##### Table of Contents









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, 2004                                                 
|  
|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                                                           |  | 76-0502785                                              
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification No.)                
|                                                                  
|333 Clay Street, Suite 3600                                        |  | (713) 650-3700                                          
|Houston, Texas 77002-4109(Address of principal executive offices)  |  | (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:






þ o


o


o þ




APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:


þ o














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IMPORTANT INFORMATION REGARDING THIS FORM 10-K






Forward-Looking Statements






| |   |                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the cyclicality of the petrochemicals industry;                                                                                                       
|
| |  | current and future industry conditions;                                                                                                               
|
| |  | the extent and timing of expansions of production capacity of
    our products, by us or by our competitors;                                          
|
| |  | the potential effects of market and industry conditions and
    cyclicality on our business strategy, results of operations or
    financial position;
|
| |  | the level of expected savings from our cost reduction
    initiatives;                                                                                
|
| |  | the adequacy of our liquidity;                                                                                                                        
|
| |  | our environmental management programs and safety initiatives;                                                                                         
|
| |  | our market sensitive financial instruments;                                                                                                           
|
| |  | future uses of and requirements for financial resources;                                                                                              
|
| |  | future contractual obligations;                                                                                                                       
|
| |  | future amendments or renewals of existing contractual
    relationships;                                                                              
|
| |  | business strategy;                                                                                                                                    
|
| |  | growth opportunities;                                                                                                                                 
|
| |  | competitive position;                                                                                                                                 
|
| |  | expected financial position;                                                                                                                          
|
| |  | future cash flows;                                                                                                                                    
|
| |  | future dividends;                                                                                                                                     
|
| |  | financing plans;                                                                                                                                      
|
| |  | budgets for capital and other expenditures;                                                                                                           
|
| |  | plans and objectives of management;                                                                                                                   
|
| |  | outcomes of legal proceedings;                                                                                                                        

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| |   |                                          
| | - | -----------------------------------------
| |  | compliance with applicable laws; and     
|
| |  | adequacy of insurance or indemnification.





| |   |                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------
| |  | the timing and extent of changes in commodity prices;                                                                                        
|
| |  | petrochemicals industry production capacity and operating rates;                                                                             
|
| |  | market conditions in the petrochemicals industry, including the
    supply-demand balance for our products;                                  
|
| |  | competition, including competitive products and pricing
    pressures;                                                                       
|
| |  | obsolescence of product lines;                                                                                                               
|
| |  | the timing and extent of changes in global economic and business
    conditions;                                                             
|
| |  | increases in raw materials and energy costs, including the cost
    of natural gas;                                                          
|
| |  | our ability to obtain raw materials, energy and ocean-going
    vessels at acceptable prices, in a timely manner and on
    acceptable terms;
|
| |  | regulatory initiatives and compliance with governmental
    regulations;                                                                     
|
| |  | compliance with environmental laws and regulations;                                                                                          
|
| |  | customer preferences;                                                                                                                        
|
| |  | our ability to attract or retain high quality employees;                                                                                     
|
| |  | operating hazards attendant to the petrochemicals industry;                                                                                  
|
| |  | casualty losses;                                                                                                                             
|
| |  | changes in foreign, political, social and economic conditions;                                                                               
|
| |  | risks of war, military operations, other armed hostilities,
    terrorist acts and embargoes;                                                
|
| |  | changes in technology, which could require significant capital
    expenditures in order to maintain competitiveness;                        
|
| |  | effects of litigation;                                                                                                                       
|
| |  | cost, availability and adequacy of insurance;                                                                                                
|
| |  | adequacy of our sources of liquidity; and                                                                                                    
|
| |  | various other matters, many of which are beyond our control.                                                                                 



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Subsequent Events




Document Summaries




Fiscal Year






| |   |                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------
| |  | 2004 and fiscal 2004 refer to the
    12-month period ended December 31, 2004;                          
|
| |  | 2003 and fiscal 2003 refer to the
    12-month period ended December 31, 2003;                          
|
| |  | fiscal 2002 refers to the 12-month period ended
    September 30, 2002; and                               
|
| |  | the Transition Period refers to the three-month
    period from October 1, 2002 through December 31, 2002.

iii



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TABLE OF CONTENTS


|                                                           |  |                                                                                           |  |      |    | 
|---------------------------------------------------------- |  | ----------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                           |  |                                                                                           |  | Page |   
|                                                           |  |                                                                                           |  |      |   
|PART I                                                    
|Item 1.                                                    |  | Business                                                                                  |  |      | 2  | 
|Item 2.                                                    |  | Properties                                                                                |  |      | 14 | 
|Item 3.                                                    |  | Legal Proceedings                                                                         |  |      | 14 | 
|Item 4.                                                    |  | Submission of Matters to a Vote of Security
    Holders                                   |  |      | 15 | 
|PART II                                                   
|Item 5.                                                    |  | Market for Registrants Common Equity
    and Related Stockholder Matters                 |  |      | 16 | 
|Item 6.                                                    |  | Selected Financial Data                                                                   |  |      | 17 | 
|Item 7.                                                    |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations |  |      | 19 | 
|Item 7A.                                                   |  | Quantitative and Qualitative Disclosures
    about Market Risk                            |  |      | 42 | 
|Item 8.                                                    |  | Financial Statements and Supplementary
    Data                                           |  |      | 43 | 
|Item 9.                                                    |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure  |  |      | 77 | 
|Item 9A.                                                   |  | Controls and Procedures                                                                   |  |      | 77 | 
|Item 9B.                                                   |  | Other Information                                                                         |  |      | 78 | 
|PART III                                                  
|Item 10.                                                   |  | Directors and Executive Officers of the
    Registrant                                    |  |      | 78 | 
|Item 11.                                                   |  | Executive Compensation                                                                    |  |      | 78 | 
|Item 12.                                                   |  | Security Ownership of Certain Beneficial
    Owners and Management                        |  |      | 78 | 
|Item 13.                                                   |  | Certain Relationships and Related
    Transactions                                        |  |      | 78 | 
|Item 14.                                                   |  | Principal Accountant Fees and Services                                                    |  |      | 78 | 
|PART IV                                                   
|Item 15.                                                   |  | Exhibits and Consolidated Financial
    Statement Schedules                               |  |      | 78 | 
|14th.Amend.to Amended Salaried Employees' Pension Plan    
|1st Amend.to Pension Benefit Equalization Plan            
|1st Amend.to Amended Supplemental Employee Retirement Plan
|7th Amend.to 6th Amended Savings & Investment Plan        
|Subsidiaries of the Registrant                            
|Consent of Deloitte & Touche LLP                          
|Certification of CEO Pursuant to Rule 13a-14(a)           
|Certification of CFO Pursuant to Rule 13a-14(a)           
|Certification of CEO Pursuant to Section 1350             
|Certification of CFO Pursuant to Section 1350             



1



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PART I







|        |         
|------- | --------
|Item 1. | Business





|              |  |                     |                    |             |          |  |     |                 |  |  |                     |  |  |  |                   | 
|------------- |  | ------------------- | ------------------ | ----------- | -------- |  | --- | --------------- |  |  | ------------------- |  |  |  | ----------------- | 
|              |  |                     |                    | Percent of  |          |  |     |                 | 
|              |  |                     |                    | Total North |          |  |     |                 | 
|              |  | Rated Annual        |                    |             | American |  |     | North American  |  |  | Global              | 
|Product       |  | Production Capacity |                    |             | Capacity |  |     | Market Position |  |  | Production Capacity | 
|              |  |                     |                    |             |          |  |     |                 |  |  |                     | 
|Styrene       |  |                     | 1.7 billion pounds |             |          |  | 11% |                 |  |  | 4                   |  |  |  | 58 billion pounds | 
|Acetic Acid   |  |                     | 1 billion pounds   |             |          |  | 17% |                 |  |  | 3                   |  |  |  | 20 billion pounds | 
|Acrylonitrile |  |                     | 740 million pounds |             |          |  | 19% |                 |  |  | 3                   |  |  |  | 14 billion pounds | 





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Business Strategy




Optimize Capacity Utilization Rates Through Long-Term Supply
Contracts.


Capitalize on Cyclical Peaks in Markets.


Improve Organization Efficiency and Cost Structure.


Industry Overview


Styrene.


3



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Acetic Acid.


4



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Acrylonitrile.






Plasticizers.


5



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Product Summary




|                                           |  |                                                                                            |  |                                                                                                                                                                                                                                               |  |                                                          |  |                                                                                                                                                                                                                                                  
|------------------------------------------ |  | ------------------------------------------------------------------------------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Sterling Product                           |  |                                                                                            |  |                                                                                                                                                                                                                                               |  |                                                          |  |                                                                                                                                                                                                                                                  
|(Capacity)                                 |  | Intermediate Products                                                                      |  | Primary End Products                                                                                                                                                                                                                          |  | Raw Materials                                            |  | Major Competitors                                                                                                                                                                                                                                
|                                           |  |                                                                                            |  |                                                                                                                                                                                                                                               |  |                                                          |  |                                                                                                                                                                                                                                                  
|Styrene(1.7 billion pounds per year)       |  | Polystyrene, ABS/ SAN resins, styrene butadiene latex and
    unsaturated polyester resins |  | Building products, boat and automotive components, disposable
    cups and trays, packaging and containers, housewares, tires,
    audio and video cassettes, luggage, childrens toys, paper
    coating, appliance parts and carpet backing |  | Benzene and Ethylene                                     |  | Lyondell Chemical Company, BP Amoco Chemical Company, Chevron
    Phillips Chemical Company, Shell Chemical Company, Cos-Mar (a
    joint venture of General Electric Company and FINA Inc.), Nova
    Corporation, SABIC, Samsung and Mitsubishi
|Acetic Acid(1 billion pounds per year)     |  | Vinyl acetate, terephthalic acid, and acetate solvents                                     |  | Adhesives, PET bottles, fibers and surface coatings                                                                                                                                                                                           |  | Methanol and Carbon Monoxide                             |  | Celanese AG, Eastman Chemical Company and Lyondell Chemical
    Company                                                                                                                                                                          
|Acrylonitrile(740 million pounds per year) |  | Acrylic fibers, ABS/SAN resins, NB copolymers, adiponitrile and
    acrylamide             |  | Apparel, furnishings, upholstery, household appliances, carpets
    and plastics for automotive parts using ABS and SAN polymers                                                                                                              |  | Propylene and Ammonia                                    |  | BP Amoco Chemical Company, Cytec Industries Inc., E.I. du Pont
    de Nemours and Company, Asahi Chemical Industry Company, Ltd.,
    Solutia Inc., Tae Kwang, Formosa Plastics, CPDC and DSM                                                    
|Plasticizers(280 million pounds per year)  |  | Flexible polyvinyl chloride (PVC)                                                        |  | Flexible plastics, such as shower curtains and liners, floor
    coverings, cable insulation, upholstery and plastic molding                                                                                                                  |  | Alpha-olefins, Carbon Monoxide, Hydrogen and Orthoxylene |  | ExxonMobil Corporation, Eastman Chemical Company and BASF
    Corporation                                                                                                                                                                        
|Sodium Cyanide(85 million pounds per year) |  | N/A                                                                                        |  | Electroplating and precious metals recovery                                                                                                                                                                                                   |  | Hydrogen Cyanide and Caustic Soda                        |  | E.I. du Pont de Nemours and Company, Degussa- Huls, FMC
    Corporation, Tong Soh Petrochemical, Tae Kwang and DSM                                                                                                                               
|DSIDA(80 million pounds per year)          |  | N/A                                                                                        |  | Herbicides                                                                                                                                                                                                                                    |  | Hydrogen Cyanide and Caustic Soda                        |  | Solutia Inc.                                                                                                                                                                                                                                     

Products


Styrene.


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Acetic Acid. Acetic Acid-BP Chemicals


Acrylonitrile. Acrylonitrile-BP Chemicals




Plasticizers. Plasticizers-BASF


Sodium Cyanide.


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DSIDA.


Sales and Marketing






| |   |                                                           
| | - | ----------------------------------------------------------
| |  | multi-year contracts;                                     
|
| |  | conversion agreements; and                                
|
| |  | spot transactions in both the domestic and export markets.







| |   |                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------
| |  | optimize capacity utilization rates;                                                                                       
|
| |  | lower our selling, general and administrative expenses;                                                                    
|
| |  | reduce our working capital requirements;                                                                                   
|
| |  | insulate our operations, to some extent, 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.                                



8



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Contracts




Acetic Acid-BP
Chemicals




Acrylonitrile-BP
Chemicals




Plasticizers-BASF




9



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Raw Materials for Products and Energy Resources




Styrene.


Acetic Acid.


Acrylonitrile.


Plasticizers.


Sodium Cyanide.


DSIDA.


10



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Technology and Licensing










Competition








Environmental Matters




11



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12



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Employees




Insurance




13



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Access to Filings









|        |           
|------- | ----------
|Item 2. | Properties












|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings



14



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|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders



15



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PART II







|        |                                                                          
|------- | -------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity and Related
    Stockholder Matters



|          |  |         |       |  |         |   |       |         |  |   |         |  |  |   |       | 
|--------- |  | ------- | ----- |  | ------- | - | ----- | ------- |  | - | ------- |  |  | - | ----- | 
|          |  | First   |       |  | Second  |   |       | Third   |  |   | Fourth  | 
|          |  | Quarter |       |  | Quarter |   |       | Quarter |  |   | Quarter | 
|          |  |         |       |  |         |   |       |         |  |   |         | 
|2004 High |  | $       | 29.00 |  |         | $ | 26.00 |         |  | $ | 25.00   |  |  | $ | 37.00 | 
|Low       |  | $       | 25.00 |  |         | $ | 21.00 |         |  | $ | 23.00   |  |  | $ | 23.50 | 
|2003 High |  | $       | 40.01 |  |         | $ | 23.00 |         |  | $ | 17.00   |  |  | $ | 25.50 | 
|Low       |  | $       | 22.00 |  |         | $ | 15.00 |         |  | $ | 14.00   |  |  | $ | 15.25 | 



Dividend Policy




16



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|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data







17



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|                                                                                      |  |                                       |         |   |                      |   |         |                |  |   |              |   |  |                                 |         |  |      |   |          |      |  |   |          |   |  |   |          |  
|------------------------------------------------------------------------------------- |  | ------------------------------------- | ------- | - | -------------------- | - | ------- | -------------- |  | - | ------------ | - |  | ------------------------------- | ------- |  | ---- | - | -------- | ---- |  | - | -------- | - |  | - | -------- | -
|                                                                                      |  | Reorganized Sterling                  |         |   | Predecessor Sterling |  
|                                                                                      |  |                                       |         |   |                      |  
|                                                                                      |  | Year ended                            |         |   | Year ended           |   |         | December 20 to |  |   | October 1 to |   |  | Fiscal Year Ended September 30, |        
|                                                                                      |  | December 31,                          |         |   | December 31          |   |         | December 31,   |  |   | December 19, |   |  |                                 |        
|                                                                                      |  | 2004                                  |         |   | 2003                 |   |         | 2002           |  |   | 2002         |   |  | 2002                            |         |  | 2001 |   |          | 2000 | 
|                                                                                      |  |                                       |         |   |                      |   |         |                |  |   |              |   |  |                                 |         |  |      |   |          |      | 
|                                                                                      |  | (In Thousands, Except Per Share Data) |        
|Operating Data:                                                                       |  |                                       |         |   |                      |   |         |                |  |   |              |   |  |                                 |         |  |      |   |          |      |  |   |          |   |  |   |          |  
|Revenues                                                                              |  | $                                     | 851,662 |   |                      | $ | 592,791 |                |  | $ | 12,572       |   |  | $                               | 99,888  |  |      | $ | 381,801  |      |  | $ | 468,738  |   |  | $ | 797,756  |  
|Gross profit (loss)                                                                   |  |                                       | 2,568   |   |                      |   | 3,051   |                |  |   | (29          | ) |  |                                 | 300     |  |      |   | 27,646   |      |  |   | (52,639  | ) |  |   | 97,504   |  
|Income (loss) from continuing
    operations(1)                                       |  |                                       | (62,444 | ) |                      |   | (13,223 | )              |  |   | (1,544       | ) |  |                                 | 223,974 |  |      |   | (52,616  | )    |  |   | (135,640 | ) |  |   | 14,891   |  
|Income (loss) from discontinued
    operations(2)                                     |  |                                       |        |   |                      |   | (976    | )              |  |   |             |   |  |                                 | 194,637 |  |      |   | 16,630   |      |  |   | (46,070  | ) |  |   | (78,738  | )
|Per Share Data:                                                                       |  |                                       |         |   |                      |   |         |                |  |   |              |   |  |                                 |         |  |      |   |          |      |  |   |          |   |  |   |          |  
|Net income (loss) attributable to common stockholders                                 |  |                                       | (24.30  | ) |                      |   | (6.84   | )              |  |   | (0.61        | ) |  |                                 |        |  |      |   |         |      |  |   |         |   |  |   |         |  
|Net income (loss) from continuing operations attributable to
    common stockholders. |  |                                       | (24.30  | ) |                      |   | (6.49   | )              |  |   | (0.61        | ) |  |                                 |        |  |      |   |         |      |  |   |         |   |  |   |         |  
|Cash dividends                                                                        |  |                                       |        |   |                      |   |        |                |  |   |             |   |  |                                 |        |  |      |   |         |      |  |   |         |   |  |   |         |  
|Balance Sheet Data:                                                                   |  |                                       |         |   |                      |   |         |                |  |   |              |   |  |                                 |         |  |      |   |          |      |  |   |          |   |  |   |          |  
|Working
    capital(3)                                                                |  | $                                     | 102,530 |   |                      | $ | 118,165 |                |  | $ | 129,413      |   |  | $                               | 132,058 |  |      | $ | 122,178  |      |  | $ | 179,082  |   |  | $ | (96,760  | )
|Total assets                                                                          |  |                                       | 473,553 |   |                      |   | 550,503 |                |  |   | 547,170      |   |  |                                 | 546,014 |  |      |   | 489,648  |      |  |   | 511,850  |   |  |   | 677,143  |  
|Long-term debt (excluding current portion of long-term
    debt)(4)                   |  |                                       | 100,579 |   |                      |   | 100,579 |                |  |   | 94,275       |   |  |                                 | 94,275  |  |      |   |         |      |  |   | 42,270   |   |  |   | 438,910  |  
|Stockholders equity (deficiency in assets)                                           |  |                                       | 120,083 |   |                      |   | 189,436 |                |  |   | 209,011      |   |  |                                 | 210,725 |  |      |   | (611,477 | )    |  |   | (563,582 | ) |  |   | (377,790 | )






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | During 2004, we recorded a $48.5 million goodwill
    impairment charge and a $22 million impairment charge
    related to our acrylonitrile long-lived assets. Also during
    2004, we recorded a pension curtailment gain of
    $13 million. The period from October 1, 2002 through
    December 19, 2002 includes a net loss on fresh-start
    adjustments of $203 million along with a net gain on debt
    restructuring of $458 million. During fiscal 2002, we
    recorded $56.8 million of deferred tax expense to reflect a
    full valuation allowance on our U.S. deferred tax assets.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|(2) | Pursuant to the Plan of Reorganization, on December 19,
    2002, the Debtors pulp chemicals business was sold to
    Superior Propane, Inc. for approximately $373 million and
    the Debtors acrylic fibers business was sold to local
    management of that business for nominal consideration. In
    accordance with Statement of Financial Accounting Standards
    (SFAS) No. 144, Accounting for the
    Impairment and Disposal of Long Lived Assets, we have
    reported the operating results of these businesses as
    discontinued operations in the consolidated statement of
    operations and cash flows for Predecessor Sterling, and the
    assets and liabilities of these businesses have been presented
    separately as assets held for sale and liabilities related to
    discontinued operations in Predecessor Sterlings
    consolidated balance sheet. During fiscal 2000, we recorded a
    $60 million non-cash charge related to the write down of
    our acrylic fibers production assets.
|   
|(3) | Working capital at September 30, 2002 and 2001 excludes
    pre-petition liabilities. Working capital at September 30,
    2002, 2001 and 2000 includes net assets (liabilities) of
    discontinued operations held for sale of $125 million,
    $130 million and ($137) million, respectively. See
    Note 1 of the Notes to Consolidated Financial Statements
    included in Item 8 of this Form 10-K.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|(4) | Excludes long-term debt of $418.4 million and
    $295.0 million, classified as pre-petition
    liabilities  subject to compromise and pre-petition
    liabilities  not subject to compromise, respectively
    for September 30, 2002 and 2001. Long-term debt at
    September 30, 2000 excludes $355 million of debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

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| |                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | allocated to discontinued operations and treated as current
    liabilities. See Note 1 to Consolidated Financial
    Statements included in Item 8 of this Form 10-K.






|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations



Overview




| |         
| | --------
| | Business





|              |  |                     |                    |             |          |  |     |                 |  |  |                     |  |  |                  
|------------- |  | ------------------- | ------------------ | ----------- | -------- |  | --- | --------------- |  |  | ------------------- |  |  | -----------------
|              |  |                     |                    | Percent of  |          |  |     |                 | 
|              |  |                     |                    | Total North |          |  |     |                 | 
|              |  | Rated Annual        |                    |             | American |  |     | North American  |  |  | Global             
|Product       |  | Production Capacity |                    |             | Capacity |  |     | Market Position |  |  | Production Capacity
|              |  |                     |                    |             |          |  |     |                 |  |  |                    
|Styrene       |  |                     | 1.7 billion pounds |             |          |  | 11% |                 |  |  | 4                   |  |  | 58 billion pounds
|Acetic Acid   |  |                     | 1 billion pounds   |             |          |  | 17% |                 |  |  | 3                   |  |  | 20 billion pounds
|Acrylonitrile |  |                     | 740 million pounds |             |          |  | 19% |                 |  |  | 3                   |  |  | 14 billion pounds



19



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vice versa vice versa,


20



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Styrene.




Acetic Acid.




Acrylonitrile.


21



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| |                                          
| | -----------------------------------------
| | Reorganization and Fresh-Start Accounting





|                           |  |   |         | 
|-------------------------- |  | - | ------- | 
|Long-term debt             |  | $ | 94,275  | 
|Redeemable preferred stock |  |   | 30,000  | 
|Stockholders equity       |  |   | 210,725 | 
|                           |  |   |        
|Total                      |  | $ | 335,000 | 
|                           |  |   |        

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##### Table of Contents



Results of Operations




|                                          |  |                        |         |             |                      |   |         |              |             |   |              |              |  |               |         |  |              |   |         |   |  |   |         |  
|----------------------------------------- |  | ---------------------- | ------- | ----------- | -------------------- | - | ------- | ------------ | ----------- | - | ------------ | ------------ |  | ------------- | ------- |  | ------------ | - | ------- | - |  | - | ------- | -
|                                          |  | Reorganized Sterling   |         |             | Predecessor Sterling |  
|                                          |  |                        |         |             |                      |  
|                                          |  |                        |         | December 20 |                      |   |         |              | Fiscal Year |   |              | Three Months | 
|                                          |  | Year Ended             |         |             | Year Ended           |   |         | to           |             |   | October 1 to |              |  | Ended         |         |  | Ended        |  
|                                          |  | December 31,           |         |             | December 31,         |   |         | December 31, |             |   | December 19, |              |  | September 30, |         |  | December 31, |  
|                                          |  | 2004                   |         |             | 2003                 |   |         | 2002         |             |   | 2002         |              |  | 2002          |         |  | 2001         |  
|                                          |  |                        |         |             |                      |   |         |              |             |   |              |              |  |               |         |  |              |  
|                                          |  | (Dollars in Thousands) |        
|Revenues:                                 |  | $                      | 851,662 |             |                      | $ | 592,791 |              |             | $ | 12,572       |              |  | $             | 99,888  |  |              | $ | 381,801 |   |  | $ | 63,355  |  
|Gross profit (loss):                      |  |                        | 2,568   |             |                      |   | 3,051   |              |             |   | (29          | )            |  |               | 300     |  |              |   | 27,646  |   |  |   | (4,210  | )
|Income (loss) from continuing operations: |  |                        | (62,644 | )           |                      |   | (13,223 | )            |             |   | (1,544       | )            |  |               | 223,974 |  |              |   | (52,616 | ) |  |   | (23,090 | )



| |                                         
| | ----------------------------------------
| | Comparison of Fiscal 2004 to Fiscal 2003



| |                                                                                   
| | ----------------------------------------------------------------------------------
| | Revenues, Gross Profit (Loss) and Net Income (Loss) from
    continuing operations







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| |                                  
| | ---------------------------------
| | Organizational efficiency project





| |                                
| | -------------------------------
| | Impairment of long-lived assets







24



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| |                            
| | ---------------------------
| | Gain on pension curtailment





| |                               
| | ------------------------------
| | Gain on sale of methanol plant





| |                       
| | ----------------------
| | Other Expense (Income)





| |                                     
| | ------------------------------------
| | Provision (benefit) for income taxes





| |                                         
| | ----------------------------------------
| | Comparison of Fiscal 2003 to Fiscal 2002



| |                                                                                   
| | ----------------------------------------------------------------------------------
| | Revenues, Gross Profit (Loss) and Net Income (Loss) from
    continuing operations





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| |                       
| | ----------------------
| | Other Expense (Income)





| |                     
| | --------------------
| | Reorganization Items





| |                                                           
| | ----------------------------------------------------------
| | Interest and Debt Related Expenses, Net of Interest Income

3 8




| |                                     
| | ------------------------------------
| | Provision (Benefit) for Income Taxes





| |                                                                                                           
| | ----------------------------------------------------------------------------------------------------------
| | Comparison of the Three Months Ended December 31,
    2002 to the Three Months Ended
    December 31, 2001





| |                                                                                       
| | --------------------------------------------------------------------------------------
| | Revenues, Operating Income (Loss) and Net Income (Loss) from
    continuing operations



26



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| |                     
| | --------------------
| | Reorganization Items



Liquidity and Capital Resources


3 8


3 8


27



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i.e.


28



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| |                
| | ---------------
| | Working Capital





| |          
| | ---------
| | Cash Flow





3 8




| |                     
| | --------------------
| | Capital Expenditures





Contractual Cash Obligations




|                                          |  |                        |         |  |           |   |         |           |           |   |         |  |  |       |         |  |  |   |         | 
|----------------------------------------- |  | ---------------------- | ------- |  | --------- | - | ------- | --------- | --------- | - | ------- |  |  | ----- | ------- |  |  | - | ------- | 
|                                          |  | Less than              |         |  |           |   |         |           | More than |   |         | 
|                                          |  | 1 year                 |         |  | 1-3 years |   |         | 4-5 years |           |   | 5 years |  |  | Total |        
|                                          |  |                        |         |  |           |   |         |           |           |   |         |  |  |       |        
|                                          |  | (Dollars in Thousands) |        
|Long-term debt                            |  | $                      |        |  |           | $ | 100,579 |           |           | $ |        |  |  | $     |        |  |  | $ | 100,579 | 
|Interest payments on long-term debt       |  |                        | 10,058  |  |           |   | 20,200  |           |           |   |        |  |  |       |        |  |  |   | 30,258  | 
|Current portion of long-term
    debt(1)  |  |                        |        |  |           |   | 17,684  |           |           |   |        |  |  |       |        |  |  |   | 17,684  | 
|Capital leases                            |  |                        |        |  |           |   |        |           |           |   |        |  |  |       |        |  |  |   |        | 
|Operating leases                          |  |                        | 293     |  |           |   | 879     |           |           |   | 586     |  |  |       | 805     |  |  |   | 2,563   | 
|Purchase
    obligations(2)               |  |                        | 135,000 |  |           |   | 112,000 |           |           |   | 55,000  |  |  |       | 166,000 |  |  |   | 468,000 | 
|Pension and other postretirement benefits |  |                        | 9,181   |  |           |   | 22,746  |           |           |   | 6,503   |  |  |       | 33,690  |  |  |   | 72,120  | 
|                                          |  |                        |         |  |           |   |         |           |           |   |         |  |  |       |        
|Total                                     |  | $                      | 154,532 |  |           | $ | 274,088 |           |           | $ | 62,089  |  |  | $     | 200,495 |  |  | $ | 691,204 | 
|                                          |  |                        |         |  |           |   |         |           |           |   |         |  |  |       |        

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The interest payment obligations on our Revolver are not
    presented because the interest payments fluctuate depending on
    the interest rate and balance of our Revolver.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(2) | 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.

Critical Accounting Policies, Use of Estimates and
Assumptions






| |                    
| | -------------------
| | Revenue Recognition





| |            
| | -----------
| | Inventories





| |                  
| | -----------------
| | Long-Lived Assets



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| |         
| | --------
| | Goodwill





| |             
| | ------------
| | Income Taxes





| |                       
| | ----------------------
| | Employee Benefit Plans





| |                       
| | ----------------------
| | Plant Turnaround Costs



New Accounting Standards




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Certain Known Events, Trends, Uncertainties and Risk
Factors




| |                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------
| | Cyclicality in the petrochemicals industry has in the past
    and may in the future result in reduced operating margins or
    operating losses.



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| |                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our level of indebtedness could adversely affect our
    ability to react to changes in our business, and we may be
    limited in our ability to use debt to fund future capital
    needs.





| |   |                                                                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | require us to dedicate a substantial portion of our cash flow
    from operations to payments with respect to our indebtedness,
    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;                                                                                                                                                                                                    
|
| |  | limit our flexibility in planning for, or reacting to,
    competition or changes in our business or our industry:                                                                                                                                                                    
|
| |  | limit our ability to borrow additional funds;                                                                                                                                                                                                                                         
|
| |  | restrict us from making strategic acquisitions, introducing new
    products or services or exploiting business opportunities;                                                                                                                                                        
|
| |  | make it more difficult for us to satisfy our obligations with
    respect to our indebtedness, including our Secured
    Notes; and                                                                                                                                                   
|
| |  | place us at a competitive disadvantage relative to competitors
    that have less debt or greater financial resources.                                                                                                                                                                





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| |                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Despite our level of indebtedness, we and our subsidiaries
    may be able to incur substantially more debt; which may impact
    our ability to meet our debt service requirements.





| |                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Natural gas prices have a significant impact on our
    competitiveness. High natural gas prices can have the effect of
    closing markets to our products where we are not
    competitive.





| |                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------
| | Our financial performance may be adversely affected if we
    are unable to obtain raw materials at reasonable prices or on
    acceptable terms.



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| |                                                                                                        
| | -------------------------------------------------------------------------------------------------------
| | Our financial performance may be adversely affected by our
    inability to secure ocean-going vessels.





| |                                                                                     
| | ------------------------------------------------------------------------------------
| | We may be unable to compete successfully with integrated
    and larger competitors.





| |                                                                                                          
| | ---------------------------------------------------------------------------------------------------------
| | Our industry is highly competitive and our results are
    significantly impacted by manufacturing costs.



35



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| |                                                                                          
| | -----------------------------------------------------------------------------------------
| | The loss of a long-term contract or a significant customer
    could adversely affect us.





| |                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------
| | The petrochemicals industry has experienced several years
    of depressed conditions and many of our customers are in
    troubled financial condition.





| |                                                                  
| | -----------------------------------------------------------------
| | Our technology is widely available and could become
    obsolete.



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| |                                                                                                   
| | --------------------------------------------------------------------------------------------------
| | We face risks related to our export sales of products that
    may negatively affect our business.







| |                                                                                           
| | ------------------------------------------------------------------------------------------
| | Our business activities in the Peoples Republic of
    China subject us to certain risks.





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| |                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------
| | We depend upon the continued operation of our Texas City
    facility and any significant downtime at our facility would
    affect our operations.





| |                                                                                                               
| | --------------------------------------------------------------------------------------------------------------
| | Our operations involve risks that may not be covered by
    our insurance or may increase our operating costs.





| |   |                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------
| |  | pipeline leaks and ruptures, explosions and fires;                                                  
|
| |  | severe weather and natural disasters;                                                               
|
| |  | mechanical failures, unscheduled downtimes, labor difficulties
    and transportation interruptions;
|
| |  | remediation complications;                                                                          
|
| |  | chemical spills and discharges or releases of toxic or hazardous
    substances or gases; and       
|
| |  | storage tank leaks.                                                                                 







| |                                                                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Terrorist attacks, the current military action in Iraq,
    general instability in various OPEC member nations and other
    attacks or acts of war in the United States and abroad may
    adversely affect the markets in which we operate, our operations
    and our profitability.



38



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| |                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------
| | Our property insurance does not cover acts of terrorism
    and, in the event of a terrorist attack, we could lose net sales
    and our facilities.





| |                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.





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| |                                                                        
| | -----------------------------------------------------------------------
| | Current and future legal proceedings may have unfavorable
    outcomes.





| |                                                                             
| | ----------------------------------------------------------------------------
| | Future problems with labor relations may negatively affect
    our business.





| |                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------
| | Transactions consummated pursuant to our plan of
    reorganization could result in the imposition of material tax
    liabilities.



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| |                                                                                                 
| | ------------------------------------------------------------------------------------------------
| | Our securities are thinly traded and control of our equity
    is concentrated in a few holders.







41



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|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures about Market
    Risk



|                        |        |                        |   |      |  |      |   |   |      |   |         |         |            |   |       |              |  |      |   |   |  |   |   |   |  |   |         |         |  |   |        |         | 
|----------------------- | ------ | ---------------------- | - | ---- |  | ---- | - | - | ---- | - | ------- | ------- | ---------- | - | ----- | ------------ |  | ---- | - | - |  | - | - | - |  | - | ------- | ------- |  | - | ------ | ------- | 
|                        |        |                        |   |      |  |      |   |   |      |   |         |         |            |   |       | Fair Value   | 
|                        |        |                        |   |      |  |      |   |   |      |   |         |         |            |   |       | December 31, | 
|Expected Maturity Dates |        | 2005                   |   | 2006 |  | 2007 |   |   | 2008 |   | 2009    |         | Thereafter |   | Total |              |  | 2004 |  
|                        |        |                        |   |      |  |      |   |   |      |   |         |         |            |   |       |              |  |      |  
|                        |        | (Dollars in Thousands) |  
|DEBT                    |        |                        |   |      |  |      |   |   |      |   |         |         |            |   |       |              |  |      |   |   |  |   |   |   |  |   |         |         |  |   |        |        
|Revolver                |        | $                      |  |      |  | $    |  |   |      | $ | 17,684  |         |            | $ |      |              |  | $    |  |   |  | $ |  |   |  | $ | 17,684  |         |  | $ | 17,684 |        
|Secured Notes           |        |                        |  |      |  |      |  |   |      |   | 100,579 |         |            |   |      |              |  |      |  |   |  |   |  |   |  |   | 100,579 |         |  |   | 99,699 |        
|                        |        |                        |   |      |  |      |   |   |      |   |         |         |            |   |       |              |  |      |   |   |  |   |   |  
|                        | Totals |                        | $ |     |  |      | $ |  |      |   | $       | 118,263 |            |   | $     |             |  |      | $ |  |  |   | $ |  |  |   | $       | 118,263 |  |   | $      | 117,383 | 
|                        |        |                        |   |      |  |      |   |   |      |   |         |         |            |   |       |              |  |      |   |   |  |   |   |  



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|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data

INDEX TO FINANCIAL STATEMENTS


Sterling Chemicals, Inc.


|                                                                                                                                                                                                                                                                |  |  |    | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | -- | 
|Consolidated Statements of Operations for the year ended
    December 31, 2004, the year ended December 31, 2003,
    the three months ended December 31, 2002 and the fiscal
    year ended September 30, 2002                                                 |  |  | 44 | 
|Consolidated Balance Sheets as of December 31, 2004 and 2003                                                                                                                                                                                                    |  |  | 45 | 
|Consolidated Statements of Changes in Stockholders Equity
    (Deficiency in Assets) for the year ended December 31,
    2004, the year ended December 31, 2003, the three months
    ended December 31, 2002 and the fiscal year ended
    September 30, 2002 |  |  | 46 | 
|Consolidated Statements of Cash Flows for the year ended
    December 31, 2004, the year ended December 31, 2003,
    the three months ended December 31, 2002 and the fiscal
    year ended September 30, 2002                                                 |  |  | 47 | 
|Notes to Consolidated Financial Statements                                                                                                                                                                                                                      |  |  | 48 | 
|Report of Independent Registered Public Accounting Firm                                                                                                                                                                                                         |  |  | 76 | 

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STERLING CHEMICALS, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS


|                                                                  |                   |                                           |         |           |                      |             |         |                |  |   |              |           |  |               |          |   |  |   |         |   | 
|----------------------------------------------------------------- | ----------------- | ----------------------------------------- | ------- | --------- | -------------------- | ----------- | ------- | -------------- |  | - | ------------ | --------- |  | ------------- | -------- | - |  | - | ------- | - | 
|                                                                  |                   | Reorganized Sterling                      |         |           | Predecessor Sterling |            
|                                                                  |                   |                                           |         |           |                      |            
|                                                                  |                   |                                           |         |           |                      | Fiscal Year |        
|                                                                  |                   | Year Ended                                |         |           | Year Ended           |             |         | December 20 to |  |   | October 1 to |           |  | Ended         |         
|                                                                  |                   | December 31,                              |         |           | December 31,         |             |         | December 31,   |  |   | December 19, |           |  | September 30, |         
|                                                                  |                   | 2004                                      |         |           | 2003                 |             |         | 2002           |  |   | 2002         |           |  | 2002          |         
|                                                                  |                   |                                           |         |           |                      |             |         |                |  |   |              |           |  |               |         
|                                                                  |                   | (Dollars in Thousands, Except Share Data) |        
|Revenues                                                          |                   | $                                         | 851,662 |           |                      | $           | 592,791 |                |  | $ | 12,572       |           |  | $             | 99,888   |   |  | $ | 381,801 |  
|Cost of goods sold                                                |                   |                                           | 849,094 |           |                      |             | 589,740 |                |  |   | 12,601       |           |  |               | 99,588   |   |  |   | 354,155 |  
|                                                                  |                   |                                           |         |           |                      |             |         |                |  |   |              |           |  |               |         
|Gross profit (loss)                                               |                   |                                           | 2,568   |           |                      |             | 3,051   |                |  |   | (29          | )         |  |               | 300      |   |  |   | 27,646  |  
|Selling, general and administrative expenses                      |                   |                                           | 14,673  |           |                      |             | 15,881  |                |  |   | 1,988        |           |  |               | 3,072    |   |  |   | 14,975  |  
|Impairment of long-lived assets                                   |                   |                                           | 70,498  |           |                      |             |        |                |  |   |             |           |  |               |         |   |  |   |        |  
|Gain on pension curtailment                                       |                   |                                           | (12,944 | )         |                      |             |        |                |  |   |             |           |  |               |         |   |  |   |        |  
|Gain on sale of methanol plant                                    |                   |                                           | (2,396  | )         |                      |             |        |                |  |   |             |           |  |               |         |   |  |   |        |  
|Other expense (income)                                            |                   |                                           |        |           |                      |             | (3,520  | )              |  |   |             |           |  |               | 368      |   |  |   | (1,925  | )
|Equity (income) loss from joint venture                           |                   |                                           | (3,046  | )         |                      |             | 2,068   |                |  |   |             |           |  |               |         |   |  |   |        |  
|Reorganization items                                              |                   |                                           |        |           |                      |             |        |                |  |   |             |           |  |               | 15,214   |   |  |   | 17,022  |  
|Fresh-start adjustments                                           |                   |                                           |        |           |                      |             |        |                |  |   |             |           |  |               | 203,344  |   |  |   |        |  
|Gain on debt restructuring                                        |                   |                                           |        |           |                      |             |        |                |  |   |             |           |  |               | (457,824 | ) |  |   |        |  
|Interest and debt related expenses, net of interest
    income(1) |                   |                                           | 10,427  |           |                      |             | 9,729   |                |  |   | 355          |           |  |               | 12,144   |   |  |   | 50,065  |  
|                                                                  |                   |                                           |         |           |                      |             |         |                |  |   |              |           |  |               |         
|Income (loss) from continuing operations before income tax        |                   |                                           | (74,644 | )         |                      |             | (21,107 | )              |  |   | (2,372       | )         |  |               | 223,982  |   |  |   | (52,491 | )
|Provision (benefit) for income taxes                              |                   |                                           | (12,000 | )         |                      |             | (7,884  | )              |  |   | (828         | )         |  |               | 8        |   |  |   | 125     |  
|                                                                  |                   |                                           |         |           |                      |             |         |                |  |   |              |           |  |               |         
|Income (loss) from continuing operations                          |                   |                                           | (62,644 | )         |                      |             | (13,223 | )              |  |   | (1,544       | )         |  |               | 223,974  |   |  |   | (52,616 | )
|Income (loss) from discontinued
    operations(2)                 |                   |                                           |        |           |                      |             | (976    | )              |  |   |             |           |  |               | 194,637  |   |  |   | 16,630  |  
|                                                                  |                   |                                           |         |           |                      |             |         |                |  |   |              |           |  |               |         
|Net income (loss)                                                 |                   |                                           | (62,644 | )         |                      |             | (14,199 | )              |  |   | (1,544       | )         |  |               | 418,611  |   |  |   | (35,986 | )
|Preferred stock dividends                                         |                   |                                           | 5,994   |           |                      |             | 5,125   |                |  |   | 170          |           |  |               |         |   |  |   |        |  
|                                                                  |                   |                                           |         |           |                      |             |         |                |  |   |              |           |  |               |         
|Net income (loss) attributable to common stockholders             |                   | $                                         | (68,638 | )         |                      | $           | (19,324 | )              |  | $ | (1,714       | )         |  | $             | 418,611  |   |  | $ | (35,986 | )
|                                                                  |                   |                                           |         |           |                      |             |         |                |  |   |              |           |  |               |         
|Net loss per share of common stock, basic and diluted             |                   | $                                         | (24.30  | )         |                      | $           | (6.84   | )              |  | $ | (0.61        | )         |  | $             |         |   |  | $ |        |  
|                                                                  |                   |                                           |         |           |                      |             |         |                |  |   |              |           |  |               |         
|Weighted average shares outstanding:                              |                   |                                           |         |           |                      |             |         |                |  |   |              |           |  |               |          |   |  |   |         |  
|                                                                  | Basic and diluted |                                           |         | 2,825,000 |                      |             |         | 2,825,000      |  |   |              | 2,825,000 |  |               |          |  |  |   |         |  | 






|    |                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Contractual interest for the October 1 to December 19,
    2002 period and the fiscal year ended September 30, 2002
    totaled $18,003 and $76,429, respectively.                                                                                        
|   
|(2) | Includes a net gain on disposal of $188,891 for the period
    October 1, 2002 to December 19, 2002. The tax expense
    associated with discontinued operations for the listed periods
    presented is zero, zero, zero, $342 and $14,743, respectively.



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STERLING CHEMICALS, INC. AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS


|                                       |                                                                              |                                            |         |         |         |  |         |         |         | 
|-------------------------------------- | ---------------------------------------------------------------------------- | ------------------------------------------ | ------- | ------- | ------- |  | ------- | ------- | ------- | 
|                                       |                                                                              | Reorganized Sterling                       |        
|                                       |                                                                              |                                            |        
|                                       |                                                                              | December 31,                               |        
|                                       |                                                                              |                                            |        
|                                       |                                                                              | 2004                                       |         |         | 2003    | 
|                                       |                                                                              |                                            |         |         |         | 
|                                       |                                                                              | (Dollars in Thousands)                     |        
|ASSETS                                
|Current assets:                        |                                                                              |                                            |         |         |         |  |         |        
|                                       | Cash and cash equivalents                                                    |                                            | $       | 1,901   |         |  | $       | 42,384  |        
|                                       | Accounts receivable, net of allowance of $3,092 and $6,860,
    respectively |                                            |         | 113,074 |         |  |         | 87,565  |        
|                                       | Inventories, net                                                             |                                            |         | 87,980  |         |  |         | 61,583  |        
|                                       | Prepaid expenses and other current assets                                    |                                            |         | 4,198   |         |  |         | 6,430   |        
|                                       | Deferred tax asset                                                           |                                            |         | 4,108   |         |  |         | 9,081   |        
|                                       |                                                                              |                                            |         |         |         | 
|                                       |                                                                              | Total current assets                       |         |         | 211,261 |  |         |         | 207,043 | 
|Property, plant and equipment, net     |                                                                              |                                            | 248,598 |         |         |  | 277,613 |        
|Goodwill                               |                                                                              |                                            |        |         |         |  | 48,463  |        
|Other assets, net                      |                                                                              |                                            | 13,694  |         |         |  | 17,384  |        
|                                       |                                                                              |                                            |         |         |         | 
|                                       |                                                                              | Total assets                               |         | $       | 473,553 |  |         | $       | 550,503 | 
|                                       |                                                                              |                                            |         |         |         | 
|                                      
|LIABILITIES AND STOCKHOLDERS EQUITY  
|Current liabilities:                   |                                                                              |                                            |         |         |         |  |         |        
|                                       | Accounts payable                                                             |                                            | $       | 67,260  |         |  | $       | 64,833  |        
|                                       | Accrued liabilities                                                          |                                            |         | 23,787  |         |  |         | 24,045  |        
|                                       | Current portion of long-term debt                                            |                                            |         | 17,684  |         |  |         |        |        
|                                       |                                                                              |                                            |         |         |         | 
|                                       |                                                                              | Total current liabilities                  |         |         | 108,731 |  |         |         | 88,878  | 
|Long-term debt                         |                                                                              |                                            | 100,579 |         |         |  | 100,579 |        
|Deferred income tax liability          |                                                                              |                                            | 28,407  |         |         |  | 49,909  |        
|Deferred credits and other liabilities |                                                                              |                                            | 74,464  |         |         |  | 86,407  |        
|Redeemable preferred stock             |                                                                              |                                            | 41,289  |         |         |  | 35,294  |        
|Commitments and contingencies (Note 9) |                                                                              |                                            |         |         |         |  |         |        
|Stockholders equity:                  |                                                                              |                                            |         |         |         |  |         |        
|                                       | Common stock, $.01 par value                                                 |                                            |         | 28      |         |  |         | 28      |        
|                                       | Additional paid-in capital                                                   |                                            |         | 199,408 |         |  |         | 205,402 |        
|                                       | Accumulated deficit                                                          |                                            |         | (78,387 | )       |  |         | (15,743 | )      
|                                       | Accumulated other comprehensive loss                                         |                                            |         | (966    | )       |  |         | (251    | )      
|                                       |                                                                              |                                            |         |         |         | 
|                                       |                                                                              | Total stockholders equity                 |         |         | 120,083 |  |         |         | 189,436 | 
|                                       |                                                                              |                                            |         |         |         | 
|                                       |                                                                              | Total liabilities and stockholders equity |         | $       | 473,553 |  |         | $       | 550,503 | 
|                                       |                                                                              |                                            |         |         |         | 



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##### Table of Contents



STERLING CHEMICALS, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF


CHANGES IN STOCKHOLDERS EQUITY (DEFICIENCY IN
ASSETS)


|                                                                       |                        |                        |       |   |            |   |    |             |  |       |               |   |  |          |          |   |              |   |         |         |   |   |    |   |  |   |          |   |         |  
|---------------------------------------------------------------------- | ---------------------- | ---------------------- | ----- | - | ---------- | - | -- | ----------- |  | ----- | ------------- | - |  | -------- | -------- | - | ------------ | - | ------- | ------- | - | - | -- | - |  | - | -------- | - | ------- | -
|                                                                       |                        |                        |       |   |            |   |    | Accumulated |  |       |               |   | 
|                                                                       |                        | Common Stock           |       |   | Additional |   |    |             |  | Other |               |   |  |          |         
|                                                                       |                        |                        |       |   | Paid-In    |   |    | Accumulated |  |       | Comprehensive |   |  | Deferred |          |   |             
|                                                                       |                        | Shares                 |       |   | Amount     |   |    | Capital     |  |       | Deficit       |   |  | Loss     |          |   | Compensation |   |         | Total   |  
|                                                                       |                        |                        |       |   |            |   |    |             |  |       |               |   |  |          |          |   |              |   |         |         |  
|                                                                       |                        | (Amounts in Thousands) |      
|Predecessor Sterling:                                                  |                        |                        |       |   |            |   |    |             |  |       |               |   |  |          |          |   |              |   |         |         |   |   |    |   |  |   |          |  
|                                                                       |                        |                        |       |   |            |   |    |             |  |       |               |   |  |          |          |   |              |   |         |         |  
|Balance, September 30, 2001                                            |                        |                        | 1     |   |            | $ |   |             |  | $     | (141,786      | ) |  | $        | (383,740 | ) |              | $ | (38,053 | )       |   | $ | (3 | ) |  | $ | (563,582 | )
|Comprehensive loss:                                                    |                        |                        |       |   |            |   |    |             |  |       |               |   |  |          |          |   |              |   |         |         |   |   |    |   |  |   |          |  
|Net loss                                                               |                        |                        |      |   |            |   |   |             |  |       |              |   |  |          | (35,986  | ) |              |   |        |         |   |   |   |   |  |   |          |  
|Other comprehensive loss:                                              |                        |                        |       |   |            |   |    |             |  |       |               |   |  |          |          |   |              |   |         |         |   |   |    |   |  |   |          |  
|                                                                       | Translation adjustment |                        |       |  |            |   |    |            |  |       |               |  |  |          |          |  |              |   |         | (516    | ) |   |    |  |  |   |          |   |        
|                                                                       | Pension adjustment     |                        |       |  |            |   |    |            |  |       |               |  |  |          |          |  |              |   |         | (11,685 | ) |   |    |  |  |   |          |   |        
|                                                                       |                        | Comprehensive loss     |       |   |            |   |    |             |  |       |               |   |  |          |          |   |              |   |         |         |   |   |    |   |  |   |          |   | (48,187 | )
|Revaluation of ESOP shares to independently appraised market
    value |                        |                        |      |   |            |   |   |             |  |       |              |   |  |          | 289      |   |              |   |        |         |   |   |   |   |  |   | 289      |  
|Amortization of deferred compensation                                  |                        |                        |      |   |            |   |   |             |  |       |              |   |  |          |         |   |              |   |        |         |   |   | 3  |   |  |   | 3        |  
|                                                                       |                        |                        |       |   |            |   |    |             |  |       |               |   |  |          |          |   |              |   |         |         |  
|Balance, September 30, 2002                                            |                        |                        | 1     |   |            |   |   |             |  |       | (141,786      | ) |  |          | (419,437 | ) |              |   | (50,254 | )       |   |   |   |   |  |   | (611,477 | )
|Net income                                                             |                        |                        |      |   |            |   |   |             |  |       |              |   |  |          | 418,611  |   |              |   |        |         |   |   |   |   |  |   | 418,611  |  
|Fresh-start adjustments                                                |                        |                        | 2,824 |   |            |   | 28 |             |  |       | 352,483       |   |  |          | 826      |   |              |   | 50,254  |         |   |   |   |   |  |   | 403,591  |  
|                                                                       |                        |                        |       |   |            |   |    |             |  |       |               |   |  |          |          |   |              |   |         |         |  
|Reorganized Sterling:                                                  |                        |                        |       |   |            |   |    |             |  |       |               |   |  |          |          |   |              |   |         |         |   |   |    |   |  |   |          |  
|                                                                       |                        |                        |       |   |            |   |    |             |  |       |               |   |  |          |          |   |              |   |         |         |  
|Balance, December 19, 2002                                             |                        |                        | 2,825 |   |            |   | 28 |             |  |       | 210,697       |   |  |          |         |   |              |   |        |         |   |   |   |   |  |   | 210,725  |  
|Net loss                                                               |                        |                        |      |   |            |   |   |             |  |       |              |   |  |          | (1,544   | ) |              |   |        |         |   |   |   |   |  |   | (1,544   | )
|Preferred stock dividends                                              |                        |                        |      |   |            |   |   |             |  |       | (170          | ) |  |          |         |   |              |   |        |         |   |   |   |   |  |   | (170     | )
|                                                                       |                        |                        |       |   |            |   |    |             |  |       |               |   |  |          |          |   |              |   |         |         |  
|Balance, December 31, 2002                                             |                        |                        | 2,825 |   |            |   | 28 |             |  |       | 210,527       |   |  |          | (1,544   | ) |              |   |        |         |   |   |   |   |  |   | 209,011  |  
|Comprehensive loss:                                                    |                        |                        |       |   |            |   |    |             |  |       |               |   |  |          |          |   |              |   |         |         |   |   |    |   |  |   |          |  
|Net loss                                                               |                        |                        |      |   |            |   |   |             |  |       |              |   |  |          | (14,199  | ) |              |   |        |         |   |   |   |   |  |   |          |  
|Other comprehensive loss:                                              |                        |                        |       |   |            |   |    |             |  |       |               |   |  |          |          |   |              |   |         |         |   |   |    |   |  |   |          |  
|                                                                       | Pension adjustment     |                        |       |  |            |   |    |            |  |       |               |  |  |          |          |  |              |   |         | (251    | ) |   |    |  |  |   |          |   |        
|                                                                       |                        | Comprehensive loss     |       |   |            |   |    |             |  |       |               |   |  |          |          |   |              |   |         |         |   |   |    |   |  |   |          |   | (14,450 | )
|Preferred stock dividends                                              |                        |                        |      |   |            |   |   |             |  |       | (5,125        | ) |  |          |         |   |              |   |        |         |   |   |   |   |  |   | (5,125   | )
|                                                                       |                        |                        |       |   |            |   |    |             |  |       |               |   |  |          |          |   |              |   |         |         |  
|Balance, December 31, 2003                                             |                        |                        | 2,825 |   |            | $ | 28 |             |  | $     | 205,402       |   |  | $        | (15,743  | ) |              | $ | (251    | )       |   | $ |   |   |  | $ | 189,436  |  
|Comprehensive loss:                                                    |                        |                        |       |   |            |   |    |             |  |       |               |   |  |          |          |   |              |   |         |         |   |   |    |   |  |   |          |  
|Net loss                                                               |                        |                        |      |   |            |   |   |             |  |       |              |   |  |          | (62,644  | ) |              |   |        |         |   |   |   |   |  |   |          |  
|Other comprehensive loss:                                              |                        |                        |       |   |            |   |    |             |  |       |               |   |  |          |          |   |              |   |         |         |   |   |    |   |  |   |          |  
|                                                                       | Pension adjustment     |                        |       |  |            |   |    |            |  |       |               |  |  |          |          |  |              |   |         | (715    | ) |   |    |  |  |   |          |   |        
|                                                                       |                        | Comprehensive loss     |       |   |            |   |    |             |  |       |               |   |  |          |          |   |              |   |         |         |   |   |    |   |  |   |          |   | (63,359 | )
|Preferred stock dividends                                              |                        |                        |      |   |            |   |   |             |  |       | (5,994        | ) |  |          |         |   |              |   |        |         |   |   |   |   |  |   | (5,994   | )
|                                                                       |                        |                        |       |   |            |   |    |             |  |       |               |   |  |          |          |   |              |   |         |         |  
|Balance, December 31, 2004                                             |                        |                        | 2,825 |   |            | $ | 28 |             |  | $     | 199,408       |   |  | $        | (78,387  | ) |              | $ | (966    | )       |   | $ |   |   |  | $ | 120,083  |  
|                                                                       |                        |                        |       |   |            |   |    |             |  |       |               |   |  |          |          |   |              |   |         |         |  



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##### Table of Contents



STERLING CHEMICALS, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                                                                       |                                                           |                        |         |                      |              |   |             |                |   |   |              |        |   |               |          |          |   |   |         |         |  
|------------------------------------------------------------------------------------------------------ | --------------------------------------------------------- | ---------------------- | ------- | -------------------- | ------------ | - | ----------- | -------------- | - | - | ------------ | ------ | - | ------------- | -------- | -------- | - | - | ------- | ------- | -
|                                                                                                       |                                                           |                        |         | Predecessor Sterling |             
|                                                                                                       |                                                           | Reorganized Sterling   |         |                      |              |  
|                                                                                                       |                                                           |                        |         |                      |              |   | Fiscal Year |               
|                                                                                                       |                                                           | Year Ended             |         |                      | Year Ended   |   |             | December 20 to |   |   | October 1 to |        |   | Ended         |         
|                                                                                                       |                                                           | December 31,           |         |                      | December 31, |   |             | December 31,   |   |   | December 19, |        |   | September 30, |         
|                                                                                                       |                                                           | 2004                   |         |                      | 2003         |   |             | 2002           |   |   | 2002         |        |   | 2002          |         
|                                                                                                       |                                                           |                        |         |                      |              |   |             |                |   |   |              |        |   |               |         
|                                                                                                       |                                                           | (Dollars in Thousands) |        
|Cash flows from operating activities:                                                                  |                                                           |                        |         |                      |              |   |             |                |   |   |              |        |   |               |          |          |   |   |         |        
|Net income (loss) from continuing operations                                                           |                                                           | $                      | (62,644 | )                    |              | $ | (13,223     | )              |   | $ | (1,544       | )      |   | $             | 223,974  |          |   | $ | (52,616 | )      
|Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities: |                                                           |                        |         |                      |              |   |             |                |   |   |              |        |   |               |          |          |   |   |         |        
|                                                                                                       | Depreciation and amortization                             |                        |         | 28,693               |              |   |             | 27,656         |   |   |              | 858    |   |               |          | 4,857    |   |   |         | 22,912  |  
|                                                                                                       | Interest amortization                                     |                        |         | 398                  |              |   |             | 383            |   |   |              | 12     |   |               |          | 887      |   |   |         | 4,805   |  
|                                                                                                       | Impairment of long-lived assets                           |                        |         | 70,498               |              |   |             |               |   |   |              |       |   |               |          |         |   |   |         |        |  
|                                                                                                       | Gain on pension curtailment                               |                        |         | (12,944              | )            |   |             |               |   |   |              |       |   |               |          |         |   |   |         |        |  
|                                                                                                       | Lower-of-cost-or-market adjustment                        |                        |         | 16,407               |              |   |             |               |   |   |              |       |   |               |          |         |   |   |         |        |  
|                                                                                                       | Gain on sale of methanol plant                            |                        |         | (2,396               | )            |   |             |               |   |   |              |       |   |               |          |         |   |   |         |        |  
|                                                                                                       | Fresh-start adjustments                                   |                        |         |                     |              |   |             |               |   |   |              |       |   |               |          | 203,344  |   |   |         |        |  
|                                                                                                       | Gain on cancellation of debt                              |                        |         |                     |              |   |             |               |   |   |              |       |   |               |          | (457,824 | ) |   |         |        |  
|                                                                                                       | Deferred tax benefit                                      |                        |         | (16,529              | )            |   |             | (7,986         | ) |   |              | (854   | ) |               |          |         |   |   |         |        |  
|                                                                                                       | Other                                                     |                        |         | 1                    |              |   |             | (252           | ) |   |              |       |   |               |          | (594     | ) |   |         | 9,432   |  
|Change in assets/liabilities:                                                                          |                                                           |                        |         |                      |              |   |             |                |   |   |              |        |   |               |          |          |   |   |         |        
|                                                                                                       | Accounts receivable                                       |                        |         | (25,509              | )            |   |             | (45,750        | ) |   |              | 12,075 |   |               |          | 18,382   |   |   |         | (11,552 | )
|                                                                                                       | Inventories                                               |                        |         | (42,804              | )            |   |             | (30,572        | ) |   |              | (3,940 | ) |               |          | 5,856    |   |   |         | (5,937  | )
|                                                                                                       | Prepaid expenses                                          |                        |         | 2,232                |              |   |             | (1,869         | ) |   |              | 789    |   |               |          | (1,592   | ) |   |         | (1,093  | )
|                                                                                                       | Other assets                                              |                        |         | (3,650               | )            |   |             | 2,127          |   |   |              | 11     |   |               |          | (208     | ) |   |         | (6,228  | )
|                                                                                                       | Accounts payable                                          |                        |         | 2,427                |              |   |             | 31,688         |   |   |              | 2,298  |   |               |          | (1,299   | ) |   |         | 18,197  |  
|                                                                                                       | Accrued liabilities                                       |                        |         | (1,879               | )            |   |             | 3,714          |   |   |              | 2,268  |   |               |          | (7,100   | ) |   |         | 3,472   |  
|                                                                                                       | Other liabilities                                         |                        |         | 286                  |              |   |             | (6,725         | ) |   |              | (1,866 | ) |               |          | 4,447    |   |   |         | 18,761  |  
|                                                                                                       |                                                           |                        |         |                      |              |   |             |                |   |   |              |        |   |               |         
|Net cash provided by (used in) operating activities                                                    |                                                           |                        | (47,413 | )                    |              |   | (40,809     | )              |   |   | 10,107       |        |   |               | (6,870   | )        |   |   | 153     |        
|                                                                                                       |                                                           |                        |         |                      |              |   |             |                |   |   |              |        |   |               |         
|Cash flows from investing activities:                                                                  |                                                           |                        |         |                      |              |   |             |                |   |   |              |        |   |               |          |          |   |   |         |        
|                                                                                                       | Capital expenditures                                      |                        |         | (14,771              | )            |   |             | (15,649        | ) |   |              | (116   | ) |               |          | (837     | ) |   |         | (6,700  | )
|                                                                                                       | Net proceeds from the sale of methanol fixed assets       |                        |         | 4,017                |              |   |             |               |   |   |              |       |   |               |          |         |   |   |         |        |  
|                                                                                                       | Net proceeds from the sale of the pulp chemicals business |                        |         |                     |              |   |             |               |   |   |              |       |   |               |          | 357,641  |   |   |         |        |  
|                                                                                                       |                                                           |                        |         |                      |              |   |             |                |   |   |              |        |   |               |         
|Net cash provided by (used in) investing activities                                                    |                                                           |                        | (10,754 | )                    |              |   | (15,649     | )              |   |   | (116         | )      |   |               | 356,804  |          |   |   | (6,700  | )      
|Cash flows from financing activities:                                                                  |                                                           |                        |         |                      |              |   |             |                |   |   |              |        |   |               |          |          |   |   |         |        
|                                                                                                       | Net borrowings under the Revolver                         |                        |         | 17,684               |              |   |             |               |   |   |              |       |   |               |          |         |   |   |         |        |  
|                                                                                                       | Proceeds from issuance of Secured Notes                   |                        |         |                     |              |   |             |               |   |   |              |       |   |               |          | 94,275   |   |   |         |        |  
|                                                                                                       | Proceeds from issuance of new common stock                |                        |         |                     |              |   |             |               |   |   |              |       |   |               |          | 30,000   |   |   |         |        |  
|                                                                                                       | Proceeds from issuance of new preferred stock             |                        |         |                     |              |   |             |               |   |   |              |       |   |               |          | 30,000   |   |   |         |        |  
|                                                                                                       | Net borrowings under DIP Facility                         |                        |         |                     |              |   |             |               |   |   |              |       |   |               |          | (42,200  | ) |   |         | 14,972  |  
|                                                                                                       | Repayment of the
    133/8% Notes                         |                        |         |                     |              |   |             |               |   |   |              |       |   |               |          | (371,916 | ) |   |         |        |  
|                                                                                                       |                                                           |                        |         |                      |              |   |             |                |   |   |              |        |   |               |         
|Net cash provided by (used in) financing activities                                                    |                                                           |                        | 17,684  |                      |              |   |            |                |   |   |             |        |   |               | (259,841 | )        |   |   | 14,972  |        
|                                                                                                       |                                                           |                        |         |                      |              |   |             |                |   |   |              |        |   |               |         
|Net increase (decrease) in cash from continuing operations                                             |                                                           |                        | (40,483 | )                    |              |   | (56,458     | )              |   |   | 9,991        |        |   |               | 90,093   |          |   |   | 8,425   |        
|Net increase (decrease) in cash from discontinued operations                                           |                                                           |                        |        |                      |              |   | (976        | )              |   |   |             |        |   |               | (10,109  | )        |   |   | 196     |        
|Cash and cash equivalents beginning of period                                                          |                                                           |                        | 42,384  |                      |              |   | 99,818      |                |   |   | 89,827       |        |   |               | 9,843    |          |   |   | 1,222   |        
|                                                                                                       |                                                           |                        |         |                      |              |   |             |                |   |   |              |        |   |               |         
|Cash and cash equivalents end of year                                                                  |                                                           | $                      | 1,901   |                      |              | $ | 42,384      |                |   | $ | 99,818       |        |   | $             | 89,827   |          |   | $ | 9,843   |        
|                                                                                                       |                                                           |                        |         |                      |              |   |             |                |   |   |              |        |   |               |         
|Supplement disclosures of cash flow information:                                                       |                                                           |                        |         |                      |              |   |             |                |   |   |              |        |   |               |          |          |   |   |         |        
|                                                                                                       | Interest paid, net of interest income received            |                        | $       | (10,957              | )            |   | $           | (3,575         | ) |   | $            |       |   |               | $        | (934     | ) |   | $       | (5,200  | )
|                                                                                                       | Cash paid for reorganization items                        |                        |         |                     |              |   |             | (13,115        | ) |   |              | (1,140 | ) |               |          | (931     | ) |   |         | (11,729 | )
|                                                                                                       | Cash paid for income taxes                                |                        |         | (50                  | )            |   |             | (175           | ) |   |              |       |   |               |          | (64      | ) |   |         | (110    | )



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STERLING CHEMICALS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|   |                                                                         
|-- | ------------------------------------------------------------------------
|1. | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
    POLICIES





| |            
| | -----------
| | Fiscal Year





| |   |                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------
| |  | 2004 and fiscal 2004 refer to the
    12-month period ended December 31, 2004;                          
|
| |  | 2003 and fiscal 2003 refer to the
    12-month period ended December 31, 2003;                          
|
| |  | fiscal 2002 refers to the 12-month period ended
    September 30, 2002; and                               
|
| |  | the Transition Period refers to the three-month
    period from October 1, 2002 through December 31, 2002.



| |                          
| | -------------------------
| | Bankruptcy Reorganization





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##### Table of Contents



STERLING CHEMICALS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)








| |                            
| | ---------------------------
| | Principles of Consolidation





| |                          
| | -------------------------
| | Cash and Cash Equivalents





| |                                
| | -------------------------------
| | Allowance for Doubtful Accounts





| |            
| | -----------
| | Inventories





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STERLING CHEMICALS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




| |                              
| | -----------------------------
| | Property, Plant and Equipment





| |                       
| | ----------------------
| | Plant Turnaround Costs





| |                  
| | -----------------
| | Long-Lived Assets





| |         
| | --------
| | Goodwill



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STERLING CHEMICALS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




| |                 
| | ----------------
| | Debt Issue Costs





| |             
| | ------------
| | Income Taxes





| |                    
| | -------------------
| | Environmental Costs





| |                    
| | -------------------
| | Revenue Recognition





| |                          
| | -------------------------
| | Earnings (Loss) Per Share



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STERLING CHEMICALS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




| |                                               
| | ----------------------------------------------
| | Accumulated Other Comprehensive Income (Loss):

|                            |  |                        |         |   |                    |   |         |       |  |   |         |  
|--------------------------- |  | ---------------------- | ------- | - | ------------------ | - | ------- | ----- |  | - | ------- | -
|                            |  | Cumulative             |         |   |                    |   |        
|                            |  | Translation            |         |   |                    |   |        
|                            |  | Adjustment             |         |   | Pension Adjustment |   |         | Total | 
|                            |  |                        |         |   |                    |   |         |       | 
|                            |  | (Dollars in Thousands) |        
|Predecessor Sterling:       |  |                        |         |   |                    |   |         |       |  |   |         |  
|                            |  |                        |         |   |                    |   |         |       | 
|Balance, September 30, 2002 |  |                        | (35,171 | ) |                    |   | (15,083 | )     |  |   | (50,254 | )
|Fresh-start adjustments     |  |                        | 35,171  |   |                    |   | 15,083  |       |  |   | 50,254  |  
|                            |  |                        |         |   |                    |   |         |       | 
|Reorganized Sterling:       |  |                        |         |   |                    |   |         |       |  |   |         |  
|                            |  |                        |         |   |                    |   |         |       | 
|Balance, December 19, 2002  |  |                        |        |   |                    |   |        |       |  |   |        |  
|Changes                     |  |                        |        |   |                    |   |        |       |  |   |        |  
|Balance, December 31, 2002  |  |                        |        |   |                    |   |        |       |  |   |        |  
|Changes                     |  |                        |        |   |                    |   | (251    | )     |  |   | (251    | )
|                            |  |                        |         |   |                    |   |         |       | 
|Balance, December 31, 2003  |  |                        |        |   |                    |   | (251    | )     |  |   | (251    | )
|Changes                     |  |                        |        |   |                    |   | (715    | )     |  |   | (715    | )
|                            |  |                        |         |   |                    |   |         |       | 
|Balance, December 31, 2004  |  | $                      |        |   |                    | $ | (966    | )     |  | $ | (966    | )
|                            |  |                        |         |   |                    |   |         |       | 



| |                                                          
| | ---------------------------------------------------------
| | Disclosures about Fair Value of Financial
    Instruments





| |                     
| | --------------------
| | Accounting Estimates





| |                  
| | -----------------
| | Reclassifications





|   |                              
|-- | -----------------------------
|2. | STOCK-BASED COMPENSATION PLAN



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STERLING CHEMICALS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)








|                                                               |  |      |       |   |      |   |       |  
|-------------------------------------------------------------- |  | ---- | ----- | - | ---- | - | ----- | -
|                                                               |  | 2004 |       |   | 2003 |  
|                                                               |  |      |       |   |      |  
|Expected life (years)                                          |  |      | 10.0  |   |      |   | 10.0  |  
|Expected volatility                                            |  |      | 42.0  | % |      |   | 42.0  | %
|Expected dividend yield                                        |  |      |      |   |      |   |      |  
|Risk-free interest rate                                        |  |      | 3.85  | % |      |   | 3.85  | %
|Weighted-average fair value of options granted during the year |  | $    | 12.95 |   |      | $ | 18.58 |  



|                                                                                                                                                    |  |                        |         |   |      |   |         |  
|--------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | -
|                                                                                                                                                    |  | Reorganized Sterling   |        
|                                                                                                                                                    |  | For the Year Ended     |        
|                                                                                                                                                    |  | December 31,           |        
|                                                                                                                                                    |  |                        |        
|                                                                                                                                                    |  | 2004                   |         |   | 2003 |  
|                                                                                                                                                    |  |                        |         |   |      |  
|                                                                                                                                                    |  | (Dollars in Thousands, |        
|                                                                                                                                                    |  | Except Share Data)     |        
|Net loss attributable to common stockholders, as reported                                                                                           |  | $                      | (68,638 | ) |      | $ | (19,324 | )
|Add: Stock-based employee compensation expense included in
    reported net loss, net of related tax effects                                        |  |                        |        |   |      |   |        |  
|Deduct: Total stock-based employee compensation expense
    determined under fair value based method for all awards, net of
    related tax effects |  |                        | 1,147   |   |      |   | 1,944   |  
|                                                                                                                                                    |  |                        |         |   |      |  
|Pro forma net loss                                                                                                                                  |  | $                      | (69,785 | ) |      | $ | (21,268 | )
|                                                                                                                                                    |  |                        |         |   |      |  
|Loss per share attributable to common stockholders:                                                                                                 |  |                        |         |   |      |   |         |  
|As reported                                                                                                                                         |  | $                      | (24.30  | ) |      | $ | (6.84   | )
|Pro forma                                                                                                                                           |  |                        | (24.70  | ) |      |   | (7.53   | )



|   |                       
|-- | ----------------------
|3. | FRESH-START ACCOUNTING



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STERLING CHEMICALS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




|                           |  |   |         | 
|-------------------------- |  | - | ------- | 
|Long-term debt             |  | $ | 94,275  | 
|Redeemable preferred stock |  |   | 30,000  | 
|Stockholders equity       |  |   | 210,725 | 
|                           |  |   |        
|Total                      |  | $ | 335,000 | 
|                           |  |   |        



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STERLING CHEMICALS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


|                                                                      |  |                        |          |   |              |   |          |                |  |   |             |   |  |              |          |   |  |   |         | 
|--------------------------------------------------------------------- |  | ---------------------- | -------- | - | ------------ | - | -------- | -------------- |  | - | ----------- | - |  | ------------ | -------- | - |  | - | ------- | 
|                                                                      |  | Predecessor            |          |   |              |   |          |                |  |   | Reorganized |  
|                                                                      |  | Sterling               |          |   |              |   |          |                |  |   | Sterling    |  
|                                                                      |  | December 19,           |          |   | Discontinued |   |          | Reorganization |  |   | Fresh-Start |   |  | December 19, |         
|                                                                      |  | 2002                   |          |   | Operations   |   |          | Adjustments    |  |   | Adjustments |   |  | 2002         |         
|                                                                      |  |                        |          |   |              |   |          |                |  |   |             |   |  |              |         
|                                                                      |  | (Dollars in Thousands) |         
|ASSETS                                                                |  |                        |          |   |              |   |          |                |  |   |             |   |  |              |          |   |  |   |         | 
|Current assets:                                                       |  |                        |          |   |              |   |          |                |  |   |             |   |  |              |          |   |  |   |         | 
|Cash and cash equivalents                                             |  | $                      | 5,839    |   |              | $ | 358,108  |                |  | $ | (274,120    | ) |  | $            |         |   |  | $ | 89,827  | 
|Accounts receivable, net                                              |  |                        | 87,435   |   |              |   | (35,771  | )              |  |   | 2,226       |   |  |              |         |   |  |   | 53,890  | 
|Inventories                                                           |  |                        | 44,832   |   |              |   | (17,852  | )              |  |   | 91          |   |  |              |         |   |  |   | 27,071  | 
|Prepaid expenses                                                      |  |                        | 6,658    |   |              |   | (1,388   | )              |  |   |            |   |  |              | 80       |   |  |   | 5,350   | 
|Deferred tax asset                                                    |  |                        |         |   |              |   |         |                |  |   |            |   |  |              | 11,134   |   |  |   | 11,134  | 
|                                                                      |  |                        |          |   |              |   |          |                |  |   |             |   |  |              |         
|Total current assets                                                  |  |                        | 144,764  |   |              |   | 303,097  |                |  |   | (271,803    | ) |  |              | 11,214   |   |  |   | 187,272 | 
|Property, plant and equipment, net                                    |  |                        | 253,875  |   |              |   | (139,940 | )              |  |   |            |   |  |              | 173,257  |   |  |   | 287,192 | 
|Goodwill                                                              |  |                        |         |   |              |   |         |                |  |   |            |   |  |              | 48,463   |   |  |   | 48,463  | 
|Other assets                                                          |  |                        | 45,212   |   |              |   | (6,039   | )              |  |   | (3,027      | ) |  |              | (13,059  | ) |  |   | 23,087  | 
|                                                                      |  |                        |          |   |              |   |          |                |  |   |             |   |  |              |         
|Total assets                                                          |  | $                      | 443,851  |   |              | $ | 157,118  |                |  | $ | (274,830    | ) |  | $            | 219,875  |   |  | $ | 546,014 | 
|                                                                      |  |                        |          |   |              |   |          |                |  |   |             |   |  |              |         
|LIABILITIES AND STOCKHOLDERS EQUITY                                  |  |                        |          |   |              |   |          |                |  |   |             |   |  |              |          |   |  |   |         | 
|Current liabilities:                                                  |  |                        |          |   |              |   |          |                |  |   |             |   |  |              |          |   |  |   |         | 
|Accounts payable                                                      |  | $                      | 45,976   |   |              | $ | (16,684  | )              |  | $ | 343         |   |  | $            | 1,212    |   |  | $ | 30,847  | 
|Accrued liabilities                                                   |  |                        | 31,860   |   |              |   | (7,240   | )              |  |   | 791         |   |  |              | (1,044   | ) |  |   | 24,367  | 
|Current portion of long-term debt                                     |  |                        | 52,327   |   |              |   | (10,127  | )              |  |   | (42,200     | ) |  |              |         |   |  |   |        | 
|                                                                      |  |                        |          |   |              |   |          |                |  |   |             |   |  |              |         
|Total current liabilities                                             |  |                        | 130,163  |   |              |   | (34,051  | )              |  |   | (41,066     | ) |  |              | 168      |   |  |   | 55,214  | 
|Pre-petition liabilities subject to compromise                        |  |                        | 512,760  |   |              |   | (2,159   | )              |  |   | (510,601    | ) |  |              |         |   |  |   |        | 
|Pre-petition liabilities not subject to compromise                    |  |                        | 372,326  |   |              |   |         |                |  |   | (372,326    | ) |  |              |         |   |  |   |        | 
|Long-term debt                                                        |  |                        |         |   |              |   |         |                |  |   | 94,275      |   |  |              |         |   |  |   | 94,275  | 
|Deferred tax liability                                                |  |                        | 13,835   |   |              |   | (13,835  | )              |  |   |            |   |  |              | 60,802   |   |  |   | 60,802  | 
|Deferred credits and other liabilities                                |  |                        | 39,189   |   |              |   | (15,011  | )              |  |   | 45,970      |   |  |              | 24,850   |   |  |   | 94,998  | 
|Commitments and contingencies                                         |  |                        |          |   |              |   |          |                |  |   |             |   |  |              |          |   |  |   |         | 
|Redeemable preferred stock                                            |  |                        |         |   |              |   |         |                |  |   | 30,000      |   |  |              |         |   |  |   | 30,000  | 
|Stockholders equity (deficiency in assets):                          |  |                        |          |   |              |   |          |                |  |   |             |   |  |              |          |   |  |   |         | 
|Common stock, $.01 par value                                          |  |                        |         |   |              |   |         |                |  |   |            |   |  |              | 28       |   |  |   | 28      | 
|Additional paid-in capital                                            |  |                        | (141,786 | ) |              |   |         |                |  |   | 30,000      |   |  |              | 322,483  |   |  |   | 210,697 | 
|Retained earnings (accumulated deficit)                               |  |                        | (434,465 | ) |              |   | 188,891  |                |  |   | 448,918     |   |  |              | (203,344 | ) |  |   |        | 
|Accumulated other comprehensive income                                |  |                        | (48,171  | ) |              |   | 33,283   |                |  |   |            |   |  |              | 14,888   |   |  |   |        | 
|                                                                      |  |                        |          |   |              |   |          |                |  |   |             |   |  |              |         
|Total stockholders equity (deficiency in assets)                     |  |                        | (624,422 | ) |              |   | 222,174  |                |  |   | 478,918     |   |  |              | 134,055  |   |  |   | 210,725 | 
|                                                                      |  |                        |          |   |              |   |          |                |  |   |             |   |  |              |         
|Total liabilities and stockholders equity (deficiency in
    assets) |  | $                      | 443,851  |   |              | $ | 157,118  |                |  | $ | (274,830    | ) |  | $            | 219,875  |   |  | $ | 546,014 | 
|                                                                      |  |                        |          |   |              |   |          |                |  |   |             |   |  |              |         



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STERLING CHEMICALS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


4.     DISCONTINUED OPERATIONS




|                   |                         |                        |   |         |                    |  |   |         |         |  
|------------------ | ----------------------- | ---------------------- | - | ------- | ------------------ |  | - | ------- | ------- | -
|                   |                         | Predecessor Sterling   |  
|                   |                         |                        |  
|                   |                         | October 1 to           |   |         | Fiscal Year Ended  | 
|                   |                         | December 19, 2002      |   |         | September 30, 2002 | 
|                   |                         |                        |   |         |                    | 
|                   |                         | (Dollars in Thousands) |  
|Revenues:          |                         |                        |   |         |                    |  |   |        
|                   | Pulp chemicals business |                        | $ | 50,282  |                    |  | $ | 227,962 |        
|                   | Acrylic fibers business |                        |   | 4,075   |                    |  |   | 18,964  |        
|                   |                         |                        |   |         |                    | 
|                   |                         | Total                  |   | $       | 54,357             |  |   | $       | 246,926 |  
|                   |                         |                        |   |         |                    | 
|Net income (loss): |                         |                        |   |         |                    |  |   |        
|                   | Pulp chemicals business |                        | $ | 201,404 |                    |  | $ | 25,652  |        
|                   | Acrylic fibers business |                        |   | (6,767  | )                  |  |   | (9,022  | )      
|                   |                         |                        |   |         |                    | 
|                   |                         | Total                  |   | $       | 194,637            |  |   | $       | (16,630 | )
|                   |                         |                        |   |         |                    | 

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STERLING CHEMICALS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


5.     DETAIL OF CERTAIN BALANCE
SHEET ACCOUNTS


|                                        |                                                                                          |                        |         |         |      |   |         |         |  
|--------------------------------------- | ---------------------------------------------------------------------------------------- | ---------------------- | ------- | ------- | ---- | - | ------- | ------- | -
|                                        |                                                                                          | Reorganized Sterling   |        
|                                        |                                                                                          | December 31,           |        
|                                        |                                                                                          |                        |        
|                                        |                                                                                          | 2004                   |         |         | 2003 |  
|                                        |                                                                                          |                        |         |         |      |  
|                                        |                                                                                          | (Dollars in Thousands) |        
|Inventories:                            |                                                                                          |                        |         |         |      |   |         |        
|                                        | Finished products                                                                        |                        | $       | 63,841  |      |   | $       | 37,944  |  
|                                        | Raw materials                                                                            |                        |         | 18,682  |      |   |         | 16,480  |  
|                                        |                                                                                          |                        |         |         |      |  
|Inventories at cost                     |                                                                                          |                        | 82,523  |         |      |   | 54,424  |        
|                                        | Inventories under exchange agreements                                                    |                        |         | 330     |      |   |         | 1,325   |  
|                                        | Stores and supplies (net of obsolescence reserve of $1,938 and
    $1,370, respectively) |                        |         | 5,127   |      |   |         | 5,834   |  
|                                        |                                                                                          |                        |         |         |      |  
|                                        |                                                                                          | $                      | 87,980  |         |      | $ | 61,583  |        
|                                        |                                                                                          |                        |         |         |      |  
|Property, plant and equipment, net:     |                                                                                          |                        |         |         |      |   |         |        
|                                        | Land                                                                                     |                        | $       | 7,149   |      |   | $       | 7,149   |  
|                                        | Buildings                                                                                |                        |         | 4,497   |      |   |         | 3,543   |  
|                                        | Plant and equipment                                                                      |                        |         | 292,567 |      |   |         | 282,648 |  
|                                        | Construction in progress                                                                 |                        |         | 14,915  |      |   |         | 10,097  |  
|                                        | Less: accumulated depreciation                                                           |                        |         | (70,530 | )    |   |         | (25,824 | )
|                                        |                                                                                          |                        |         |         |      |  
|                                        |                                                                                          | $                      | 248,598 |         |      | $ | 277,613 |        
|                                        |                                                                                          |                        |         |         |      |  
|Accrued liabilities:                    |                                                                                          |                        |         |         |      |   |         |        
|                                        | Employee compensation and benefits                                                       |                        | $       | 11,135  |      |   | $       | 20,643  |  
|                                        | Property taxes                                                                           |                        |         | 5,694   |      |   |         |        |  
|                                        | Other                                                                                    |                        |         | 6,958   |      |   |         | 3,402   |  
|                                        |                                                                                          |                        |         |         |      |  
|                                        |                                                                                          | $                      | 23,787  |         |      | $ | 24,045  |        
|                                        |                                                                                          |                        |         |         |      |  
|Deferred credits and other liabilities: |                                                                                          |                        |         |         |      |   |         |        
|                                        | Accrued postretirement, pension and post employment benefits                             |                        | $       | 68,298  |      |   | $       | 82,433  |  
|                                        | Other                                                                                    |                        |         | 6,166   |      |   |         | 3,974   |  
|                                        |                                                                                          |                        |         |         |      |  
|                                        |                                                                                          | $                      | 74,464  |         |      | $ | 86,407  |        
|                                        |                                                                                          |                        |         |         |      |  



|   |               
|-- | --------------
|6. | LONG-TERM DEBT

3 8


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STERLING CHEMICALS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


3 8










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STERLING CHEMICALS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)






| |                
| | ---------------
| | Debt Maturities





|   |             
|-- | ------------
|7. | INCOME TAXES



|                                                        |  |                        |         |                |                      |   |              |              |  |       |              |   |  |               |          |   |  |   |         |  
|------------------------------------------------------- |  | ---------------------- | ------- | -------------- | -------------------- | - | ------------ | ------------ |  | ----- | ------------ | - |  | ------------- | -------- | - |  | - | ------- | -
|                                                        |  | Reorganized Sterling   |         |                | Predecessor Sterling |  
|                                                        |  |                        |         |                |                      |  
|                                                        |  |                        |         |                |                      |   |              | Fiscal Year  | 
|                                                        |  |                        |         | December 20 to |                      |   | October 1 to |              |  | Ended |             
|                                                        |  | December 31,           |         |                | December 31,         |   |              | December 31, |  |       | December 19, |   |  | September 30, |         
|                                                        |  | 2004                   |         |                | 2003                 |   |              | 2002         |  |       | 2002         |   |  | 2002          |         
|                                                        |  |                        |         |                |                      |   |              |              |  |       |              |   |  |               |         
|                                                        |  | (Dollars in Thousands) |        
|Provision (benefit) for income taxes at statutory rates |  | $                      | (26,125 | )              |                      | $ | (7,387       | )            |  | $     | (831         | ) |  | $             | 78,391   |   |  | $ | (18,372 | )
|Change in beginning of the year valuation allowance     |  |                        |        |                |                      |   |             |              |  |       |             |   |  |               | (148,464 | ) |  |   | 18,371  |  
|Non-deductible expenses                                 |  |                        | 26      |                |                      |   | 65           |              |  |       |             |   |  |               |         |   |  |   | 1       |  
|Non-deductible fresh-start adjustments                  |  |                        |        |                |                      |   |             |              |  |       |             |   |  |               | 70,073   |   |  |   |        |  
|Non-deductible goodwill impairment                      |  |                        | 16,962  |                |                      |   |             |              |  |       |             |   |  |               |         |   |  |   |        |  
|State income taxes                                      |  |                        | (1,933  | )              |                      |   | (361         | )            |  |       | 26           |   |  |               | 8        |   |  |   | 125     |  
|Other                                                   |  |                        | (930    | )              |                      |   | (201         | )            |  |       | (23          | ) |  |               |         |   |  |   |        |  
|                                                        |  |                        |         |                |                      |   |              |              |  |       |              |   |  |               |         
|Effective tax provision                                 |  | $                      | (12,000 | )              |                      | $ | (7,884       | )            |  | $     | (828         | ) |  | $             | 8        |   |  | $ | 125     |  
|                                                        |  |                        |         |                |                      |   |              |              |  |       |              |   |  |               |         



|                              |  |                        |         |   |                      |   |        |                |  |   |              |   |  |               |   |  |  |   |     | 
|----------------------------- |  | ---------------------- | ------- | - | -------------------- | - | ------ | -------------- |  | - | ------------ | - |  | ------------- | - |  |  | - | --- | 
|                              |  | Reorganized Sterling   |         |   | Predecessor Sterling |  
|                              |  |                        |         |   |                      |  
|                              |  |                        |         |   |                      |   |        | Fiscal Year    | 
|                              |  | Year Ended             |         |   | Year Ended           |   |        | December 20 to |  |   | October 1 to |   |  | Ended         |  
|                              |  | December 31,           |         |   | December 31,         |   |        | December 31,   |  |   | December 19, |   |  | September 30, |  
|                              |  | 2004                   |         |   | 2003                 |   |        | 2002           |  |   | 2002         |   |  | 2002          |  
|                              |  |                        |         |   |                      |   |        |                |  |   |              |   |  |               |  
|                              |  | (Dollars in Thousands) |        
|Current federal               |  | $                      |        |   |                      | $ |       |                |  | $ |             |   |  | $             |  |  |  | $ |    | 
|Deferred federal              |  |                        | (10,105 | ) |                      |   | (7,323 | )              |  |   | (854         | ) |  |               |  |  |  |   |    | 
|State income taxes            |  |                        | (1,895  | ) |                      |   | (561   | )              |  |   | 26           |   |  |               | 8 |  |  |   | 125 | 
|                              |  |                        |         |   |                      |   |        |                |  |   |              |   |  |               |  
|Total tax provision (benefit) |  | $                      | (12,000 | ) |                      | $ | (7,884 | )              |  | $ | (828         | ) |  | $             | 8 |  |  | $ | 125 | 
|                              |  |                        |         |   |                      |   |        |                |  |   |              |   |  |               |  

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STERLING CHEMICALS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




|                                   |  |                        |         |   |      |   |         |  
|---------------------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | -
|                                   |  | Reorganized Sterling   |        
|                                   |  |                        |        
|                                   |  | December 31,           |        
|                                   |  |                        |        
|                                   |  | 2004                   |         |   | 2003 |  
|                                   |  |                        |         |   |      |  
|                                   |  | (Dollars in Thousands) |        
|Deferred tax assets:               |  |                        |         |   |      |   |         |  
|Accrued liabilities                |  | $                      | 3,737   |   |      | $ | 7,434   |  
|Accrued postretirement cost        |  |                        | 13,916  |   |      |   | 15,004  |  
|Accrued pension cost               |  |                        | 8,377   |   |      |   | 11,163  |  
|Tax loss and credit carry forwards |  |                        | 27,475  |   |      |   | 13,612  |  
|Allowance for doubtful accounts    |  |                        | 1,082   |   |      |   | 2,401   |  
|Other                              |  |                        | 55      |   |      |   |        |  
|                                   |  |                        |         |   |      |  
|Total deferred tax assets          |  | $                      | 54,642  |   |      | $ | 49,614  |  
|                                   |  |                        |         |   |      |  
|Deferred tax liabilities:          |  |                        |         |   |      |   |         |  
|Property, plant and equipment      |  | $                      | (70,680 | ) |      | $ | (81,764 | )
|State deferred taxes               |  |                        | (2,166  | ) |      |   | (2,291  | )
|Other                              |  |                        |        |   |      |   | (683    | )
|                                   |  |                        |         |   |      |  
|Subtotal                           |  |                        | (72,846 | ) |      |   | (84,738 | )
|Less: valuation allowance          |  |                        | (6,096  | ) |      |   | (5,704  | )
|                                   |  |                        |         |   |      |  
|Total deferred tax liabilities     |  |                        | (78,942 | ) |      |   | (90,442 | )
|                                   |  |                        |         |   |      |  
|Net deferred tax liabilities       |  | $                      | (24,300 | ) |      | $ | (40,828 | )
|                                   |  |                        |         |   |      |  





|   |                  
|-- | -----------------
|8. | EMPLOYEE BENEFITS





| |                         
| | ------------------------
| | Retirement Benefit Plans





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STERLING CHEMICALS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)






|                                                           |                                                  |                        |   |         |      |  |   |         |  
|---------------------------------------------------------- | ------------------------------------------------ | ---------------------- | - | ------- | ---- |  | - | ------- | -
|                                                           |                                                  | Reorganized Sterling   |  
|                                                           |                                                  |                        |  
|                                                           |                                                  | December 31,           |  
|                                                           |                                                  |                        |  
|                                                           |                                                  | 2004                   |   |         | 2003 | 
|                                                           |                                                  |                        |   |         |      | 
|                                                           |                                                  | (Dollars in Thousands) |  
|Change in benefit obligation:                              |                                                  |                        |   |         |      |  |   |        
|                                                           | Benefit obligation at beginning of year          |                        | $ | 124,704 |      |  | $ | 116,818 |  
|                                                           | Service cost                                     |                        |   | 3,466   |      |  |   | 3,312   |  
|                                                           | Interest cost                                    |                        |   | 7,561   |      |  |   | 7,634   |  
|                                                           | Plan amendment/curtailment                       |                        |   | (14,472 | )    |  |   |        |  
|                                                           | Actuarial loss                                   |                        |   | 5,600   |      |  |   | 4,179   |  
|                                                           | Benefits paid                                    |                        |   | (7,177  | )    |  |   | (7,239  | )
|                                                           |                                                  |                        |   |         |      | 
|                                                           | Benefit obligation at end of year                |                        | $ | 119,682 |      |  | $ | 124,704 |  
|                                                           |                                                  |                        |   |         |      | 
|Change in plan assets:                                     |                                                  |                        |   |         |      |  |   |        
|                                                           | Fair value at beginning of year                  |                        | $ | 77,709  |      |  | $ | 66,496  |  
|                                                           | Actual return on plan assets                     |                        |   | 8,511   |      |  |   | 9,253   |  
|                                                           | Employer contributions                           |                        |   | 10,207  |      |  |   | 9,199   |  
|                                                           | Benefits paid                                    |                        |   | (7,177  | )    |  |   | (7,239  | )
|                                                           |                                                  |                        |   |         |      | 
|                                                           | Fair value at end of year                        |                        | $ | 89,250  |      |  | $ | 77,709  |  
|                                                           |                                                  |                        |   |         |      | 
|Development of net amount recognized:                      |                                                  |                        |   |         |      |  |   |        
|                                                           | Funded status                                    |                        | $ | (30,432 | )    |  | $ | (46,995 | )
|                                                           | Actuarial loss                                   |                        |   | 1,626   |      |  |   | 130     |  
|                                                           |                                                  |                        |   |         |      | 
|                                                           | Net amount recognized                            |                        | $ | (28,806 | )    |  | $ | (46,865 | )
|                                                           |                                                  |                        |   |         |      | 
|Amounts recognized in the statement of financial position: |                                                  |                        |   |         |      |  |   |        
|                                                           | Accrued pension cost                             |                        | $ | (30,415 | )    |  | $ | (47,116 | )
|                                                           | Accumulated other comprehensive income (pre-tax) |                        |   | 1,609   |      |  |   | 251     |  
|                                                           |                                                  |                        |   |         |      | 
|                                                           | Net amount recognized                            |                        | $ | (28,806 | )    |  | $ | (46,865 | )
|                                                           |                                                  |                        |   |         |      | 
|Weighted-average assumptions:                              |                                                  |                        |   |         |      |  |   |        
|                                                           | Discount Rate                                    |                        |   | 5.75    | %    |  |   | 6.25    | %
|                                                           | Rates of increase in salary compensation level   |                        |   | 5.00    | %    |  |   | 5.00    | %



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STERLING CHEMICALS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)






|                                 |                                                       |                        |   |             |              |             |   |              |   |  |               |        |     |  |   |        |     | 
|-------------------------------- | ----------------------------------------------------- | ---------------------- | - | ----------- | ------------ | ----------- | - | ------------ | - |  | ------------- | ------ | --- |  | - | ------ | --- | 
|                                 |                                                       |                        |   | Predecessor |             
|                                 |                                                       | Reorganized Sterling   |   |             | Sterling     |            
|                                 |                                                       |                        |   |             |              |            
|                                 |                                                       |                        |   |             |              | Fiscal Year |  
|                                 |                                                       | Year Ended             |   |             | Year Ended   |             |   | October 1 to |   |  | Ended         |       
|                                 |                                                       | December 31,           |   |             | December 31, |             |   | December 31, |   |  | September 30, |       
|                                 |                                                       | 2004                   |   |             | 2003         |             |   | 2002         |   |  | 2002          |       
|                                 |                                                       |                        |   |             |              |             |   |              |   |  |               |       
|                                 |                                                       | (Dollars in Thousands) |  
|Components of net pension costs: |                                                       |                        |   |             |              |             |   |              |   |  |               |        |     |  |   |       
|                                 | Service cost-benefits earned during the year          |                        | $ | 3,466       |              |             | $ | 3,312        |   |  | $             | 1,081  |     |  | $ | 3,826  |    
|                                 | Interest on prior years projected benefit obligation |                        |   | 7,561       |              |             |   | 7,634        |   |  |               | 2,258  |     |  |   | 7,317  |    
|                                 | Expected return on plan assets                        |                        |   | (5,934      | )            |             |   | (5,205       | ) |  |               | (1,602 | )   |  |   | (6,536 | )  
|                                 | Net amortization:                                     |                        |   |             |              |             |   |              |   |  |               |        |     |  |   |        |    
|                                 |                                                       | Actuarial loss (gain)  |   |             |             |             |   |              |  |  |               |        |    |  |   |        | 152 | 
|                                 |                                                       | Prior service cost     |   |             |             |             |   |              |  |  |               |        | 203 |  |   |        | 777 | 
|                                 |                                                       | Transition liability   |   |             |             |             |   |              |  |  |               |        | 425 |  |   |        | 354 | 
|                                 | Discontinued operations (see Note 4)                  |                        |   |            |              |             |   |             |   |  |               |       |     |  |   | 1,255  |    
|                                 | Settlement/curtailment                                |                        |   | (12,944     | )            |             |   |             |   |  |               | 63     |     |  |   | 22     |    
|                                 |                                                       |                        |   |             |              |             |   |              |   |  |               |       
|                                 | Net pension costs                                     |                        | $ | (7,851      | )            |             | $ | 5,741        |   |  | $             | 2,428  |     |  | $ | 7,167  |    
|                                 |                                                       |                        |   |             |              |             |   |              |   |  |               |       
|Weighted-average assumptions:    |                                                       |                        |   |             |              |             |   |              |   |  |               |        |     |  |   |       
|                                 | Discount Rate                                         |                        |   | 6.25%       |              |             |   | 6.75%        |   |  |               | 6.75%  |     |  |   | 6.75%  |    
|                                 | Rates of increase in salary compensation level        |                        |   | 5.00%       |              |             |   | 5.00%        |   |  |               | 4.92%  |     |  |   | 4.92%  |    
|                                 | Expected long-term rate of return on plan assets      |                        |   | 7.50%       |              |             |   | 8.00%        |   |  |               | 8.72%  |     |  |   | 8.72%  |    





| |                                            
| | -------------------------------------------
| | Postretirement Benefits Other than Pensions





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NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)








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STERLING CHEMICALS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




|                                      |                                         |                        |   |         |         |   |   |         |         |  
|------------------------------------- | --------------------------------------- | ---------------------- | - | ------- | ------- | - | - | ------- | ------- | -
|                                      |                                         | Reorganized Sterling   |  
|                                      |                                         |                        |  
|                                      |                                         | December 31,           |  
|                                      |                                         |                        |  
|                                      |                                         | 2004                   |   |         | 2003    |  
|                                      |                                         |                        |   |         |         |  
|                                      |                                         | (Dollars in Thousands) |  
|Change in benefit obligation:         |                                         |                        |   |         |         |   |   |        
|                                      | Benefit obligation at beginning of year |                        | $ | 34,870  |         |   | $ | 46,141  |        
|                                      | Service cost                            |                        |   | 310     |         |   |   | 460     |        
|                                      | Interest cost                           |                        |   | 1,864   |         |   |   | 2,336   |        
|                                      | Plan amendments                         |                        |   | (9,541  | )       |   |   | (13,070 | )      
|                                      | Actuarial loss (gain)                   |                        |   | 4,404   |         |   |   | (220    | )      
|                                      | Benefits paid                           |                        |   | (4,162  | )       |   |   | (777    | )      
|                                      |                                         |                        |   |         |         |  
|                                      | Benefit obligation at end of year       |                        | $ | 27,745  |         |   | $ | 34,870  |        
|                                      |                                         |                        |   |         |         |  
|Funded plan assets                    |                                         | $                      |  |         |         | $ |  |        
|                                      |                                         |                        |   |         |         |  
|Development of net amount recognized: |                                         |                        |   |         |         |   |   |        
|                                      | Funded status                           |                        | $ | (27,745 | )       |   | $ | (34,870 | )      
|                                      | Unrecognized cost:                      |                        |   |         |         |   |   |         |        
|                                      |                                         | Actuarial loss         |   |         | 5,204   |   |   |         | 1,151   |  
|                                      |                                         | Plan amendment         |   |         | (19,164 | ) |   |         | (12,593 | )
|                                      |                                         |                        |   |         |         |  
|                                      | Net amount recognized                   |                        | $ | (41,705 | )       |   | $ | (46,312 | )      
|                                      |                                         |                        |   |         |         |  
|                                      | Prepaid OPEB cost                       |                        | $ |        |         |   | $ |        |        
|                                      | Accrued OPEB liability                  |                        |   | (41,705 | )       |   |   | (46,312 | )      
|                                      |                                         |                        |   |         |         |  
|                                      | Net amount recognized                   |                        | $ | (41,705 | )       |   | $ | (46,312 | )      
|                                      |                                         |                        |   |         |         |  

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STERLING CHEMICALS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




|                              |                                              |                        |   |             |              |             |   |              |      |   |               |       |      |   |   |       |      |  
|----------------------------- | -------------------------------------------- | ---------------------- | - | ----------- | ------------ | ----------- | - | ------------ | ---- | - | ------------- | ----- | ---- | - | - | ----- | ---- | -
|                              |                                              |                        |   | Predecessor |             
|                              |                                              | Reorganized Sterling   |   |             | Sterling     |            
|                              |                                              |                        |   |             |              |            
|                              |                                              |                        |   |             |              | Fiscal Year |  
|                              |                                              | Year Ended             |   |             | Year Ended   |             |   | October 1 to |      |   | Ended         |      
|                              |                                              | December 31,           |   |             | December 31, |             |   | December 31, |      |   | September 30, |      
|                              |                                              | 2004                   |   |             | 2003         |             |   | 2002         |      |   | 2002          |      
|                              |                                              |                        |   |             |              |             |   |              |      |   |               |      
|                              |                                              | (Dollars in Thousands) |  
|Components of net plan costs: |                                              |                        |   |             |              |             |   |              |      |   |               |       |      |   |   |      
|                              | Service cost                                 |                        | $ | 310         |              |             | $ | 460          |      |   | $             | 115   |      |   | $ | 480   |     
|                              | Interest cost                                |                        |   | 1,864       |              |             |   | 2,336        |      |   |               | 749   |      |   |   | 3,132 |     
|                              | Net amortization:                            |                        |   |             |              |             |   |              |      |   |               |       |      |   |   |       |     
|                              |                                              | Actuarial loss         |   |             | 21           |             |   |              |     |   |               |       | 121  |   |   |       | 642  |  
|                              |                                              | Prior service cost     |   |             |             |             |   |              |     |   |               |       | (116 | ) |   |       | (463 | )
|                              |                                              | Plan amendment         |   |             | (1,223       | )           |   |              | (477 | ) |               |       |     |   |   |       |     |  
|                              | Discontinued operations (see Note 4)         |                        |   |            |              |             |   |             |      |   |               |      |      |   |   | 151   |     
|                              | Curtailment and special termination benefits |                        |   |            |              |             |   | (1,418       | )    |   |               |      |      |   |   |      |     
|                              |                                              |                        |   |             |              |             |   |              |      |   |               |      
|                              | Net plan costs                               |                        | $ | (446        | )            |             | $ | 2,319        |      |   | $             | 869   |      |   | $ | 3,942 |     
|                              |                                              |                        |   |             |              |             |   |              |      |   |               |      
|Weighted-average assumptions: |                                              |                        |   |             |              |             |   |              |      |   |               |       |      |   |   |      
|                              | Discount rate                                |                        |   | 5.75%       |              |             |   | 6.25%        |      |   |               | 6.75% |      |   |   | 6.75% |     





|                                                        |  |                        |       |  |             |   |        |  
|------------------------------------------------------- |  | ---------------------- | ----- |  | ----------- | - | ------ | -
|                                                        |  | 1% Increase            |       |  | 1% Decrease |  
|                                                        |  |                        |       |  |             |  
|                                                        |  | (Dollars in Thousands) |      
|Effect on total of service and interest cost components |  | $                      | 114   |  |             | $ | (108   | )
|Effect on post-retirement benefit obligation            |  |                        | 1,123 |  |             |   | (1,076 | )



| |                                  
| | ---------------------------------
| | Estimated Future Benefits Payable



|          |  |                        |        |  |           |       |        |                |  |   |        |  |  |   |         | 
|--------- |  | ---------------------- | ------ |  | --------- | ----- | ------ | -------------- |  | - | ------ |  |  | - | ------- | 
|          |  |                        |        |  |           | Other |        |                | 
|          |  | Pensions-              |        |  | Pensions- |       |        | Postretirement |  |   |       
|          |  | Hourly                 |        |  | Salaried  |       |        | Benefits       |  |   | Total  | 
|          |  |                        |        |  |           |       |        |                |  |   |        | 
|          |  | (Dollars in thousands) |       
|2005      |  | $                      | 3,516  |  |           | $     | 3,626  |                |  | $ | 2,682  |  |  | $ | 9,824   | 
|2006      |  |                        | 3,381  |  |           |       | 3,734  |                |  |   | 2,640  |  |  |   | 9,755   | 
|2007      |  |                        | 3,201  |  |           |       | 3,841  |                |  |   | 2,578  |  |  |   | 9,620   | 
|2008      |  |                        | 3,048  |  |           |       | 3,953  |                |  |   | 2,528  |  |  |   | 9,529   | 
|2009      |  |                        | 2,935  |  |           |       | 4,205  |                |  |   | 2,503  |  |  |   | 9,643   | 
|2010-2014 |  |                        | 15,219 |  |           |       | 27,822 |                |  |   | 10,030 |  |  |   | 53,071  | 
|          |  |                        |        |  |           |       |        |                |  |   |        | 
|Total     |  | $                      | 31,300 |  |           | $     | 47,181 |                |  | $ | 22,961 |  |  | $ | 101,442 | 
|          |  |                        |        |  |           |       |        |                |  |   |        | 

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STERLING CHEMICALS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




| |                            
| | ---------------------------
| | Savings and Investment Plan





| |                                 
| | --------------------------------
| | Bonus Plan and Gain Sharing Plan





| |                             
| | ----------------------------
| | Key Employee Protection Plan





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STERLING CHEMICALS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)












| |                     
| | --------------------
| | Retention Bonus Plan



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STERLING CHEMICALS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)






| |                   
| | ------------------
| | Severance Pay Plan









| |                        
| | -----------------------
| | Supplemental Bonus Plan





| |                      
| | ---------------------
| | Supplemental Pay Plan



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STERLING CHEMICALS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)






| |                          
| | -------------------------
| | Outstanding Stock Options



|                                 |                                    |        |         |           |       |   |       |  | 
|-------------------------------- | ---------------------------------- | ------ | ------- | --------- | ----- | - | ----- |  | 
|                                 |                                    |        |         | Weighted- |      
|                                 |                                    |        |         | average   |      
|                                 |                                    |        |         | exercise  |      
|As of December 31, 2004:         |                                    | Shares |         |           | price |  
|                                 |                                    |        |         |           |       |  
|Outstanding at beginning of year |                                    |        | 326,000 |           |       | $ | 31.60 | 
|Granted                          |                                    |        | 27,500  |           |       |   | 31.60 | 
|Forfeited                        |                                    |        | (59,166 | )         |       |   | 31.60 | 
|                                 |                                    |        |         |           |       |  
|Outstanding at end of year       |                                    |        | 294,334 |           |       | $ | 31.60 | 
|                                 |                                    |        |         |           |       |  
|                                 | Options exercisable at end of year |        |         | 99,500    |       |   |       |  | 
|                                 |                                    |        |         |           |       |  

|                                 |                                    |        |         |           |       |   |       |  | 
|-------------------------------- | ---------------------------------- | ------ | ------- | --------- | ----- | - | ----- |  | 
|                                 |                                    |        |         | Weighted- |      
|                                 |                                    |        |         | average   |      
|                                 |                                    |        |         | exercise  |      
|As of December 31, 2003:         |                                    | Shares |         |           | price |  
|                                 |                                    |        |         |           |       |  
|Outstanding at beginning of year |                                    |        |        |           |       | $ |      | 
|Granted                          |                                    |        | 326,000 |           |       |   | 31.60 | 
|Forfeited                        |                                    |        |        |           |       |   |      | 
|                                 |                                    |        |         |           |       |  
|Outstanding at end of year       |                                    |        | 326,000 |           |       | $ | 31.60 | 
|                                 |                                    |        |         |           |       |  
|                                 | Options exercisable at end of year |        |         |          |       |   |       |  | 
|                                 |                                    |        |         |           |       |  









|   |                              
|-- | -----------------------------
|9. | COMMITMENTS AND CONTINGENCIES



| |                  
| | -----------------
| | Product Contracts



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STERLING CHEMICALS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)






| |                  
| | -----------------
| | Lease Commitments





| |                         
| | ------------------------
| | Environmental and Safety









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STERLING CHEMICALS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)








| |                  
| | -----------------
| | Legal Proceedings







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STERLING CHEMICALS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




|    |                  
|--- | -----------------
|10. | SALES INFORMATION



|                 |                              |                        |   |             |                      |  |   |              |             |  |              |       |   |               |   |        |  |  |   |         | 
|---------------- | ---------------------------- | ---------------------- | - | ----------- | -------------------- |  | - | ------------ | ----------- |  | ------------ | ----- | - | ------------- | - | ------ |  |  | - | ------- | 
|                 |                              | Reorganized Sterling   |   |             | Predecessor Sterling | 
|                 |                              |                        |   |             |                      | 
|                 |                              |                        |   | December 20 |                      |  |   |              | Fiscal Year | 
|                 |                              | Year Ended             |   |             | Year Ended           |  |   | to           |             |  | October 1 to |       |   | Ended         |  
|                 |                              | December 31,           |   |             | December 31,         |  |   | December 31, |             |  | December 19, |       |   | September 30, |  
|                 |                              | 2004                   |   |             | 2003                 |  |   | 2002         |             |  | 2002         |       |   | 2002          |  
|                 |                              |                        |   |             |                      |  |   |              |             |  |              |       |   |               |  
|                 |                              | (Dollars in Thousands) |  
|Major customers: |                              |                        |   |             |                      |  |   |              |             |  |              |       |   |               |   |        |  |  |   |        
|                 | BP p.l.c. and subsidiaries   |                        | $ | 119,008     |                      |  | $ | 93,061       |             |  | $            | 3,595 |   |               | $ | 14,049 |  |  | $ | 60,095  | 
|                 | Customer B                   |                        |   | 127,956     |                      |  |   | 69,533       |             |  |              | *     |   |               |   | *      |  |  |   | *       | 
|                 | Customer C                   |                        |   | 116,912     |                      |  |   | *            |             |  |              | *     |   |               |   | *      |  |  |   | *       | 
|Export sales:    |                              |                        |   |             |                      |  |   |              |             |  |              |       |   |               |   |        |  |  |   |        
|                 | Export revenues              |                        | $ | 317,104     |                      |  | $ | 224,595      |             |  | $            | 3,715 |   |               | $ | 15,996 |  |  | $ | 131,701 | 
|                 | Percentage of total revenues |                        |   | 37          | %                    |  |   | 38           | %           |  |              | 30    | % |               |   | 16%    |  |  |   | 34%     | 






|  |                                                                                                         
|- | --------------------------------------------------------------------------------------------------------
|* | Does not comprise more than 10% of total revenue for the periods
    indicated, therefore not presented.



|    |                      
|--- | ---------------------
|11. | FINANCIAL INSTRUMENTS



| |                       
| | ----------------------
| | Concentrations of Risk







| |                                    
| | -----------------------------------
| | Fair Value of Financial Instruments





|    |              
|--- | -------------
|12. | CAPITAL STOCK





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STERLING CHEMICALS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 Series A Preferred Stock
    were convertible immediately prior to such merger or
    consolidation had such shares of 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 Series A Preferred Stock were
    convertible immediately prior to such change of control had such
    shares of Series A Preferred Stock been converted prior
    thereto (plus accrued and unpaid dividends).                                                       





|    |                           
|--- | --------------------------
|13. | RELATED PARTY TRANSACTIONS



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STERLING CHEMICALS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)








|    |                         
|--- | ------------------------
|14. | NEW ACCOUNTING STANDARDS





74



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STERLING CHEMICALS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)








75



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


















| |                          
| | -------------------------
| | Deloitte & Touche
    LLP





76



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STERLING CHEMICALS, INC. AND SUBSIDIARIES


SUPPLEMENTAL FINANCIAL INFORMATION


QUARTERLY FINANCIAL DATA (unaudited)


|                                                      |         |                                               |      |       |         |   |         |         |   |       |         |        |        |         |         |      |  |   |         |       |  
|----------------------------------------------------- | ------- | --------------------------------------------- | ---- | ----- | ------- | - | ------- | ------- | - | ----- | ------- | ------ | ------ | ------- | ------- | ---- |  | - | ------- | ----- | -
|                                                      |         |                                               |      | First |         |   | Second  |         |   | Third |         |        | Fourth |        
|                                                      |         | Year                                          |      |       | Quarter |   |         | Quarter |   |       | Quarter |        |        | Quarter |        
|                                                      |         |                                               |      |       |         |   |         |         |   |       |         |        |        |         |        
|                                                      |         | (Dollars in Thousands, Except Per Share Data) |     
|Revenues                                              |         |                                               | 2004 |       |         | $ | 146,101 |         |   | $     | 184,905 |        |        | $       | 251,839 |      |  | $ | 268,817 |      
|                                                      |         |                                               | 2003 |       |         |   | 121,849 |         |   |       | 120,121 |        |        |         | 160,210 |      |  |   | 190,611 |      
|                                                     
|Gross profit (loss)                                   |         |                                               | 2004 |       |         |   | (11,600 | )       |   |       | 3,135   |        |        |         | 15,293  |      |  |   | (4,260  | )    
|                                                      |         |                                               | 2003 |       |         |   | (2,644  | )       |   |       | (9,788  | )      |        |         | 7,160   |      |  |   | 8,323   |      
|                                                     
|Net income (loss) from continuing operations
    (1)  |         |                                               | 2004 |       |         |   | (9,860  | )       |   |       | (50,584 | )      |        |         | 5,529   |      |  |   | (7,729  | )    
|                                                      |         |                                               | 2003 |       |         |   | (3,540  | )       |   |       | (9,775  | )      |        |         | 1,535   |      |  |   | (1,443  | )    
|                                                     
|Income (loss) from discontinued operations            |         |                                               | 2004 |       |         |   |        |         |   |       |        |        |        |         |        |      |  |   |        |      
|                                                      |         |                                               | 2003 |       |         |   | (634    | )       |   |       | (342    | )      |        |         |        |      |  |   |        |      
|                                                     
|Net income (loss) attributable to common stockholders |         |                                               | 2004 |       |         |   | (11,272 | )       |   |       | (52,052 | )      |        |         | 4,002   |      |  |   | (9,316  | )    
|                                                      |         |                                               | 2003 |       |         |   | (5,381  | )       |   |       | (11,372 | )      |        |         | 230     |      |  |   | (2,801  | )    
|                                                     
|Net income (loss) per share of common stock:          |         |                                               |      |       |         |   |         |         |   |       |         |        |        |         |         |      |  |   |         |      
|                                                      | Basic   |                                               |      | 2004  |         |   |         | (3.99   | ) |       |         | (18.43 | )      |         |         | 1.42 |  |   |         | (3.30 | )
|                                                      |         |                                               | 2003 |       |         |   | (1.90   | )       |   |       | (4.03   | )      |        |         | 0.08    |      |  |   | (0.99   | )    
|                                                     
|                                                      | Diluted |                                               |      | 2004  |         |   |         | (3.99   | ) |       |         | (18.43 | )      |         |         | 0.99 |  |   |         | (3.30 | )
|                                                      |         |                                               | 2003 |       |         |   | (1.90   | )       |   |       | (4.03   | )      |        |         | 0.08    |      |  |   | (0.99   | )    






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In the second quarter of 2004, we recorded a $48.5 million
    non-cash goodwill impairment charge. In the fourth quarter of
    2004, we recorded a $22 million non-cash impairment charge
    related to our acrylonitrile long-lived assets and a pension
    curtailment gain of $13 million. We incurred
    $17.0 million in reorganization items in fiscal 2002 as a
    result of our Chapter 11 proceedings. Contractual interest
    expense not paid or accrued was $49 million in fiscal 2002.






|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures





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|         |                  
|-------- | -----------------
|Item 9B. | Other Information






PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant








|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation








|         |                                                                   
|-------- | ------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management








|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions








|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services






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.

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| |                                                                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.



|        |     |  |  |                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|------- | --- |  |  | ---------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |     |  |  |                       
|Number  |     |  |  | Description of Exhibit
|        |     |  |  |                       
|        | 2.1 |  |  |                       |  | Certificate of Ownership and Merger merging Sterling Chemicals
    Holdings, Inc. into Sterling Chemicals, Inc. (incorporated
    herein by reference from Exhibit 2.1 to our Annual Report
    on Form 10-K for the fiscal year ended September 30, 2002).                                                                                                                                                                                                                                              
|        | 2.2 |  |  |                       |  | Joint Plan of Reorganization of Sterling Chemicals Holdings,
    Inc., et. al., Debtors, dated October 14, 2002
    (incorporated herein by reference from Exhibit 2.1 to our
    Form 8-K filed on November 26, 2002).                                                                                                                                                                                                                                                                                  
|        | 2.3 |  |  |                       |  | First Modification to Joint Plan of Reorganization of Sterling
    Chemicals Holdings, Inc., et. al., Debtors, dated
    November 18, 2002 (incorporated herein by reference from
    Exhibit 2.2 to our Form 8-K filed on November 26,
    2002).                                                                                                                                                                                                                                                       
|        | 3.1 |  |  |                       |  | Amended and Restated Certificate of Incorporation of Sterling
    Chemicals, Inc. (incorporated herein by reference from
    Exhibit 3.1 to our Annual Report on Form 10-K for the
    fiscal year ended September 30, 2002).                                                                                                                                                                                                                                                                            
|        | 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
    June 30, 2003).                                                                                                                                                                                                                                                                                          
|        | 4.1 |  |  |                       |  | Warrant Agreement dated as of December 19, 2002 by and
    between Sterling Chemicals, Inc., and Wells Fargo Bank
    Minnesota, N.A., as warrant agent (incorporated herein by
    reference from Exhibit 5 to our Form 8-A filed on
    December 19, 2002).                                                                                                                                                                                                                                            
|        | 4.2 |  |  |                       |  | Registration Rights Agreement dated as of December 19, 2002
    by and between Sterling Chemicals, Inc. and Resurgence Asset
    Management, L.L.C. (incorporated herein by reference from
    Exhibit 7 to our Form 8-A filed on December 19,
    2002).                                                                                                                                                                                                                                                
|        | 4.3 |  |  |                       |  | 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).                                                                                                                                                                                                         
|        | 4.4 |  |  |                       |  | Indenture dated December 19, 2002 by and among Sterling
    Chemicals, Inc., as Issuer, Sterling Chemicals Energy, Inc., as
    Guarantor, and National City Bank, as Trustee, governing the
    10% Senior Secured Notes due 2007 of Sterling Chemicals,
    Inc. (incorporated herein by reference from Exhibit T3-C to
    Amendment No. 3 to our Form T-3 filed on
    December 19, 2002).                                                                                                           
|        | 4.5 |  |  |                       |  | Deed of Trust, Assignment of Leases and Rents, Security
    Agreement and Fixture Filing dated December 19, 2002 made
    by Sterling Chemicals, Inc., as Trustor, to Thomas S. Henderson,
    as Individual Trustee for the benefit of National City Bank, in
    its capacity as described therein, as Beneficiary (incorporated
    herein by reference from Exhibit 4.2 to our Transition
    Report on Form 10-Q for the transition period ended
    December 31, 2002).                            
|        | 4.6 |  |  |                       |  | Security Agreement dated as of December 19, 2002 by and
    among Sterling Chemicals, Inc. and Sterling Chemicals Energy,
    Inc., as Assignors, National City Bank, as Collateral Agent, and
    National City Bank, as Indenture Trustee for the benefit of the
    holders the 10% Senior Secured Notes due 2007 of Sterling
    Chemicals, Inc. (incorporated herein by reference from
    Exhibit 4.3 to our Transition Report on Form 10-Q for
    the transition period ended December 31, 2002).

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|        |          |  |  |   |                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------- | -------- |  |  | - | ---------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |          |  |  |   |                       
|Number  |          |  |  |   | Description of Exhibit
|        |          |  |  |   |                       
|        | 10.1     |  |  |  |                        | Revolving Credit Agreement dated as of December 19, 2002 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 (incorporated herein by
    reference from Exhibit 4.4 to our Transition Report on Form
    10-Q for the transition period ended December 31, 2002).
|        | 10.1(a)  |  |  |  |                        | First Amendment to Revolving Credit Agreement dated as of
    February 12, 2003 by and among Sterling Chemicals, Inc. and
    Sterling Chemicals Energy, Inc., as Borrowers, the various
    financial institutions party thereto, as the Lenders, and The
    CIT Group/Business Credit, Inc., as the Administrative Agent for
    the Lenders (incorporated herein by reference from
    Exhibit 4.8 to our Transition Report on Form 10-Q for
    the transition period ended December 31, 2002).                      
|        | 10.2     |  |  |  |                        | Security Agreement dated as of December 19, 2002 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 4.5 to our Transition
    Report on Form 10-Q for the transition period ended
    December 31, 2002).                                                                                                                 
|        | 10.3     |  |  |  |                        | Pledge Agreement dated as of December 19, 2002 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 4.6 to our Transition
    Report on Form 10-Q for the transition period ended
    December 31, 2002).                                                                                                                   
|        | 10.4*    |  |  |  |                        | Sterling Chemicals, Inc. 2002 Stock Plan (incorporated herein by
    reference to Exhibit 6 to our Form 8-A filed on
    December 19, 2002).                                                                                                                                                                                                                                                                                                                                                                              
|        | 10.5*    |  |  |  |                        | Fourth Amended and Restated Key Employee Protection Plan
    (incorporated herein by reference from Exhibit 10.1 to our
    Quarterly Report on Form 10-Q for the quarterly period ended
    March 31, 2004).                                                                                                                                                                                                                                                                                                             
|        | 10.6*    |  |  |  |                        | Amended and Restated Supplemental Pay Plan (incorporated herein
    by reference from Exhibit 10.1 to our Quarterly Report on
    Form 10-Q for the quarterly period ended June 30, 2001).                                                                                                                                                                                                                                                                                                                                
|        | 10.6(a)* |  |  |  |                        | First Amendment to Amended and Restated Supplemental Pay Plan
    (incorporated herein by reference from Exhibit 10.2(a) to
    our Annual Report on Form 10-K for the fiscal year ended
    September 30, 2002).                                                                                                                                                                                                                                                                                                         
|        | 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).                                                                                                                                                                                                                                                                                                                                 
|        | 10.8*    |  |  |  |                        | Sterling Chemicals, Inc. Amended and Restated Salaried
    Employees Pension Plan (Effective as of May 1, 1996)
    (incorporated herein by reference from Exhibit 10.4 to our
    Annual Report on Form 10-K for the fiscal year ended
    September 30, 2000).                                                                                                                                                                                                                                                         
|        | 10.8(a)* |  |  |  |                        | First Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Salaried Employees Pension Plan (Effective as of
    January 31, 1997) (incorporated herein by reference from
    Exhibit 10.4(a) to our Annual Report on Form 10-K for
    the fiscal year ended September 30, 2000).                                                                                                                                                                                                                          
|        | 10.8(b)* |  |  |  |                        | Second Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Salaried Employees Pension Plan (Effective as of
    January 1, 1997) (incorporated herein by reference from
    Exhibit 10.4(b) to our Annual Report on Form 10-K for
    the fiscal year ended September 30, 2000).                                                                                                                                                                                                                          
|        | 10.8(c)* |  |  |  |                        | Third Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Salaried Employees Pension Plan (Effective as of
    November 1, 1998) (incorporated herein by reference from
    Exhibit 10.4(c) to our Annual Report on Form 10-K for the
    fiscal year ended September 30, 2000).                                                                                                                                                                                                                          

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|        |            |   |  |   |                        |                                                                                                                                                                                                                                                                                                   
|------- | ---------- | - |  | - | ---------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |            |   |  |   |                       
|Number  |            |   |  |   | Description of Exhibit
|        |            |   |  |   |                       
|        | 10.8(d)*   |   |  |  |                        | Fourth Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Salaried Employees Pension Plan (Effective as of
    December 31, 1998) (incorporated herein by reference from
    Exhibit 10.4(d) to our Annual Report on Form 10-K for the
    fiscal year ended September 30, 2000).
|        | 10.8(e)*   |   |  |  |                        | Fifth Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Salaried Employees Pension Plan (Effective as of
    April 1, 1999) (incorporated herein by reference from
    Exhibit 10.4(e) to our Annual Report on Form 10-K for
    the fiscal year ended September 30, 2000).     
|        | 10.8(f)*   |   |  |  |                        | Sixth Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Salaried Employees Pension Plan (Effective as of
    May 14, 1999) (incorporated herein by reference from
    Exhibit 10.4(f) to our Annual Report on Form 10-K for the
    fiscal year ended September 30, 2000).      
|        | 10.8(g)*   |   |  |  |                        | Seventh Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Salaried Employees Pension Plan (incorporated
    herein by reference from Exhibit 10.1 to our Transition
    Report on Form 10-Q for the transition period ended
    December 31, 2002).                             
|        | 10.8(h)*   |   |  |  |                        | Eighth Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Salaried Employees Pension Plan (incorporated
    herein by reference from Exhibit 10.2 to our Transition
    Report on Form 10-Q for the transition period ended
    December 31, 2002).                              
|        | 10.8(i)*   |   |  |  |                        | Ninth Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Salaried Employees Pension Plan (incorporated
    herein by reference from Exhibit 10.3 to our Transition
    Report on Form 10-Q for the transition period ended
    December 31, 2002).                               
|        | 10.8(j)*   |   |  |  |                        | Tenth Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Salaried Employees Pension Plan (incorporated
    herein by reference from Exhibit 10.2 to our Quarterly
    Report on Form 10-Q for the quarterly period ended
    June 30, 2003).                                     
|        | 10.8(k)*   |   |  |  |                        | Eleventh Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Salaried Employees Pension Plan (incorporated
    herein by reference from Exhibit 10.8(k) to our Annual
    Report on Form 10-K for the fiscal year ended December 31,
    2003).                                   
|        | 10.8(l)*   |   |  |  |                        | Twelfth 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
    June 30, 2004).                                   
|        | 10.8(m)*   |   |  |  |                        | Thirteenth Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Salaried Employees Pension Plan (incorporated
    herein by reference from Exhibit 10.2 to our Quarterly
    Report on Form 10-Q for the quarterly period ended
    June 30, 2004).                                
|        | **10.8(n)* |   |  |  |                        | Fourteenth Amendment to the Sterling Chemicals, Inc. 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.                                                                                                                                                                                                                
|        | 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.                                                                                                                                                                                       

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|        |          |   |  |   |                        |                                                                                                                                                                                                                                                                                                       
|------- | -------- | - |  | - | ---------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |          |   |  |   |                       
|Number  |          |   |  |   | Description of Exhibit
|        |          |   |  |   |                       
|        | 10.11    |   |  |  |                        | Sterling Chemicals, Inc. Amended and Restated Hourly Paid
    Employees Pension Plan (Effective as of May 1, 1996)
    (incorporated herein by reference from Exhibit 10.3(c) to
    our Annual Report on Form 10-K for the fiscal year ended
    September 30, 1996 (SEC File Number 333-04343-01)).
|        | 10.11(a) |   |  |  |                        | First Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Hourly Paid Employees Pension Plan (Effective as
    of December 31, 1998) (incorporated herein by reference
    from Exhibit 10.7(a) to our Annual Report on Form 10-K
    for the fiscal year ended September 30, 2000).  
|        | 10.11(b) |   |  |  |                        | Second Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Hourly Paid Employees Pension Plan (Effective as
    of December 17, 1998) (incorporated herein by reference
    from Exhibit 10.7(b) to our Annual Report on Form 10-K for
    the fiscal year ended September 30, 2000). 
|        | 10.11(c) |   |  |  |                        | Third Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Hourly Paid Employees Pension Plan (Effective as
    of September 20, 1999) (incorporated herein by reference
    from Exhibit 10.7(c) to our Annual Report on Form 10-K
    for the fiscal year ended September 30, 2000). 
|        | 10.11(d) |   |  |  |                        | Fourth Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Hourly Paid Employees Pension Plan (incorporated
    herein by reference from Exhibit 10.4 to our Transition
    Report on Form 10-Q for the transition period ended
    December 31, 2002).                               
|        | 10.11(e) |   |  |  |                        | Fifth Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Hourly Paid Employees Pension Plan (incorporated
    herein by reference from Exhibit 10.5 to our Transition
    Report on Form 10-Q for the transition period ended
    December 31, 2002).                                
|        | 10.11(f) |   |  |  |                        | Sixth Amendment to the Sterling Chemicals, Inc. Hourly Paid
    Employees Pension Plan (incorporated herein by reference
    from Exhibit 10.3 to our Quarterly Report on Form 10-Q
    for the quarterly period ended June 30, 2003).                                                               
|        | 10.11(g) |   |  |  |                        | Seventh Amendment to the Sterling Chemicals, Inc. Hourly Paid
    Employees Pension Plan (incorporated herein by reference
    from Exhibit 10.11(g) to our Annual Report on
    Form 10-K for the fiscal year ended December 31, 2003).                                                             
|        | 10.11(h) |   |  |  |                        | Eighth Amendment to the Sterling Chemicals, Inc. Hourly Paid
    Employees Pension Plan (incorporated herein by reference
    from Exhibit 10.3 to our Quarterly Report on Form 10-Q
    for the quarterly period ended June 30, 2004).                                                              
|        | 10.12*   |   |  |  |                        | Sterling Chemicals, Inc. Sixth Amended and Restated Savings and
    Investment Plan dated as of October 1, 2000 (incorporated
    herein by reference from Exhibit 10.8 to our Annual Report
    on Form 10-K for the fiscal year ended September 30,
    2000).                                      
|        | 10.12(a) | * |  |  |                        | First Amendment to the Sixth Amended and Restated Savings and
    Investment Plan dated as of October 1, 2000 (incorporated
    herein by reference from Exhibit 10.1 to our Quarterly
    Report on Form 10-Q for the quarterly period ended
    December 31, 2001).                                 
|        | 10.12(b) | * |  |  |                        | Second Amendment to the Sixth Amended and Restated Savings and
    Investment Plan (incorporated herein by reference from
    Exhibit 10.6 to our Transition Report on Form 10-Q for
    the transition period ended December 31, 2002).                                                              
|        | 10.12(c) | * |  |  |                        | Third Amendment to the Sixth Amended and Restated Savings and
    Investment Plan (incorporated herein by reference from
    Exhibit 10.7 to our Transition Report on Form 10-Q for
    the transition period ended December 31, 2002).                                                               
|        | 10.12(d) | * |  |  |                        | Fourth Amendment to the Sixth Amended and Restated Savings and
    Investment Plan (incorporated herein by reference from
    Exhibit 10.4 to our Quarterly Report on Form 10-Q for
    the quarterly period ended June 30, 2003).                                                                    
|        | 10.12(e) | * |  |  |                        | Fifth Amendment to the Sixth Amended and Restated Savings and
    Investment Plan (incorporated herein by reference from
    Exhibit 10.4 to our Quarterly Report on Form 10-Q for
    the quarterly period ended June 30, 2004).                                                                     

82



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|        |            |   |  |   |                        |                                                                                                                                                                                                                                                                                                                                                                                                    
|------- | ---------- | - |  | - | ---------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |            |   |  |   |                       
|Number  |            |   |  |   | Description of Exhibit
|        |            |   |  |   |                       
|        | 10.12(f)   | * |  |  |                        | Sixth Amendment to the Sixth Amended and Restated Savings and
    Investment Plan (incorporated herein by reference from
    Exhibit 10.1 to our Quarterly Report on Form 10-Q for
    the quarterly period ended September 30, 2004).                                                                                                                                                             
|        | **10.12(g) | * |  |  |                        | Seventh Amendment to the Sixth Amended and Restated Savings and
    Investment Plan.                                                                                                                                                                                                                                                                                                               
|        | 10.13      |   |  |  |                        | Articles of Agreement between Sterling Chemicals, Inc., its
    successors and assigns, and Texas City, Texas Metal Trades
    Council, AFL-CIO Texas City, Texas, May 27, 2004 to
    May 1, 2007 (incorporated herein by reference from
    Exhibit 10.5 to our Quarterly Report on Form 10-Q for
    the quarterly period ended June 30, 2004).                                                 
|        | 10.14*     |   |  |  |                        | 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)).                                                                                                                                           
|        | 10.15*     |   |  |  |                        | Employment Agreement dated as of January 23, 2001 among
    David G. Elkins, Sterling Chemicals Holdings, Inc. and Sterling
    Chemicals, Inc. (incorporated herein by reference from
    Exhibit 10.16 to our Annual Report on Form 10-K for
    the fiscal year ended September 30, 2002).                                                                                                      
|        | 10.16*     |   |  |  |                        | Severance Agreement dated effective as of January 2, 2003
    between David G. Elkins and Sterling Chemicals, Inc.
    (incorporated herein by reference from Exhibit 10.10 to our
    Transition Report on Form 10-Q for the transition period
    ended December 31, 2002).                                                                                                                      
|        | 10.17*     |   |  |  |                        | Settlement Agreement, Waiver and General Release dated
    March 17, 2003 between Frank P. Diassi and Sterling
    Chemicals, Inc. (incorporated herein by reference from
    Exhibit 10.1 to our Quarterly Report on Form 10-Q for
    the transition period ended March 31, 2003).                                                                                                               
|        | +10.18     |   |  |  |                        | Amended and Restated Production Agreement dated March 31,
    1998 between BP Chemicals, Inc. (predecessor in interest to
    BP Amoco Chemical Company) and Sterling Chemicals, Inc.
    (incorporated herein by reference from Exhibit 10.2 to our
    Quarterly Report on Form 10-Q for the quarterly period
    ended March 31, 1998 (SEC File Number 333-04343-01)).                          
|        | +10.19     |   |  |  |                        | Joint Venture Agreement dated March 31, 1998 between
    BP Chemicals Inc. (predecessor in interest to BP Amoco
    Chemical Company) and Sterling Chemicals, Inc. (incorporated
    herein by reference from Exhibit 10.4 to our Quarterly
    Report on Form 10-Q for the quarterly period ended
    March 31, 1998 (SEC File Number 333-04343-01)).                                             
|        | +10.19(a)  |   |  |  |                        | First Amendment to Joint Venture Agreement dated effective as of
    March 31, 1998 between BP Chemicals Inc. (predecessor in
    interest to BP Amoco Chemical Company) and Sterling
    Chemicals, Inc. (incorporated herein by reference from
    Exhibit 10.26(a) to our Annual Report on Form 10-K for
    the fiscal year ended September 30, 1998 (SEC File
    Number 333-04343-01)).      
|        | +10.20     |   |  |  |                        | Acrylonitrile Expanded Relationship and Master Modification
    Agreement dated June 19, 2003 between BP Chemicals
    Inc. (predecessor in interest to BP Amoco Chemical Company)
    and Sterling Chemicals, Inc. (incorporated herein by reference
    from Exhibit 10.1 to our Quarterly Report on Form 10-Q
    for the quarterly period ended June 30, 2003).                                
|        | +10.21     |   |  |  |                        | Second Amended and Restated Production Agreement dated effective
    as of August 1, 1996 between BP Chemicals Inc.
    (predecessor in interest to BP Amoco Chemical Company) and
    Sterling Chemicals, Inc. (incorporated herein by reference from
    Exhibit 10.3 to our Quarterly Report on Form 10-Q for
    the quarterly period ended March 31, 1998 (SEC File
    Number 333-04343-01)).
|        | +10.21(a)  |   |  |  |                        | Amendment to Second Amended and Restated Production Agreement
    dated as of March 1, 2001 between BP Chemicals Inc.
    (predecessor in interest to BP Amoco Chemical Company) and
    Sterling Chemicals, Inc. (incorporated herein by reference from
    Exhibit 10.1 to our Quarterly Report on Form 10-Q for the
    quarterly period ended March 31, 2001).                                 

83



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|        |        |  |  |   |                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------- | ------ |  |  | - | ---------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |  |  |   |                       
|Number  |        |  |  |   | Description of Exhibit
|        |        |  |  |   |                       
|        | +10.22 |  |  |  |                        | Amended and Restated Product Sales Agreement dated effective as
    of January 1, 1998 between BASF Corporation and Sterling
    Chemicals, Inc. (incorporated herein by referenced from
    Exhibit 10.11 to our Annual Report on Form 10-K for
    the fiscal year ended September 30, 1997 (SEC File
    Number 333-04343-01)).                                                                                                                        
|        | 10.23  |  |  |  |                        | 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)).                                                                                                                                                                                                                     
|        | 10.24  |  |  |  |                        | Asset and Stock Purchase Agreement dated as of November 13,
    2002 among Sterling Chemicals, Inc. and Sterling Canada, Inc.,
    Sterling Pulp Chemicals US Inc., Sterling Pulp Chemicals,
    Inc. and Sterling Chemicals Acquisitions, Inc., as Sellers, and
    Superior Propane Inc., as Purchaser (incorporated herein by
    reference from Exhibit 10.23 to our Annual Report on
    Form 10-K for the fiscal year ended September 30,
    2002).
|        | 10.25  |  |  |  |                        | Investment Agreement dated as of October 11, 2002 among
    Sterling Chemicals Holdings, Inc., Sterling Chemicals, Inc. and
    Resurgence Asset Management, L.L.C. (incorporated herein by
    reference from Exhibit 2.1 to our Annual Report on
    Form 10-K for the fiscal year ended September 30,
    2002).                                                                                                                                       
|        | 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 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 Officer                                                                                                                                                                                                                                                                                                                                                                                                 
|        | 99.1   |  |  |  |                        | Amended and Restated Audit 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, 2003).                                                                                                                                                                                                                         
|        | 99.2   |  |  |  |                        | Amended and Restated Corporate Governance Committee Charter of
    Sterling Chemicals, Inc. (incorporated herein by reference from
    Exhibit 99.2 to our Annual Report on Form 10-K for the
    fiscal year ended December 31, 2003).                                                                                                                                                                                                                   






|  |                                                            
|- | -----------------------------------------------------------
|* | 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.

84



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SIGNATURES






| |                         
| | ------------------------
| | Sterling Chemicals, Inc.
| | (Registrant)            



| |     |                     
| | --- | --------------------
| | By: | /s/ Richard K. Crump

| |                                                
| | -----------------------------------------------
| |                                                
| | Richard K. Crump                               
| | President, Chief Executive Officer and Director



| |     |                        
| | --- | -----------------------
| | By: | /s/ Paul G. Vanderhoven

| |                                  
| | ---------------------------------
| |                                  
| | Paul G. Vanderhoven              
| | Senior Vice President-Finance and
| | Chief Financial Officer          





|                                                       |  |                                                               |  |                   |  | 
|------------------------------------------------------ |  | ------------------------------------------------------------- |  | ----------------- |  | 
|Signature                                              |  | Title                                                         |  | Date             
|                                                       |  |                                                               |  |                  
|                                                      
|Principal Executive Officer:                           |  |                                                               |  |                  
|                                                      
|/s/ Richard K. CrumpRichard
    K. Crump               |  | President, Chief Executive Officer and Director               |  | February 15, 2005
|                                                      
|Principal Financial Officer:                           |  |                                                               |  |                  
|                                                      
|/s/ Paul G. VanderhovenPaul
    G. Vanderhoven         |  | Senior Vice President-Finance and
    Chief Financial Officer |  | February 15, 2005
|                                                      
|Principal Accounting Officer:                          |  |                                                               |  |                  
|                                                      
|/s/ John R. BeaverJohn
    R. Beaver                   |  | Vice President,
    Corporate Controller                      |  | February 15, 2005
|                                                      
|/s/ Byron J. HaneyByron
    J. Haney                   |  | Director                                                      |  | February 15, 2005
|                                                      
|/s/ Marc S. KirschnerMarc
    S. Kirschner             |  | Director                                                      |  | February 15, 2005
|                                                      
|/s/ Robert T. SymingtonRobert
    T. Symington         |  | Director                                                      |  | February 15, 2005
|                                                      
|/s/ Keith R. WhittakerKeith
    R. Whittaker           |  | Director                                                      |  | February 15, 2005
|                                                      
|/s/ John W. GildeaJohn
    W. Gildea                   |  | Director                                                      |  | February 15, 2005
|                                                      
|/s/ Thomas P. KrasnerThomas
    P. Krasner             |  | Director                                                      |  | February 15, 2005
|                                                      
|/s/ Dr. Peter Ting Kai
    WuDr.
    Peter Ting Kai Wu |  | Director                                                      |  | February 15, 2005
|                                                      
|/s/ Philip M. SivinPhilip
    M. Sivin                 |  | Director                                                      |  | February 15, 2005

85



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|        |      |  |  |                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------- | ---- |  |  | ---------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |  |  |                       
|Number  |      |  |  | Description of Exhibit
|        |      |  |  |                       
|        | 2.1  |  |  |                       |  | Certificate of Ownership and Merger merging Sterling Chemicals
    Holdings, Inc. into Sterling Chemicals, Inc. (incorporated
    herein by reference from Exhibit 2.1 to our Annual Report
    on Form 10-K for the fiscal year ended September 30, 2002).                                                                                                                                                                                                                                                               
|        | 2.2  |  |  |                       |  | Joint Plan of Reorganization of Sterling Chemicals Holdings,
    Inc., et. al., Debtors, dated October 14, 2002
    (incorporated herein by reference from Exhibit 2.1 to our
    Form 8-K filed on November 26, 2002).                                                                                                                                                                                                                                                                                                   
|        | 2.3  |  |  |                       |  | First Modification to Joint Plan of Reorganization of Sterling
    Chemicals Holdings, Inc., et. al., Debtors, dated
    November 18, 2002 (incorporated herein by reference from
    Exhibit 2.2 to our Form 8-K filed on November 26,
    2002).                                                                                                                                                                                                                                                                        
|        | 3.1  |  |  |                       |  | Amended and Restated Certificate of Incorporation of Sterling
    Chemicals, Inc. (incorporated herein by reference from
    Exhibit 3.1 to our Annual Report on Form 10-K for the
    fiscal year ended September 30, 2002).                                                                                                                                                                                                                                                                                             
|        | 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
    June 30, 2003).                                                                                                                                                                                                                                                                                                           
|        | 4.1  |  |  |                       |  | Warrant Agreement dated as of December 19, 2002 by and
    between Sterling Chemicals, Inc., and Wells Fargo Bank
    Minnesota, N.A., as warrant agent (incorporated herein by
    reference from Exhibit 5 to our Form 8-A filed on
    December 19, 2002).                                                                                                                                                                                                                                                             
|        | 4.2  |  |  |                       |  | Registration Rights Agreement dated as of December 19, 2002
    by and between Sterling Chemicals, Inc. and Resurgence Asset
    Management, L.L.C. (incorporated herein by reference from
    Exhibit 7 to our Form 8-A filed on December 19,
    2002).                                                                                                                                                                                                                                                                 
|        | 4.3  |  |  |                       |  | 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).                                                                                                                                                                                                                          
|        | 4.4  |  |  |                       |  | Indenture dated December 19, 2002 by and among Sterling
    Chemicals, Inc., as Issuer, Sterling Chemicals Energy, Inc., as
    Guarantor, and National City Bank, as Trustee, governing the
    10% Senior Secured Notes due 2007 of Sterling Chemicals,
    Inc. (incorporated herein by reference from Exhibit T3-C to
    Amendment No. 3 to our Form T-3 filed on
    December 19, 2002).                                                                                                                            
|        | 4.5  |  |  |                       |  | Deed of Trust, Assignment of Leases and Rents, Security
    Agreement and Fixture Filing dated December 19, 2002 made
    by Sterling Chemicals, Inc., as Trustor, to Thomas S. Henderson,
    as Individual Trustee for the benefit of National City Bank, in
    its capacity as described therein, as Beneficiary (incorporated
    herein by reference from Exhibit 4.2 to our Transition
    Report on Form 10-Q for the transition period ended
    December 31, 2002).                                             
|        | 4.6  |  |  |                       |  | Security Agreement dated as of December 19, 2002 by and
    among Sterling Chemicals, Inc. and Sterling Chemicals Energy,
    Inc., as Assignors, National City Bank, as Collateral Agent, and
    National City Bank, as Indenture Trustee for the benefit of the
    holders the 10% Senior Secured Notes due 2007 of Sterling
    Chemicals, Inc. (incorporated herein by reference from
    Exhibit 4.3 to our Transition Report on Form 10-Q for
    the transition period ended December 31, 2002).                 
|        | 10.1 |  |  |                       |  | Revolving Credit Agreement dated as of December 19, 2002 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 (incorporated herein by
    reference from Exhibit 4.4 to our Transition Report on Form
    10-Q for the transition period ended December 31, 2002).

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|        |          |  |  |   |                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------- | -------- |  |  | - | ---------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |          |  |  |   |                       
|Number  |          |  |  |   | Description of Exhibit
|        |          |  |  |   |                       
|        | 10.1(a)  |  |  |  |                        | First Amendment to Revolving Credit Agreement dated as of
    February 12, 2003 by and among Sterling Chemicals, Inc. and
    Sterling Chemicals Energy, Inc., as Borrowers, the various
    financial institutions party thereto, as the Lenders, and The
    CIT Group/Business Credit, Inc., as the Administrative Agent for
    the Lenders (incorporated herein by reference from
    Exhibit 4.8 to our Transition Report on Form 10-Q for
    the transition period ended December 31, 2002).
|        | 10.2     |  |  |  |                        | Security Agreement dated as of December 19, 2002 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 4.5 to our Transition
    Report on Form 10-Q for the transition period ended
    December 31, 2002).                                                                                           
|        | 10.3     |  |  |  |                        | Pledge Agreement dated as of December 19, 2002 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 4.6 to our Transition
    Report on Form 10-Q for the transition period ended
    December 31, 2002).                                                                                             
|        | 10.4*    |  |  |  |                        | Sterling Chemicals, Inc. 2002 Stock Plan (incorporated herein by
    reference to Exhibit 6 to our Form 8-A filed on
    December 19, 2002).                                                                                                                                                                                                                                                                                                                                                        
|        | 10.5*    |  |  |  |                        | Fourth Amended and Restated Key Employee Protection Plan
    (incorporated herein by reference from Exhibit 10.1 to our
    Quarterly Report on Form 10-Q for the quarterly period ended
    March 31, 2004).                                                                                                                                                                                                                                                                                       
|        | 10.6*    |  |  |  |                        | Amended and Restated Supplemental Pay Plan (incorporated herein
    by reference from Exhibit 10.1 to our Quarterly Report on
    Form 10-Q for the quarterly period ended June 30, 2001).                                                                                                                                                                                                                                                                                                          
|        | 10.6(a)* |  |  |  |                        | First Amendment to Amended and Restated Supplemental Pay Plan
    (incorporated herein by reference from Exhibit 10.2(a) to
    our Annual Report on Form 10-K for the fiscal year ended
    September 30, 2002).                                                                                                                                                                                                                                                                                   
|        | 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).                                                                                                                                                                                                                                                                                                           
|        | 10.8*    |  |  |  |                        | Sterling Chemicals, Inc. Amended and Restated Salaried
    Employees Pension Plan (Effective as of May 1, 1996)
    (incorporated herein by reference from Exhibit 10.4 to our
    Annual Report on Form 10-K for the fiscal year ended
    September 30, 2000).                                                                                                                                                                                                                                   
|        | 10.8(a)* |  |  |  |                        | First Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Salaried Employees Pension Plan (Effective as of
    January 31, 1997) (incorporated herein by reference from
    Exhibit 10.4(a) to our Annual Report on Form 10-K for
    the fiscal year ended September 30, 2000).                                                                                                                                                                                                    
|        | 10.8(b)* |  |  |  |                        | Second Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Salaried Employees Pension Plan (Effective as of
    January 1, 1997) (incorporated herein by reference from
    Exhibit 10.4(b) to our Annual Report on Form 10-K for
    the fiscal year ended September 30, 2000).                                                                                                                                                                                                    
|        | 10.8(c)* |  |  |  |                        | Third Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Salaried Employees Pension Plan (Effective as of
    November 1, 1998) (incorporated herein by reference from
    Exhibit 10.4(c) to our Annual Report on Form 10-K for the
    fiscal year ended September 30, 2000).                                                                                                                                                                                                    
|        | 10.8(d)* |  |  |  |                        | Fourth Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Salaried Employees Pension Plan (Effective as of
    December 31, 1998) (incorporated herein by reference from
    Exhibit 10.4(d) to our Annual Report on Form 10-K for the
    fiscal year ended September 30, 2000).                                                                                                                                                                                                  

87



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|        |            |   |  |   |                        |                                                                                                                                                                                                                                                                                                       
|------- | ---------- | - |  | - | ---------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |            |   |  |   |                       
|Number  |            |   |  |   | Description of Exhibit
|        |            |   |  |   |                       
|        | 10.8(e)*   |   |  |  |                        | Fifth Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Salaried Employees Pension Plan (Effective as of
    April 1, 1999) (incorporated herein by reference from
    Exhibit 10.4(e) to our Annual Report on Form 10-K for
    the fiscal year ended September 30, 2000).         
|        | 10.8(f)*   |   |  |  |                        | Sixth Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Salaried Employees Pension Plan (Effective as of
    May 14, 1999) (incorporated herein by reference from
    Exhibit 10.4(f) to our Annual Report on Form 10-K for the
    fiscal year ended September 30, 2000).          
|        | 10.8(g)*   |   |  |  |                        | Seventh Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Salaried Employees Pension Plan (incorporated
    herein by reference from Exhibit 10.1 to our Transition
    Report on Form 10-Q for the transition period ended
    December 31, 2002).                                 
|        | 10.8(h)*   |   |  |  |                        | Eighth Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Salaried Employees Pension Plan (incorporated
    herein by reference from Exhibit 10.2 to our Transition
    Report on Form 10-Q for the transition period ended
    December 31, 2002).                                  
|        | 10.8(i)*   |   |  |  |                        | Ninth Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Salaried Employees Pension Plan (incorporated
    herein by reference from Exhibit 10.3 to our Transition
    Report on Form 10-Q for the transition period ended
    December 31, 2002).                                   
|        | 10.8(j)*   |   |  |  |                        | Tenth Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Salaried Employees Pension Plan (incorporated
    herein by reference from Exhibit 10.2 to our Quarterly
    Report on Form 10-Q for the quarterly period ended
    June 30, 2003).                                         
|        | 10.8(k)*   |   |  |  |                        | Eleventh Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Salaried Employees Pension Plan (incorporated
    herein by reference from Exhibit 10.8(k) to our Annual
    Report on Form 10-K for the fiscal year ended December 31,
    2003).                                       
|        | 10.8(l)*   |   |  |  |                        | Twelfth 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
    June 30, 2004).                                       
|        | 10.8(m)*   |   |  |  |                        | Thirteenth Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Salaried Employees Pension Plan (incorporated
    herein by reference from Exhibit 10.2 to our Quarterly
    Report on Form 10-Q for the quarterly period ended
    June 30, 2004).                                    
|        | **10.8(n)* |   |  |  |                        | Fourteenth Amendment to the Sterling Chemicals, Inc. 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.                                                                                                                                                                                                                    
|        | 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.                                                                                                                                                                                           
|        | 10.11      |   |  |  |                        | Sterling Chemicals, Inc. Amended and Restated Hourly Paid
    Employees Pension Plan (Effective as of May 1, 1996)
    (incorporated herein by reference from Exhibit 10.3(c) to
    our Annual Report on Form 10-K for the fiscal year ended
    September 30, 1996 (SEC File Number 333-04343-01)).
|        | 10.11(a)   |   |  |  |                        | First Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Hourly Paid Employees Pension Plan (Effective as
    of December 31, 1998) (incorporated herein by reference
    from Exhibit 10.7(a) to our Annual Report on Form 10-K
    for the fiscal year ended September 30, 2000).  

88



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|        |            |   |  |   |                        |                                                                                                                                                                                                                                                                                                                                                   
|------- | ---------- | - |  | - | ---------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |            |   |  |   |                       
|Number  |            |   |  |   | Description of Exhibit
|        |            |   |  |   |                       
|        | 10.11(b)   |   |  |  |                        | Second Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Hourly Paid Employees Pension Plan (Effective as
    of December 17, 1998) (incorporated herein by reference
    from Exhibit 10.7(b) to our Annual Report on Form 10-K for
    the fiscal year ended September 30, 2000).                                             
|        | 10.11(c)   |   |  |  |                        | Third Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Hourly Paid Employees Pension Plan (Effective as
    of September 20, 1999) (incorporated herein by reference
    from Exhibit 10.7(c) to our Annual Report on Form 10-K
    for the fiscal year ended September 30, 2000).                                             
|        | 10.11(d)   |   |  |  |                        | Fourth Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Hourly Paid Employees Pension Plan (incorporated
    herein by reference from Exhibit 10.4 to our Transition
    Report on Form 10-Q for the transition period ended
    December 31, 2002).                                                                           
|        | 10.11(e)   |   |  |  |                        | Fifth Amendment to the Sterling Chemicals, Inc. Amended and
    Restated Hourly Paid Employees Pension Plan (incorporated
    herein by reference from Exhibit 10.5 to our Transition
    Report on Form 10-Q for the transition period ended
    December 31, 2002).                                                                            
|        | 10.11(f)   |   |  |  |                        | Sixth Amendment to the Sterling Chemicals, Inc. Hourly Paid
    Employees Pension Plan (incorporated herein by reference
    from Exhibit 10.3 to our Quarterly Report on Form 10-Q
    for the quarterly period ended June 30, 2003).                                                                                                           
|        | 10.11(g)   |   |  |  |                        | Seventh Amendment to the Sterling Chemicals, Inc. Hourly Paid
    Employees Pension Plan (incorporated herein by reference
    from Exhibit 10.11(g) to our Annual Report on
    Form 10-K for the fiscal year ended December 31, 2003).                                                                                                         
|        | 10.11(h)   |   |  |  |                        | Eighth Amendment to the Sterling Chemicals, Inc. Hourly Paid
    Employees Pension Plan (incorporated herein by reference
    from Exhibit 10.3 to our Quarterly Report on Form 10-Q
    for the quarterly period ended June 30, 2004).                                                                                                          
|        | 10.12*     |   |  |  |                        | Sterling Chemicals, Inc. Sixth Amended and Restated Savings and
    Investment Plan dated as of October 1, 2000 (incorporated
    herein by reference from Exhibit 10.8 to our Annual Report
    on Form 10-K for the fiscal year ended September 30,
    2000).                                                                                  
|        | 10.12(a)   | * |  |  |                        | First Amendment to the Sixth Amended and Restated Savings and
    Investment Plan dated as of October 1, 2000 (incorporated
    herein by reference from Exhibit 10.1 to our Quarterly
    Report on Form 10-Q for the quarterly period ended
    December 31, 2001).                                                                             
|        | 10.12(b)   | * |  |  |                        | Second Amendment to the Sixth Amended and Restated Savings and
    Investment Plan (incorporated herein by reference from
    Exhibit 10.6 to our Transition Report on Form 10-Q for
    the transition period ended December 31, 2002).                                                                                                          
|        | 10.12(c)   | * |  |  |                        | Third Amendment to the Sixth Amended and Restated Savings and
    Investment Plan (incorporated herein by reference from
    Exhibit 10.7 to our Transition Report on Form 10-Q for
    the transition period ended December 31, 2002).                                                                                                           
|        | 10.12(d)   | * |  |  |                        | Fourth Amendment to the Sixth Amended and Restated Savings and
    Investment Plan (incorporated herein by reference from
    Exhibit 10.4 to our Quarterly Report on Form 10-Q for
    the quarterly period ended June 30, 2003).                                                                                                                
|        | 10.12(e)   | * |  |  |                        | Fifth Amendment to the Sixth Amended and Restated Savings and
    Investment Plan (incorporated herein by reference from
    Exhibit 10.4 to our Quarterly Report on Form 10-Q for
    the quarterly period ended June 30, 2004).                                                                                                                 
|        | 10.12(f)   | * |  |  |                        | Sixth Amendment to the Sixth Amended and Restated Savings and
    Investment Plan (incorporated herein by reference from
    Exhibit 10.1 to our Quarterly Report on Form 10-Q for
    the quarterly period ended September 30, 2004).                                                                                                            
|        | **10.12(g) | * |  |  |                        | Seventh Amendment to the Sixth Amended and Restated Savings and
    Investment Plan.                                                                                                                                                                                                                                                              
|        | 10.13      |   |  |  |                        | Articles of Agreement between Sterling Chemicals, Inc., its
    successors and assigns, and Texas City, Texas Metal Trades
    Council, AFL-CIO Texas City, Texas, May 27, 2004 to
    May 1, 2007 (incorporated herein by reference from
    Exhibit 10.5 to our Quarterly Report on Form 10-Q for
    the quarterly period ended June 30, 2004).

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|        |           |  |  |   |                        |                                                                                                                                                                                                                                                                                                                                                                                                    
|------- | --------- |  |  | - | ---------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |           |  |  |   |                       
|Number  |           |  |  |   | Description of Exhibit
|        |           |  |  |   |                       
|        | 10.14*    |  |  |  |                        | 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)).                                                                                                                                           
|        | 10.15*    |  |  |  |                        | Employment Agreement dated as of January 23, 2001 among
    David G. Elkins, Sterling Chemicals Holdings, Inc. and Sterling
    Chemicals, Inc. (incorporated herein by reference from
    Exhibit 10.16 to our Annual Report on Form 10-K for
    the fiscal year ended September 30, 2002).                                                                                                      
|        | 10.16*    |  |  |  |                        | Severance Agreement dated effective as of January 2, 2003
    between David G. Elkins and Sterling Chemicals, Inc.
    (incorporated herein by reference from Exhibit 10.10 to our
    Transition Report on Form 10-Q for the transition period
    ended December 31, 2002).                                                                                                                      
|        | 10.17*    |  |  |  |                        | Settlement Agreement, Waiver and General Release dated
    March 17, 2003 between Frank P. Diassi and Sterling
    Chemicals, Inc. (incorporated herein by reference from
    Exhibit 10.1 to our Quarterly Report on Form 10-Q for
    the transition period ended March 31, 2003).                                                                                                               
|        | +10.18    |  |  |  |                        | Amended and Restated Production Agreement dated March 31,
    1998 between BP Chemicals, Inc. (predecessor in interest to
    BP Amoco Chemical Company) and Sterling Chemicals, Inc.
    (incorporated herein by reference from Exhibit 10.2 to our
    Quarterly Report on Form 10-Q for the quarterly period
    ended March 31, 1998 (SEC File Number 333-04343-01)).                          
|        | +10.19    |  |  |  |                        | Joint Venture Agreement dated March 31, 1998 between
    BP Chemicals Inc. (predecessor in interest to BP Amoco
    Chemical Company) and Sterling Chemicals, Inc. (incorporated
    herein by reference from Exhibit 10.4 to our Quarterly
    Report on Form 10-Q for the quarterly period ended
    March 31, 1998 (SEC File Number 333-04343-01)).                                             
|        | +10.19(a) |  |  |  |                        | First Amendment to Joint Venture Agreement dated effective as of
    March 31, 1998 between BP Chemicals Inc. (predecessor in
    interest to BP Amoco Chemical Company) and Sterling
    Chemicals, Inc. (incorporated herein by reference from
    Exhibit 10.26(a) to our Annual Report on Form 10-K for
    the fiscal year ended September 30, 1998 (SEC File
    Number 333-04343-01)).      
|        | +10.20    |  |  |  |                        | Acrylonitrile Expanded Relationship and Master Modification
    Agreement dated June 19, 2003 between BP Chemicals
    Inc. (predecessor in interest to BP Amoco Chemical Company)
    and Sterling Chemicals, Inc. (incorporated herein by reference
    from Exhibit 10.1 to our Quarterly Report on Form 10-Q
    for the quarterly period ended June 30, 2003).                                
|        | +10.21    |  |  |  |                        | Second Amended and Restated Production Agreement dated effective
    as of August 1, 1996 between BP Chemicals Inc.
    (predecessor in interest to BP Amoco Chemical Company) and
    Sterling Chemicals, Inc. (incorporated herein by reference from
    Exhibit 10.3 to our Quarterly Report on Form 10-Q for
    the quarterly period ended March 31, 1998 (SEC File
    Number 333-04343-01)).
|        | +10.21(a) |  |  |  |                        | Amendment to Second Amended and Restated Production Agreement
    dated as of March 1, 2001 between BP Chemicals Inc.
    (predecessor in interest to BP Amoco Chemical Company) and
    Sterling Chemicals, Inc. (incorporated herein by reference from
    Exhibit 10.1 to our Quarterly Report on Form 10-Q for the
    quarterly period ended March 31, 2001).                                 
|        | +10.22    |  |  |  |                        | Amended and Restated Product Sales Agreement dated effective as
    of January 1, 1998 between BASF Corporation and Sterling
    Chemicals, Inc. (incorporated herein by referenced from
    Exhibit 10.11 to our Annual Report on Form 10-K for
    the fiscal year ended September 30, 1997 (SEC File
    Number 333-04343-01)).                                                                 
|        | 10.23     |  |  |  |                        | 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)).                                                                                                                                                              

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##### Table of Contents



|        |        |  |  |   |                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------- | ------ |  |  | - | ---------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |  |  |   |                       
|Number  |        |  |  |   | Description of Exhibit
|        |        |  |  |   |                       
|        | 10.24  |  |  |  |                        | Asset and Stock Purchase Agreement dated as of November 13,
    2002 among Sterling Chemicals, Inc. and Sterling Canada, Inc.,
    Sterling Pulp Chemicals US Inc., Sterling Pulp Chemicals,
    Inc. and Sterling Chemicals Acquisitions, Inc., as Sellers, and
    Superior Propane Inc., as Purchaser (incorporated herein by
    reference from Exhibit 10.23 to our Annual Report on
    Form 10-K for the fiscal year ended September 30,
    2002).
|        | 10.25  |  |  |  |                        | Investment Agreement dated as of October 11, 2002 among
    Sterling Chemicals Holdings, Inc., Sterling Chemicals, Inc. and
    Resurgence Asset Management, L.L.C. (incorporated herein by
    reference from Exhibit 2.1 to our Annual Report on
    Form 10-K for the fiscal year ended September 30,
    2002).                                                                                                                                       
|        | 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 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 Officer                                                                                                                                                                                                                                                                                                                                                                                                 
|        | 99.1   |  |  |  |                        | Amended and Restated Audit 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, 2003).                                                                                                                                                                                                                         
|        | 99.2   |  |  |  |                        | Amended and Restated Corporate Governance Committee Charter of
    Sterling Chemicals, Inc. (incorporated herein by reference from
    Exhibit 99.2 to our Annual Report on Form 10-K for the
    fiscal year ended December 31, 2003).                                                                                                                                                                                                                   






|  |                                                            
|- | -----------------------------------------------------------
|* | 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.

91