DIANA SHIPPING INC. current report, Q4 FY2010 (NYSE:DSX)

Business Context and Reporting Period

Company: Diana Shipping Inc. (NYSE: DSX), a global provider of dry bulk shipping services.

Filing Type: Form 6-K (Report of Foreign Private Issuer).

Reporting Period: Third quarter and nine months ended September 30, 2010.

Submission Date: November 17, 2010.

The filing incorporates a press release dated November 15, 2010, detailing financial results and fleet employment status as of November 12, 2010.

Metric	Q3 2010	Q3 2009	9M 2010	9M 2009
Voyage & Time Charter Revenues	$71.6 million	$58.2 million	$202.5 million	$180.7 million
Net Income (Attributed to Diana)	$33.8 million	$28.7 million	$96.5 million	$93.9 million
Operating Income	$35.9 million	$29.6 million	$100.4 million	$96.2 million
EPS (Diluted)	$0.42	$0.36	$1.19	$1.21
Net Cash from Operating Activities	$44.3 million	$42.0 million	$127.9 million	$111.4 million
Net Cash Used in Investing Activities	($49.4 million)	($14.1 million)	($197.7 million)	($50.4 million)
Net Cash from Financing Activities	$18.1 million	$6.0 million	$98.5 million	$128.6 million

Cash and Cash Equivalents: $311.2 million (up from $282.4 million at Dec 31, 2009).
Total Assets: $1.51 billion.
Long-term Debt: $337.3 million (up from $276.1 million).
Total Stockholders' Equity: $1.14 billion.

Fleet Size: 24 vessels (average 23.9 in Q3 2010 vs. 19.0 in Q3 2009).
Fleet Utilization: 99.7% for both Q3 2010 and Q3 2009.
Time Charter Equivalent (TCE) Rate: $31,593 per day (Q3 2010) vs. $32,367 (Q3 2009).
Daily Vessel Operating Expenses: $5,962 (Q3 2010) vs. $5,898 (Q3 2009).

Revenue Growth: Q3 2010 revenues increased 23% year-over-year, driven by fleet expansion (addition of m/v Houston, m/v Melite, m/v New York) and participation in Diana Containerships Inc.
Profitability: Net income rose 18% in Q3 2010 compared to Q3 2009. However, nine-month net income growth was modest (2.7%) due to higher expenses.
Expense Increases: Vessel operating expenses increased significantly ($13.1M in Q3 2010 vs. $10.3M in Q3 2009) due to the larger fleet. General and administrative expenses also rose ($6.3M vs. $4.4M).
Investing Outflows: Net cash used in investing activities surged to $197.7 million for the nine months ended Sept 30, 2010, compared to $50.4 million in the prior year, reflecting capital expenditures for new vessels.
Debt Levels: Long-term debt increased by approximately $61 million year-over-year to fund fleet expansion.

Fleet Employment: As of November 12, 2010, the fleet is heavily employed with long-term time charters. Notable charters include the m/v Norfolk (Capesize) at $74,750/day until 2013 and m/v Houston at $55,000/day until 2015.
Construction: Two vessels (H1234 and H1235) are under construction with expected delivery in 2012.
Forward-Looking Risks: The company highlights risks including fluctuations in charter rates and vessel values, changes in demand for dry bulk capacity, bunker price volatility, drydocking costs, and potential disruptions from political events or accidents.
Derivatives: The company reported a loss from derivative instruments of $0.8 million in Q3 2010 and $1.8 million for the nine-month period.

Fleet Expansion Impact: Verify the capitalization schedule and debt covenants related to the new vessels (m/v Houston, m/v Melite, m/v New York) and those under construction.
Charter Rate Exposure: Assess the risk of rate declines upon redelivery of vessels currently on long-term charters (e.g., m/v Norfolk, m/v Houston) given the current TCE rate of $31,593 is lower than the prior year's $32,367.
Operating Cost Trends: Monitor daily vessel operating expenses, which have risen to $5,962, to ensure they do not outpace revenue growth in a softer market.
Liquidity Position: Confirm the sustainability of the $311 million cash balance against the high capital expenditure requirements ($197.7M in 9 months) and debt service obligations.
Non-Controlling Interests: Review the impact of the majority-owned subsidiary, Diana Containerships Inc., on consolidated earnings and cash flows.