted-Average
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    Weighted-AverageShares
    
    Exercise Price
    
    Shares
    
    Exercise Price
    
    Shares
    
    Exercise PriceOutstanding at
beginning of year
    
    
    245,500
    
    
    $
    31.60
    
    
    
    278,500
    
    
    $
    31.60
    
    
    
    278,500
    
    
    $
    31.60Forfeited
    
    
    (23,000
    )
    
    
    31.60
    
    
    
    (33,000
    )
    
    
    31.60
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    125,000
    
    
    
    31.60
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at end
of year
    
    
    347,500
    
    
    $
    31.60
    
    
    
    245,500
    
    
    $
    31.60
    
    
    
    278,500
    
    
    $
    31.60Options exercisable
at end of year
    
    
    222,500
    
    
    
    
    
    
    
    245,500
    
    
    
    
    
    
    
    269,333
  9. Commitments and Contingencies
 Product Contracts
  63




---



##### 



Environmental, Health and Safety
       64




---



##### 



Legal Proceedings
    65




---



##### 



th
    10. Leasing Arrangements
   66




---



##### 



Machinery and equipment
    
    $
    72,859Other
    
    
    768Less: accumulated depreciation
    
    
    (47,546
    )$
    26,081
  Year ending December 31:2009
    
    $
    8,0752010
    
    
    8,0752011
    
    
    8,0752012
    
    
    8,0752013
    
    
    8,075Thereafter
    
    
    12,594$
    52,969
  Year ended December 31,2008
    
    
    2007
    
    
    2006Minimum rentals
    
    $
    3,200
    
    
    $
    3,200
    
    
    $
    3,200Contingent rentals (1)
    
    
    28,634
    
    
    
    
    
    
    
    $
    31,834
    
    
    $
    3,200
    
    
    $
    3,200
 
 (1)
    
    Contingent rentals are primarily based on profit sharing.  Year ending December 31:2009
    
    $
    7,7512010
    
    
    7,7512011
    
    
    7,7512012
    
    
    7,7512013
    
    
    7,751Thereafter
    
    
    20,023$
    58,778
  Year endedDecember 31,2008Minimum rentals
    
    $
    7,751Contingent rentals (1)
    
    
    216$
    7,967
 
 (1)
    
    Contingent rentals are based on carbon monoxide purchases in excess
of the minimum purchase requirement. 67




---



##### 



11. Operating Segment and Sales Information
  Year Ended December 312008
    
    
    2007
    
    
    2006(Dollars in Thousands)Revenues:Acetic acid
    
    $
    129,506
    
    
    $
    100,772
    
    
    $
    96,724Plasticizers
    
    
    30,997
    
    
    
    28,133
    
    
    
    44,535Other
    
    
    949
    
    
    
    908
    
    
    
    Total
    
    $
    161,452
    
    
    $
    129,813
    
    
    $
    141,259Segment gross profit:Acetic acid
    
    $
    28,321
    
    
    $
    23,441
    
    
    $
    25,976Plasticizers
    
    
    4,099
    
    
    
    840
    
    
    
    (847
    )Other(1)
    
    
    (2,122
    )
    
    
    (10,899
    )
    
    
    (11,283
    )Gross profit:
    
    
    30,298
    
    
    
    13,382
    
    
    
    13,846Selling, general and administrative expenses
    
    
    12,331
    
    
    
    8,679
    
    
    
    7,073Impairment of long-lived assets
    
    
    7,403
    
    
    
    
    
    
    
    Interest and debt related expenses
    
    
    17,175
    
    
    
    17,313
    
    
    
    10,680Interest income
    
    
    (4,408
    )
    
    
    (1,607
    )
    
    
    (601
    )Other expense (income)
    
    
    (2,030
    )
    
    
    839
    
    
    
    (724
    )Loss from continuing operations before income tax
    
    $
    (173
    )
    
    $
    (11,842
    )
    
    $
    (2,582
    )Depreciation and amortization expenses:Acetic acid
    
    $
    6,209
    
    
    $
    5,319
    
    
    $
    6,108Plasticizers
    
    
    1,724
    
    
    
    1,990
    
    
    
    4,328Other(2)
    
    
    1,669
    
    
    
    3,599
    
    
    
    20,040Total
    
    $
    9,602
    
    
    $
    10,908
    
    
    $
    30,476Capital expenditures:Acetic acid
    
    $
    3,467
    
    
    $
    1,220
    
    
    $
    771Plasticizers
    
    
    
    
    
    
    
    
    
    
    Other-plant infrastructure(3)
    
    
    2,950
    
    
    
    5,191
    
    
    
    10,776Total
    
    $
    6,417
    
    
    $
    6,411
    
    
    $
    11,547
 Year Ended December 312008
    
    
    2007Total assets:Acetic acid
    
    $
    40,050
    
    
    $
    53,769Plasticizers
    
    
    5,885
    
    
    
    13,216Other(4)
    
    
    216,011
    
    
    
    239,459Total
    
    $
    261,946
    
    
    $
    306,444
 68




---



##### 



(1)
    
    Gross profit (loss) for Other includes residual,
unallocated costs from styrene operations and various
unallocated corporate charges and credits.(2)
    
    Includes depreciation and amortization expense of $0.5
million, $2.5 million and $18.1 million for discontinued
operations in 2008, 2007 and 2006, respectively.(3)
    
    Includes capital expenditures of zero, $2.6 million and
$6.6 million for discontinued operations in 2008, 2007 and
2006, respectively.(4)
    
    Components of Other are presented in the table below: Year Ended December 312008
    
    
    2007Total assets:Corporate:Cash
    
    $
    156,126
    
    
    $
    100,183Other
    
    
    17,989
    
    
    
    27,998Plant infrastructure:Property, plant and equipment, net
    
    
    41,730
    
    
    
    39,524Assets of discontinued operations.
    
    
    166
    
    
    
    71,754Total
    
    $
    216,011
    
    
    $
    239,459
  Year Ended December 31,2008
    
    2007
    
    2006(Dollars in thousands)Major customers:BP Chemicals
    
    $
    129,506
    
    
    $
    100,772
    
    
    $
    96,724BASF
    
    
    30,997
    
    
    
    28,132
    
    
    
    44,535
  12. Financial Instruments
 Concentrations of Risk
   Fair Value of Financial Instruments
  13. Capital Stock
  69




---



##### 



14. Series A Convertible Preferred Stock
   
    
    the liquidation preference for such shares (plus accrued and unpaid dividends);
    
    in the event of a merger or consolidation, the fair market value of the consideration
that would have been received in such merger or consolidation in respect of the shares of
our common stock into which such shares of our Series A Preferred Stock were convertible
immediately prior to such merger or consolidation had such shares of our Series A Preferred
Stock been converted prior thereto; or
    
    in the event of some other specified change of control, the current market value of the shares of our common stock into which such shares of our Series A Preferred Stock were
convertible immediately prior to such change of control had such shares of our Series A
Preferred Stock been converted prior thereto (plus accrued and unpaid dividends).
   70




---



##### 



2008
    
    2007
    
    2006Risk-free interest rate
    
    
    1.6
    %
    
    
    3.5
    %
    
    
    4.7
    %Volatility
    
    
    63.6
    %
    
    
    55.5
    %
    
    
    46.2
    %Dividend yield
    
    
    
    
    
    
    
    
    
    
    Expected term
    
    
    5.0
    
    
    
    5.0
    
    
    
    5.0
  15. Related Party Transactions
  16. New Accounting Standards
    71




---



##### 



72




---



##### 



73




---



##### 



STERLING CHEMICALS, INC. AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
QUARTERLY FINANCIAL DATA
(unaudited)
 Three Months Ended,March 31
    
    June 30
    
    September 30
    
    December 312008Revenues
    
    $
    38,199
    
    
    $
    47,795
    
    
    $
    42,317
    
    
    $
    33,141Gross profit
    
    
    4,400
    
    
    
    9,826
    
    
    
    9,127
    
    
    
    6,945Income (loss) from continuing operations
    
    
    (905
    )
    
    
    (4,222
    )
    
    
    3,079
    
    
    
    1,946Income (loss) from discontinued operations, net of tax
    
    
    (6,224
    )
    
    
    (1,588
    )
    
    
    (1,791
    )
    
    
    1,341Net loss attributable to common stockholders
    
    
    (11,400
    )
    
    
    (10,232
    )
    
    
    (3,632
    )
    
    
    (841
    )Basic and
diluted net loss per share
    
    
    (4.03
    )
    
    
    (3.62
    )
    
    
    (1.28
    )
    
    
    (0.30
    )2007Revenues
    
    $
    32,715
    
    
    $
    34,133
    
    
    $
    32,988
    
    
    $
    29,977Gross profit (loss)
    
    
    5,627
    
    
    
    2,804
    
    
    
    5,915
    
    
    
    (963
    )Loss from continuing operations
    
    
    (56
    )
    
    
    (3,947
    )
    
    
    (30
    )
    
    
    (3,680
    )Income (loss) from discontinued operations, net of tax
    
    
    2,725
    
    
    
    4,474
    
    
    
    46
    
    
    
    (18,462
    )Net loss attributable to common stockholders
    
    
    (380
    )
    
    
    (4,450
    )
    
    
    (5,118
    )
    
    
    (26,530
    )Basic and diluted net loss per share
    
    
    (0.14
    )
    
    
    (1.57
    )
    
    
    (1.81
    )
    
    
    (9.38
    )
 
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A(T). Controls and Procedures
 Evaluation of Disclosure Controls and Procedures.
 Managements Annual Report on Internal Control over Financial Reporting
   74




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##### 



Changes in Internal Control over Financial Reporting
 75




---



##### 



PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance
  
 Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
 Item 13. Certain Relationships and Related Transactions, and Director Independence
  
 Item 14. Principal Accountant Fees and Services
  76




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##### 



PART IV
 
 Item 15. Exhibits and Consolidated Financial Statement Schedules
  1.
    
    Consolidated Financial Statements. See Item 8. Financial Statements and
Supplementary Data  Index to Financial Statements.2.
    
    Consolidated Financial Statement Schedules. All schedules for which
provision is made in Regulation S-X either are not required under the related
instruction or are inapplicable and, therefore, have been omitted.3.
    
    Exhibits. See the Exhibit Index for a list of those exhibits filed herewith,
which index also includes and identifies management contracts or compensatory plans or
arrangements required to be filed as exhibits to this Form 10-K by Item
601(b)(10)(iii) of Regulation S-K.
  ExhibitNumber
    
    
    
    Description of Exhibit3.1
    
    
    
    
    Second Amended and Restated Certification of Incorporation of Sterling Chemicals, Inc.
(incorporated by reference to Annex A to the Companys definitive proxy statement on Schedule
14A filed on April 15, 2008).3.2
    
    
    
    
    Restated Certificate of Designations, Preferences, Rights and Limitations of Series A
Convertible Preferred Stock of Sterling Chemicals, Inc. (incorporated herein by reference
from Exhibit 3.2 to our Annual Report on Form 10-K for the fiscal year ended December 31,
2003).3.3
    
    
    
    
    Restated Bylaws of Sterling Chemicals, Inc. (conformed copy) (incorporated herein by
reference from Exhibit 3.3 to our Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2007).4.1
    
    
    
    
    Tag Along Agreement dated as of December 19, 2002 by and among Sterling Chemicals, Inc.,
Resurgence Asset Management, L.L.C. and the Official Committee of the Unsecured Creditors
(incorporated herein by reference from Exhibit 8 to our Form 8-A filed on December 19, 2002
(SEC File Number 000-50132)).4.2
    
    
    
    
    Indenture dated March 29, 2007 by and among Sterling Chemicals, Inc., as Issuer, Sterling
Chemicals Energy, Inc., as Guarantor, and U. S. Bank National Association, as Trustee and
Collateral Agent, governing the 101/4% Senior Secured Notes due 2015 of Sterling Chemicals,
Inc. (incorporated herein by reference from Exhibit 4.2 to our Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 2007).4.3
    
    
    
    
    Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated
March 29, 2007 made by Sterling Chemicals, Inc., Trustor, to Stanley Keeton, an Individual
Trustee, for the benefit of U. S. Bank National Association, as Collateral Agent,
Beneficiary. (incorporated herein by reference from Exhibit 4.3 to our Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 2007).4.4
    
    
    
    
    Security Agreement dated as of March 29, 2007 by and among Sterling Chemicals, Inc. and
Sterling Chemicals Energy, Inc., as Assignors, U. S. Bank National Association, as Collateral
Agent, and U. S. Bank National Association, as Indenture Trustee for the benefit of the
holders the 101/4% Senior Secured Notes due 2015 of Sterling Chemicals, Inc. (incorporated
herein by reference from Exhibit 4.4 to our Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2007).4.5
    
    
    
    
    Pledge Agreement dated as of March 29, 2007 by Sterling Chemicals, Inc. and Sterling
Chemicals Energy, Inc. in favor of U. S. Bank National Association, as Collateral Agent for
the Secured Parties (incorporated herein by reference from Exhibit 4.5 to our Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 2007).
 77




---



##### 



ExhibitNumber
    
    
    
    Description of Exhibit4.6
    
    
    
    
    Registration Rights Agreement dated as of March 29, 2007 by and among Sterling Chemicals,
Inc., as the Company, Sterling Chemicals Energy, Inc., as Guarantor, and Jefferies & Company,
Inc. and CIBC World Markets Corp., as the Initial Purchasers of the 101/4% Senior Secured Notes
due 2015 of Sterling Chemicals, Inc. (incorporated herein by reference from Exhibit 4.6 to
our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007).10.1
    
    
    
    
    Amended and Restated Revolving Credit Agreement dated as of March 29, 2007 by and among
Sterling Chemicals, Inc. and Sterling Chemicals Energy, Inc., as Borrowers, the various
financial institutions as are or may become parties thereto from time to time, as the
Lenders, and The CIT Group/Business Credit, Inc., as the Administrative Agent for the
Lenders, and Wachovia Bank, National Association, as Documentation Agent (incorporated herein
by reference from Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2007).10.1(a)
    
    
    
    
    First Amendment to Amended and Restated Revolving Credit Agreement dated as of November 7,
2008 among Sterling Chemicals, Inc., The CIT Group/Business Credit, Inc., as the
Administrative Agent for the Lenders and the Lenders (incorporated herein by reference from
Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarterly period ended September
30, 2008).10.2
    
    
    
    
    Amended and Restated Security Agreement dated as of March 29, 2007 made by Sterling
Chemicals, Inc. and Sterling Chemicals Energy, Inc., as Grantors, in favor of The CIT
Group/Business Credit, Inc. as Administrative Agent for the Secured Parties (incorporated
herein by reference from Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2007).10.3
    
    
    
    
    Amended and Restated Pledge Agreement dated as of March 29, 2007 made by Sterling Chemicals,
Inc. and Sterling chemicals Energy, Inc. as Pledgors, in favor of The CIT Group/Business
Credit, Inc., as Administrative Agent for the Secured Parties (incorporated herein by
reference from Exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2007).10.4
    
    
    
    
    Intercreditor Agreement dated as of March 29, 2007 among Sterling Chemicals, Inc. and
Sterling Chemicals Energy, Inc., as Borrowers, The CIT Group/Business Credit, Inc., as First
Lien Collateral Agent, and U. S. Bank National Association, as Second Lien Collateral Agent
(incorporated herein by reference from Exhibit 10.4 to our Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 2007).10.5*
    
    
    
    
    Sterling Chemicals, Inc. Amended and Restated 2002 Stock Plan (incorporated herein by
reference from Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 2006).10.6*
    
    
    
    
    Fifth Amended and Restated Key Employee Protection Plan (incorporated herein by reference
from Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2006).10.7*
    
    
    
    
    Third Amended and Restated Severance Pay Plan (incorporated herein by reference from Exhibit
10.7 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2003).10.7(a)*
    
    
    
    
    First Amendment to Third Amended and Restated Severance Pay Plan (incorporated herein by
reference from Exhibit 10.7(a) to our Annual Report on Form 10-K for the fiscal year ended
December 31, 2007).10.8*
    
    
    
    
    Sterling Chemicals, Inc. Amended and Restated Salaried Employees Pension Plan (incorporated
herein by reference from Exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2006).10.8(a)*
    
    
    
    
    First Amendment to the Sterling Chemicals, Inc. Amended and Restated Salaried Employees
Pension Plan (incorporated herein by reference from Exhibit 10.7(a) to our Annual Report on
Form 10-K for the fiscal year ended December 31, 2006).10.8(b)*
    
    
    
    
    Second Amendment to the Sterling Chemicals, Inc. Amended and Restated Salaried Employees
Pension Plan (incorporated herein by reference from Exhibit 10.1 to our Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 2007).10.8(c)*
    
    
    
    
    Third Amendment to the Sterling Chemicals, Inc. Amended and Restated Salaried Employees
Pension Plan (incorporated herein by reference from Exhibit 10.8(c) to our Annual Report on
Form 10-K for the fiscal year ended December 31, 2007).
 78




---



##### 



ExhibitNumber
    
    
    
    Description of Exhibit10.8(d)*
    
    
    
    

Fourth
Amendment to the Sterling Chemicals, Inc. Amended and Restated Salaried Employees
Pension Plan (incorporated herein by reference from Exhibit 10.8(d) to our Annual Report on
Form 10-K for the fiscal year ended December 31, 2007).**10.8(e)*
    
    
    
    
    415 Compliance Appendix to Sterling Chemicals, Inc. Eighth Amended and Restated Salaried Employees
Pension Plan.10.9*
    
    
    
    
    Sterling Chemicals, Inc. Pension Benefit Equalization Plan (incorporated herein by reference
from Exhibit 10.10 to our Registration Statement on Form S-1 (Registration No. 33-24020)).10.9(a)*
    
    
    
    
    First Amendment to Sterling Chemicals, Inc. Pension Benefit Equalization Plan (incorporated
herein by reference from Exhibit 10.9(a) to our Annual Report on Form 10-K for the fiscal
year ended December 31, 2004).10.10*
    
    
    
    
    Sterling Chemicals, Inc. Amended and Restated Supplemental Employee Retirement Plan
(incorporated herein by reference from Exhibit 10.34 to our Annual Report on Form 10-K for
the fiscal year ended September 30, 1989 (SEC File Number 1-10059)).10.10(a)*
    
    
    
    
    First Amendment to Sterling Chemicals, Inc. Amended and Restated Supplemental Employee
Retirement Plan (incorporated herein by reference from Exhibit 10.10(a) to our Annual Report
on Form 10-K for the fiscal year ended December 31, 2004).10.11
    
    
    
    
    Sterling Chemicals, Inc. Amended and Restated Hourly Paid Employees Pension Plan (Effective
as of January 1, 2007) (incorporated herein by reference from Exhibit 10.2 to our Quarterly
Report on Form 10-Q for the quarterly period ended September 30, 2007).10.11(a)
    
    
    
    
    First Amendment to the Sterling Chemicals, Inc. Amended and Restated Hourly Paid Employees
Pension Plan (Effective as of January 1, 2007) (incorporated herein by reference from Exhibit
10.11(a) to our Annual Report on Form 10-K for the fiscal year ended December 31, 2007).**10.11(b)
    
    
    
    
    415 Compliance Appendix to Sterling Chemicals, Inc. Amended and Restated Hourly Paid
Employees Pension Plan.**10.12*
    
    
    
    
    Sterling Chemicals, Inc. Eighth Amended and Restated Savings and Investment Plan.10.13*
    
    
    
    
    2009 Bonus Plan (incorporated herein by reference from Exhibit 10.1 to our Form 8-K filed
January 15, 2009).10.13(a)*
    
    
    
    
    2008 Bonus Plan (incorporated by reference from Exhibit 10.2 to our Current Report on Form
8-K filed on August 22, 2008).10.14*
    
    
    
    
    Sterling Chemicals, Inc. Comprehensive Welfare Benefit Plan (incorporated herein by reference
from Exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2007).**10.14 (a)
    
    
    
    
    First Amendment to the Sterling Chemicals, Inc. Comprehensive Welfare Benefit Plan.**10.14 (b)
    
    
    
    
    Sterling Chemicals, Inc. Flexible Spending Account Plan (amended and restated January 1, 2008)10.15
    
    
    
    
    Articles of Agreement between Sterling Chemicals, Inc., its successors and assigns, and Texas
City, Texas Metal Trades Council, AFL-CIO Texas City, Texas, May 1, 2007 to May 1, 2012
(incorporated herein by reference from Exhibit 10.5 to our Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 2007).10.16*
    
    
    
    
    Form of Indemnity Agreement with each of its officers and directors (incorporated herein by
reference from Exhibit 10.17 to our Annual Report on Form 10-K for the fiscal year ended
September 30, 1996 (SEC File Number 333-04343-01)).+10.17
    
    
    
    
    2008 Amended and Restated Production Agreement dated effective as of January 1, 2008 between
BP Amoco Chemical Company and Sterling Chemicals, Inc. (incorporated by reference from
Exhibit 10.1 to our Current Report on Form 8-K filed on August 22, 2008).+10.18
    
    
    
    
    Third Amended and Restated Plasticizers Production Agreement dated effective as of April 1,
2008 between BASF Corporation and Sterling Chemicals, Inc. (incorporated by reference from
Exhibit 10.1 to our Current Report on Form 8-K filed on July 25, 2008).10.19
    
    
    
    
    License Agreement dated August 1, 1986 between Monsanto Company and Sterling Chemicals, Inc.
(incorporated herein by reference from Exhibit 10.25 to our Registration Statement on Form
S-1 (Registration No. 33-24020)).
 79




---



##### 



ExhibitNumber
    
    
    
    Description of Exhibit+10.20
    
    
    
    
    Agreement for the Exclusive Supply of Styrene by and between Sterling Chemicals, Inc. and
NOVA Chemicals Inc., dated September 17, 2007 (incorporated by reference from Exhibit 10.20
to Amendment No. 1 to our Form S-4 Registration Statement (Registration No. 333-145803)).10.21*
    
    
    
    
    Employment Agreement between Sterling Chemicals, Inc. and John V. Genova, dated effective as
of May 27, 2008 (incorporated by reference from Exhibit 10.1 to our Current Report on Form
8-K filed on May 27, 2008).**12.1
    
    
    
    
    Computation of Ratio of Earnings (Losses) to Fixed Charges.14.1
    
    
    
    
    Sterling Chemicals, Inc. Code of Ethics for the Chief Executive Officer and Senior Financial
Officers (incorporated herein by reference from Exhibit 14.1 to our Quarterly Report on Form
10-Q for the quarterly period ended June 30, 2003).**21.1
    
    
    
    
    Subsidiaries of Sterling Chemicals, Inc.**23.1
    
    
    
    
    Consent of Grant Thornton LLP**23.2
    
    
    
    
    Consent of Deloitte & Touche LLP**31.1
    
    
    
    
    Rule 13a-14(a) Certification of the Chief Executive Officer**31.2
    
    
    
    
    Rule 13a-14(a) Certification of the Chief Financial Officer**32.1
    
    
    
    
    Section 1350 Certification of the Chief Executive Officer**32.2
    
    
    
    
    Section 1350 Certification of the Chief Financial Officer99.1
    
    
    
    
    Amended and Restated Audit Committee Charter of Sterling Chemicals, Inc. (incorporated herein
by reference from Exhibit 99.1 to our Annual Report on Form 10-K for the fiscal year ended
December 31, 2005).99.2
    
    
    
    
    Amended and Restated Corporate Governance Committee Charter of Sterling Chemicals, Inc.
(incorporated herein by reference from Exhibit 99.1 to our Quarterly Report on Form 10-Q for
the quarterly period ended September 30, 2005).99.3
    
    
    
    
    Compensation Committee Charter of Sterling Chemicals, Inc. (incorporated herein by reference
from Exhibit 99.1 to our Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2006).
 
 *
    
    Management contracts or compensatory plans or arrangements.**
    
    Filed or furnished herewith.+
    
    Portions of the exhibit have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment. 80




---



##### 



SIGNATURES
  STERLING CHEMICALS, INC.
(Registrant)By:
    /s/ JOHN V. GENOVAJohn V. GenovaPresident, Chief Executive Officer and DirectorBy:
    /s/ JOHN R. BEAVERJohn R. BeaverSenior Vice President-Finance and Chief Financial Officer   Signature
    
    Title
    
    DatePrincipal Executive Officer:
    
    
    
    

/s/ JOHN V. GENOVA

John V. Genova
    
    President, Chief Executive Officer
and Director
    
    March 17, 2009Principal Financial Officer:/s/  JOHN R. BEAVER

John R. Beaver
    
    Senior Vice President-Finance
and Chief Financial Officer
    
    March 17, 2009Principal Accounting Officer:/s/  CARLA E. STUCKY

Carla E. Stucky
    
    Vice President and Corporate Controller
    
    March 17, 2009/s/  RICHARD K. CRUMP

Richard K. Crump
    
    Director
    
    March 17, 2009/s/   JOHN W. GILDEA

John W. Gildea
    
    Director
    
    March 17, 2009/s/  BYRON J. HANEY

Byron J. Haney
    
    Director
    
    March 17, 2009/s/   KARL W. SCHWARZFELD

Karl W. Schwarzfeld
    
    Director
    
    March 17, 2009/s/   PHILIP M. SIVIN

Philip M. Sivin
    
    Director
    
    March 17, 2009/s/   DR. PETER TING KAI WU
Dr. Peter Ting Kai Wu
    
    Director
    
    March 17, 2009
 81




---



##### 



EXHIBIT INDEX
 ExhibitNumber
    
    
    
    Description of Exhibit3.1
    
    
    
    
    Second Amended and Restated Certification of Incorporation of Sterling Chemicals, Inc.
(incorporated by reference to Annex A to the Companys definitive proxy statement on Schedule
14A filed on April 15, 2008).3.2
    
    
    
    
    Restated Certificate of Designations, Preferences, Rights and Limitations of Series A
Convertible Preferred Stock of Sterling Chemicals, Inc. (incorporated herein by reference
from Exhibit 3.2 to our Annual Report on Form 10-K for the fiscal year ended December 31,
2003).3.3
    
    
    
    
    Restated Bylaws of Sterling Chemicals, Inc. (conformed copy) (incorporated herein by
reference from Exhibit 3.3 to our Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2007).4.1
    
    
    
    
    Tag Along Agreement dated as of December 19, 2002 by and among Sterling Chemicals, Inc.,
Resurgence Asset Management, L.L.C. and the Official Committee of the Unsecured Creditors
(incorporated herein by reference from Exhibit 8 to our Form 8-A filed on December 19, 2002
(SEC File Number 000-50132)).4.2
    
    
    
    
    Indenture dated March 29, 2007 by and among Sterling Chemicals, Inc., as Issuer, Sterling
Chemicals Energy, Inc., as Guarantor, and U. S. Bank National Association, as Trustee and
Collateral Agent, governing the 101/4% Senior Secured Notes due 2015 of Sterling Chemicals,
Inc. (incorporated herein by reference from Exhibit 4.2 to our Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 2007).4.3
    
    
    
    
    Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated
March 29, 2007 made by Sterling Chemicals, Inc., Trustor, to Stanley Keeton, an Individual
Trustee, for the benefit of U. S. Bank National Association, as Collateral Agent,
Beneficiary. (incorporated herein by reference from Exhibit 4.3 to our Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 2007).4.4
    
    
    
    
    Security Agreement dated as of March 29, 2007 by and among Sterling Chemicals, Inc. and
Sterling Chemicals Energy, Inc., as Assignors, U. S. Bank National Association, as Collateral
Agent, and U. S. Bank National Association, as Indenture Trustee for the benefit of the
holders the 101/4% Senior Secured Notes due 2015 of Sterling Chemicals, Inc. (incorporated
herein by reference from Exhibit 4.4 to our Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2007).4.5
    
    
    
    
    Pledge Agreement dated as of March 29, 2007 by Sterling Chemicals, Inc. and Sterling
Chemicals Energy, Inc. in favor of U. S. Bank National Association, as Collateral Agent for
the Secured Parties (incorporated herein by reference from Exhibit 4.5 to our Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 2007).4.6
    
    
    
    
    Registration Rights Agreement dated as of March 29, 2007 by and among Sterling Chemicals,
Inc., as the Company, Sterling Chemicals Energy, Inc., as Guarantor, and Jefferies & Company,
Inc. and CIBC World Markets Corp., as the Initial Purchasers of the 101/4% Senior Secured Notes
due 2015 of Sterling Chemicals, Inc. (incorporated herein by reference from Exhibit 4.6 to
our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007).10.1
    
    
    
    
    Amended and Restated Revolving Credit Agreement dated as of March 29, 2007 by and among
Sterling Chemicals, Inc. and Sterling Chemicals Energy, Inc., as Borrowers, the various
financial institutions as are or may become parties thereto from time to time, as the
Lenders, and The CIT Group/Business Credit, Inc., as the Administrative Agent for the
Lenders, and Wachovia Bank, National Association, as Documentation Agent (incorporated herein
by reference from Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2007).10.1(a)
    
    
    
    
    First Amendment to Amended and Restated Revolving Credit Agreement dated as of November 7,
2008 among Sterling Chemicals, Inc., The CIT Group/Business Credit, Inc., as the
Administrative Agent for the Lenders and the Lenders (incorporated herein by reference from
Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarterly period ended September
30, 2008).
 82




---



##### 



ExhibitNumber
    
    
    
    Description of Exhibit10.2
    
    
    
    
    Amended and Restated Security Agreement dated as of March 29, 2007 made by Sterling
Chemicals, Inc. and Sterling Chemicals Energy, Inc., as Grantors, in favor of The CIT
Group/Business Credit, Inc. as Administrative Agent for the Secured Parties (incorporated
herein by reference from Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2007).10.3
    
    
    
    
    Amended and Restated Pledge Agreement dated as of March 29, 2007 made by Sterling Chemicals,
Inc. and Sterling chemicals Energy, Inc. as Pledgors, in favor of The CIT Group/Business
Credit, Inc., as Administrative Agent for the Secured Parties (incorporated herein by
reference from Exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2007).10.4
    
    
    
    
    Intercreditor Agreement dated as of March 29, 2007 among Sterling Chemicals, Inc. and
Sterling Chemicals Energy, Inc., as Borrowers, The CIT Group/Business Credit, Inc., as First
Lien Collateral Agent, and U. S. Bank National Association, as Second Lien Collateral Agent
(incorporated herein by reference from Exhibit 10.4 to our Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 2007).10.5*
    
    
    
    
    Sterling Chemicals, Inc. Amended and Restated 2002 Stock Plan (incorporated herein by
reference from Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 2006).10.6*
    
    
    
    
    Fifth Amended and Restated Key Employee Protection Plan (incorporated herein by reference
from Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2006).10.7*
    
    
    
    
    Third Amended and Restated Severance Pay Plan (incorporated herein by reference from Exhibit
10.7 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2003).10.7(a)*
    
    
    
    
    First Amendment to Third Amended and Restated Severance Pay Plan (incorporated herein by
reference from Exhibit 10.7(a) to our Annual Report on Form 10-K for the fiscal year ended
December 31, 2007).10.8*
    
    
    
    

Sterling
Chemicals, Inc. Amended and Restated Salaried Employees Pension Plan (incorporated
herein by reference from Exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2006).10.8(a)*
    
    
    
    
    First Amendment to the Sterling Chemicals, Inc. Amended and Restated Salaried Employees
Pension Plan (incorporated herein by reference from Exhibit 10.7(a) to our Annual Report on
Form 10-K for the fiscal year ended December 31, 2006).10.8(b)*
    
    
    
    
    Second Amendment to the Sterling Chemicals, Inc. Amended and Restated Salaried Employees
Pension Plan (incorporated herein by reference from Exhibit 10.1 to our Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 2007).10.8(c)*
    
    
    
    
    Third Amendment to the Sterling Chemicals, Inc. Amended and Restated Salaried Employees
Pension Plan (incorporated herein by reference from Exhibit 10.8(c) to our Annual Report on
Form 10-K for the fiscal year ended December 31, 2007).10.8(d)*
    
    
    
    
    Fourth Amendment to the Sterling Chemicals, Inc. Amended and Restated Salaried Employees
Pension Plan (incorporated herein by reference from Exhibit 10.8(d) to our Annual Report on
Form 10-K for the fiscal year ended December 31, 2007).**10.8(e)*
    
    
    
    
    415 Compliance Appendix to Sterling Chemicals, Inc. Eighth Amended and Restated Salaried Employees
Pension Plan.10.9*
    
    
    
    
    Sterling Chemicals, Inc. Pension Benefit Equalization Plan (incorporated herein by reference
from Exhibit 10.10 to our Registration Statement on Form S-1 (Registration No. 33-24020)).10.9(a)*
    
    
    
    
    First Amendment to Sterling Chemicals, Inc. Pension Benefit Equalization Plan (incorporated
herein by reference from Exhibit 10.9(a) to our Annual Report on Form 10-K for the fiscal
year ended December 31, 2004).10.10*
    
    
    
    
    Sterling Chemicals, Inc. Amended and Restated Supplemental Employee Retirement Plan
(incorporated herein by reference from Exhibit 10.34 to our Annual Report on Form 10-K for
the fiscal year ended September 30, 1989 (SEC File Number 1-10059)).
 83




---



##### 



ExhibitNumber
    
    
    
    Description of Exhibit10.10(a)*
    
    
    
    
    First Amendment to Sterling Chemicals, Inc. Amended and Restated Supplemental Employee
Retirement Plan (incorporated herein by reference from Exhibit 10.10(a) to our Annual Report
on Form 10-K for the fiscal year ended December 31, 2004).10.11
    
    
    
    
    Sterling Chemicals, Inc. Amended and Restated Hourly Paid Employees Pension Plan (Effective
as of January 1, 2007) (incorporated herein by reference from Exhibit 10.2 to our Quarterly
Report on Form 10-Q for the quarterly period ended September 30, 2007).10.11(a)
    
    
    
    
    First Amendment to the Sterling Chemicals, Inc. Amended and Restated Hourly Paid Employees
Pension Plan (Effective as of January 1, 2007) (incorporated herein by reference from Exhibit
10.11(a) to our Annual Report on Form 10-K for the fiscal year ended December 31, 2007).**10.11(b)
    
    
    
    
    415 Compliance Appendix to Sterling Chemicals, Inc. Amended and Restated Hourly Paid
Employees Pension Plan.**10.12*
    
    
    
    
    Sterling Chemicals, Inc. Eighth Amended and Restated Savings and Investment Plan.10.13*
    
    
    
    
    2009 Bonus Plan (incorporated herein by reference from Exhibit 10.1 to our Form 8-K filed
January 15, 2009).10.13(a)*
    
    
    
    
    2008 Bonus Plan (incorporated by reference from Exhibit 10.2 to our Current Report on Form
8-K filed on August 22, 2008).10.14*
    
    
    
    
    Sterling Chemicals, Inc. Comprehensive Welfare Benefit Plan (incorporated herein by reference
from Exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2007).**10.14 (a)
    
    
    
    
    First Amendment to the Sterling Chemicals, Inc. Comprehensive Welfare Benefit Plan.**10.14 (b)
    
    
    
    
    Sterling Chemicals, Inc. Flexible Spending Account Plan (amended and restated January 1, 2008)10.15
    
    
    
    
    Articles of Agreement between Sterling Chemicals, Inc., its successors and assigns, and Texas
City, Texas Metal Trades Council, AFL-CIO Texas City, Texas, May 1, 2007 to May 1, 2012
(incorporated herein by reference from Exhibit 10.5 to our Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 2007).10.16*
    
    
    
    
    Form of Indemnity Agreement with each of its officers and directors (incorporated herein by
reference from Exhibit 10.17 to our Annual Report on Form 10-K for the fiscal year ended
September 30, 1996 (SEC File Number 333-04343-01)).+10.17
    
    
    
    
    2008 Amended and Restated Production Agreement dated effective as of January 1, 2008 between
BP Amoco Chemical Company and Sterling Chemicals, Inc. (incorporated by reference from
Exhibit 10.1 to our Current Report on Form 8-K filed on August 22, 2008).+10.18
    
    
    
    
    Third Amended and Restated Plasticizers Production Agreement dated effective as of April 1,
2008 between BASF Corporation and Sterling Chemicals, Inc. (incorporated by reference from
Exhibit 10.1 to our Current Report on Form 8-K filed on July 25, 2008).10.19
    
    
    
    
    License Agreement dated August 1, 1986 between Monsanto Company and Sterling Chemicals, Inc.
(incorporated herein by reference from Exhibit 10.25 to our Registration Statement on Form
S-1 (Registration No. 33-24020)).+10.20
    
    
    
    
    Agreement for the Exclusive Supply of Styrene by and between Sterling Chemicals, Inc. and
NOVA Chemicals Inc., dated September 17, 2007 (incorporated by reference from Exhibit 10.20
to Amendment No. 1 to our Form S-4 Registration Statement (Registration No. 333-145803)).10.21*
    
    
    
    
    Employment Agreement between Sterling Chemicals, Inc. and John V. Genova, dated effective as
of May 27, 2008 (incorporated by reference from Exhibit 10.1 to our Current Report on Form
8-K filed on May 27, 2008).**12.1
    
    
    
    
    Computation of Ratio of Earnings (Losses) to Fixed Charges.14.1
    
    
    
    
    Sterling Chemicals, Inc. Code of Ethics for the Chief Executive Officer and Senior Financial
Officers (incorporated herein by reference from Exhibit 14.1 to our Quarterly Report on Form
10-Q for the quarterly period ended June 30, 2003).**21.1
    
    
    
    
    Subsidiaries of Sterling Chemicals, Inc.**23.1
    
    
    
    
    Consent of Grant Thornton LLP
 84




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##### 



ExhibitNumber
    
    
    
    Description of Exhibit**23.2
    
    
    
    
    Consent of Deloitte & Touche LLP**31.1
    
    
    
    
    Rule 13a-14(a) Certification of the Chief Executive Officer**31.2
    
    
    
    
    Rule 13a-14(a) Certification of the Chief Financial Officer**32.1
    
    
    
    
    Section 1350 Certification of the Chief Executive Officer**32.2
    
    
    
    
    Section 1350 Certification of the Chief Financial Officer99.1
    
    
    
    
    Amended and Restated Audit Committee Charter of Sterling Chemicals, Inc. (incorporated herein
by reference from Exhibit 99.1 to our Annual Report on Form 10-K for the fiscal year ended
December 31, 2005).99.2
    
    
    
    
    Amended and Restated Corporate Governance Committee Charter of Sterling Chemicals, Inc.
(incorporated herein by reference from Exhibit 99.1 to our Quarterly Report on Form 10-Q for
the quarterly period ended September 30, 2005).99.3
    
    
    
    
    Compensation Committee Charter of Sterling Chemicals, Inc. (incorporated herein by reference
from Exhibit 99.1 to our Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2006).
 
 *
    
    Management contracts or compensatory plans or arrangements.**
    
    Filed or furnished herewith.+
    
    Portions of the exhibit have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment. 85