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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from            to
 Commission File Number 000-50132
 
 Sterling Chemicals, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    76-0502785(State or other jurisdiction of
    
    (IRS Employer Identification No.)Incorporation or organization)333 Clay Street, Suite 3600
    
    (713) 650-3700Houston, Texas 77002-4109
    
    (Registrants telephone number,(Address of principal executive offices)
    
    including area code)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company þ
 o þ




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##### Table of Contents



IMPORTANT INFORMATION REGARDING THIS FORM 10-Q
   Forward-Looking Statements
   Document Summaries
  Access to Filings
 http://www.sterlingchemicals.com
 1




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##### 



STERLING CHEMICALS, INC.
 INDEX
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    19Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    28Item 4T. Controls and Procedures
    
    
    28PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    29Item 4. Submission of Matters to a Vote of Security Holders
    
    
    29Item 5. Other Information
    
    
    31Item 6. Exhibits
    
    
    32EX-10.2EX-15.1EX-31.1EX-31.2EX-32.1EX-32.2
  2




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      
 3




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##### Table of Contents



PART I.
FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 STERLING CHEMICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in Thousands, Except Share Data)
 Three months ended June 30,
    
    
    Six months ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues
    
    $
    26,941
    
    
    $
    47,837
    
    
    $
    58,318
    
    
    $
    86,095Cost of goods sold
    
    
    25,773
    
    
    
    38,040
    
    
    
    51,582
    
    
    
    71,925Gross profit
    
    
    1,168
    
    
    
    9,797
    
    
    
    6,736
    
    
    
    14,170Selling, general and administrative expenses
    
    
    3,344
    
    
    
    3,787
    
    
    
    7,227
    
    
    
    6,205Impairment of long-lived assets
    
    
    
    
    
    
    6,649
    
    
    
    
    
    
    
    6,649Interest and debt related expenses
    
    
    3,968
    
    
    
    4,719
    
    
    
    7,971
    
    
    
    8,931Interest income
    
    
    (212
    )
    
    
    (1,107
    )
    
    
    (596
    )
    
    
    (2,432
    )Other income
    
    
    (1,544
    )
    
    
    
    
    
    
    (2,689
    )
    
    
    Loss from continuing operations before income tax
    
    
    (4,388
    )
    
    
    (4,251
    )
    
    
    (5,177
    )
    
    
    (5,183
    )Benefit for income taxes
    
    
    (1,022
    )
    
    
    
    
    
    
    (1,217
    )
    
    
    Loss from continuing operations
    
    $
    (3,366
    )
    
    $
    (4,251
    )
    
    $
    (3,960
    )
    
    $
    (5,183
    )Income (loss) from discontinued operations, net of tax
of $1,043, zero, $1,912 and zero, respectively
    
    
    1,928
    
    
    
    (1,603
    )
    
    
    3,550
    
    
    
    (7,857
    )Net loss
    
    $
    (1,438
    )
    
    $
    (5,854
    )
    
    $
    (410
    )
    
    $
    (13,040
    )Preferred stock dividends
    
    
    3,894
    
    
    
    4,422
    
    
    
    8,041
    
    
    
    8,693Net loss attributable to common stockholders
    
    $
    (5,332
    )
    
    $
    (10,276
    )
    
    $
    (8,451
    )
    
    $
    (21,733
    )Income (loss) per share of common stock attributable
to common stockholders, basic and diluted:Loss from continuing operations
    
    $
    (2.57
    )
    
    $
    (3.06
    )
    
    $
    (4.25
    )
    
    $
    (4.91
    )Income (loss) from discontinued operations,
net of tax
    
    
    0.68
    
    
    
    (0.57
    )
    
    
    1.26
    
    
    
    (2.77
    )Basic and diluted loss per share
    
    $
    (1.89
    )
    
    $
    (3.63
    )
    
    $
    (2.99
    )
    
    $
    (7.68
    )Weighted average shares outstanding:Basic and diluted
    
    
    2,828,460
    
    
    
    2,828,460
    
    
    
    2,828,460
    
    
    
    2,828,460
  4




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STERLING CHEMICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in Thousands, Except Share Data)
 June 30,
    
    
    December 31,2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    150,786
    
    
    $
    156,126Accounts receivable, net of allowance of $18 and $18, respectively
    
    
    15,060
    
    
    
    23,163Inventories, net
    
    
    5,692
    
    
    
    5,221Prepaid expenses and other current assets
    
    
    1,257
    
    
    
    2,704Assets of discontinued operations
    
    
    100
    
    
    
    166Total current assets
    
    
    172,895
    
    
    
    187,380Property, plant and equipment, net
    
    
    71,073
    
    
    
    67,811Other assets, net
    
    
    7,232
    
    
    
    7,838Total assets
    
    $
    251,200
    
    
    $
    263,029LIABILITIES AND STOCKHOLDERS DEFICIENCY IN ASSETSCurrent liabilities:Accounts payable
    
    $
    8,469
    
    
    $
    8,915Accrued liabilities
    
    
    13,146
    
    
    
    20,008Liabilities of discontinued operations
    
    
    14,310
    
    
    
    12,444Total current liabilities
    
    
    35,925
    
    
    
    41,367Long-term debt
    
    
    150,000
    
    
    
    150,000Deferred credits and other liabilities
    
    
    59,130
    
    
    
    59,103Long-term liabilities of discontinued operations
    
    
    29,201
    
    
    
    35,394Commitments and contingencies (Note 4)Redeemable preferred stock
    
    
    125,648
    
    
    
    117,607Stockholders equity:Common stock, $.01 par value (shares authorized 100,000,000; shares issued
and outstanding 2,828,460)
    
    
    28
    
    
    
    28Additional paid-in capital
    
    
    115,888
    
    
    
    123,740Accumulated deficit
    
    
    (240,233
    )
    
    
    (239,823
    )Accumulated other comprehensive loss
    
    
    (24,387
    )
    
    
    (24,387
    )Total stockholders deficiency in assets
    
    
    (148,704
    )
    
    
    (140,442
    )Total liabilities and stockholders deficiency in assets
    
    $
    251,200
    
    
    $
    263,029
  5




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STERLING CHEMICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)
 Six months ended June 30,2009
    
    
    2008Cash flows from operating activities:Net loss
    
    $
    (410
    )
    
    $
    (13,040
    )Adjustments to reconcile net loss to net cash provided by operating
activities:Stock compensation expense
    
    
    189
    
    
    
    46Bad debt expense
    
    
    
    
    
    
    10Depreciation and amortization
    
    
    4,547
    
    
    
    5,082Interest amortization
    
    
    553
    
    
    
    810Unearned income amortization
    
    
    (7,274
    )
    
    
    (5,744
    )Impairment of long-lived assets
    
    
    
    
    
    
    6,649Gain on disposal of property, plant and equipment
    
    
    (305
    )
    
    
    Other
    
    
    
    
    
    
    2Change in assets/liabilities:Accounts and other receivables
    
    
    8,169
    
    
    
    60,295Inventories
    
    
    (471
    )
    
    
    15,010Prepaid expenses and other current assets
    
    
    1,447
    
    
    
    2,620Other assets
    
    
    (422
    )
    
    
    (126
    )Accounts payable
    
    
    (1,400
    )
    
    
    1,846Accrued liabilities
    
    
    (4,996
    )
    
    
    (6,533
    )Other liabilities
    
    
    1,108
    
    
    
    (3,862
    )Net cash provided by operating activities
    
    $
    735
    
    
    $
    63,065Cash flows used in investing activities:Capital expenditures for property, plant and equipment
    
    
    (6,380
    )
    
    
    (2,757
    )Net proceeds from the sale of property, plant and equipment
    
    
    305
    
    
    
    Net cash used in investing activities
    
    
    (6,075
    )
    
    
    (2,757
    )Cash flows provided by financing activities:Net cash provided by financing activities
    
    
    
    
    
    
    Net increase (decrease) in cash:
    
    
    (5,340
    )
    
    
    60,308Cash and cash equivalents  beginning of year
    
    
    156,126
    
    
    
    100,183Cash and cash equivalents  end of period
    
    $
    150,786
    
    
    $
    160,491Supplemental disclosures of cash flow information:Interest paid
    
    $
    8,358
    
    
    $
    8,039Interest income received
    
    
    596
    
    
    
    2,433Cash paid for income taxes
    
    
    
    
    
    
    404
  6




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STERLING CHEMICALS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 1. Basis of Presentation
  Reclassifications and Revisions:
   Three Months Ended
    
    
    Six Months EndedJune 30, 2008
    
    
    June 30, 2008(Dollars in Thousands)
    
    
    (Dollars in Thousands)Previously
    
    
    
    
    
    
    PreviouslyReported
    
    
    As Revised
    
    
    Reported
    
    
    As RevisedStatement of Operations:Revenues
    
    $
    47,795
    
    
    $
    47,837
    
    
    $
    85,995
    
    
    $
    86,095Cost of goods sold
    
    
    37,969
    
    
    
    38,040
    
    
    
    71,767
    
    
    
    71,925Gross profit
    
    
    9,826
    
    
    
    9,797
    
    
    
    14,228
    
    
    
    14,170Loss from continuing operations before income tax
    
    
    (4,222
    )
    
    
    (4,251
    )
    
    
    (5,125
    )
    
    
    (5,183
    )Loss from continuing operations
    
    
    (4,222
    )
    
    
    (4,251
    )
    
    
    (5,125
    )
    
    
    (5,183
    )Loss from discontinued operations, net of tax of zero
    
    
    (1,588
    )
    
    
    (1,603
    )
    
    
    (7,813
    )
    
    
    (7,857
    )Net loss
    
    
    (5,810
    )
    
    
    (5,854
    )
    
    
    (12,938
    )
    
    
    (13,040
    )Net loss attributable to common stockholders
    
    
    (10,232
    )
    
    
    (10,276
    )
    
    
    (21,631
    )
    
    
    (21,733
    )Loss per share of common stock attributable to
common stockholders, basic and diluted:Loss from continuing operations
    
    $
    (3.06
    )
    
    $
    (3.06
    )
    
    $
    (4.89
    )
    
    $
    (4.91
    )Loss from discontinued operations, net of tax
    
    
    (0.56
    )
    
    
    (0.57
    )
    
    
    (2.76
    )
    
    
    (2.77
    )Basic and diluted loss per share
    
    $
    (3.62
    )
    
    $
    (3.63
    )
    
    $
    (7.65
    )
    
    $
    (7.68
    )
 7




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STERLING CHEMICALS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
 Six Months EndedJune 30, 2008(Dollars in Thousands)PreviouslyReported
    
    As RevisedStatement of Cash Flows:Net loss
    
    $
    (12,938
    )
    
    $
    (13,040
    )Change in accounts and other receivables
    
    
    60,193
    
    
    
    60,295
 As of December 31, 2008(Dollars in Thousands)PreviouslyReported
    
    As RevisedBalance Sheet:Accounts and other receivables, net of allowance
    
    $
    22,080
    
    
    $
    23,163Total current assets
    
    
    186,297
    
    
    
    187,380Total assets
    
    
    261,946
    
    
    
    263,029Accumulated deficit
    
    
    (240,906
    )
    
    
    (239,823
    )Total stockholders deficiency in assets
    
    
    (141,525
    )
    
    
    (140,442
    )Total liabilities and stockholders deficiency in assets
    
    
    261,946
    
    
    
    263,029
  Disclosures about Fair Value of Financial Instruments
  Subsequent Events
  2. Discontinued Operations
  8




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STERLING CHEMICALS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
   June 30,
    
    
    December 31,2009
    
    
    2008(Dollars in Thousands)Assets of discontinued operations:Accounts receivable, net
    
    $
    100
    
    
    $
    166Liabilities of discontinued operations:Accrued liabilities(1)
    
    $
    14,310
    
    
    $
    12,444Deferred credits and other liabilities(1)
    
    
    29,201
    
    
    
    35,394Total
    
    $
    43,511
    
    
    $
    47,838
 
 (1)
    
    As of June 30, 2009, represents deferred income for the NOVA supply agreement
that is being amortized over the contractual non-compete period of five years using the
straight-line method. Accrued liabilities include the current portion of $12.4 million and
deferred credits and other liabilities include the long-term portion of the deferred income of
$29.2 million.  Three months ended June 30,
    
    Six months ended June 30,2009
    
    2008
    
    2009
    
    2008(Dollars in Thousands)Revenues
    
    $
    3,311
    
    
    $
    611
    
    
    $
    6,406
    
    
    $
    15,208Income (loss) before income taxes
    
    
    2,971
    
    
    
    (1,603
    )
    
    
    5,462
    
    
    
    (7,857
    )
 3. Long-Term Debt
 1 4
 9




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STERLING CHEMICALS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
 1 4
      10




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STERLING CHEMICALS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
  4. Commitments and Contingencies
 Product Contracts:
  Environmental Regulations:
      11




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STERLING CHEMICALS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
     Legal Proceedings:
  12




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STERLING CHEMICALS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
  
     13




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STERLING CHEMICALS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
 5. Income Taxes
  6. Pension Plans and Other Postretirement Benefits
  Three months ended June 30,
    
    
    Six months ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars in Thousands)
    
    
    (Dollars in Thousands)Interest cost
    
    $
    1,828
    
    
    $
    1,788
    
    
    $
    3,656
    
    
    $
    3,576Expected return on plan assets
    
    
    (1,513
    )
    
    
    (2,148
    )
    
    
    (3,026
    )
    
    
    (4,296
    )Amortization
    
    
    864
    
    
    
    2
    
    
    
    1,728
    
    
    
    4Net pension cost (benefit)
    
    $
    1,179
    
    
    $
    (358
    )
    
    $
    2,358
    
    
    $
    (716
    )
  Three months ended June 30,
    
    
    Six months ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars in Thousands)
    
    
    (Dollars in Thousands)Service cost
    
    $
    11
    
    
    $
    14
    
    
    $
    22
    
    
    $
    28Interest cost
    
    
    121
    
    
    
    142
    
    
    
    242
    
    
    
    284Amortization of unrecognized costs
    
    
    (541
    )
    
    
    (541
    )
    
    
    (1,082
    )
    
    
    (1,082
    )Net plan benefit
    
    $
    (409
    )
    
    $
    (385
    )
    
    $
    (818
    )
    
    $
    (770
    )
 7. Operating Segment and Sales Information
  Three months ended June 30,
    
    
    Six months ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars in Thousands)Revenues:Acetic acid
    
    $
    19,796
    
    
    $
    39,170
    
    
    $
    43,635
    
    
    $
    68,147Plasticizers
    
    
    6,890
    
    
    
    8,498
    
    
    
    14,173
    
    
    
    17,509Other
    
    
    255
    
    
    
    169
    
    
    
    510
    
    
    
    439Total
    
    $
    26,941
    
    
    $
    47,837
    
    
    $
    58,318
    
    
    $
    86,095Segment gross profit:Acetic acid
    
    $
    (134
    )
    
    $
    9,547
    
    
    $
    4,441
    
    
    $
    13,491
 14




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STERLING CHEMICALS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
 Three months ended June 30,
    
    
    Six months ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars in Thousands)Plasticizers
    
    
    1,402
    
    
    
    1,166
    
    
    
    2,724
    
    
    
    3,075Other(1)
    
    
    (100
    )
    
    
    (916
    )
    
    
    (429
    )
    
    
    (2,396
    )Total
    
    
    1,168
    
    
    
    9,797
    
    
    
    6,736
    
    
    
    14,170Selling, general and administrative expense
    
    
    3,344
    
    
    
    3,787
    
    
    
    7,227
    
    
    
    6,205Impairment
of long-lived assets
    
    
    
    
    
    
    6,649
    
    
    
    
    
    
    
    6,649Interest and debt related expenses
    
    
    3,968
    
    
    
    4,719
    
    
    
    7,971
    
    
    
    8,931Interest income
    
    
    (212
    )
    
    
    (1,107
    )
    
    
    (596
    )
    
    
    (2,432
    )Other income
    
    
    (1,544
    )
    
    
    
    
    
    
    (2,689
    )
    
    
    Loss from continuing operations before income tax
    
    $
    (4,388
    )
    
    $
    (4,251
    )
    
    $
    (5,177
    )
    
    $
    (5,183
    )Depreciation and amortization expenses:Acetic acid
    
    $
    1,715
    
    
    $
    1,525
    
    
    $
    3,359
    
    
    $
    3,037Plasticizers
    
    
    325
    
    
    
    532
    
    
    
    637
    
    
    
    1,064Other(2)
    
    
    262
    
    
    
    390
    
    
    
    551
    
    
    
    981Total
    
    $
    2,302
    
    
    $
    2,447
    
    
    $
    4,547
    
    
    $
    5,082Capital expenditures:Acetic acid
    
    $
    2,252
    
    
    $
    348
    
    
    $
    3,707
    
    
    $
    1,142Other  plant infrastructure
    
    
    1,686
    
    
    
    372
    
    
    
    2,673
    
    
    
    1,615Total
    
    $
    3,938
    
    
    $
    720
    
    
    $
    6,380
    
    
    $
    2,757
 
 (1)
    
    Gross loss for Other includes various unallocated corporate charges and
credits.(2)
    
    Includes depreciation and amortization expense of less than $0.1 million for
discontinued operations for each of the three month periods ended June 30, 2009 and 2008, and
less than $0.1 million and $0.4 million for the six month periods ended June 30, 2009 and
2008, respectively. As of
    
    
    As ofJune 30, 2009
    
    
    December 31, 2008(Dollars in Thousands)Total assets:Acetic acid
    
    $
    32,497
    
    
    $
    40,707Plasticizers
    
    
    5,798
    
    
    
    6,311Other(3)
    
    
    212,905
    
    
    
    216,011Total
    
    $
    251,200
    
    
    $
    263,029
 
 (3)
    
    Components of Other are presented in the table below: As of
    
    
    As ofJune 30, 2009
    
    
    December 31, 2008(Dollars in Thousands)Other:Corporate:Cash
    
    $
    150,786
    
    
    $
    156,126Other
    
    
    16,422
    
    
    
    17,989Plant infrastructure:Property, plant and equipment, net
    
    
    45,597
    
    
    
    41,730Assets of discontinued operations
    
    
    100
    
    
    
    166Total
    
    $
    212,905
    
    
    $
    216,011
 15




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STERLING CHEMICALS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
 8. New Accounting Standards
 Adoption of Accounting Standards:
       16




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STERLING CHEMICALS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
      
    
    the period after the balance sheet date during which management of a reporting
entity should evaluate events or transactions that may occur for potential recognition
or disclosure in the financial statements;
 
    
    the circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements; and
 
    
    the disclosures that an entity should make about events or transactions that
occurred after the balance sheet date.
  Future Adoption of Accounting Standards:
  17




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STERLING CHEMICALS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
   TM TM
 18




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Business Overview
       19




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Recent Developments
  Results of Operations
 Three Months Ended June 30, 2009 Compared to Three Months Ended June 30, 2008
 Revenues and loss from continuing operations
   20




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Selling, general and administrative expenses
  Impairment of long-lived assets
  Interest and debt related expenses
  Interest income
  Other income
  Benefit for income taxes
  21




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Income (loss) from discontinued operations, net of tax
  Six Months Ended June 30, 2009 Compared to Six Months Ended June 30, 2008
 Revenues and loss from continuing operations
    Selling, general and administrative expenses
  Impairment of long-lived assets
  Interest and debt related expenses
  22




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Interest income
  Other income
  Benefit for income taxes
  Income (loss) from discontinued operations, net of tax
  Liquidity and Capital Resources
 1 4 1 4
  23




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24




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i.e.
  Working Capital
  Cash Flow
  Capital Expenditures
   Contractual Cash Obligations
  25




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Critical Accounting Policies, Use of Estimates and Assumptions
  New Accounting Standards
 Adoption of Accounting Standards:
      26




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
    
    the period after the balance sheet date during which management of a reporting
entity should evaluate events or transactions that may occur for potential recognition
or disclosure in the financial statements;
    
    the circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements; and
    
    the disclosures that an entity should make about events or transactions that
occurred after the balance sheet date.
  27




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Future Adoption of Accounting Standards:
   TM TM
 
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
 1 4
 
 Item 4T. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures.
  28




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§
    
    management review and annual approval of the pre-established allocation percentages and
any changes to the allocation;§
    
    management review and approval of the methodology used to address the allocation
limitations in our general ledger system; and§
    
    management review and approval of the volume data from the meter to our general ledger
system, including formulas used to correct the volume data.
    Changes in Internal Control over Financial Reporting.
 
 PART II.
OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
    
    seven of our incumbent directors were re-elected;
    
    the appointment of Grant Thornton LLP as our independent registered accounting
firm for the fiscal year ending December 31, 2009 was ratified and approved;
    
    our Amended and Restated 2002 Stock Plan was ratified and approved;
    
    our Second Amended and Restated Certificate of Incorporation which increases the
number of our total authorized shares of Common Stock from 20,000,000 to 100,000,000 was
approved.
  29




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Director
    
    For
    
    WithheldByron J. Haney
    
    
    5,601,280
    
    
    
    0Philip M. Sivin
    
    
    5,601,280
    
    
    
    0Karl W. Schwarzfeld
    
    
    5,601,280
    
    
    
    0
  Director
    
    For
    
    WithheldRichard K. Crump
    
    
    8,232,436
    
    
    
    82,566John V. Genova
    
    
    8,231,539
    
    
    
    83,463John W. Gildea
    
    
    8,232,436
    
    
    
    82,566Dr. Peter Ting Kai Wu
    
    
    8,314,970
    
    
    
    32
  For
    
    Against
    
    Abstain8,359,088
    
    58
    
    51
  For
    
    Against
    
    Abstain7,581,466
    
    333,246
    
    84
  30




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For
    
    Against
    
    Abstain8,022,163
    
    336,979
    
    55
  
 Item 5. Other
Information
  provided
  Cumulative Free Cash Flow(1)Threshold
    
    $
    27,600,000Target
    
    $
    33,900,000Maximum
    
    $
    54,200,000
 
 (1)   Free Cash Flow means operating cash flow (from the cash flow statement), plus
out-of-pocket cash used for project development activities (i.e., cash used to explore or implement
new strategic initiatives (not involving existing businesses) aimed to improve future free cash
flow such as gasification, mergers and acquisitions, terminalling and sale of utilities to new
customers), plusnet proceeds from equipment sales plus$15.4 million (interest on our Secured
Notes without reduction for paydowns/purchases), plusinsurance proceeds related to plant, property
and equipment, plusLTI Plan cash payments, minussustaining (non-return) capital.  31




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Cumulative Free Cash FlowThreshold
    
    Target
    
    MaximumNamed Executive Officer
    
    $27,600,000
    
    $33,900,000
    
    $54,220,000John V. Genova
    
    310 Units
    
    620 Units
    
    1,240 UnitsJohn R. Beaver
    
    123 Units
    
    245 Units
    
    490 UnitsKenneth M. Hale
    
    130 Units
    
    260 Units
    
    520 UnitsPaul C. Rostek
    
    120 Units
    
    240 Units
    
    480 UnitsWalter B. Treybig
    
    110 Units
    
    220 Units
    
    440 Units
    
 
 Item 6. Exhibits
  ExhibitNumber
    
    
    
    Description of Exhibit3.1
    
    
    
    Certificate of Amendment to the Second Amended and Restated Certificate of
Incorporation of Sterling Chemicals, Inc. (incorporated by reference to
Exhibit 3.1 to our Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2009).+10.1
    
    
    
    Amended and Restated Employment Agreement dated June 16, 2009 between Sterling
Chemicals, Inc. and John V. Genova (incorporated by reference to Exhibit 10.1
to our current report on Form 8-K filed June 16, 2009).*+10.2
    
    
    
    Long-Term Incentive Plan.*15.1
    
    
    
    Letter of Grant Thornton LLP regarding unaudited interim financial information.*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




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ExhibitNumber
    
    
    
    Description of Exhibit*32.1
    
    
    
    Section 1350 Certification of the Chief Executive Officer.*32.2
    
    
    
    Section 1350 Certification of the Chief Financial Officer.
 
 *
    
    Filed or furnished herewith+
    
    Management contract or compensatory plan or arrangement 33




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SIGNATURES
  STERLING CHEMICALS, INC.
(Registrant)Date:  August 11, 2009
    By
    /s/ JOHN V. GENOVAJohn V. GenovaPresident and Chief Executive Officer Date:  August 11, 2009
    By
    /s/ JOHN R. BEAVERJohn R. BeaverSenior Vice President-Finance and
Chief Financial Officer
(Principal Financial Officer) 34




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EXHIBIT INDEX
 ExhibitNumber
    
    
    
    Description of Exhibit3.1
    
    
    
    Certificate of Amendment to the Second Amended and Restated Certificate of
Incorporation of Sterling Chemicals, Inc. (incorporated by reference to
Exhibit 3.1 to our Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2009).+10.1
    
    
    
    Amended and Restated Employment Agreement dated June 16, 2009 between Sterling
Chemicals, Inc. and John V. Genova (incorporated by reference to Exhibit 10.1
to our current report on Form 8-K filed June 16, 2009).*+10.2
    
    
    
    Long-Term Incentive Plan.*15.1
    
    
    
    Letter of Grant Thornton LLP regarding unaudited interim financial information.*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.
 
 *
    
    Filed or furnished herewith+
    
    Management contract or compensatory plan or arrangement 35