##### 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, 2005
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from            to
 Commission File Number 000-50132
 Sterling Chemicals, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware(State or other jurisdiction of
incorporation or organization)
    
    76-0502785(I.R.S. Employer Identification No.)333 Clay Street, Suite 3600
Houston, Texas 77002-4109(Address of principal executive offices)
    
    (713-650-3700)(Registrants telephone number,
including area code)
 Securities registered pursuant to Section 12(b) of the Act: None
 Securities registered pursuant to Section 12(g) of the Act:
 
 o þ
 o þ
 þ o
 o
 o o þ
  APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
 þ o
 o þ




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##### Table of Contents



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 strategies;
    
    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;
    
    compliance with applicable laws; and
    
    adequacy of insurance coverage or indemnification rights.
  
    
    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;




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
    
    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, including those resulting from weather related events;
    
    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.
  Subsequent Events
  Document Summaries
  Fiscal Year
  
    
    2005 refers to the 12-month period ended December 31, 2005;
    
    2004 refers 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.




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##### 



TABLE OF CONTENTS
 PagePART IItem 1.
    
    Business
    
    
    2Item 1A.
    
    Risk Factors
    
    
    10Item 1B.
    
    Unresolved Staff Comments
    
    
    18Item 2.
    
    Properties
    
    
    18Item 3.
    
    Legal Proceedings
    
    
    18Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    19PART IIItem 5.
    
    Market for Registrants Common Equity and Related Stockholder Matters
    
    
    20Item 6.
    
    Selected Financial Data
    
    
    22Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    23Item 7A.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    34Item 8.
    
    Financial Statements and Supplementary Data
    
    
    35Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
    
    
    61Item 9A.
    
    Controls and Procedures
    
    
    61Item 9B.
    
    Other Information
    
    
    62PART IIIItem 10.
    
    Directors and Executive Officers of the Registrant
    
    
    63Item 11.
    
    Executive Compensation
    
    
    63Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management
    
    
    63Item 13.
    
    Certain Relationships and Related Transactions
    
    
    63Item 14.
    
    Principal Accountant Fees and Services
    
    
    63PART IVItem 15.
    
    Exhibits and Consolidated Financial Statement Schedules
    
    
    64Bonus PlanAmended and Restated Plasticizers Production AgreementSubsidiaries of Sterling Chemicals, Inc.Consent of Deloitte & Touche LLPRule 13a-14(a) Certification of CEORule 13a-14(a) Certification of CFOSection 1350 Certification of CEOSection 1350 Certification of CFOAmended and Restated Audit Committee Charter
  1




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PART I
 
 Item 1. Bussines s
   Percent ofTotal NorthRated Annual
    
    American
    
    North American
    
    GlobalProduct
    
    Production Capacity
    
    Capacity
    
    Market Position
    
    Production CapacityStyrene
    
    1.7 billion pounds
    
    
    11
    %
    
    
    4
    
    
    60 billion poundsAcetic Acid
    
    1.1 billion pounds
    
    
    17
    %
    
    
    3
    
    
    22 billion pounds
 .
   Business Strategy
  2




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Optimize Capacity Utilization Rates Through Long-Term Supply Contracts
 Balance Benefits of Long-Term Contracts Versus Product Availability During Peak Markets
 Improve Organization Efficiency and Cost Structure
 Attract New Businesses to Our Site.
 Industry Overview
 Styrene.
  3




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Acetic Acid.
  4




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Plasticizers.
 Product Summary
  Sterling Product
    
    Intermediate(Capacity)
    
    Products
    
    Primary End Products
    
    Raw Materials
    
    Major CompetitorsStyrene
(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, Ineos, PLC,
Chevron Phillips
Chemical Company,
Shell Chemical
Company, Cos-Mar (a
joint venture of
General
Electric Company and
FINA Inc.), Nova
Corporation, SABIC,
Samsung Corporation
and Mitsubishi
CorporationAcetic Acid
(1.1 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
CompanyPlasticizers
(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
 Products
 Styrene.
  5




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Acetic Acid. Acetic Acid-BP Chemicals
 Plasticizers. Plasticizers-BASF
 Sales and Marketing
  
    
    multi-year contracts;
    
    conversion agreements; and
    
    spot transactions in both the domestic and export markets.
    6




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
    
    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.
  Contracts
  Customer
    
    2005
    
    2004
    
    2003BP Chemicals
    
    
    13
    %
    
    
    12
    %
    
    
    14
    %Customer A
    
    
    15
    %
    
    
    15
    %
    
    
    12
    %Customer B
    
    
    19
    %
    
    
    14
    %
    
    
    Customer C
    
    
    12
    %
    
    
    
    
    
    
    
  Acetic Acid-BP Chemicals
  Plasticizers-BASF
  Raw Materials for Products and Energy Resources
  Styrene.
 7




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Acetic Acid.
 Plasticizers.
 Technology and Licensing
    Competition
    Environmental Matters
  8




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9




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Employees
  Insurance
  Access to Filings
  
 Item 1A. Risk Factors
  Risks Related to our Business
 Cyclicality in the styrene markets has in the past and may in the future result in reduced
operating margins or operating losses.
  10




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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 10% Senior Secured Notes due 2007 (our Secured Notes);
and
    
    place us at a competitive disadvantage relative to competitors that have less debt
or greater financial resources.
   11




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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.
   12




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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.
  The loss of a long-term contract or a significant customer could adversely affect us.
  13




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The petrochemicals industry has experienced several years of depressed conditions and many of our
styrene customers are in troubled financial condition.
  Our technology is widely available and could become obsolete.
  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.
   14




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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.
   Losses as a result of the September 22, 2005 incident may not be fully covered by insurance
  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.
 15




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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.
   16




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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.
  Our securities are thinly traded and control of our equity is concentrated in a few holders.
   17




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Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
     
 Item 3. Legal Proceedings
   18




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Item 4. Submission of Matters to a Vote of Security Holders
  19




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PART II
 
 Item 5. Market for Registrants Common Equity and Related Stockholder Matters
  First
    
    Second
    
    Third
    
    FourthQuarter
    
    Quarter
    
    Quarter
    
    Quarter2005 High
    
    $
    46.50
    
    
    $
    41.00
    
    
    $
    37.00
    
    
    $
    25.50Low
    
    $
    35.05
    
    
    $
    26.00
    
    
    $
    22.00
    
    
    $
    11.772004 High
    
    $
    29.00
    
    
    $
    26.00
    
    
    $
    25.00
    
    
    $
    37.00Low
    
    $
    25.00
    
    
    $
    21.00
    
    
    $
    23.00
    
    
    $
    23.50
  Dividend Policy
  Equity Compensation Plan
   20




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Number of securitiesremaining available forNumber of securities to
    
    Weighted-average
    
    future issuance under equitybe issued upon exercise
    
    exercise price of
    
    compensation plansof outstanding options,
    
    outstanding options,
    
    (excluding securitiesPlan Category
    
    warrants and rights
    
    warrants and rights
    
    reflected in first columnEquity
compensation plans
approved by
security
holders(1)
    
    
    278,500
    
    
    $
    31.60
    
    
    
    85,414Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    278,500
    
    
    $
    31.60
    
    
    
    85,414
 
 (1)
    
    Our 2002 Stock Plan was authorized and established under our Plan of Reorganization,
which became effective on December 19, 2002. Our Plan of Reorganization provided that,
without any further act or authorization, confirmation of our Plan of Reorganization and entry
of the confirmation order was deemed to satisfy all applicable federal and state law
requirements and all listing standards of any securities exchange for approval by the board of
directors or the stockholders of our 2002 Stock Plan. No additional stockholder approval of
our 2002 Stock Plan has been obtained. 21




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Item 6. Selected Financial Data
    Reorganized Sterling
    
    
    Predecessor SterlingYear ended
    
    Year ended
    
    Year ended
    
    December 20 to
    
    
    October 1 toDecember 31,
    
    December 31,
    
    December 31,
    
    December 31,
    
    
    December 19,
    
    Fiscal Year Ended September 30,2005
    
    2004
    
    2003
    
    2002
    
    
    2002
    
    2002
    
    2001(In Thousands, Except Per Share Data)Operating Data:Revenues
    
    $
    641,886
    
    
    $
    655,353
    
    
    $
    518,772
    
    
    $
    12,211
    
    
    
    $
    98,575
    
    
    $
    375,095
    
    
    $
    381,670Gross profit (loss)
    
    
    (11,248
    )
    
    
    22,344
    
    
    
    23,790
    
    
    
    1,494
    
    
    
    
    6,471
    
    
    
    47,530
    
    
    
    (22,398
    )Income (loss) from
continuing
operations(1)
    
    
    (18,508
    )
    
    
    (39,881
    )
    
    
    1,270
    
    
    
    (553
    )
    
    
    
    230,145
    
    
    
    (32,685
    )
    
    
    (105,511
    )Income (loss) from
discontinued
operations(2)
    
    
    (11,060
    )
    
    
    (22,763
    )
    
    
    (15,469
    )
    
    
    (991
    )
    
    
    
    188,466
    
    
    
    (3,301
    )
    
    
    (76,199
    )Per Share Data:Net loss attributable to
common stockholders
    
    
    (12.94
    )
    
    
    (24.30
    )
    
    
    (6.84
    )
    
    
    (0.61
    )
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4Net income (loss) from
continuing operations
attributable to common
stockholders
    
    
    (9.03
    )
    
    
    (16.24
    )
    
    
    (1.36
    )
    
    
    (0.26
    )
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4Cash dividends
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
 22




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Reorganized Sterling
    
    
    Predecessor SterlingYear ended
    
    Year ended
    
    Year ended
    
    December 20 to
    
    
    October 1 toDecember 31,
    
    December 31,
    
    December 31,
    
    December 31,
    
    
    December 19,
    
    Fiscal Year Ended September 30,2005
    
    2004
    
    2003
    
    2002
    
    
    2002
    
    2002
    
    2001(In Thousands, Except Per Share Data)Balance Sheet Data:Working capital(3)
    
    $
    76,605
    
    
    $
    106,767
    
    
    $
    137,412
    
    
    $
    149,518
    
    
    
    $
    163,638
    
    
    $
    154,988
    
    
    $
    218,107Total assets
    
    
    386,594
    
    
    
    473,553
    
    
    
    550,503
    
    
    
    547,170
    
    
    
    
    546,014
    
    
    
    489,648
    
    
    
    511,850Long-term debt (excluding
current portion of long-term
debt)(4)
    
    
    100,579
    
    
    
    100,579
    
    
    
    100,579
    
    
    
    94,275
    
    
    
    
    94,275
    
    
    
    3⁄4
    
    
    
    42,270Stockholders equity
(deficiency in assets)
    
    
    80,285
    
    
    
    120,083
    
    
    
    189,436
    
    
    
    209,011
    
    
    
    
    210,725
    
    
    
    (611,477
    )
    
    
    (563,582
    )
 
 (1)
    
    During 2004, we recorded a $48.5 million goodwill impairment charge. 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. Duringfiscal 2002, we
recorded $56.8 million of deferred tax expense to reflect a full valuation allowance on our
U.S. deferred tax assets.(2)
    
    During 2005, we announced that we were exiting the acrylonitrile business and
related derivatives operations. On December 19, 2002, pursuant to our Plan of Reorganization,
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
reported the operating results of these businesses as discontinued operations in the
consolidated statement of operations and cash flows, and the assets and liabilities of these
businesses have been presented separately as assets and liabilities related to discontinued
operations in our consolidated balance sheet. During 2004, we recorded a $22 million pre-tax
impairment charge related to our acrylonitrile long-lived assets.(3)
    
    Working capital at December 31, 2005, 2004, 2003, 2002 and September 30, 2002 and
2001 includes net assets (liabilities) of discontinued operations of $(2) million, $55
million, $57 million, $27 million, $164 million and $178 million, respectively. Working
capital at September 30, 2002 and 2001 excludes pre-petition liabilities.(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. 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
 Business
  23




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Percent ofTotal NorthRated Annual
    
    American
    
    North American
    
    GlobalProduct
    
    Production Capacity
    
    Capacity
    
    Market Position
    
    Production CapacityStyrene
    
    1.7 billion pounds
    
    
    11
    %
    
    
    4
    
    
    60 billion poundsAcetic Acid
    
    1.1 billion pounds
    
    
    17
    %
    
    
    3
    
    
    22 billion pounds
 .
  vice versa. vice versa,
 24




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Styrene.
    Acetic Acid.
 25




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Plasticizers.
 Discontinued Operations
    Results of Operations
  26




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Year ended December 31,2005
    
    2004
    
    2003(Dollars in Thousands)Revenues:
    
    $
    641,886
    
    
    $
    655,353
    
    
    $
    518,772Gross profit (loss):
    
    
    (11,248
    )
    
    
    22,344
    
    
    
    23,790Operating income (loss)
from continuing
operations:
    
    
    (19,059
    )
    
    
    (22,192
    )
    
    
    11,757Income (loss) from
continuing operations
    
    
    (18,508
    )
    
    
    (39,881
    )
    
    
    1,270
 Comparison of 2005 to 2004
 Revenues, Gross Profit (Loss) and Net Income (Loss) from continuing operations
    Organizational efficiency project
  SG&A Expenses
  27




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Provision (benefit) for income taxes
  Loss from Discontinued Operation, net of tax
  Comparison of 2004 to 2003
 Revenues, Gross Profit (Loss) and Net Income (Loss) from continuing operations
    Organizational efficiency project
  SG&A Expenses
  28




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##### Table of Contents



Impairment of long-lived assets
   Gain on pension curtailment
  Gain on sale of methanol plant
  Other Expense (Income)
  Provision (benefit) for income taxes
  Loss from Discontinued Operations, net of tax
  Liquidity and Capital Resources
  29




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Working Capital
  30




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Cash Flow
    Capital Expenditures
   Contractual Cash Obligations
  Less than 1
    
    
    
    
    
    
    
    
    
    More thanyear(1)
    
    1-3 years
    
    4-5 years
    
    5 years
    
    Total(Dollars in Thousands)Long-term debt
    
    $
    
    
    
    $
    100,579
    
    
    $
    
    
    
    $
    
    
    
    $
    100,579Interest payments on long-term debt
    
    
    10,058
    
    
    
    10,058
    
    
    
    
    
    
    
    
    
    
    
    20,116Operating leases
    
    
    293
    
    
    
    879
    
    
    
    586
    
    
    
    513
    
    
    
    2,271Purchase obligations (2)
    
    
    80,000
    
    
    
    135,000
    
    
    
    59,000
    
    
    
    149,000
    
    
    
    423,000Pension and other postretirement
benefits
    
    
    9,472
    
    
    
    17,856
    
    
    
    8,142
    
    
    
    30,491
    
    
    
    65,961Contractual obligations of
discontinued operations
    
    
    3,800
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,800Total
    
    $
    103,623
    
    
    $
    264,372
    
    
    $
    67,728
    
    
    $
    180,004
    
    
    $
    615,727
 
 (1)
    
    Payment obligations under our Revolver are not presented because there were
no outstanding borrowings at December 31, 2005 and interest payments fluctuate depending on the
interest rate and outstanding balance under our Revolver at any point in time. 31




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##### Table of Contents



(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
  Income Taxes
  Employee Benefit Plans
  32




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##### Table of Contents



Plant Turnaround Costs
  New Accounting Standards
      33




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##### Table of Contents



Item 7A. Quantitative and Qualitative Disclosures about Market Risk
  Fair ValueDecember 31,Expected Maturity Dates
    
    2006
    
    2007
    
    2008
    
    2009
    
    2010
    
    Thereafter
    
    Total
    
    2005(Dollars in Thousands)Secured Notes
    
    
    
    
    
    
    100,579
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,579
    
    
    
    95,625
  34




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##### Table of Contents



Item 8. Financial Statements and Supplementary Data
 INDEX TO FINANCIAL STATEMENTS
 Sterling Chemicals, Inc.Consolidated Statements of Operations for the years ended December 31, 2005, 2004 and 2003
    
    
    36Consolidated Balance Sheets as of December 31, 2005 and 2004
    
    
    37Consolidated Statements of Changes in Stockholders Equity (Deficiency in Assets) for the
years ended December 31, 2005, 2004 and 2003
    
    
    38Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003
    
    
    39Notes to Consolidated Financial Statements
    
    
    40Report of Independent Registered Public Accounting Firm
    
    
    60
 35




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STERLING CHEMICALS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Year ended December 31,2005
    
    
    2004
    
    
    2003(Dollars in Thousands, Except Share Data)Revenues
    
    $
    641,886
    
    
    $
    655,353
    
    
    $
    518,772Cost of goods sold
    
    
    653,134
    
    
    
    633,009
    
    
    
    494,982Gross profit (loss)
    
    
    (11,248
    )
    
    
    22,344
    
    
    
    23,790Selling, general and administrative expenses
    
    
    7,811
    
    
    
    11,413
    
    
    
    15,553Impairment of long-lived assets
    
    
    
    
    
    
    48,463
    
    
    
    Gain on pension curtailment
    
    
    
    
    
    
    (12,944
    )
    
    
    Gain on sale of methanol plant
    
    
    
    
    
    
    (2,396
    )
    
    
    Other expense (income)
    
    
    
    
    
    
    
    
    
    
    (3,520
    )Interest and debt related expenses, net of
interest income
    
    
    10,090
    
    
    
    10,427
    
    
    
    9,729Income (loss) from continuing operations
before income tax
    
    
    (29,149
    )
    
    
    (32,619
    )
    
    
    2,028Provision (benefit) for income taxes
    
    
    (10,641
    )
    
    
    7,262
    
    
    
    758Income (loss) from continuing operations
    
    
    (18,508
    )
    
    
    (39,881
    )
    
    
    1,270Loss from discontinued operations, net of tax
    
    
    (11,060
    )
    
    
    (22,763
    )
    
    
    (15,469
    )Net loss
    
    
    (29,568
    )
    
    
    (62,644
    )
    
    
    (14,199
    )Preferred stock dividends
    
    
    7,014
    
    
    
    5,994
    
    
    
    5,125Net loss attributable to common stockholders
    
    $
    (36,582
    )
    
    $
    (68,638
    )
    
    $
    (19,324
    )Income (loss) per share of common stock,
basic and diluted:Income (loss) from continuing operations
    
    $
    (9.03
    )
    
    $
    (16.24
    )
    
    $
    (1.36
    )Loss from discontinued operations
    
    
    (3.91
    )
    
    
    (8.06
    )
    
    
    (5.48
    )Earnings per share, basic and diluted
    
    $
    (12.94
    )
    
    $
    (24.30
    )
    
    $
    (6.84
    )Weighted average shares outstanding:Basic and diluted
    
    
    2,827,795
    
    
    
    2,825,000
    
    
    
    2,825,000
  36




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STERLING CHEMICALS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 December 31,2005
    
    
    2004(Dollars in Thousands)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    42,197
    
    
    $
    1,901Accounts receivable, net of allowance of $953 and $3,092, respectively
    
    
    57,261
    
    
    
    63,603Inventories, net
    
    
    39,094
    
    
    
    77,226Prepaid expenses and other current assets
    
    
    4,888
    
    
    
    4,198Deferred tax asset
    
    
    2,802
    
    
    
    3,655Assets of discontinued operations
    
    
    1,791
    
    
    
    64,915Total current assets
    
    
    148,033
    
    
    
    215,498Property, plant and equipment, net
    
    
    230,018
    
    
    
    248,076Other assets, net
    
    
    8,543
    
    
    
    9,979Total assets
    
    $
    386,594
    
    
    $
    473,553LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    43,912
    
    
    $
    57,773Accrued liabilities
    
    
    23,690
    
    
    
    23,787Current portion of long-term debt
    
    
    
    
    
    
    17,684Liabilities of discontinued operations
    
    
    3,826
    
    
    
    9,487Total current liabilities
    
    
    71,428
    
    
    
    108,731Long-term debt
    
    
    100,579
    
    
    
    100,579Deferred income tax liability
    
    
    8,196
    
    
    
    28,407Deferred credits and other liabilities
    
    
    77,804
    
    
    
    74,464Redeemable preferred stock
    
    
    48,302
    
    
    
    41,289Commitments and contingencies (Note 8)Stockholders equity:Common stock, $.01 par value
    
    
    28
    
    
    
    28Additional paid-in capital
    
    
    192,551
    
    
    
    199,408Accumulated deficit
    
    
    (107,955
    )
    
    
    (78,387
    )Accumulated other comprehensive loss
    
    
    (4,339
    )
    
    
    (966
    )Total stockholders equity
    
    
    80,285
    
    
    
    120,083Total liabilities and stockholders equity
    
    $
    386,594
    
    
    $
    473,553
  37




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##### Table of Contents



STERLING CHEMICALS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF
 CHANGES IN STOCKHOLDERS EQUITY (DEFICIENCY IN ASSETS)
 AccumulatedAdditional
    
    
    
    
    
    
    OtherCommon Stock
    
    
    Paid-In
    
    
    Accumulated
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Loss
    
    
    Total(Amounts in Thousands)Balance, December 31, 2002
    
    
    2,825
    
    
    $
    28
    
    
    $
    210,527
    
    
    $
    (1,544
    )
    
    $
    
    
    
    $
    209,011Comprehensive 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
    )
    
    $
    189,436Comprehensive 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
    )
    
    $
    120,083Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (29,568
    )
    
    
    Other comprehensive loss:Pension adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,373
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (32,941
    )Preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    (7,014
    )
    
    
    
    
    
    
    
    
    
    
    (7,014
    )Exercised stock options
    
    
    3
    
    
    
    
    
    
    
    157
    
    
    
    
    
    
    
    
    
    
    
    157Balance, December 31, 2005
    
    
    2,828
    
    
    $
    28
    
    
    $
    192,551
    
    
    $
    (107,955
    )
    
    $
    (4,339
    )
    
    $
    80,285
  38




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##### Table of Contents



STERLING CHEMICALS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year ended December 31,2005
    
    
    2004
    
    
    2003(Dollars in Thousands)Cash flows from operating activities:Net income (loss)
    
    $
    (29,568
    )
    
    $
    (62,644
    )
    
    $
    (14,199
    )Adjustments to reconcile income (loss) to
net cash provided by (used in) operating
activities:Depreciation and amortization
    
    
    33,342
    
    
    
    28,693
    
    
    
    27,656Interest amortization
    
    
    400
    
    
    
    398
    
    
    
    383Impairment of long-lived assets
    
    
    
    
    
    
    70,498
    
    
    
    Gain on pension curtailment
    
    
    
    
    
    
    (12,944
    )
    
    
    Lower-of-cost-or-market adjustment
    
    
    2,738
    
    
    
    16,407
    
    
    
    Gain on sale of methanol plant
    
    
    
    
    
    
    (2,396
    )
    
    
    Deferred tax benefit (expense)
    
    
    (18,905
    )
    
    
    (16,529
    )
    
    
    (7,986
    )Other
    
    
    156
    
    
    
    1
    
    
    
    (252
    )Change in assets/liabilities:Accounts receivable
    
    
    54,850
    
    
    
    (25,509
    )
    
    
    (45,750
    )Inventories
    
    
    45,772
    
    
    
    (42,804
    )
    
    
    (30,572
    )Prepaid expenses
    
    
    (690
    )
    
    
    2,232
    
    
    
    (1,869
    )Other assets
    
    
    (1,003
    )
    
    
    (3,650
    )
    
    
    2,127Accounts payable
    
    
    (23,348
    )
    
    
    2,427
    
    
    
    31,688Accrued liabilities
    
    
    4,396
    
    
    
    (1,879
    )
    
    
    3,714Other liabilities
    
    
    (33
    )
    
    
    286
    
    
    
    (6,725
    )Net cash provided by operating activities
    
    
    68,107
    
    
    
    (47,413
    )
    
    
    (41,785
    )Cash flows from investing activities:Capital expenditures
    
    
    (9,460
    )
    
    
    (14,771
    )
    
    
    (15,649
    )Cash used for the methanol dismantling
    
    
    (667
    )
    
    
    
    
    
    
    Net proceeds from the sale of methanol
fixed assets assets
    
    
    
    
    
    
    4,017
    
    
    
    Net cash used in investing activities
    
    
    (10,127
    )
    
    
    (10,754
    )
    
    
    (15,649
    )Net cash provided by (used in) financing
activities  net borrowings (repayments)
under the Revolver
    
    
    (17,684
    )
    
    
    17,684
    
    
    
    Net increase in cash
    
    
    40,296
    
    
    
    (40,483
    )
    
    
    (57,434
    )Cash and cash equivalents beginning of
period
    
    
    1,901
    
    
    
    42,384
    
    
    
    99,818Cash and cash equivalents end of year
    
    $
    42,197
    
    
    $
    1,901
    
    
    $
    42,384Supplement disclosures of cash flow
information:Interest paid, net of interest income
received received
    
    $
    10,726
    
    
    $
    10,957
    
    
    $
    3,575Cash paid for reorganization items
    
    
    
    
    
    
    
    
    
    
    13,115Cash paid for income taxes
    
    
    59
    
    
    
    50
    
    
    
    175
  39




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##### Table of Contents



STERLING CHEMICALS, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Principles of Consolidation
  Cash and Cash Equivalents
  Allowance for Doubtful Accounts
  Inventories
   Property, Plant and Equipment
  40




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##### Table of Contents



STERLING CHEMICALS, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Plant Turnaround Costs
  Long-Lived Assets
  Goodwill
  Debt Issue Costs
  Income Taxes
  Environmental Costs
  41




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##### Table of Contents



STERLING CHEMICALS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Revenue Recognition
  Earnings (Loss) Per Share
  Disclosures about Fair Value of Financial Instruments
  Accounting Estimates
  Reclassifications
  2. STOCK-BASED COMPENSATION PLAN
   42




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##### Table of Contents



STERLING CHEMICALS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   2004
    
    
    2003Expected life (years)
    
    
    10.0
    
    
    
    10.0Expected 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
  For the Year Ended December 31,2005
    
    
    2004(Dollars in Thousands, Except Share Data)Net loss attributable to common stockholders, as reported
    
    $
    (36,582
    )
    
    $
    (68,638
    )Add: Stock-based employee compensation expense included in
reported net loss, net of related tax effects
    
    
    157
    
    
    
    Deduct: Total stock-based employee compensation expense
determined under fair value based method for all awards, net
of related tax effects
    
    
    (606
    )
    
    
    (1,147
    )Pro forma net loss
    
    $
    (37,031
    )
    
    $
    (69,785
    )Loss per share attributable to common stockholders:As reported
    
    $
    (12.94
    )
    
    $
    (24.30
    )Pro forma
    
    
    (13.10
    )
    
    
    (24.70
    )
 3. DISCONTINUED OPERATIONS
   43




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##### Table of Contents



STERLING CHEMICALS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
     Year ended December 31,2005
    
    
    2004(Dollars in Thousands)Assets of discontinued operations:Accounts receivable, net
    
    $
    963
    
    
    $
    49,471Inventories
    
    
    376
    
    
    
    10,754Deferred tax asset
    
    
    
    
    
    
    453Property, plant and equipment, net
    
    
    
    
    
    
    522Other assets
    
    
    452
    
    
    
    3,715Total
    
    $
    1,791
    
    
    $
    64,915Liabilities of discontinued operations:Accounts payable
    
    $
    
    
    
    
    9,487Accrued liabilities
    
    
    3,826
    
    
    
    Total
    
    $
    3,826
    
    
    $
    9,487
  Year ended December 31,2005
    
    
    2004
    
    
    2003(Dollars in Thousands)Revenues
    
    $
    43,374
    
    
    $
    196,309
    
    
    $
    74,019Loss before income taxes
    
    
    17,420
    
    
    
    42,025
    
    
    
    23,135
  Accrued as ofAccrued in 2005
    
    
    Cash payments
    
    
    December 31, 2005(Dollars in Thousands)Severance accrual
    
    $
    568
    
    
    $
    (91
    )
    
    $
    477DSIDA contractual obligation
    
    
    2,853
    
    
    
    
    
    
    
    2,853DSIDA dismantling costs
    
    
    496
    
    
    
    
    
    
    
    496Totals
    
    $
    3,917
    
    
    $
    (91
    )
    
    $
    3,826
 44




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##### Table of Contents



STERLING CHEMICALS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  
    
    a prior force majeure dispute among the parties was settled;
    
    most of the acrylonitrile-related agreements between the parties were terminated as of
May 31, 2005, including the Amended and Restated Production Agreement dated March 31, 1998,
the Joint Venture Agreement dated March 31, 1998, the Acrylonitrile Expanded Relationship
and Master Modification Agreement dated June 19, 2003 and the European Distribution
Agreement dated March 31, 1998;
    
    we assigned our interest in ANEXCO, LLC to Innovene Chemicals; and
    
    we and Innovene Chemicals entered into amended and restated versions of our acrylonitrile License
Agreement and Catalyst Sales Contract.
    4. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS
 December 31,2005
    
    
    2004(Dollars in Thousands)Inventories:Finished products
    
    $
    30,162
    
    
    $
    56,404Raw materials
    
    
    7,974
    
    
    
    14,178Inventories at lower-of-cost-or-market
    
    
    38,136
    
    
    
    70,582Inventories under exchange agreements
    
    
    (2,807
    )
    
    
    1,517Stores and supplies (net of obsolescence
reserve of $2,573 and $1,938,
respectively)
    
    
    3,765
    
    
    
    5,127$
    39,094
    
    
    $
    77,226Property, plant and equipment, net:Land
    
    $
    7,149
    
    
    $
    7,149Buildings
    
    
    4,497
    
    
    
    4,497Plant and equipment
    
    
    287,061
    
    
    
    274,706Construction in progress
    
    
    11,555
    
    
    
    14,915Less: accumulated depreciation
    
    
    (80,244
    )
    
    
    (53,191
    )$
    230,018
    
    
    $
    248,076Accrued liabilities:Employee compensation and benefits
    
    $
    12,164
    
    
    $
    11,135Property taxes
    
    
    5,236
    
    
    
    5,694Other
    
    
    6,290
    
    
    
    6,958$
    23,690
    
    
    $
    23,787
 45




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##### Table of Contents



STERLING CHEMICALS, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December 31,2005
    
    
    2004(Dollars in Thousands)Deferred credits and other liabilities:Accrued postretirement, pension and post employment benefits
    
    $
    62,885
    
    
    $
    68,298Deferred revenue
    
    
    9,000
    
    
    
    Other
    
    
    5,919
    
    
    
    6,166$
    77,804
    
    
    $
    74,464
 5. LONG-TERM DEBT
       46




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##### Table of Contents



STERLING CHEMICALS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Debt Maturities
  6. INCOME TAXES
  Year Ended December 31,2005
    
    
    2004
    
    
    2003(Dollars in Thousands)Benefit for income taxes at statutory rates
    
    $
    (16,299
    )
    
    $
    (26,125
    )
    
    $
    (7,387
    )Non-deductible expenses
    
    
    19
    
    
    
    26
    
    
    
    65Non-deductible goodwill impairment
    
    
    
    
    
    
    16,962
    
    
    
    State income taxes
    
    
    (956
    )
    
    
    (1,933
    )
    
    
    (361
    )Other
    
    
    235
    
    
    
    (930
    )
    
    
    (201
    )Effective tax benefit
    
    $
    (17,001
    )
    
    $
    (12,000
    )
    
    $
    (7,884
    )
  Year Ended December 31,2005
    
    
    2004
    
    
    2003(Dollars in Thousands)Tax expense
 continuing operations
    
    $
    (10,641
    )
    
    $
    7,262
    
    
    $
    758Tax expense
 discontinued operations
    
    
    (6,360
    )
    
    
    (19,262
    )
    
    
    (8,642
    )Total tax benefit
    
    $
    (17,001
    )
    
    $
    (12,000
    )
    
    $
    (7,884
    )
 47




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STERLING CHEMICALS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Year Ended December 31,2005
    
    
    2004
    
    
    2003(Dollars in Thousands)Current federal
    
    $
    
    
    
    $
    
    
    
    $
    Deferred federal
    
    
    (16,066
    )
    
    
    (10,105
    )
    
    
    (7,323
    )State income taxes
    
    
    (935
    )
    
    
    (1,895
    )
    
    
    (561
    )Total tax benefit
    
    $
    (17,001
    )
    
    $
    (12,000
    )
    
    $
    (7,884
    )
  December 31,2005
    
    
    2004(Dollars in Thousands)Deferred tax assets:Accrued liabilities
    
    $
    787
    
    
    $
    3,737Accrued postretirement cost
    
    
    12,552
    
    
    
    13,916Accrued pension cost
    
    
    10,770
    
    
    
    8,377Tax loss carry forwards
    
    
    46,734
    
    
    
    27,475Other
    
    
    2,385
    
    
    
    1,137Total deferred tax assets
    
    $
    73,228
    
    
    $
    54,642Deferred tax liabilities:Property, plant and equipment
    
    $
    (66,571
    )
    
    $
    (70,680
    )State deferred taxes
    
    
    (3,219
    )
    
    
    (2,166
    )Subtotal
    
    
    (69,790
    )
    
    
    (72,846
    )Less: valuation allowance
    
    
    (8,832
    )
    
    
    (6,096
    )Total deferred tax liabilities
    
    
    (78,622
    )
    
    
    (78,942
    )Net deferred tax liabilities
    
    $
    (5,394
    )
    
    $
    (24,300
    )
  7. EMPLOYEE BENEFITS
  Retirement Benefit Plans
   48




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STERLING CHEMICALS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  As of December 31,2005
    
    
    2004Asset CategoryEquities
    
    
    57
    %
    
    
    55
    %Bonds
    
    
    38
    %
    
    
    40
    %Other
    
    
    5
    %
    
    
    5
    %Total
    
    
    100
    %
    
    
    100
    %
  December 31,2005
    
    
    2004(Dollars in Thousands)Change in benefit obligation:Benefit obligation at beginning of year
    
    $
    119,682
    
    
    $
    124,704Service cost
    
    
    622
    
    
    
    3,466Interest cost
    
    
    6,993
    
    
    
    7,561Plan amendment/curtailment
    
    
    
    
    
    
    (14,472
    )Actuarial loss
    
    
    6,259
    
    
    
    5,600Benefits paid
    
    
    (7,862
    )
    
    
    (7,177
    )Benefit obligation at end of year
    
    $
    125,694
    
    
    $
    119,682
 December 31,2005
    
    
    2004(Dollars in Thousands)Change in plan assets:Fair value at beginning of year
    
    $
    89,250
    
    
    $
    77,709Actual return on plan assets
    
    
    7,643
    
    
    
    8,511Employer contributions
    
    
    6,659
    
    
    
    10,207Benefits paid
    
    
    (7,862
    )
    
    
    (7,177
    )Fair value at end of year
    
    $
    95,690
    
    
    $
    89,250Development of net amount recognized:Funded status
    
    $
    (30,004
    )
    
    $
    (30,432
    )Actuarial loss
    
    
    6,874
    
    
    
    1,626Net amount recognized
    
    $
    (23,130
    )
    
    $
    (28,806
    )Amounts recognized in the statement of financial position:Accrued pension cost
    
    $
    (29,959
    )
    
    $
    (30,415
    )Accumulated other comprehensive income (pre-tax)
    
    
    6,829
    
    
    
    1,609Net amount recognized
    
    $
    (23,130
    )
    
    $
    (28,806
    )
 49




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STERLING CHEMICALS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December 31,2005
    
    
    2004Weighted-average assumptions:Discount rate
    
    
    5.75
    %
    
    
    6.25
    %Rates of increase in salary compensation level
    
    
    5.00
    %
    
    
    5.00
    %
    Year ended December 31,2005
    
    
    2004
    
    
    2003(Dollars In Thousands)Components of net pension costs:Service cost-benefits earned during the year
    
    $
    622
    
    
    $
    3,466
    
    
    $
    3,312Interest on prior years projected benefit
obligation
    
    
    6,993
    
    
    
    7,561
    
    
    
    7,634Expected return on plan assets
    
    
    (6,641
    )
    
    
    (5,934
    )
    
    
    (5,205
    )Net amortization of actuarial loss (gain)
    
    
    8
    
    
    
    
    
    
    
    Settlement/curtailment
    
    
    
    
    
    
    (12,944
    )
    
    
    Net pension costs
    
    $
    982
    
    
    $
    (7,851
    )
    
    $
    5,741Weighted-average assumptions:Discount Rate
    
    
    5.75
    %
    
    
    6.25
    %
    
    
    6.75
    %Rates of increase in salary compensation
level
    
    
    5.00
    %
    
    
    5.00
    %
    
    
    5.00
    %Expected long-term rate of return on plan
assets
    
    
    7.50
    %
    
    
    7.50
    %
    
    
    8.00
    %
 Postretirement Benefits Other than Pensions
     50




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STERLING CHEMICALS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    December 31,2005
    
    
    2004(Dollars in Thousands)Change in benefit obligation:Benefit obligation at beginning of year
    
    $
    27,745
    
    
    $
    34,870Service cost
    
    
    208
    
    
    
    310Interest cost
    
    
    1,558
    
    
    
    1,864Plan amendments
    
    
    46
    
    
    
    (9,541
    )Actuarial loss (gain)
    
    
    1,392
    
    
    
    4,404Benefits paid
    
    
    (3,115
    )
    
    
    (4,162
    )Benefit obligation at end of year
    
    $
    27,834
    
    
    $
    27,745Funded plan assets
    
    $
    
    
    
    $
    Development of net amount recognized:Funded status
    
    $
    (27,834
    )
    
    $
    (27,745
    )Unrecognized cost:Actuarial loss
    
    
    6,048
    
    
    
    5,204Plan amendment
    
    
    (15,691
    )
    
    
    (19,164
    )Net amount recognized
    
    $
    (37,477
    )
    
    $
    (41,705
    )Prepaid OPEB cost
    
    $
    
    
    
    $
    Accrued OPEB liability
    
    
    (37,477
    )
    
    
    (41,705
    )Net amount recognized
    
    $
    (37,477
    )
    
    $
    (41,705
    )
 51




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STERLING CHEMICALS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Year ended December 31,2005
    
    
    2004
    
    
    2003(Dollars in Thousands)Components of net plan costs:Service cost
    
    $
    208
    
    
    $
    310
    
    
    $
    460Interest cost
    
    
    1,558
    
    
    
    1,864
    
    
    
    2,336Net amortization:Actuarial loss
    
    
    333
    
    
    
    21
    
    
    
    Plan amendment
    
    
    (1,484
    )
    
    
    (1,223
    )
    
    
    (477
    )Curtailment and special
termination benefits
    
    
    (1,727
    )
    
    
    (1,418
    )
    
    
    Net plan costs
    
    $
    (1,112
    )
    
    $
    (446
    )
    
    $
    2,319Weighted-average assumptions:Discount rate
    
    
    5.75
    %
    
    
    5.75
    %
    
    
    6.25
    %
  1% Increase
    
    
    1% Decrease(Dollars in Thousands)Effect on total of service and interest cost components
    
    $
    35
    
    
    $
    (31
    )Effect on post-retirement benefit obligation
    
    
    638
    
    
    
    (562
    )
 Estimated Future Benefits Payable
  OtherPensions-
    
    
    Pensions-
    
    
    postretirementhourly
    
    
    salaried
    
    
    benefits
    
    
    Total(Dollars in Thousands)2006
    
    $
    3,781
    
    
    $
    4,106
    
    
    $
    1,572
    
    
    $
    9,4592007
    
    
    3,590
    
    
    
    3,953
    
    
    
    1,476
    
    
    
    9,0192008
    
    
    3,439
    
    
    
    3,991
    
    
    
    1,417
    
    
    
    8,8472009
    
    
    3315
    
    
    
    4,119
    
    
    
    1,363
    
    
    
    8,7972010
    
    
    3103
    
    
    
    4,293
    
    
    
    2,399
    
    
    
    9,7952011-2015
    
    
    16,272
    
    
    
    24,361
    
    
    
    11,177
    
    
    
    51,810Total
    
    $
    33,500
    
    
    $
    44,823
    
    
    $
    19,404
    
    
    $
    97,727
 Savings and Investment Plan
  52




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STERLING CHEMICALS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Bonus Plan and Gain Sharing Plan
   Key Employee Protection Plan
    53




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STERLING CHEMICALS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    Severance Pay Plan
     Supplemental Pay Plan
  54




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STERLING CHEMICALS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Outstanding Stock Options
  December 31, 2005
    
    
    December 31, 2004Weighted-
    
    
    
    
    
    
    Weighted-average
    
    
    
    
    
    
    averageShares
    
    
    exercise price
    
    
    Shares
    
    
    exercise priceOutstanding at beginning of year
    
    
    294,334
    
    
    $
    31.60
    
    
    
    326,000
    
    
    $
    31.60Granted
    
    
    
    
    
    
    31.60
    
    
    
    27,500
    
    
    
    31.60Exercised
    
    
    (15,834
    )
    
    
    31.60
    
    
    
    (59,166
    )
    
    
    31.60Outstanding at end of year
    
    
    278,500
    
    
    $
    31.60
    
    
    
    294,334
    
    
    $
    31.60Options exercisable at end of year
    
    
    176,500
    
    
    
    
    
    
    
    99,500
  8. COMMITMENTS AND CONTINGENCIES
 Product Contracts
  Lease Commitments
  Environmental and Safety
  55




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STERLING CHEMICALS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
     Legal Proceedings
   56




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STERLING CHEMICALS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   9. SALES INFORMATION
  Year ended December 31,2005
    
    
    2004
    
    
    2003(Dollars in Thousands)Major customers:BP p.l.c. and subsidiaries
    
    $
    86,625
    
    
    $
    81,069
    
    
    $
    70,108Customer A
    
    
    93,752
    
    
    
    127,956
    
    
    
    69,533Customer B
    
    
    124,149
    
    
    
    116,912
    
    
    
    *Customer C
    
    
    77,570
    
    
    
    *
    
    
    
    *Export sales:Export revenues
    
    $
    143,448
    
    
    $
    152,211
    
    
    $
    179,958Percentage of total revenues
    
    
    22
    %
    
    
    23
    %
    
    
    35
    %
 
 *
    
    Does not comprise more than 10% of total revenue for the periods indicated, therefore not
presented. 10. FINANCIAL INSTRUMENTS
 Concentrations of Risk
   Fair Value of Financial Instruments
  11. CAPITAL STOCK
   57




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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 convertedve prior thereto (plus accrued and unpaid dividends).
  12. RELATED PARTY TRANSACTIONS
  58




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STERLING CHEMICALS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 13. NEW ACCOUNTING STANDARDS
      59




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      
 60




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STERLING CHEMICALS, INC. AND SUBSIDIARIES
 SUPPLEMENTAL FINANCIAL INFORMATION
 QUARTERLY FINANCIAL DATA (unaudited)
 First
    
    
    Second
    
    
    Third
    
    
    FourthYear
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter(Dollars in Thousands, Except Per Share Data)Revenues
    
    
    2005
    
    
    $
    180,207
    
    
    $
    163,515
    
    
    $
    148,733
    
    
    $
    149,4312004
    
    
    
    122,504
    
    
    
    140,924
    
    
    
    189,916
    
    
    
    202,009Gross profit (loss)
    
    
    2005
    
    
    
    14,370
    
    
    
    (17,124
    )
    
    
    4,854
    
    
    
    (13,348
    )2004
    
    
    
    (995
    )
    
    
    11,337
    
    
    
    19,927
    
    
    
    (7,925
    )Income (loss) from continuing operations (1)
    
    
    2005
    
    
    
    5,645
    
    
    
    (12,965
    )
    
    
    115
    
    
    
    (11,303
    )2004
    
    
    
    (4,727
    )
    
    
    (45,490
    )
    
    
    8,867
    
    
    
    1,469Income (loss) from discontinued operations, net of tax
(2)
    
    
    2005
    
    
    
    (3,839
    )
    
    
    (885
    )
    
    
    (9,164
    )
    
    
    2,8282004
    
    
    
    (5,133
    )
    
    
    (5,094
    )
    
    
    (3,338
    )
    
    
    (9,198
    )Net income (loss) attributable to common stockholders
    
    
    2005
    
    
    
    154
    
    
    
    (15,569
    )
    
    
    (10,835
    )
    
    
    (10,332
    )2004
    
    
    
    (11,272
    )
    
    
    (52,052
    )
    
    
    4,002
    
    
    
    (9,316
    )Net income (loss) per share of common stock:Basic
    
    
    2005
    
    
    
    0.05
    
    
    
    (5.50
    )
    
    
    (3.83
    )
    
    
    (3.66
    )2004
    
    
    
    (3.99
    )
    
    
    (18.43
    )
    
    
    1.42
    
    
    
    (3.30
    )Diluted
    
    
    2005
    
    
    
    0.05
    
    
    
    (5.50
    )
    
    
    (3.83
    )
    
    
    (3.66
    )2004
    
    
    
    (3.99
    )
    
    
    (18.43
    )
    
    
    0.99
    
    
    
    (3.30
    )
 
 (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 pension curtailment gain of $13
million.(2)
    
    In the fourth quarter of 2004, we recorded a pre-tax impairment charge of $22
million related to our acrylonitrile long-lived assets. 
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
   61




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Item 9B. Other Information
  62




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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
  63




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PART IV
 
 Item 15. Exhibits and Consolidated Financial Statement Schedules
  1.
    
    Consolidated Financial Statements. See Item 8. Financial Statements and
Supplementary Data  Index to Financial Statements.2.
    
    Consolidated Financial Statement Schedules. All schedules for which
provision is made in Regulation S-X either are not required under the related
instruction or are inapplicable and, therefore, have been omitted.3.
    
    Exhibits. See the Exhibit Index for a list of those exhibits filed herewith,
which index also includes and identifies management contracts or compensatory plans or
arrangements required to be filed as exhibits to this Form 10-K by Item
601(b)(10)(iii) of Regulation S-K.
  ExhibitNumber
    
    
    
    Description of Exhibit2.1
    
    
    
    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. (conformed copy) (incorporated herein by reference from
Exhibit 3.1 to our Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2005).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).
 64




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##### Table of Contents



ExhibitNumber
    
    
    
    Description of Exhibit4.5
    
    
    
    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).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*
    
    
    
    Third Amended and Restated Severance Pay Plan (incorporated herein by
reference from Exhibit 10.7 to our Annual Report on Form 10-K for the
fiscal year ended December 31, 2003).10.7*
    
    
    
    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).10.7(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).10.7(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).10.7(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).10.7(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).
 65




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##### Table of Contents



ExhibitNumber
    
    
    
    Description of Exhibit10.7(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).10.7(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).10.7(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).10.7(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).10.7(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).10.7(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).10.7(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).10.7(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).10.7(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).10.7(n)*
    
    
    
    Fourteenth Amendment to the Sterling Chemicals, Inc. Amended and
Restated Salaried Employees Pension Plan (incorporated herein by
reference from Exhibit 10.8(n) to our Annual Report on Form 10-K for the
fiscal year ended December 31, 2004).10.7(o)*
    
    
    
    Fifteenth 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, 2005).10.8*
    
    
    
    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)).10.8(a)*
    
    
    
    First Amendment to Sterling Chemicals, Inc. Pension Benefit
Equalization Plan (incorporated herein by reference from Exhibit 10.9(a)
to our Annual Report on Form 10-K for the fiscal year ended December 31,
2004).10.9*
    
    
    
    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)).10.9(a)*
    
    
    
    First Amendment to Sterling Chemicals, Inc. Amended and Restated
Supplemental Employee Retirement Plan (incorporated herein by reference
from Exhibit 10.10(a) to our Annual Report on Form 10-K for the fiscal
year ended December 31, 2004).10.10
    
    
    
    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)).10.10(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).
 66




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##### Table of Contents



ExhibitNumber
    
    
    
    Description of Exhibit10.10(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).10.10(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).10.10(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).10.10(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).10.10(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).10.10(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).10.10(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).10.10(i)
    
    
    
    Ninth 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,
2005).10.11*
    
    
    
    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).10.11(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).10.11(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).10.11(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).10.11(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).10.11(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).10.11(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).10.11(g)*
    
    
    
    Seventh Amendment to the Sixth Amended and Restated Savings and
Investment Plan (incorporated herein by reference from Exhibit 10.12(g)
to our Annual Report on Form 10-K for the fiscal year ended December 31,
2004).**10.12*
    
    
    
    Bonus Plan
 67




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##### Table of Contents



ExhibitNumber
    
    
    
    Description of Exhibit10.13
    
    
    
    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
    
    
    
    Separation Agreement effective as of May 31, 2005 by and among
Sterling Chemicals, Inc., O&D USA LLC (d/b/a Innovene Chemicals),
ANEXCO, LLC and BP Amoco Chemical Company (incorporated by reference
from Exhibit 10.1 to our Form 8-K filed on May 31, 2005).+10.18
    
    
    
    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)).+10.18(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).++10.19
    
    
    
    Second Amended and Restated Plasticizers Production Agreement dated
effective as of January 1, 2006 between BASF Corporation and Sterling
Chemicals, Inc.10.20
    
    
    
    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)).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.99.2
    
    
    
    Amended and Restated Corporate Governance Committee Charter of
Sterling Chemicals, Inc. (incorporated herein by reference from Exhibit
99.1 to our Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2005).
 
 *
    
    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.++
    
    Filed herewith. Portions of the exhibit have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a
request for confidential treatment. 68




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##### Table of Contents



SIGNATURES
  STERLING CHEMICALS, INC.
(Registrant)By:
    
    /s/ RICHARD K. CRUMPRichard K. CrumpPresident, Chief Executive Officer and DirectorBy:
    
    /s/ PAUL G. VANDERHOVENPaul G. VanderhovenSenior Vice PresidentFinance and Chief Financial Officer
   Signature
    
    Title
    
    DatePrincipal Executive Officer:/s/ RICHARD K. CRUMP

Richard K. Crump
    
    President, Chief Executive Officer
and Director
    
    March 15, 2006Principal Financial Officer:/s/ PAUL G. VANDERHOVEN

Paul G. Vanderhoven
    
    Senior Vice PresidentFinance
and Chief Financial Officer
    
    March 15, 2006Principal Accounting Officer:/s/ JOHN R. BEAVER

John R. Beaver
    
    Vice President, Corporate Controller
    
    March 15, 2006/s/ JOHN W. GILDEA

John W. Gildea
    
    Director
    
    March 15, 2006/s/ BYRON J. HANEY

Byron J. Haney
    
    Director
    
    March 15, 2006Karl W. Schwarzfeld
    
    Director
    
    March 15, 2006/s/ PHILIP M. SIVIN

Philip M. Sivin
    
    Director
    
    March 15, 2006/s/ DR. PETER TING KAI WU

Dr. Peter Ting Kai Wu
    
    Director
    
    March 15, 2006
 69




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    
    
    Description of Exhibit2.1
    
    
    
    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. (conformed copy) (incorporated herein by reference from
Exhibit 3.1 to our Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2005).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).
 70




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##### Table of Contents



ExhibitNumber
    
    
    
    
    Description of Exhibit10.1(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*
    
    
    
    Third Amended and Restated Severance Pay Plan (incorporated herein by
reference from Exhibit 10.7 to our Annual Report on Form 10-K for the
fiscal year ended December 31, 2003).10.7*
    
    
    
    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).10.7(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).10.7(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).10.7(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).10.7(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).10.7(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).10.7(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).10.7(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).10.7(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).10.7(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).
 71




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##### Table of Contents



ExhibitNumber
    
    
    
    Description of Exhibit10.7(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).10.7(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).10.7(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).10.7(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).10.7(n)*
    
    
    
    Fourteenth Amendment to the Sterling Chemicals, Inc. Amended and
Restated Salaried Employees Pension Plan (incorporated herein by
reference from Exhibit 10.8(n) to our Annual Report on Form 10-K for the
fiscal year ended December 31, 2004).10.7(o)*
    
    
    
    Fifteenth 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, 2005).10.8*
    
    
    
    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)).10.8(a)*
    
    
    
    First Amendment to Sterling Chemicals, Inc. Pension Benefit
Equalization Plan (incorporated herein by reference from Exhibit 10.9(a)
to our Annual Report on Form 10-K for the fiscal year ended December 31,
2004).10.9*
    
    
    
    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)).10.9(a)*
    
    
    
    First Amendment to Sterling Chemicals, Inc. Amended and Restated
Supplemental Employee Retirement Plan (incorporated herein by reference
from Exhibit 10.10(a) to our Annual Report on Form 10-K for the fiscal
year ended December 31, 2004).10.10
    
    
    
    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)).10.10(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).10.10(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).10.10(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).10.10(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).10.10(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).10.10(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).
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##### Table of Contents



ExhibitNumber
    
    
    
    Description of Exhibit10.10(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).10.10(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).10.10(i)
    
    
    
    Ninth 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,
2005).10.11*
    
    
    
    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).10.11(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).10.11(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).10.11(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).10.11(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).10.11(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).10.11(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).10.11(g)*
    
    
    
    Seventh Amendment to the Sixth Amended and Restated Savings and
Investment Plan (incorporated herein by reference from Exhibit 10.12(g)
to our Annual Report on Form 10-K for the fiscal year ended December 31,
2004).**10.12*
    
    
    
    Bonus Plan10.13
    
    
    
    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
    
    
    
    Separation Agreement effective as of May 31, 2005 by and among
Sterling Chemicals, Inc., O&D USA LLC (d/b/a Innovene Chemicals),
ANEXCO, LLC and BP Amoco Chemical Company (incorporated by reference
from Exhibit 10.1 to our Form 8-K filed on May 31, 2005).
 73




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##### Table of Contents



ExhibitNumber
    
    
    
    Description of Exhibit+10.18
    
    
    
    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)).+10.18(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).++10.19
    
    
    
    Amended and Restated Plasticizers Production Agreement dated effective
as of January 1, 2006 between BASF Corporation and Sterling Chemicals,
Inc.10.20
    
    
    
    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)).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.99.2
    
    
    
    Amended and Restated Corporate Governance Committee Charter of
Sterling Chemicals, Inc. (incorporated herein by reference from Exhibit
99.1 to our Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2005).
 
 *
    
    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.++
    
    Filed herewith. Portions of the exhibit have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a
request for confidential treatment. 74