As of and for the
Year Ended December 31,
2011 2010 2009 2008 2007
(in thousands of U.S. dollars,
except for share and per share data and average daily results)
Loss from derivative instruments (737 ) (1,477 ) (505 ) - -
Insurance settlements for vessel un-repaired damages - - - 945 -
Income from investment in Diana Containerships Inc. 1,207 - - - -

Net income $ 107,495 $ 127,869 $ 121,498 $ 221,699 $ 134,220

Loss assumed by non controlling interests $ 2 $ 910 $ - $ - $ -

Net income attributed to Diana Shipping Inc. $ 107,497 $ 128,779 $ 121,498 $ 221,699 $ 134,220

Earnings per common share, basic $ 1.33 $ 1.60 $ 1.55 $ 2.97 $ 2.11

Earnings per common share, diluted $ 1.33 $ 1.59 $ 1.55 $ 2.97 $ 2.11

Weighted average number of common shares, basic 81,081,774 80,682,770 78,282,775 74,375,686 63,748,973

Weighted average number of common shares, diluted 81,124,348 80,808,232 78,385,464 74,558,254 63,748,973

Cash dividends declared and paid per share $ - $ - $ - $ 3.31 $ 2.05

Balance Sheet Data:
Cash and cash equivalents                                                     $ 416,674 $ 345,414 $ 282,438 $ 62,033 $ 16,726
Total current assets                                                     432,691 354,649 297,156 68,554 21,514
Vessels' net book value                                        1,046,719 1,160,850 979,343 960,431 867,632
Property and equipment, net 21,659 21,842 200 136 956
Total assets                                                     1,604,471 1,585,389 1,320,425 1,057,206 944,342
Total current liabilities                                                     48,095 32,510 32,386 20,012 20,964
Deferred revenue, non-current portion - 4,227 11,244 22,502 23,965
Long-term debt (including current portion) 373,338 383,623 281,481 238,094 98,819
Total stockholders’ equity                                                     1,208,878 1,169,930 999,325 775,476 799,474

	As of and for the
	Year Ended December 31,
	2012			2011			2010			2009			2008
	(in thousands of U.S. dollars,
	except for share and per share data, fleet data and average daily results)
Loss from derivative instruments		(518	)		(737	)		(1,477	)		(505	)		-
Insurance settlements for vessel un-repaired damages		-			-			-			-			945
Income / (loss) from investment in Diana Containerships Inc.		(1,773	)		1,207			-			-			-

Net income	$	54,639		$	107,495		$	127,869		$	121,498		$	221,699

Loss assumed by non controlling interests	$	-		$	2		$	910		$	-		$	-

Net income attributed to Diana Shipping Inc.	$	54,639		$	107,497		$	128,779		$	121,498		$	221,699

Earnings per common share, basic	$	0.67		$	1.33		$	1.60		$	1.55		$	2.97

Earnings per common share, diluted	$	0.67		$	1.33		$	1.59		$	1.55		$	2.97

Weighted average number of common shares, basic		81,083,485			81,081,774			80,682,770			78,282,775			74,375,686

Weighted average number of common shares, diluted		81,083,485			81,124,348			80,808,232			78,385,464			74,558,254

Cash dividends declared and paid per share	$	-		$	-		$	-		$	-		$	3.31

Cash Flow Data:
Net cash provided by operating activities $ 154,230 $ 178,292 $ 151,903 $ 261,151 $ 148,959
Net cash used in investing activities (90,428 ) (252,313 ) (73,081 ) (108,662 ) (409,085 )
Net cash provided by / (used in) financing activities 7,458 136,997 141,583 (107,182 ) 262,341

Balance Sheet Data:
Cash and cash equivalents	$	446,624	$	416,674	$	345,414	$	282,438	$	62,033
Total current assets		466,986		432,691		354,649		297,156		68,554
Vessels' net book value		1,211,138		1,046,719		1,160,850		979,343		960,431
Property and equipment, net		22,774		21,659		21,842		200		136
Total assets		1,742,802		1,604,471		1,585,389		1,320,425		1,057,206
Total current liabilities		61,477		48,095		32,510		32,386		20,012
Deferred revenue, non-current portion		-		-		4,227		11,244		22,502
Long-term debt (including current portion), net of deferred financing costs		459,112		373,338		383,623		281,481		238,094
Total stockholders' equity		1,266,424		1,208,878		1,169,930		999,325		775,476

Cash Flow Data:
Net cash provided by operating activities	$	119,886		$	154,230		$	178,292		$	151,903		261,151
Net cash used in investing activities		(169,913	)		(90,428	)		(252,313	)		(73,081	)	(108,662	)
Net cash provided by / (used in) financing activities		79,977			7,458			136,997			141,583		(107,182	)

Fleet Data:
Average number of vessels (1)	23.6	22.9	19.2	18.9	15.9	27.6	23.6	22.9	19.2	18.9
Number of vessels at end of period	24.0	25.0	20.0	19.0	18.0	30.0	24.0	25.0	20.0	19.0
Weighted average age of drybulk vessels at year-end (in years)	6.3	5.4	4.9	4.3	3.4	6.0	6.3	5.4	4.9	4.3
Weighted average age of containerships at year-end (in years)	-	0.6	-	-	-	-	-	0.6	-	-

	As of and for the
	Year Ended December 31,
		2012			2011			2010			2009			2008

Ownership days (2)			10,119			8,609			8,348			7,000			6,913
Available days (3)			9,998			8,474			8,208			6,930			6,892
Operating days (4)			9,865			8,418			8,180			6,857			6,862
Fleet utilization (5)			98.7	%		99.3	%		99.7	%		98.9	%		99.6	%

Average Daily Results:
Time charter equivalent (TCE) rate (6)	$	21,255	$	28,920	$	32,049	$	32,811	$	46,777
Daily vessel operating expenses (7)		6,551		6,432		6,299		5,910		5,772

As of and for the
Year Ended December 31,
2011 2010 2009 2008 2007

Ownership days (2) 8,609 8,348 7,000 6,913 5,813
Available days (3) 8,474 8,208 6,930 6,892 5,813
Operating days (4) 8,418 8,180 6,857 6,862 5,771
Fleet utilization (5) 99.3 % 99.7 % 98.9 % 99.6 % 99.3 %

Average Daily Results:
Time charter equivalent (TCE) rate (6) $ 28,920 $ 32,049 $ 32,811 $ 46,777 $ 31,272
Daily vessel operating expenses (7) 6,432 6,299 5,910 5,772 5,046

_________________________

(1)

Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of our fleet during the period divided by the number of calendar days in the period.

(2)

Ownership days are the aggregate number of days in a period during which each vessel in our fleet has been owned by us. Ownership days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during a period.

(3)

Available days are the number of our ownership days less the aggregate number of days that our vessels are off-hire due to scheduled repairs or repairs under guarantee, vessel upgrades or special surveys and the aggregate amount of time that we spend positioning our vessels for such events. The shipping industry uses available days to measure the number of days in a period during which vessels should be capable of generating revenues.

(4)

Operating days are the number of available days in a period less the aggregate number of days that our vessels are off-hire due to any reason, including unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues.

(5)

We calculate fleet utilization by dividing the number of our operating days during a period by the number of our available days during the period. The shipping industry uses fleet utilization to measure a company's efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are off-hire for reasons other than scheduled repairs or repairs under guarantee, vessel upgrades, special surveys or vessel positioning for such events.

(6)

Time charter equivalent rates, or TCE rates, are defined as our time charter revenues less voyage expenses during a period divided by the number of our available days during the period, which is consistent with industry standards. Voyage expenses include port charges, bunker (fuel) expenses, canal charges and commissions. TCE rate is a non-GAAP measure, and is a standard shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charter hire rates for vessels on voyage charters are generally not expressed in per day amounts while charter hire rates for vessels on time charters are generally expressed in such amounts. The following table reflects the calculation of our TCE rates for the periods presented.

	Year Ended December 31,															Year Ended December 31,
	2011			2010			2009			2008			2007			2012			2011			2010			2009			2008
	(in thousands of U.S. dollars, except for															(in thousands of U.S. dollars, except for
	TCE rates, which are expressed in U.S. dollars, and available days)															TCE rates, which are expressed in U.S. dollars, and available days)
Time charter revenues	$	255,669		$	275,448		$	239,342		$	337,391		$	190,480		$	220,785		$	255,669		$	275,448		$	239,342		$	337,391
Less: voyage expenses		(10,597	)		(12,392	)		(11,965	)		(15,003	)		(8,697	)		(8,274	)		(10,597	)		(12,392	)		(11,965	)		(15,003	)

Time charter equivalent revenues	$	245,072		$	263,056		$	227,377		$	322,388		$	181,783		$	212,511		$	245,072		$	263,056		$	227,377		$	322,388

Available days		8,474			8,208			6,930			6,892			5,813			9,998			8,474			8,208			6,930			6,892
Time charter equivalent (TCE) rate	$	28,920		$	32,049		$	32,811		$	46,777		$	31,272		$	21,255		$	28,920		$	32,049		$	32,811		$	46,777

(7)

Daily vessel operating expenses, which include crew wages and related costs, the cost of insurance, expenses relating to repairs and maintenance, the costs of spares and consumable stores, tonnage taxes and other miscellaneous expenses, are calculated by dividing vessel operating expenses by ownership days for the relevant period.

B. Capitalization and Indebtedness

Not Applicable.

C. Reasons for the Offer and Use of Proceeds

Not Applicable.

D. Risk Factors

Some of the following risks relate principally to the industry in which we operate and our business in general. Other risks relate principally to the securities market and ownership of our common stock. The occurrence of any of the events described in this section could significantly and negatively affect our business, financial condition or operating results or the trading price of our common stock.

Industry Specific Risk Factors

Charter hire rates for dry bulk carriers may decrease in the future, which may adversely affect our earnings.

The dry bulk shipping industry is cyclical with attendant volatility in charter hire rates and profitability. The degree of charter hire rate volatility among different types of dry bulk carriers has varied widely, and charter hire rates for Panamax and Capesize dry bulk carriers have reached near historically low levels. Because we charter some of our vessels pursuant to short-term time charters, we are exposed to changes in spot market and short-term charter rates for dry bulk carriers and such changes may affect our earnings and the value of our dry bulk carriers at any given time. In addition, we have ~~nine~~seven vessels coming off of their current charters in ~~2012~~2013 for which we will be seeking new employment. We cannot assure you that we will be able to successfully charter our vessels in the future or renew existing charters at rates sufficient to allow us to meet our obligations or pay any dividends in the future. Fluctuations in charter rates result from changes in the supply and demand for vessel capacity and changes in the supply and demand for the major commodities carried by water internationally. Because the factors affecting the supply and demand for vessels are outside of our control and are unpredictable, the nature, timing, direction and degree of changes in industry conditions are also unpredictable.

~~Factors that influence demand for vessel capacity include:~~

Factors that influence demand for vessel capacity include:

●

supply and demand for energy resources, commodities, semi-finished and finished consumer and industrial products;

●

changes in the exploration or production of energy resources, commodities, semi-finished and finished consumer and industrial products;

●

the location of regional and global exploration, production and manufacturing facilities;

●

the location of consuming regions for energy resources, commodities, semi-finished and finished consumer and industrial products;

●

the globalization of production and manufacturing;

●

global and regional economic and political conditions, including armed conflicts and terrorist ~~activities,~~activities; embargoes and strikes;

●

natural disasters and other disruptions in international trade;

●

developments in international trade;

●

changes in seaborne and other transportation patterns, including the distance cargo is transported by sea;

●

environmental and other regulatory developments;

●

currency exchange rates; and

●

weather.

Factors that influence the supply of vessel capacity include:

●

the number of newbuilding deliveries;

●

the scrapping rate of older vessels;

●

vessel casualties; and

●

the number of vessels that are out of service, namely those that are laid-up, drydocked, awaiting repairs or otherwise not available for hire.

In addition to the prevailing and anticipated freight rates, factors that affect the rate of newbuilding, scrapping and laying-up include newbuilding prices, secondhand vessel values in relation to scrap prices, costs of bunkers and other operating costs, costs associated with classification society surveys, normal maintenance and insurance coverage, the efficiency and age profile of the existing dry bulk fleet in the market and government and industry regulation of maritime transportation practices, particularly environmental protection laws and regulations. These factors influencing the supply of and demand for shipping capacity are outside of our control, and we may not be able to correctly assess the nature, timing and degree of changes in industry conditions.

Demand for our dry bulk carriers is dependent upon economic growth in the world's economies, including China and India, seasonal and regional changes in demand, changes in the capacity of the global dry bulk carrier fleet and the sources and supply of dry bulk cargo transported by sea. Given the large number of new dry bulk carriers currently on order with shipyards, the capacity of the global dry bulk carrier fleet seems likely to increase and economic growth may not resume in areas that have experienced a recession or continue in other areas. Adverse economic, political, social or other developments could have a material adverse effect on our business and operating results.

The dry bulk carrier charter market remains significantly below its high in 2008, which has had and may continue to have an adverse effect on our revenues, earnings and profitability, and may affect our ability to comply with our loan covenants.

The abrupt and dramatic downturn in the dry bulk charter market, from which we derive substantially all of our revenues, has severely affected the dry bulk shipping industry and has adversely affected our business. The Baltic Dry Index, or the BDI, has long been viewed as the main benchmark to monitor the movements of the dry bulk vessel charter market and the performance of the entire dry bulk shipping market. The BDI declined 94% in 2008 from a peak of 11,793 in May 2008 to a low of 663 in December 2008 and has remained volatile ~~during 2009, ranging from~~since then. The BDI recorded a 25-year record low of ~~772~~647 in January 2009 to a high of 4,661 in November 2009. The BDI continued its volatility in 2010, reaching a high of 4,209 in May 2010 and a low of 1,700 in July 2010, and in 2011, ranging from a low of approximately 1,043 in February 2011 and a high of approximately 2,173 in October 2011. As of April 10, 2012,2012. While the BDI ~~stood at 928.~~has since increased to 923 as of March 20, 2013, there can be no assurance that the drybulk charter market will increase further, and the market could decline. The decline and volatility in charter rates is due to various factors, including the lack of trade financing for purchases of commodities carried by sea, which has resulted in a significant decline in cargo shipments, and the excess supply of iron ore in China, which has resulted in falling iron ore prices and increased stockpiles in Chinese ports. The decline and volatility in charter rates in the dry bulk market also affects the value of our dry bulk vessels, which follows the trends of dry bulk charter rates, and earnings on our charters, and similarly, affects our cash flows, liquidity and compliance with the covenants contained in our loan agreements.

The decline in the dry bulk carrier charter market has had and may continue to have additional adverse consequences for our industry, including an absence of financing for vessels, no active secondhand market for the sale of vessels, charterers seeking to renegotiate the rates for existing time charters, and widespread loan covenant defaults in the dry bulk shipping industry. Accordingly, the value of our common shares could be substantially reduced or eliminated.

A significant economic slowdown in the Asia Pacific region could exacerbate the effect of recent slowdowns in the economies of the United States and the European Union and may have a material adverse effect on our business, financial condition and results of operations.

Continued economic slowdown in ~~any~~the Asia Pacific ~~country, particularly~~region, especially in Japan and China, may ~~further~~ exacerbate the effect on us of the ~~significant~~ recent ~~slowdowns~~slowdown in the ~~economies~~rest of the ~~United States and the European Union and may have a material adverse effect on our business, financial condition and results of operations, as well as our future prospects.~~world. Before the global economic financial crisis that began in 2008, China had one of the world's fastest growing economies in terms of gross domestic product, or GDP, which had a significant impact on shipping demand. ~~While the~~The growth rate of China's GDP ~~increased~~decreased to approximately ~~10.3%~~7.8% for the year ended December 31, ~~2010,~~2012, as compared to approximately ~~9.1% for the year ended December 31, 2009, the Chinese GDP growth rate decreased to approximately 9.5%~~9.3% for the year ended December 31, 2011, and ~~remains~~continues to remain below pre-2008 levels. China has ~~recently~~ imposed measures to restrain lending, which may further contribute to a slowdown in its economic growth. ~~It is possible that~~ China and other countries in the Asia Pacific region ~~will~~may continue to experience slowed or even negative economic growth in the ~~near~~ future. Moreover, the current economic slowdown in the economies of the United States, the European Union and other Asian countries may further adversely affect economic growth in China and elsewhere. Our ~~business, financial condition and~~ results of operations and ability to ~~pay dividends as well as~~grow our ~~future prospects, will likely~~fleet would be ~~materially and adversely affected~~impeded by ana continuing or worsening economic downturn in any of these countries.

A decrease in the level of China's export of goods or an increase in trade protectionism could have a material adverse impact on our charterers' business and, in turn, could cause a material adverse impact on our results of operations, financial condition and cash flows.

Our vessels may be deployed on routes involving trade in and out of emerging markets, and our charterers' shipping and business revenue may be derived from the shipment of goods from the Asia Pacific region to various overseas export markets including the United States and Europe. Any reduction in or hindrance to the output of China-based exporters could have a material adverse effect on the growth rate of China's exports and on our charterers' business.

For instance, the government of China has recently implemented economic policies aimed at increasing domestic consumption of Chinese-made goods. This may have the effect of reducing the supply of goods available for export and may, in turn, result in a decrease of demand for container shipping. Additionally, though in China there is an increasing level of autonomy and a gradual shift in emphasis to a "market economy" and enterprise reform, many of the reforms, particularly some limited price reforms that result in the prices for certain commodities being principally determined by market forces, are unprecedented or experimental and may be subject to revision, change or abolition. The level of imports to and exports from China could be adversely affected by changes to these economic reforms by the Chinese government, as well as by changes in political, economic and social conditions or other relevant policies of the Chinese government.

Our operations expose us to the risk that increased trade protectionism will adversely affect our business. If the continuing global recovery is undermined by downside risks and the recent economic downturn is prolonged, governments may turn to trade barriers to protect their domestic industries against foreign imports, thereby depressing the demand for shipping. Specifically, increasing trade protectionism in the markets that our charterers serve has caused and may continue to cause an increase in: (i) the cost of goods exported from China, (ii) the length of time required to deliver goods from China and (iii) the risks associated with exporting goods from China, as well as a decrease in the quantity of goods to be shipped.

Any increased trade barriers or restrictions on trade, especially trade with China, would have an adverse impact on our charterers' business, operating results and financial condition and could thereby affect their ability to make timely charter hire payments to us and to renew and increase the number of their time charters with us. This could have a material adverse effect on our business, results of operations and financial condition and our ability to pay dividends to our shareholders.

The instability of the euro or the inability of countries to refinance their debts could have a material adverse effect on our revenue, profitability and financial position.

As a result of the credit crisis in Europe, in particular in Greece, Italy, Ireland, Portugal and Spain, the European Commission created the European Financial Stability Facility, or the EFSF, and the European Financial Stability Mechanism, or the EFSM, to provide funding to Eurozone countries in financial difficulties that seek such support. In March 2011, the European Council agreed on the need for Eurozone countries to establish a permanent stability mechanism, the European Stability Mechanism, or the ESM, which ~~will be activated by mutual agreement,~~was established on September 27, 2012 to assume the role of the EFSF and the EFSM in providing external financial assistance to Eurozone countries. Despite these measures, concerns persist regarding the debt burden of certain Eurozone countries and their ability to meet future financial obligations and the overall stability of the euro. An extended period of adverse development in the outlook for European countries could reduce the overall demand for ~~dry bulk~~drybulk cargoes and for our services. These potential developments, or market perceptions concerning these and related issues, could affect our financial position, ~~and~~ results of ~~operations.~~operations and cash flow.

An over-supply of dry bulk carrier capacity may prolong or further depress the current low charter rates and, in turn, adversely affect our profitability.

The market supply of dry bulk carriers has been increasing ~~and~~due to the ~~number~~high level of ~~dry bulk carriers on order is near historic highs.~~new deliveries in the last few years. Dry bulk ~~new buildings~~newbuildings were delivered in significant numbers starting at the beginning of 2006 and continued to be delivered in significant numbers through ~~2011.~~the end of 2012. As of February ~~2012, newbuilding orders had been placed for an aggregate of more than 30.0%~~2013, the dry bulk orderbook was equivalent to 19% of the existing ~~global dry bulk~~ fleet ~~with~~and a high level of new deliveries ~~expected during~~is scheduled for the ~~next three years. Due~~remainder of 2013. However, due to lack of financing, many analysts expect significant cancellations and/or slippage of newbuilding ~~orders.~~orders and not all of the vessels scheduled for delivery in 2013 are likely to be delivered on time. While vessel supply will continue to be affected by the delivery of new vessels and the removal of vessels from the global fleet, either through scrapping or accidental losses, an over-supply of dry bulk carrier capacity could exacerbate the recent decrease in charter rates or prolong the period during which low charter rates prevail. If the current low charter rate environment persists, or a further reduction occurs, during a period when the current charters for our dry bulk carriers expire or are terminated, we may only be able to re-charter those vessels at reduced rates or we may not be able to charter our vessels at all. Currently, ~~nine~~seven of our charters are scheduled to expire in ~~2012.~~2013.

World events could affect our results of operations and financial condition.

~~Terrorist attacks~~Continuing conflicts and recent developments in the Middle East, including Egypt, and North Africa, and the ~~continuing response~~presence of ~~the world community to these attacks, as well as the threat of future terrorist attacks around the world, continues to cause uncertainty~~U.S. and other armed forces in ~~the world's financial markets and may affect our business, operating results and financial condition. Continuing conflicts in North Africa and~~ the Middle East, may lead to additional acts of terrorism and armed conflict around the world, which may contribute to further economic instability in the global financial markets. These uncertainties could also adversely affect our ability to obtain additional financing on terms acceptable to us or at all. In the past, political conflicts have also resulted in attacks on vessels, mining of waterways and other efforts to disrupt international shipping, particularly in the Arabian Gulf region. Acts of terrorism and piracy have also affected vessels trading in regions such as the South China Sea and the Gulf of Aden off the coast of Somalia. Any of these occurrences could have a material adverse impact on our operating ~~results, revenues and costs.~~

Future terrorist attacks could also result in increased volatility and turmoil of the financial markets in the United States and globally. Any of these occurrences could have a material adverse impact on our revenues and costs.results.

Acts of piracy on ocean-going vessels have recently increased in frequency, which could adversely affect our business.

Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the South China Sea, the Indian Ocean and in the Gulf of Aden off the coast of Somalia. Although the frequency of sea piracy worldwide decreased ~~slightly in 2011 for the first time in five years, throughout 2008,~~during 2012 to its lowest level since 2009, ~~and 2010, the frequency of~~sea piracy incidents ~~increased significantly,~~continue to occur, particularly in the Gulf of Aden off the coast of Somalia and increasingly in the Gulf of Guinea, with ~~dry bulk~~drybulk vessels and tankers particularly vulnerable to such attacks. If these piracy attacks result in regions in which our vessels are deployed being characterized ~~by insurers~~ as "war risk" zones by insurers, as the Gulf of Aden temporarily was in May 2008, or Joint War Committee "war and strikes" listed areas, premiums payable for such coverage could increase significantly and such insurance coverage may be more difficult to obtain. In addition, crew costs, including ~~those~~ due to employing onboard security guards, could increase in such circumstances. Furthermore, while we believe the charterer remains liable for charter payments when a vessel is seized by pirates, the charterer may dispute this and withhold charterhire until the vessel is released. A charterer may also claim that a vessel seized by pirates was not "on-hire" for a certain number of days and is therefore entitled to cancel the charter party, a claim that we would dispute. We may not be adequately insured to cover losses from these incidents, which could have a material adverse effect on us. In addition, any detention hijacking as a result of an act of piracy against our vessels, or an increase in cost, or unavailability, of insurance for our vessels, could have a material adverse impact on our business, financial condition and results of operations.

If economic conditions throughout the world do not improve, it will impede our results of operations, financial condition and cash flows.

Negative trends in the global economy that emerged in 2008 continue to adversely affect global economic conditions. In addition, the world economy is ~~currently facing~~continues to face a number of new challenges, including uncertainty related to the continuing discussions in the United States regarding the federal debt ceiling and recent turmoil and hostilities in the Middle East, North Africa and other geographic areas and ~~countries.~~countries and continuing economic weakness in the European Union. The deterioration in the global economy has caused, and may continue to cause, a decrease in worldwide demand for certain goods and, thus, shipping. We cannot predict how long the current market conditions will last. However, recent and developing economic and governmental factors, together with the concurrent decline in charter rates and vessel values, have had a material adverse effect on our results of operations, financial condition and cash flows, have caused the price of our common shares to decline and could cause the price of our common shares to decline further.

The economies of the United States, the European Union and other parts of the world ~~have recently been~~continue to experience relatively slow growth or ~~are currently~~remain in a recession and ~~continue to~~ exhibit weak economic trends. The credit markets in the United States and Europe have experienced significant contraction, deleveraging and reduced liquidity, and the U.S. federal government and state governments and European authorities ~~have implemented~~continue to implement a broad variety of governmental action and/or new regulation of the financial markets and may implement additional regulations in the future. Securities and futures markets and the credit markets are subject to comprehensive statutes, regulations and other requirements. The United States Securities and Exchange Commission, other regulators, self-regulatory organizations and exchanges are authorized to take extraordinary actions in the event of market emergencies, and may effect changes in law or interpretations of existing laws.markets. Global financial markets and economic conditions have been, and continue to be, severely disrupted and volatile. ~~Credit markets and~~Since 2008, lending by financial institutions worldwide remains at very low levels compared to the debt and equity capital markets have been exceedingly distressed and the uncertainty surrounding the future of the credit markets in the United States and the rest of the world has resulted in reduced access to credit worldwide.

We face risks attendant to changes in economic environments, changes in interest rates, and instability in the banking and securities markets around the world, among other factors. Major market disruptions and the current adverse changes in market conditions and regulatory climate in the United States and worldwide may adversely affect our business or impair our ability to borrow amounts under our credit facilities or any future financial arrangements. We cannot predict how long the current market conditions will last. However, these recent and developing economic and governmental factors, together with the concurrent decline in charter rates and vessel values, may have a material adverse effect on our results of operations, financial condition or cash flows, and the trading price of our common shares.period preceding 2008.

Our operating results are subject to seasonal fluctuations, which could affect our operating results and the amount of available cash with which we could pay dividends, if declared.

We operate our vessels in markets that have historically exhibited seasonal variations in demand and, as a result, in charter hire rates. This seasonality may result in quarter-to-quarter volatility in our operating results which could affect the amount of dividends, if any, that we may pay to our shareholders from quarter to quarter. The dry bulk carrier market is typically stronger in the fall and winter months in anticipation of increased consumption of coal and other raw materials in the northern hemisphere during the winter months. In addition, unpredictable weather patterns in these months tend to disrupt vessel scheduling and supplies of certain commodities. As a result, our revenues may be weaker during the fiscal quarters ended June 30 and September 30, and, conversely, our revenues may be stronger in fiscal quarters ended December 31 and March 31. While this seasonality will not directly affect our operating results and cash available for distribution to our shareholders as dividends as long as our fleet is employed on period time charters, it could materially affect our operating results to the extent our vessels are employed in the spot market in the future.

Fuel, or bunker prices, may adversely affect profits.

While we generally will not bear the cost of fuel, or bunkers for vessels operating on time charters, fuel is a significant factor in negotiating charter rates. As a result, an increase in the price of fuel beyond our expectations may adversely affect our profitability at the time of charter negotiation. Fuel is also a significant, if not the largest, expense in our shipping operations when vessels are under voyage charter. The price and supply of fuel is unpredictable and fluctuates based on events outside our control, including geopolitical developments, supply and demand for oil and gas, actions by the Organization of Petroleum Exporting Countries and other oil and gas producers, war and unrest in oil producing countries and regions, regional production patterns and environmental concerns. Further, fuel may become much more expensive in the future, which may reduce the profitability and competitiveness of our business versus other forms of transportation, such as truck or rail.

We are subject to complex laws and regulations, including environmental regulations that can adversely affect the cost, manner or feasibility of doing business.

Our operations are subject to numerous laws and regulations in the form of international conventions and treaties, national, state and local laws and national and international regulations in force in the jurisdictions in which our vessels operate or are registered, which can significantly affect the ownership and operation of our vessels. These requirements include, but are not limited to, European Union Regulations, the International Convention for the Prevention of Pollution from Ships of 1975, the International Maritime Organization, or IMO, International Convention for the Prevention of Marine Pollution of 1973, the IMO International Convention for the Safety of Life at Sea of 1974, the International Convention on Load Lines of 1966, the U.S. Oil Pollution Act of 1990, or OPA, the U.S. Comprehensive Environmental Response, Compensation and Liability Act of 1980, or CERCLA, the U.S. Clean Air Act, U.S. Clean Water Act and the U.S. Marine Transportation Security Act of 2002. Compliance with such laws, regulations and standards, where applicable, may require installation of costly equipment or operational changes and may affect the resale value or useful lives of our vessels. We may also incur additional costs in order to comply with other existing and future regulatory obligations, including, but not limited to, costs relating to air emissions including greenhouse gases, the management of ballast waters, maintenance and inspection, development and implementation of emergency procedures and insurance coverage or other financial assurance of our ability to address pollution incidents. These costs could have a material adverse effect on our business, results of operations, cash flows and financial condition. A failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions or the suspension or termination of our operations. Environmental laws often impose strict liability for remediation of spills and releases of oil and hazardous substances, which could subject us to liability without regard to whether we were negligent or at fault. Under OPA, for example, owners, operators and bareboat charterers are jointly and severally strictly liable for the discharge of oil within the 200-mile exclusive economic zone around the United States. Furthermore, the 2010 explosion of the Deepwater Horizon and the subsequent release of oil into the Gulf of Mexico, or other events, may result in further regulation of the shipping industry, and modifications to statutory liability schemes, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. An oil spill could result in significant liability, including fines, penalties and criminal liability and remediation costs for natural resource damages under other federal, state and local laws, as well as third-party damages. We are required to satisfy insurance and financial responsibility requirements for potential oil (including marine fuel) spills and other pollution incidents. Although we have arranged insurance to cover certain environmental risks, there can be no assurance that such insurance will be sufficient to cover all such risks or that any claims will not have a material adverse effect on our business, results of operations, cash flows and financial condition and our ability to pay dividends.

We are subject to international safety regulations and the failure to comply with these regulations may subject us to increased liability, may adversely affect our insurance coverage and may result in a denial of access to, or detention in, certain ports.

The operation of our vessels is affected by the requirements set forth in the United Nations' International Maritime Organization's International Management Code for the Safe Operation of Ships and Pollution Prevention, or ISM Code. The ISM Code requires ship owners, ship managers and bareboat charterers to develop and maintain an extensive "Safety Management System" that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. The failure of a shipowner or bareboat charterer to comply with the ISM Code may subject it to increased liability, may invalidate existing insurance or decrease available insurance coverage for the affected vessels and may result in a denial of access to, or detention in, certain ports. Each of the vessels that has been delivered to us is ISM Code-certified and we expect that each other vessel that we have agreed to purchase will be ISM Code-certified when delivered to us.

In addition, vessel classification societies also impose significant safety and other requirements on our vessels. In complying with current and future environmental requirements, vessel-owners and operators may also incur significant additional costs in meeting new maintenance and inspection requirements, in developing contingency arrangements for potential spills and in obtaining insurance coverage. Government regulation of vessels, particularly in the areas of safety and environmental requirements, can be expected to become stricter in the future and require us to incur significant capital expenditures on our vessels to keep them in compliance.

The operation of our vessels is also affected by other government regulation in the form of international conventions, national, state and local laws and regulations in force in the jurisdictions in which the vessels operate, as well as in the country or countries of their registration. Because such conventions, laws, and regulations are often revised, we cannot predict the ultimate cost of complying with such conventions, laws and regulations or the impact thereof on the resale prices or useful lives of our vessels. Additional conventions, laws and regulations may be adopted that could limit our ability to do business or increase the cost of our doing business and which may materially adversely affect our operations. We are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses, certificates, and financial assurances with respect to our operations.

Increased inspection procedures, tighter import and export controls and new security regulations could increase costs and disrupt our business.

International shipping is subject to various security and customs inspection and related procedures in countries of origin, destination and trans-shipment points. These security procedures can result in cargo seizure, delays in the loading, offloading, trans-shipment or delivery and the levying of customs duties, fines or other penalties against us.

For example, since the events of September 11, 2001, U.S. authorities have significantly increased the levels of inspection for all imported containers. Government investment in non-intrusive container scanning technology has grown, and there is interest in electronic monitoring technology, including so-called "e-seals" and "smart" containers that would enable remote, centralized monitoring of containers during shipment to identify tampering with or opening of the containers, along with potentially measuring other characteristics such as temperature, air pressure, motion, chemicals, biological agents and radiation.

It is possible that changes to inspection procedures, such as those described above, could impose additional financial and legal obligations on us. Changes to inspection procedures could also impose additional costs and obligations on our customers and may, in certain cases, render the shipment of certain types of cargo uneconomical or impractical. Any such changes or developments may have a material adverse effect on our business, financial condition and results of operations.

The operation of dry bulk carriers has certain unique operational risks which could affect our earnings and cash flow.

The operation of vessels, such as dry bulk carriers, has certain unique risks. With a dry bulk carrier, the cargo itself and its interaction with the vessel can be an operational risk. By their nature, dry bulk cargoes are often heavy, dense, easily shifted, and react badly to water exposure. In addition, dry bulk carriers are often subjected to battering treatment during unloading operations with grabs, jackhammers (to pry encrusted cargoes out of the hold) and small bulldozers. This treatment may cause damage to the vessel. Vessels damaged due to treatment during unloading procedures may be more susceptible to breach to the sea. Hull breaches in dry bulk carriers may lead to the flooding of the vessels' holds. If a dry bulk carrier suffers flooding in its forward holds, the bulk cargo may become so dense and waterlogged that its pressure may buckle the vessel's bulkheads leading to the loss of a vessel. If we are unable to adequately repair our vessels after such damages, we may be unable to prevent these events. Any of these circumstances or events could negatively impact our business, financial condition, results of operations and ability to pay dividends, if any, in the future. In addition, the loss of any of our vessels could harm our reputation as a safe and reliable vessel owner and operator.

If our vessels call on ports located in countries that are subject to sanctions and embargoes imposed by the U.S. or other governments, that could adversely affect our reputation and the market for our common stock.

From time to time on charterers' instructions, our vessels may call on ports located in countries subject to sanctions and embargoes imposed by the United States government and countries identified by the U.S. government as state sponsors of terrorism, including Cuba, Iran, Sudan and Syria. The U.S. sanctions and embargo laws and regulations vary in their application, as they do not all apply to the same covered persons or proscribe the same activities, and such sanctions and embargo laws and regulations may be amended or strengthened over time. In 2010, the U.S. enacted the Comprehensive Iran Sanctions Accountability and Divestment Act, or CISADA, which expanded the scope of the Iran Sanctions Act. Among other things, CISADA expands the application of the prohibitions to companies such as ours and introduces limits on the ability of companies and persons to do business or trade with Iran when such activities relate to the investment, supply or export of refined petroleum or petroleum products. In addition, 2012, President Obama signed Executive Order 13608 which prohibits foreign persons from violating or attempting to violate, or causing a violation of any sanctions in effect against Iran or facilitating any deceptive transactions for or on behalf of any person subject to U.S. sanctions. Any persons found to be in violation of Executive Order 13608 will be deemed a foreign sanctions evader and will be banned from all contacts with the United States, including conducting business in U.S. ~~Congress is currently considering~~dollars. Also in 2012, President Obama signed into law the ~~enactment~~Iran Threat Reduction and Syria Human Rights Act of 2012, or the Iran Threat Reduction Act, which created new sanctions and strengthened existing sanctions. Among other things, the Iran Threat Reduction Act intensifies existing sanctions regarding the provision of goods, services, infrastructure or technology to Iran's petroleum or petrochemical sector. The Iran Threat Reduction Act also includes a provision requiring the President of the United States to impose five or more sanctions from Section 6(a) of the Iran ~~North Korea,~~Sanctions Act, as amended, on a person the President determines is a controlling beneficial owner of, or otherwise owns, operates, or controls or insures a vessel that was used to transport crude oil from Iran to another country and ~~Syria Nonproliferation Reform and Modernization Act~~(1) if the person is a controlling beneficial owner of ~~2011, which would, among other things, provide for~~ the ~~imposition~~vessel, the person had actual knowledge the vessel was so used or (2) if the person otherwise owns, operates, or controls, or insures the vessel, the person knew or should have known the vessel was so used. Such a person could be subject to a variety of sanctions, including ~~a 180-day prohibition on calling on~~exclusion from U.S. capital markets, exclusion from financial transactions subject to U.S. jurisdiction, and exclusion of that person's vessels from U.S. ports ~~and enhanced vessel inspections, on companies or persons that provide certain shipping services~~for up to ~~or from Iran, North Korea or Syria.~~ two years.

Although we believe that we ~~are~~have been in compliance with all applicable sanctions and embargo laws and regulations, and intend to maintain such compliance, there can be no assurance that we will be in compliance in the future, particularly as the scope of certain laws may be unclear and may be subject to changing interpretations. Any such violation could result in fines, penalties or other ~~penalties~~sanctions that could severely impact our ability to access U.S. capital markets and conduct our business, and could result in some investors deciding, or being required, to divest their interest, or not to invest, in ~~our company. Additionally, some~~us. In addition, certain institutional investors may ~~decide to divest their interest,~~have investment policies or restrictions that prevent them from holding securities of companies that have contracts with countries identified by the U.S. government as state sponsors of terrorism. The determination by these investors not to invest in, or to divest from, our ~~company simply because we do business with companies that do business in sanctioned countries.~~common stock may adversely affect the price at which our common stock trades. Moreover, our charterers may violate applicable sanctions and embargo laws and regulations as a result of actions that do not involve us or our vessels, and those violations could in turn negatively affect our reputation. In addition, our reputation and the market for our securities may be adversely affected if we engage in certain other activities, such as entering into charters with individuals or entities in countries subject to U.S. sanctions and embargo laws that are not controlled by the governments of those countries, or engaging in operations associated with those countries pursuant to contracts with third parties that are unrelated to those countries or entities controlled by their governments. Investor perception of the value of our common stock may be adversely affected by the consequences of war, the effects of terrorism, civil unrest and governmental actions in these and surrounding countries.

Maritime claimants could arrest one or more of our vessels, which could interrupt our cash flow.

Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against a vessel for unsatisfied debts, claims or damages. In many jurisdictions, a claimant may seek to obtain security for its claim by arresting a vessel through foreclosure proceedings. The arrest or attachment of one or more of our vessels could interrupt our cash flow and require us to pay large sums of money to have the arrest or attachment lifted. In addition, in some jurisdictions, such as South Africa, under the "sister ship" theory of liability, a claimant may arrest both the vessel which is subject to the claimant's maritime lien and any "associated" vessel, which is any vessel owned or controlled by the same owner. Claimants could attempt to assert "sister ship" liability against one vessel in our fleet for claims relating to another of our vessels.

Governments could requisition our vessels during a period of war or emergency, resulting in a loss of earnings.

A government could requisition one or more of our vessels for title or for hire. Requisition for title occurs when a government takes control of a vessel and becomes her owner, while requisition for hire occurs when a government takes control of a vessel and effectively becomes her charterer at dictated charter rates. Generally, requisitions occur during periods of war or emergency, although governments may elect to requisition vessels in other circumstances. Although we would be entitled to compensation in the event of a requisition of one or more of our vessels, the amount and timing of payment would be uncertain. Government requisition of one or more of our vessels may negatively impact our revenues and reduce the amount of cash we may have available for distribution as dividends to our shareholders, if any such dividends are declared.

Failure to comply with the U.S. Foreign Corrupt Practices Act could result in fines, criminal penalties and an adverse effect on our business.

We charter certain of our dry bulk carriers to customers pursuant to short-term time charters that range in duration from 11 to 14 months. However, as part of our business strategy, 2431 of our vessels are currently fixed on long-term time charters ranging in duration from 1317 months to 62 months. We may extend the charter periods for additional vessels in our fleet, including additional dry bulk carriers that we may purchase in the future, to take advantage of the relatively stable cash flow and high utilization rates that are associated with long-term time charters. While we believe that long-term charters provide us with relatively stable cash flows and higher utilization rates than shorter-term charters, our vessels that are committed to long-term charters may not be available for employment on short-term charters during periods of increasing short-term charter hire rates when these charters may be more profitable than long-term charters.

Investment in derivative instruments such as forward freight agreements could result in losses.

From time to time, we may take positions in derivative instruments including forward freight agreements, or FFAs. FFAs and other derivative instruments may be used to hedge a vessel owner's exposure to the charter market by providing for the sale of a contracted charter rate along a specified route and period of time. Upon settlement, if the contracted charter rate is less than the average of the rates, as reported by an identified index, for the specified route and period, the seller of the FFA is required to pay the buyer an amount equal to the difference between the contracted rate and the settlement rate, multiplied by the number of days in the specified period. Conversely, if the contracted rate is greater than the settlement rate, the buyer is required to pay the seller the settlement sum. If we take positions in FFAs or other derivative instruments and do not correctly anticipate charter rate movements over the specified route and time period, we could suffer losses in the settling or termination of the FFA. This could adversely affect our results of operations and cash flows.

Our board of directors has suspended the payment of cash dividends as a result of market conditions in the international shipping industry. We cannot assure you that our board of directors will reinstate dividend payments in the future, or when such reinstatement might occur.

As a result of market conditions in the international shipping industry and in order to position us to take advantage of market opportunities, our board of directors, beginning with the fourth quarter of 2008, has suspended our common stock dividend. Our dividend policy will be assessed by the board of directors from time to time. We believe that this suspension will enhance our future flexibility by permitting cash flow that would have been devoted to dividends to be used for opportunities that may arise in the current marketplace, such as funding our operations, acquiring vessels or servicing our debt.

Our policy, historically, was to declare quarterly distributions to shareholders by each February, May, August and November substantially equal to our available cash from operations during the previous quarter after accounting for cash expenses and reserves for scheduled drydockings, intermediate and special surveys and other purposes as our board of directors may from time to time determine are required, and after taking into account contingent liabilities, the terms of our loan facilities, our growth strategy and other cash needs and the requirements of Marshall Islands law. The declaration and payment of dividends, if any, will always be subject to the discretion of our board of directors. The timing and amount of any dividends declared will depend on, among other things, our earnings, financial condition and cash requirements and availability, our ability to obtain debt and equity financing on acceptable terms as contemplated by our growth strategy and provisions of Marshall Islands law affecting the payment of dividends. In addition, other external factors, such as our lenders imposing restrictions on our ability to pay dividends under the terms of our loan facilities, may limit our ability to pay dividends. Further, we may not be permitted to pay dividends ~~if we are in breach~~under the terms of ~~the covenants contained in~~ our loan ~~agreements.~~agreements, that would result in an event of default or if an event of default has occurred and is continuing.

Our growth strategy contemplates that we will finance the acquisition of additional vessels through a combination of debt and equity financing on terms acceptable to us. If financing is not available to us on acceptable terms, our board of directors may determine to finance or refinance acquisitions with cash from operations, which could also reduce or even eliminate the amount of cash available for the payment of dividends.

Marshall Islands law generally prohibits the payment of dividends other than from surplus (retained earnings and the excess of consideration received for the sale of shares above the par value of the shares) or while a company is insolvent or would be rendered insolvent by the payment of such a dividend. We may not have sufficient surplus in the future to pay dividends. We can give no assurance that we will reinstate our dividends in the future or when such reinstatement might occur.

We may have difficulty effectively managing our planned growth, which may adversely affect our earnings.

Since the completion of our initial public offering in March 2005, we have taken delivery of ~~eight Panamax dry bulk carriers, one Post-Panamax dry bulk carrier~~twenty four vessels. Six of these vessels were delivered to us in 2012 and ~~eight Capesize dry bulk carriers, sold one~~two at the beginning of ~~our Capesize dry bulk carriers and entered into two shipbuilding contracts for the construction~~2013. In addition, we expect to take delivery of two ~~Newcastlemax dry bulk carriers,~~newbuilding vessels during the fourth quarter of which one was delivered in February 2012 and the other is expected to be delivered in April 2012. In March 2012 we also entered into two shipbuilding contracts for the construction of two ice class Panamax dry bulk carriers and into a memorandum of agreement to acquire a secondhand Panamax dry bulk carrier.2013. The addition of these vessels to our fleet has resulted in a significant increase in the size of our fleet and imposes significant additional responsibilities on our management and staff. While we expect our fleet to grow further, this may require us to increase the number of our personnel. We will also have to increase our customer base to provide continued employment for the new vessels.

Our future growth will primarily depend on our ability to:

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locate and acquire suitable vessels;

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identify and consummate acquisitions or joint ventures;

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enhance our customer base;

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manage our expansion; and

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obtain required financing on acceptable terms.

Growing any business by acquisition presents numerous risks, such as undisclosed liabilities and obligations, the possibility that indemnification agreements will be unenforceable or insufficient to cover potential losses and difficulties associated with imposing common standards, controls, procedures and policies, obtaining additional qualified personnel, managing relationships with customers and integrating newly acquired assets and operations into existing infrastructure. We cannot give any assurance that we will be successful in executing our growth plans or that we will not incur significant expenses and losses in connection with our future growth.

Because the Public Company Accounting Oversight Board is not currently permitted to inspect our independent accounting firm, you may not benefit from such inspections.

Auditors of U.S. public companies are required by law to undergo periodic Public Company Accounting Oversight Board (PCAOB) inspections that assess their compliance with U.S. law and professional standards in connection with performance of audits of financial statements filed with the Commission. Certain European Union countries, including Greece, do not currently permit the PCAOB to conduct inspections of accounting firms established and operating in such European Union countries, even if they are part of major international firms. Accordingly, unlike for most U.S. public companies, the PCAOB is prevented from evaluating our auditor's performance of audits and its quality control procedures, and, unlike shareholders of most U.S. public companies, we and our shareholders are deprived of the possible benefits of such inspections.

We cannot assure you that we will be able to borrow amounts under our credit and loan facilities and restrictive covenants in our credit and loan facilities may impose financial and other restrictions on us.

WeSince February 2005 we have entered into a $230.0 million secured revolving credit facility with The Royal Bank of Scotland Plc in February 2005, which was amended in May 2006 to increase the facility amount to $300.0 million. In October 2009, we entered intoseveral loan agreements ~~with Deutsche Bank AG and Bremer Landesbank, or Bremer, for a loan of $40 million, each, which we used to finance part of the construction cost of our Capesize dry bulk carriers,~~ ~~New York~~ ~~delivered in March 2010 and~~ ~~Houston~~ delivered in October 2009, respectively. In October 2010, we entered into a loan agreement with Export–Import Bank of China and DnB NOR Bank ASA, for a loan of up to $82.6 million, to finance part of the construction cost of our two Newcastlemax vessels of which one was delivered in February 2012 and the other is expected to be delivered in April 2012. In September 2011, we entered into a loan agreement with Emporiki Bank of Greece S.A. for a loan of $15.0 million to refinance part of the acquisition cost of the ~~Arethusa.~~ ~~In February 2012, we entered into a loan~~ ~~agreement with Nordea Bank Finland plc, London Branch, for a term loan of up to $16.1 million to finance part of the acquisition cost of the~~ ~~Leto. As of December 31, 2011, we had $374.3 million outstanding under our facilities. We have used our loan facilities~~ to finance vessel acquisitions and ~~newbuilding construction.~~the construction of newbuildings. As of December 31, 2012, we had $460.9 million outstanding under our facilities. Our ability to borrow amounts under our facilities is subject to the execution of customary documentation relating to the facility, including security documents, satisfaction of certain customary conditions precedent and compliance with terms and conditions included in the loan documents. Prior to each drawdown, we are required, among other things, to provide the lender with acceptable valuations of the vessels in our fleet confirming that the vessels in our fleet have a minimum value and that the vessels in our fleet that secure our obligations under the facilities are sufficient to satisfy minimum security requirements. To the extent that we are not able to satisfy these requirements, including as a result of a decline in the value of our vessels, we may not be able to draw down the full amount under the facilities without obtaining a waiver or consent from the lender. We will also not be permitted to borrow amounts under the facilities if we experience a change of control.

The credit and loan facilities also impose operating and financial restrictions on us. These restrictions may limit our ability to, among other things:

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pay dividends or make capital expenditures if we do not repay amounts drawn under our loan facilities, if there is a default under the loan facilities or if the payment of the dividend or capital expenditure would result in a default or breach of a loan covenant;

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incur additional indebtedness, including through the issuance of guarantees;

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change the flag, class or management of our vessels;

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create liens on our assets;

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sell our vessels;

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enter into a time charter or consecutive voyage charters that have a term that exceeds, or which by virtue of any optional extensions may exceed a certain period;

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merge or consolidate with, or transfer all or substantially all our assets to, another person; and

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enter into a new line of business.

Therefore, we may need to seek permission from our lenders in order to engage in some corporate actions. Our lenders' interests may be different from ours and we cannot guarantee that we will be able to obtain our lenders' permission when needed. This may limit our ability to finance our future operations, make acquisitions or pursue business opportunities.

We cannot assure you that we will be able to refinance indebtedness incurred under our loan facilities.

We cannot assure you that we will be able to refinance indebtedness with equity offerings on terms that are acceptable to us or at all. If we are not able to refinance these amounts with the net proceeds of equity offerings on terms acceptable to us or at all, we will have to dedicate a greater portion of our cash flow from operations to pay the principal and interest of this indebtedness than if we were able to refinance such amounts. If we are not able to satisfy these obligations, we may have to undertake alternative financing plans. The actual or perceived credit quality of our charterers, any defaults by them, and the market value of our fleet, among other things, may materially affect our ability to obtain alternative financing. In addition, debt service payments under our loan facilities or alternative financing may limit funds otherwise available for working capital, capital expenditures and other purposes. If we are unable to meet our debt obligations, or if we otherwise default under our loan facilities or an alternative financing arrangement, our lenders could declare the debt, together with accrued interest and fees, to be immediately due and payable and foreclose on our fleet, which could result in the acceleration of other indebtedness that we may have at such time and the commencement of similar foreclosure proceedings by other lenders.

Purchasing and operating secondhand vessels may result in increased operating costs and reduced operating days.

While we have the right to inspect previously owned vessels prior to our purchase of them and we usually inspect secondhand vessels that we acquire, such inspections do not provide us with the same knowledge about their condition that we would have if these vessels had been built for, and operated exclusively by, us. A secondhand vessel may have conditions or defects that we were not aware of when we bought the vessel and which may require us to incur costly repairs to the vessel. These repairs may require us to put a vessel into drydock which would reduce our operating days. Furthermore, we usually do not receive the benefit of warranties on secondhand vessels.

We are subject to certain risks with respect to our counterparties on contracts, and failure of such counterparties to meet their obligations could cause us to suffer losses or otherwise adversely affect our business.

We enter into, among other things, charter parties with our customers. Such agreements subject us to counterparty risks. The ability of each of our counterparties to perform its obligations under a contract with us will depend on a number of factors that are beyond our control and may include, among other things, general economic conditions, the condition of the maritime and offshore industries, the overall financial condition of the counterparty, charter rates received for specific types of vessels, and various expenses. In addition, in depressed market conditions, our charterers may no longer need a vessel that is currently under charter or may be able to obtain a comparable vessel at lower rates. As a result, charterers may seek to renegotiate the terms of their existing charter parties or avoid their obligations under those contracts. Should a counterparty fail to honor its obligations under agreements with us, we could sustain significant losses, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

In the highly competitive international shipping industry, we may not be able to compete for charters with new entrants or established companies with greater resources, and as a result, we may be unable to employ our vessels profitably.

We employ our vessels in a highly competitive market that is capital intensive and highly fragmented. Competition arises primarily from other vessel owners, some of whom have substantially greater resources than we do. Competition for the transportation of dry bulk cargo by sea is intense and depends on price, location, size, age, condition and the acceptability of the vessel and its operators to the charterers. Due in part to the highly fragmented market, competitors with greater resources than us could enter the dry bulk shipping industry and operate larger fleets through consolidations or acquisitions and may be able to offer lower charter rates and higher quality vessels than we are able to offer.

We may be unable to attract and retain key management personnel and other employees in the shipping industry, which may negatively impact the effectiveness of our management and results of operations.

Our success depends to a significant extent upon the abilities and efforts of our management team. We have entered into employment contracts with our Chairman and Chief Executive Officer, Mr. Simeon Palios; our President, Mr. Anastasios Margaronis; our Chief Financial Officer, Mr. Andreas Michalopoulos; and our Executive Vice President, Mr. Ioannis Zafirakis. Our success will depend upon our ability to retain key members of our management team and to hire new members as may be necessary. The loss of any of these individuals could adversely affect our business prospects and financial condition. Difficulty in hiring and retaining replacement personnel could have a similar effect. We do not currently, nor do we intend to, maintain "key man" life insurance on any of our officers or other members of our management team.

The fiduciary duties of our officers and directors may conflict with those of the officers and directors of Diana Containerships Inc.

Certain of our officers and directors are officers and directors of Diana Containerships Inc. and have fiduciary duties to manage our business in a manner beneficial to us and our shareholders, as well as a duty to the shareholders of Diana Containerships Inc. Consequently, these officers and directors may encounter situations in which their fiduciary obligations to Diana Containerships ~~Inc.~~Inc and to us are in conflict. The resolution of these conflicts may not always be in our best interest or that of our shareholders and could have a material adverse effect on our business, results of operations, cash flows and financial condition.

Risks associated with operating ocean-going vessels could affect our business and reputation, which could adversely affect our revenues and stock price.

The operation of ocean-going vessels carries inherent risks. These risks include the possibility of:

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marine disaster;

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terrorism;

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environmental accidents;

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cargo and property losses or damage;

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business interruptions caused by mechanical failure, human error, war, terrorism, political action in various countries, labor strikes or adverse weather conditions; and

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piracy.

These hazards may result in death or injury to persons, loss of revenues or property, environmental damage, higher insurance rates, damage to our customer relationships, delay or rerouting. If our vessels suffer damage, they may need to be repaired at a drydocking facility. The costs of drydock repairs are unpredictable and may be substantial. We may have to pay drydocking costs that our insurance does not cover in full. The loss of earnings while these vessels are being repaired and repositioned, as well as the actual cost of these repairs, would decrease our earnings. In addition, space at drydocking facilities is sometimes limited and not all drydocking facilities are conveniently located. We may be unable to find space at a suitable drydocking facility or our vessels may be forced to travel to a drydocking facility that is not conveniently located to our vessels' positions. The loss of earnings while these vessels are forced to wait for space or to steam to more distant drydocking facilities would decrease our earnings. The involvement of our vessels in an environmental disaster may also harm our reputation as a safe and reliable vessel owner and operator.

We may not have adequate insurance to compensate us if we lose our vessels or to compensate third parties.

We procure insurance for our fleet against risks commonly insured against by vessel owners and operators. Our current insurance includes hull and machinery insurance, war risks insurance and protection and indemnity insurance (which includes environmental damage and pollution insurance). We can give no assurance that we are adequately insured against all risks or that our insurers will pay a particular claim. Even if our insurance coverage is adequate to cover our losses, we may not be able to timely obtain a replacement vessel in the event of a loss. Furthermore, in the future, we may not be able to obtain adequate insurance coverage at reasonable rates for our fleet. We may also be subject to calls, or premiums, in amounts based not only on our own claim records but also the claim records of all other members of the protection and indemnity associations through which we receive indemnity insurance coverage for tort liability. Our insurance policies also contain deductibles, limitations and exclusions which, although we believe are standard in the shipping industry, may nevertheless increase our costs.

Our vessels may suffer damage and we may face unexpected drydocking costs, which could adversely affect our cash flow and financial condition.

If our vessels suffer damage, they may need to be repaired at a drydocking facility. The costs of drydock repairs are unpredictable and can be substantial. The loss of earnings while a vessel is being repaired and repositioned, as well as the actual cost of these repairs not covered by our insurance, would decrease our earnings and cash available for dividends, if declared. We may not have insurance that is sufficient to cover all or any of the costs or losses for damages to our vessels and may have to pay drydocking costs not covered by our insurance.

The aging of our fleet may result in increased operating costs in the future, which could adversely affect our earnings.

In general, the cost of maintaining a vessel in good operating condition increases with the age of the vessel. Currently, our fleet consists of 1617 Panamax dry bulk carriers, ~~one~~two Kamsarmax dry bulk carriers, three Post-Panamax dry bulk ~~carrier,~~carriers, eight Capesize dry bulk carriers, ~~one~~two Newcastlemax ~~vessel~~vessels and ~~one Newcastlemax vessel~~two ice-class Panamax vessels under construction, having a combined carrying capacity of ~~2.9~~3.5 million dead weight tons ~~or dwt,~~(dwt) and a weighted average age of 6.0 years as of ~~April 20, 2012,~~March 21, 2013, excluding ~~our newbuilding Newcastlemax vessel,~~ our two ice class newbuilding Panamax vessels under ~~construction and the Panamax dry bulk carrier we have agreed to acquire.~~construction. As our fleet ages, we will incur increased costs. Older vessels are typically less fuel efficient and more costly to maintain than more recently constructed vessels due to improvements in engine technology. Cargo insurance rates increase with the age of a vessel, making older vessels less desirable to charterers. Governmental regulations and safety or other equipment standards related to the age of vessels may also require expenditures for alterations or the addition of new equipment to our vessels and may restrict the type of activities in which our vessels may engage. We cannot assure you that, as our vessels age, market conditions will justify those expenditures or enable us to operate our vessels profitably during the remainder of their useful lives.

We are exposed to U.S. dollar and foreign currency fluctuations and devaluations that could harm our reported revenue and results of operations.

We generate all of our revenues in U.S. dollars but currently incur ~~over~~around half of our operating expenses and ~~the majority~~around 38% of our general and administrative expenses in currencies other than the U.S. dollar, primarily the Euro. Because a significant portion of our expenses is incurred in currencies other than the U.S. dollar, our expenses may from time to time increase relative to our revenues as a result of fluctuations in exchange rates, particularly between the U.S. dollar and the Euro, which could affect the amount of net income that we report in future periods. While we historically have not mitigated the risk associated with exchange rate fluctuations through the use of financial derivatives, we may employ such instruments from time to time in the future in order to minimize this risk. Our use of financial derivatives would involve certain risks, including the risk that losses on a hedged position could exceed the nominal amount invested in the instrument and the risk that the counterparty to the derivative transaction may be unable or unwilling to satisfy its contractual obligations, which could have an adverse effect on our results.

Volatility in LIBOR could affect our profitability, earnings and cash flow.

LIBOR may be volatile, with the spread between LIBOR and the prime lending rate widening significantly at times. These conditions are the result of disruptions in the international markets. Because the interest rates borne by our outstanding indebtedness fluctuate with changes in LIBOR, it would affect the amount of interest payable on our debt, which, in turn, could have an adverse effect on our profitability, earnings and cash flow.

We depend upon a few significant customers for a large part of our revenues and the loss of one or more of these customers could adversely affect our financial performance.

We have historically derived a significant part of our revenues from a small number of charterers. During 2012, approximately 40% of our revenues derived from three charterers. During 2011, approximately 41% of our revenues derived from three charterers. During 2010, approximately 44% of our revenues derived from three ~~charterers. During 2009, approximately 69% of our revenues derived from four~~ charterers. If one or more of our charterers chooses not to charter our vessels or is unable to perform under one or more charters with us and we are not able to find a replacement charter, we could suffer a loss of revenues that could adversely affect our financial condition and results of operations.

We are a holding company, and we depend on the ability of our subsidiaries to distribute funds to us in order to satisfy our financial obligations.

We are a holding company and our subsidiaries conduct all of our operations and own all of our operating assets. We have no significant assets other than the equity interests in our subsidiaries. As a result, our ability to satisfy our financial obligations depends on our subsidiaries and their ability to distribute funds to us. If we are unable to obtain funds from our subsidiaries, we may not be able to satisfy our financial obligations.

As we expand our business, we may need to improve our operating and financial systems and will need to recruit suitable employees and crew for our vessels.

Our current operating and financial systems may not be adequate as we expand the size of our fleet and our attempts to improve those systems may be ineffective. In addition, as we expand our fleet, we will need to recruit suitable additional seafarers and shoreside administrative and management personnel. While we have not experienced any difficulty in recruiting to date, we cannot guarantee that we will be able to continue to hire suitable employees as we expand our fleet. If we or our crewing agent encounter business or financial difficulties, we may not be able to adequately staff our vessels. If we are unable to grow our financial and operating systems or to recruit suitable employees as we expand our fleet, our financial performance may be adversely affected, among other things.

We may have to pay tax on U.S. source income, which would reduce our earnings.

Under the U.S. Internal Revenue Code of 1986, as amended, or the ~~Code,~~"Code", 50% of the gross shipping income of a vessel-owning or chartering corporation, such as ourselves and our subsidiaries, that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States is characterized as U.S. source shipping income and such income is generally subject to a 4% U.S. federal income tax without allowance for deductions, unless that corporation qualifies for exemption from tax under Section 883 of the Code and the Treasury Regulations thereunder.

We expect that we and each of our subsidiaries qualify for this statutory tax exemption for the ~~2011~~2012 taxable year and we will take this position for U.S. federal income tax return reporting purposes. However, there are factual circumstances beyond our control that could cause us to lose the benefit of this tax exemption in future years and thereby become subject to U.S. federal income tax on our U.S. source shipping income. For example, at December 31, ~~2011,~~2012, our 5% shareholders owned approximately ~~18.1%~~39.6% of our outstanding common stock. There is a risk that we could no longer qualify for exemption under Section 883 of the Code for a particular taxable year if other shareholders with a 5% or greater interest in our common stock were, in combination with our existing 5% shareholders, to own 50% or more of the outstanding shares of our common stock on more than half the days during the taxable year. Due to the factual nature of the issues involved, we can give no assurances on our tax-exempt status or that of any of our subsidiaries.

If we or our subsidiaries are not entitled to this exemption under Section 883 of the Code for any taxable year, we or our subsidiaries would be subject for those years to a 4% U.S. federal income tax on our gross U.S.-source shipping income. The imposition of this taxation could have a negative effect on our business and would result in decreased earnings available for distribution to our shareholders, although, for the ~~2011~~2012 taxable year, we estimate our maximum U.S. federal income tax liability to be immaterial if we were subject to this U.S. federal income tax. Please see the section of this ~~annual report~~Annual Report entitled "Taxation" under Item ~~10D~~10E for a more comprehensive discussion of U.S. federal income tax considerations.

U.S. federal tax authorities could treat us as a "passive foreign investment company", which could have adverse U.S. federal income tax consequences to U.S. shareholders.

A foreign corporation will be treated as a "passive foreign investment company", or ~~PFIC,~~"PFIC", for U.S. federal income tax purposes if either (1) at least 75% of its gross income for any taxable year consists of certain types of "passive income" or (2) at least 50% of the average value of the corporation's assets produce or are held for the production of those types of "passive income." For purposes of these tests, "passive income" includes dividends, interest, gains from the sale or exchange of investment property, and rents and royalties other than rents and royalties which are received from unrelated parties in connection with the active conduct of a trade or business. For purposes of these tests, income derived from the performance of services does not constitute "passive income." U.S. shareholders of a PFIC are subject to a disadvantageous U.S. federal income tax regime with respect to the income derived by the PFIC, the distributions they receive from the PFIC and the gain, if any, they derive from the sale or other disposition of their shares in the PFIC.

Based on our current and proposed method of operation, we do not believe that we will be a PFIC with respect to any taxable year. In this regard, we intend to treat the gross income we derive or are deemed to derive from our time chartering activities as services income, rather than rental income. Accordingly, we believe that our income from our time chartering activities does not constitute "passive income," and the assets that we own and operate in connection with the production of that income do not constitute assets that produce or are held for the production of "passive ~~income."~~income".

There is substantial legal authority supporting this position consisting of case law and U.S. Internal Revenue Service, or ~~IRS,~~"IRS", pronouncements concerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes. However, it should be noted that there is also authority which characterizes time charter income as rental income rather than services income for other tax purposes. Accordingly, no assurance can be given that the IRS or a court of law will accept this position, and there is a risk that the IRS or a court of law could determine that we are a PFIC. Moreover, no assurance can be given that we would not constitute a PFIC for any future taxable year if the nature and extent of our operations changed.

If the IRS or a court of law were to find that we are or have been a PFIC for any taxable year, our U.S. shareholders would face adverse U.S. federal income tax ~~consequences and information reporting obligations.~~consequences. Under the PFIC rules, unless those shareholders make an election available under the Code (which election could itself have adverse consequences for such shareholders), such shareholders would be subject to U.S. federal income tax at the then prevailing U.S. federal income tax rates on ordinary income plus interest upon excess distributions and upon any gain from the disposition of our common stock, as if the excess distribution or gain had been recognized ratably over the shareholder's holding period of our common stock. Please see the section of this ~~annual report~~Annual Report entitled "Taxation" under Item ~~10D~~10E for a more comprehensive discussion of the U.S. federal income tax consequences if we were to be treated as a PFIC.

Risks Relating to Our Common Stock

There is no guarantee that there will continue to be an active and liquid public market for you to resell our common stock in the future.

The price of our common stock may be volatile and may fluctuate due to factors such as:

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actual or anticipated fluctuations in our quarterly and annual results and those of other public companies in our industry;

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mergers and strategic alliances in the dry bulk shipping industry;

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market conditions in the dry bulk shipping industry;

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changes in government regulation;

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shortfalls in our operating results from levels forecast by securities analysts;

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announcements concerning us or our competitors; and

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the general state of the securities market.

The dry bulk shipping industry has been highly unpredictable and volatile. The market for common stock in this industry may be equally volatile.

Since we are incorporated in the Marshall Islands, which does not have a well-developed body of corporate law, you may have more difficulty protecting your interests than shareholders of a U.S. corporation.

Our corporate affairs are governed by our amended and restated articles of incorporation and bylaws and by the Marshall Islands Business Corporations Act, or the BCA. The provisions of the BCA resemble provisions of the corporation laws of a number of states in the United States. However, there have been few judicial cases in the Marshall Islands interpreting the BCA. The rights and fiduciary responsibilities of directors under the laws of the Marshall Islands are not as clearly established as the rights and fiduciary responsibilities of directors under statutes or judicial precedent in existence in the United States. The rights of shareholders of the Marshall Islands may differ from the rights of shareholders of companies incorporated in the United States. While the BCA provides that it is to be interpreted according to the laws of the State of Delaware and other states with substantially similar legislative provisions, there have been few, if any, court cases interpreting the BCA in the Marshall Islands and we cannot predict whether Marshall Islands courts would reach the same conclusions as United States courts. Thus, you may have more difficulty in protecting your interests in the face of actions by the management, directors or controlling shareholders than would shareholders of a corporation incorporated in a United States jurisdiction which has developed a relatively more substantial body of case law.

Certain existing shareholders will be able to exert considerable control over matters on which our shareholders are entitled to vote.

As of the date of this annual report Mr. Simeon Palios, our Chairman and Chief Executive Officer, beneficially owns ~~15,112,717~~15,278,977 shares, or approximately ~~18.2%~~18.4% of our outstanding common stock, the vast majority of which is held indirectly through entities over which he exercises sole voting power. Please see Item ~~7A.~~7.A. "Major Shareholders." While Mr. Palios and the non-voting shareholders of these entities have no agreement, arrangement or understanding relating to the voting of their shares of our common stock, they are able to influence the outcome of matters on which our shareholders are entitled to vote, including the election of directors and other significant corporate actions. The interests of these shareholders may be different from your interests.

Future sales of our common stock could cause the market price of our common stock to decline.

Sales of a substantial number of shares of our common stock in the public market, or the perception that these sales could occur, may depress the market price for our common stock. These sales could also impair our ability to raise additional capital through the sale of our equity securities in the future.

Our amended and restated articles of incorporation authorize us to issue up to 200,000,000 shares of common stock, of which as of December 31, ~~2011, 82,419,417~~2012, 82,233,424 shares were outstanding. The number of shares of common stock available for sale in the public market is limited by restrictions applicable under securities laws and agreements that we and our executive officers, directors and principal shareholders have entered into.

Anti-takeover provisions in our organizational documents could make it difficult for our shareholders to replace or remove our current board of directors or have the effect of discouraging, delaying or preventing a merger or acquisition, which could adversely affect the market price of our common stock.

Several provisions of our amended and restated articles of incorporation and bylaws could make it difficult for our shareholders to change the composition of our board of directors in any one year, preventing them from changing the composition of management. In addition, the same provisions may discourage, delay or prevent a merger or acquisition that shareholders may consider favorable.

These provisions include:

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authorizing our board of directors to issue "blank check" preferred stock without shareholder approval;

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providing for a classified board of directors with staggered, three year terms;

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prohibiting cumulative voting in the election of directors;

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authorizing the removal of directors only for cause and only upon the affirmative vote of the holders of a majority of the outstanding shares of our common stock entitled to vote for the directors;

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prohibiting shareholder action by written consent;

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limiting the persons who may call special meetings of shareholders; and

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establishing advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted on by shareholders at shareholder meetings.

In addition, we have adopted a shareholder rights plan pursuant to which our board of directors may cause the substantial dilution of any person that attempts to acquire us without the approval of our board of directors.

These anti-takeover provisions, including provisions of our shareholder rights plan, could substantially impede the ability of public shareholders to benefit from a change in control and, as a result, may adversely affect the market price of our common stock and your ability to realize any potential change of control premium.

Item 4. Information on the Company

A. History and development of the Company

Diana Shipping Inc. is a holding company incorporated under the laws of Liberia in March 1999 as Diana Shipping Investments Corp. In February 2005, the Company's articles of incorporation were amended. Under the amended and restated articles of incorporation, the Company was renamed Diana Shipping Inc. and was redomiciled from the Republic of Liberia to the Marshall Islands. Our executive offices are located at Pendelis 16, 175 64 Palaio Faliro, Athens, Greece. Our telephone number at this address is +30-210-947-0100. Our agent and authorized representative in the United States is our wholly-owned subsidiary, Bulk Carriers (USA) LLC, established in September 2006, in the State of Delaware, which is located at 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808.

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Business Development and Capital Expenditures and Divestitures

~~On April 13, 2009, we entered into agreements with the shipbuilders Shanghai Jiangnan-Changxing Shipbuilding Co. Ltd. and~~ ~~4 Sweet Dreams S.A.,~~ ~~a related party controlled by the two daughters of our Chairman and Chief Executive Officer, under which we:~~

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~~acquired Gala Properties Inc., or Gala, that had a contract with the China Shipbuilding Trading Company, Limited and Shanghai Jiangnan-Changxing Shipbuilding Co. Ltd., for the construction of the~~ ~~Houston~~ ~~(delivered in October 2009) for a contract price of $60.2 million, as amended, in exchange for our~~ ~~ownership interest in our former subsidiary Eniwetok Shipping Company Inc., which had a contract with the shipbuilders for the construction of~~ ~~a separate 177,000 dwt Capesize drybulk carrier, identified as Hull No.H1108, for the contract price of $60.2 million, with a scheduled delivery date of June 30, 2010, or~~ ~~the Eniwetok contract; and~~

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~~acquired the charter party, which~~ ~~Gala had already entered into, for the~~ ~~Houston~~ with Jiangsu Shagang Group Co., or Shagang, or its nominee (with performance guaranteed by Shagang) providing for a gross charter hire rate of $55,000 per day for a period of a minimum of 59 months and a maximum of 62 months ~~for a consideration of $15.0 million.~~

~~Assets exchanged were recorded at fair value, measured on the consummation date of the transaction. No gain or loss was recognized as a result of the transaction.~~

In April 2009, we entered into a supplemental loan agreement with Fortis Bank to amend and restate the existing loan agreement, so as to include Gala, as a borrower. Pursuant to the supplemental loan agreement and the amended and restated loan agreement, the bank consented to (i) the termination of the Eniwetok Contract; (ii) the amendment of the purpose of the loan facility made available under the principal agreement such that its purpose includes the financing of part of the construction and acquisition cost of the ~~Houston~~; and (iii) certain amendments to the terms of the principal agreement and the corporate guarantee. Under the amended and restated agreement, the bank also agreed to reduce the shareholding required to be beneficially owned by the Palios' and Margaronis' families from 20% to 10%.

~~In 2009, we drew down an aggregate amount of $30.1 million under the loan facility with Fortis Bank to finance part of the first and the second installment of the construction cost of the~~ ~~Houston, and the second and third installment of the construction cost of the~~ ~~New York. After delivery of the~~ ~~Houston, in October 2009,~~ ~~the Company repaid $30.1 million of the outstanding loan and drew down $40.0 million under our loan facility with Bremer Landesbank.~~

~~In May 2009, we completed a secondary public offering in the United States of 6,000,000 shares of common stock at a price of $16.85 per share, from which we received $98.4 million of net proceeds.~~

In October 2009, we, through our wholly-owned subsidiaries Gala Properties Inc. and Bikini Shipping Company Inc., entered into loan agreements with Bremer Landesbank and Deutsche Bank AG, respectively, for an amount of $40.0 million each, to finance part of the acquisition cost of our vessels the ~~Houston~~ ~~and the~~ ~~New York, respectively.~~

In December 2009, we, through our wholly owned subsidiary Taka Shipping Company Inc., or Taka, entered into a Memorandum of Agreement with an unrelated third party to acquire the 76,436 dwt Panamax dry bulk carrier ~~Melite~~ (built 2004) for a total consideration of $35.1 million, delivered in January 2010. The acquisition cost of the vessel was funded with funds drawn under our revolving credit facility with the Royal Bank of Scotland.

In January 2010, we established Diana Containerships Inc., or Diana Containerships, with the purpose of acquiring containerships and ~~we made an initial capital contribution of $500~~ in ~~exchange for 500 common shares of Diana Containerships.~~

~~In March 2010, we took delivery of the~~ ~~New York~~ ~~and repaid $30.1 million under our loan agreement with Fortis Bank and therefore, our loan with Fortis Bank was terminated. We financed $40.0 million of the acquisition cost of the~~ ~~New York~~ ~~with funds drawn under our facility with Deutsche Bank AG that we entered into in October 2009.~~

In April 2010, we through Lae Shipping Company Inc. and Namu Shipping Company Inc., entered into a shipbuilding contract with China Shipbuilding Trading Company, Limited and Shanghai Jiangnan-Changxing Shipbuilding Co., Ltd. for the construction of one Newcastlemax dry bulk carrier of approximately 206,000 dwt for each subsidiary. Each newbuilding (~~H1234~~ ~~named~~ ~~Los Angeles~~ ~~and~~ ~~H1235~~ ~~to be named~~ ~~Philadelphia) has a contract price of $58.0 million. In February 2012, we took delivery of the~~ ~~Los Angeles~~ ~~and financed part of its construction cost with funds drawn under our facility with the Export- Import Bank of China and DnB NOR Bank ASA, amounting to $37.5~~invested $50.0 million ~~being 70% of the market value of the vessel. We expect to take delivery of hull~~ ~~H1235,~~ ~~to be named~~ ~~Philadelphia,~~ ~~in April 2012.~~

~~In April 2010, Diana Containerships completed the sale of an aggregate of 5,892,330 common shares~~ in a private offering ~~under Rule 144A, Regulation S and Regulation D under the Securities Act of 1933, as amended, or the Securities Act, pursuant to the purchase/placement agreement, dated March 29, 2010,~~completed by ~~and between~~ Diana Containerships and FBR Capital Markets & Co., including 290,000 common shares issued pursuant to the exercise of FBR Capital Markets & Co.'s option to purchase additional shares, with aggregate net proceeds of $85.3 million. We invested $50.0 million in ~~this private offering to acquire~~which we acquired 3,333,333 common shares of its common stock, resulting to an ownership of 54.6%. In January 2011, we distributed 2,667,015 shares or 80% of our interest in Diana ~~Containerships.~~Containerships to our shareholders of record on January 3, 2011 and as a result our ownership percentage of Diana Containerships was reduced to approximately 11%. As a result of this partial spin-off, the consolidated financial statements of Diana Containerships were no longer consolidated to our consolidated financial statements and we accounted for our investment in Diana Containerships under the equity method of accounting, on the basis of the significant influence exercised over Diana Containerships through our shareholding, the management services provided by DSS (which, were terminated on March 1, 2013) and shared executive management.

In June 2010, we and Diana Containerships terminated our existing Consultancy Agreements with companies controlled by each of the executive officers and the services that were previously provided to us and to Diana Containerships by the consultants are provided by Diana Shipping Services, ~~S.A.,~~ or DSS. DSS ~~has~~ appointed Diana Enterprises Inc., or Diana Enterprises, a related party controlled by our Chief Executive Officer and Chairman Mr. Simeon Palios,, as broker to assist it in providing services to us and to Diana Containerships pursuant to the Broker Services Agreement, dated June 1, 2010. On February 22, 2012, the agreement between DSS and Diana Enterprises was terminated and replaced by a new agreement with similar terms but an annual fee of $2.4 million. On March 1, 2013, the agreement between DSS and Diana Enterprises for the services performed to Diana Containerships was terminated. On March 15, 2013, the agreement between DSS and Diana Enterprises was also terminated and replaced by a new agreement with duration from March 1, 2013 to March 31, 2014 and a monthly fee of $0.2 million payable quarterly in advance.

In June 2010, ~~Likiep Shipping Company Inc. and Orangina Inc., wholly owned subsidiaries of~~ Diana Containerships, ~~entered into memoranda of agreement with~~acquired from a third party company ~~to acquire Hull 558~~the vessels Sagitta and ~~Hull 559, named~~ ~~Sagitta~~ ~~and~~ Centaurus, ~~respectively,~~ for the purchase price of Euro 37.3 million, each. Sagitta was delivered in June 2010 and its purchase price amounted to $45.7 million. Centaurus was delivered in July 2010 and its purchase price amounted to $47.2 million.

~~In July 2010, Diana Containerships,~~ Part of the acquisition cost of the vessels was financed through ~~its wholly owned subsidiaries~~a loan facility between Likiep Shipping Company Inc. and Orangina Inc., ~~entered into a loan facility~~ with DnB NOR Bank ASA for up to $40.0 million, ~~to finance part~~entered into in July 2010.

In March 2010, we took delivery of the New York, which was under construction at the Shangai Waigaoqiao Shipbuilding Co., Ltd for $60.2 million. We financed $40.0 million of the acquisition cost of the ~~two newbuilding containerships~~ ~~Centaurus~~ New York~~and~~ ~~Sagitta~~.

~~In September 2010, we, through~~ with funds drawn under our ~~wholly owned subsidiary, Majuro Shipping Company Inc.,~~facility with Deutsche Bank AG that we entered into in October 2009 and repaid $30.1 million under a ~~memorandum of~~loan agreement ~~to purchase the dry bulk vessel~~ ~~East Sunrise 88, renamed~~ ~~Alcmene~~ ~~for the purchase price of $40.8 million~~with Fortis Bank which was ~~delivered in November 2010.~~then terminated.

In ~~October~~April 2010, ~~we, through~~ our wholly owned subsidiaries Lae Shipping Company Inc. and Namu Shipping Company Inc., entered into a ~~loan agreement~~shipbuilding contract with China Shipbuilding Trading Company, Limited and Shanghai Jiangnan-Changxing Shipbuilding Co., Ltd for the construction of the Newcastlemax vessels Los Angeles and Philadelphia for a contract price of $58.0 million each. We took delivery of the Los Angeles in February 2012 and of the Philadelphia in May 2012 and financed part of their construction cost with funds drawn under our facility with the ~~Export – Import~~Export-Import Bank of China and DnB ~~NOR~~ Bank ASA, that we entered into in October 2010, amounting to ~~finance part of the acquisition cost of the newbuildings Hull~~ ~~H1234~~$72.1 million, equal to ~~be named~~ ~~Los Angeles~~ ~~and Hull~~ ~~H1235~~ ~~to be named~~ ~~Philadelphia, for an amount of up to $82.6 million. The loan is available until November 30, 2012 in two advances with each advance not exceeding the lower of $41.3 million and the~~ 70% of the market value of the ~~ship relevant~~vessels.

In September 2010, we acquired Alcmene, a 93,193 dwt Post-Panamax vessel built in 2010, for $40.8 million. Alcmene was delivered to ~~it.~~us in November 2010. The acquisition cost of the Alcmene was funded with cash on hand.

In October 2010, we acquired Universal Shipping and Real Estates Inc., or Universal, and Diana Shipping Agencies S.A., or DSA, from Poinsettia Management Ltd., or Poinsettia, an entity affiliated with the Company's CEO and Chairman and with other executives, for an aggregate price of $21.5 million. Universal and DSA were entities controlled by Poinsettia and owned the real property which the Company was leasing as its principal executive offices in Athens, Greece. In October 2010, the real property was transferred to DSS. Universal and DSA were subsequently dissolved.

In October 2010, Diana Containerships filed a registration statement on Form F-4, to register an aggregate of 2,558,997 common shares sold previously in the private offering. On October 19, 2010 the registration statement was declared effective.

In December 2010, Diana Containerships applied to list on the Nasdaq Global Market. Its shares became available to trade on January 3, 2011 on a "when issued basis" and its common shares became available for trading on January 19, 2011, on a "regular way" basis.

~~In January 2011, we distributed 2,667,015 shares,~~ ~~or 80% of our interest~~ in Diana Containerships to our shareholders of record on January 3, 2011 and as a result our ownership percentage of Diana Containerships reduced to approximately 11%. As a result of this partial spin-off, the consolidated financial statements of Diana Containerships are no longer consolidated to our consolidated financial statements.

In May 2011, we ~~through Bikar Shipping~~ ~~Company~~ ~~Inc., entered into a Memorandum of Agreement for the purchase of M/V~~ ~~Corona, renamed~~acquired Arethusa, a 73,593 dwt Panamax dry bulk carrier, built in 2007, for ~~the purchase price of $29.99 million. The~~ ~~Arethusa~~$30.0 million, which was delivered to us in July 2011. Part of the purchase price of the vessel was financed through a loan facility entered into in September 2011 with Emporiki Bank of Greece S.A., for a loan of up to $15.0 million. In December 2012, the loan agreement was transferred to Credit Agricole Corporate and Investment Bank.

In June 2011, ~~Diana Containerships completed~~concurrently with a public offering ~~in the United States~~ of ~~14,250,000~~Diana Containerships' common shares, ~~at a price of $7.50 per share. Concurrent with this public offering,~~ we acquired ~~an additional~~ 2,666,667 ~~common~~ shares of Diana ~~Containerships~~Containerships' common stock at athe price of $7.50 per share, for a total amount of $20.0 million, increasing our ownership percentage in the share capital of Diana Containerships to ~~14.45%~~14.5%. ~~We account for~~Since August 2012, our ~~investment~~ownership in Diana Containerships ~~under the equity method~~decreased to 10.4% after a follow on offering of ~~accounting on the basis of the significant influence exercised over~~ Diana ~~Containerships through our shareholding and shared executive management.~~Containerships.

In September 2011, we, through our wholly owned subsidiary, Bikar Shipping Company Inc., entered into a loan agreement with Emporiki Bank of Greece S.A., for a loan of up to $15.0 million to refinance part of the acquisition cost of ~~Arethusa~~. The loan was drawn on September 15, 2011 and is repayable in twenty equal semiannual installments of $0.5 million each, starting six months from drawdown and a balloon payment of $5.0 million to be paid together with the last installment not later than ten years from the drawdown date. The loan bears interest at LIBOR plus a margin of 2.5% per annum, or 1% for such loan amount that is equivalently secured by a cash pledge in favor of the bank.

In November 2011, we ~~through Jemo Shipping Company Inc., entered into a memorandum of agreement with a third party company to acquire the~~ ~~Vathy~~ ~~renamed~~acquired Leto, an 81,297 dwt Panamax dry bulk carrier, built in 2010, for ~~the~~ ~~purchase price of $32.25~~$32.3 million, which was delivered to us in January 2012. The purchase price of the vessel was partly financed with the proceeds from a loan agreement with Nordea Bank Finland Plc that Jemo entered into in February 2012.The loan facility of $16.1 million has a term of five years and is repayable in 20 consecutive equal quarterly instalments of about $0.3 million, commencing 3 months after the initial borrowing date and a balloon payment of about $11.1 million payable together with the final quarterly instalment. The loan bears interest at Libor plus a margin.

In December 2011, we entered into an agreement with Goldman, Sachs & Co.~~, or the Broker,~~ (the "Broker") to repurchase our stock according to Rule 10b5-1(c)(l) and to the ~~extent~~extend applicable to Rule 10b-18 under the Securities and Exchange Act of 1934. ~~Under the terms of the agreement the Broker could purchase shares in the open market or through privately negotiated transactions for a commission of $0.03 per share of stock purchased.~~ The agreement was terminated on February 29, 2012. On June 14 and August 2, 2012, we entered into two similar agreements which were terminated on July 11, and weon October 15, 2012, respectively. We repurchased ~~a total~~and retired 154,091 shares up to December 31, 2011 for an aggregate cost of ~~251,455~~$1.2 million, and an additional 853,607 shares in 2012 for ~~$1.9~~an additional cost of $6.0 million.

In March 2012, our wholly owned subsidiaries Erikub Shipping Company Inc. and Wotho Shipping Company Inc., each entered into ~~one~~a shipbuilding contract with China Shipbuilding Trading Company, Limited and Jiangnan Shipyard (Group) Co., Ltd, respectively, for the construction of one 76,000 dwt ice class Panamax dry bulk carrier for the contract price of $29.0 million each. The contract price shall be paid in two installments of $4.35 million, one installment of $2.9 million and a fourth installment of $17.4 million. The vessels are expected to be delivered in the fourth quarter of 2013.

In ~~March~~June 2012, wethe agreement between Jemo Shipping Company Inc. and Nordea Bank Finland Plc was restated and amended by a supplemental agreement in order to include Mandaringina Inc. as a new borrower and increase the loan amount to up to $26.5 million for the purpose of financing part of the acquisition cost of the Melia.

In December 2012, our wholly-owned subsidiaries Palau Shipping Company Inc. and Guam Shipping Company Inc. entered into a ~~Memorandum~~new agreement with Nordea Bank Finland Plc for a term loan facility of ~~Agreement~~$20.0 million, to ~~purchase from an unaffiliated third party,~~finance part of the acquisition cost of vessels Amphitrite and Polymnia.

In 2012, we acquired the Melia, a ~~2005 built~~76,225 dwt Panamax dry bulk carrier, ~~of 76,225~~built in 2005, for $20.7 million, delivered in May 2012; the Amphitrite, a 98,697 dwt new built Post-Panamax dry bulk carrier, delivered in August 2012; the Polymnia, a 98,704 dwt new built Post-Panamax dry bulk carrier, for $24.6 million, delivered in November 2012; and we also entered into an agreement to acquire the Myrto, an 82,131 dwt Kamsarmax newbuilding dry bulk carrier, for $26.5 million, which was built and delivered to us in January 2013.

In February 2013, we acquired at an auction that took place in France, the Maia, a ~~price of $20.65~~Kamsarmax dry bulk carrier, for $19.8 million. The vessel ~~to be renamed~~ ~~Melia, is expected to be~~was delivered to us byon February 19, 2013.

In March 2013, we signed a commitment letter with Deutsche Bank AG for a loan facility of $18.0 million to partly finance the ~~sellers in April 2012.~~acquisition cost of the Myrto and the Maia. Both vessels will be cross-collateralized with New York, which has a loan agreement with the bank since October 2009.

~~We also refer you to Item 5. "Loan Facilities"~~Please see "Item 5.B Liquidity and Capital Resources" for a discussion of our loan facilities.

B. Business overview

We are a global provider of shipping transportation services. We specialize in transporting dry bulk cargoes, including such commodities as iron ore, coal, grain and other materials along worldwide shipping routes. Currently, our operating fleet consists of 2632 dry bulk carriers, of which 1617 are Panamax, ~~one is~~two are Kamsarmax, three are Post-Panamax, eight are Capesize and ~~one is a~~two are Newcastlemax ~~dry bulk carrier,~~vessels, having a combined carrying capacity of approximately ~~2.9~~3.5 million dwt. In addition, we expect to take delivery of ~~four~~two vessels under construction with a carrying capacity of ~~0.4 million~~152,000 dwt, ~~two in April 2012 and two~~ in the fourth quarter of 2013.

As of December 31, 2012, our fleet consisted of 17 Panamax, three Post-Panamax, eight Capesize and two Newcastlemax vessels, having a combined carrying capacity of approximately 3.4 million dwt, and a weighted average age of 6.0 years, excluding our vessels under construction.

As of December 31, 2011, our fleet consisted of 15 ~~modern~~ Panamax, ~~dry bulk carriers,~~ one Post-Panamax, and eight Capesize dry bulk carriers, ~~that had~~having a combined carrying capacity of approximately 2.6 million dwt, and a weighted average age of 6.3 years, excluding our Newcastlemax vessels that were under construction and the Leto which was delivered in January 2012.

~~As of December 31,~~During 2012, 2011 and 2010, our fleet consisted of 14 modern Panamax dry bulk carriers, one Post-Panamax, eight Capesize dry bulk carriers, and two container vessels, owned by Diana Containerships, that had a combined carrying capacity of approximately 2.6 million dwt, and a weighted average age of 5.4 years, excluding the container vessels owned by Diana Containerships and our Newcastlemax vessels under construction. At December 31, 2010, the weighted average age of the containerships was 0.6 years and their carrying capacity was 6,852 TEUs.

~~During 2011, 2010 and 2009,~~ we had a fleet utilization of ~~99.3%~~98.7%, ~~99.7%~~99.3% and ~~98.9%~~99.7%, respectively, our vessels achieved daily time charter equivalent rates of $21,255, $28,920 ~~$32,049~~ and ~~$32,811,~~$32,049, respectively, and we generated revenues of $220.8 million, $255.7 million ~~$275.4 million~~ and ~~$239.3~~$275.4 million, respectively.

During 2010, Diana ~~Containerships's~~Containerships' fleet had a fleet utilization of 97.5%, achieved a daily time charter equivalent rate of $15,146 and generated revenues of $5.7 million. The results of Diana ~~Containerships's~~Containerships' fleet have been part of our consolidated results ~~as of and~~ for the period ended December 31, 2010.

The following table presents certain information concerning the dry bulk carriers in our fleet, as of ~~April 15, 2012.~~March 21, 2013.

Fleet Employment Profile (As of April 15, 2012)
Currently Diana's fleet is employed as follows:

Vessel Sister Ships* Gross Rate (USD Per Day) Com** Charterer Delivery Date to Charterer Redelivery Date to Owners*** Notes
BUILT    DWT
Panamax Bulk Carriers

1 CORONIS C $24,000 5.00% Siba Ships Asia Pte. Ltd. 6-Apr-10 12-Mar-12
2006    74,381 $10,600 5.00% EDF Trading Limited, London 12-Mar-12 27-Nov-13 - 27-Jun-14

2 ERATO C $12,200 5.00%
Hyundai Merchant Marine Co., Ltd.,
Seoul, South Korea
26-Nov-11 26-Dec-12 - 10-Apr-13
2004    74,444

3 ARETHUSA B $13,250 5.00% Cargill International S.A., Geneva 8-Jul-11 24-May-12 - 23-Aug-12
2007     73,593

4 NAIAS B $19,750 5.00% J. Aron & Company, New York 24-Sep-10 24-Aug-12 - 24-Oct-12
2006    73,546

5 CLIO B $25,000 5.00% Daelim Corporation, Seoul 8-May-10 22-Feb-12 1
$10,750 5.00% Cargill International S.A., Geneva 22-Feb-12 22-Aug-13 - 22-Feb-14
2005    73,691

6 CALIPSO B $12,250 5.00% Louis Dreyfus Commodities Suisse S.A., Geneva 11-Oct-11 11-Aug-13 - 11-Dec-13 2
2005    73,691

7 PROTEFS B $11,750 4.75% Cargill International S.A., Geneva 6-Aug-11 6-Jul-12 - 6-Oct-12
2004    73,630

8 THETIS B $13,750 5.00% Cargill International S.A., Geneva 23-Feb-11 28-Jan-12 3
$10,500 5.00% EDF Trading Limited, London 22-Feb-12 22-Aug-13 - 22-Jun-14
2004    73,583

9 DIONE A $20,500 5.00% Louis Dreyfus Commodities Suisse S.A., Geneva 26-Sep-10 26-Jul-12 - 26-Nov-12
2001    75,172

10 DANAE A $15,600 5.00%
Hyundai Merchant Marine Co., Ltd.,
Seoul, South Korea
18-Apr-11 18-Mar-13 - 18-May-13
2001    75,106

	Vessel	Sister Ships*	Gross Rate (USD Per Day)	Com**	Charterer	Delivery Date to Charterer	Redelivery Date to Owners***	Notes
	BUILT DWT	Sister Ships*	Gross Rate (USD Per Day)		Charterer	Delivery Date to Charterer	Redelivery Date to Owners***	Notes
	Panamax Bulk Carriers

1	CORONIS	C	$10,600	5.00%	EDF Trading Limited, UK	12-Mar-12	27-Nov-13 - 27-Jun-14
	2006 74,381
2	ERATO	C	$12,200	5.00%	Hyundai Merchant Marine Co., Ltd., Seoul, South Korea	26-Nov-11	9-Jan-13
			$6,500	5.00%	Cargill International S.A., Geneva	9-Jan-13	9-Jul-14 - 9-Jan-15
	2004 74,444
3	ARETHUSA	B	$7,300	5.00%	Cargill International S.A., Geneva	22-Nov-12	22-May-14 22-Nov-14

	2007 73,593
4	NAIAS	B	$9,250	5.00%	Ultrabulk A/S, Copenhagen, Denmark	2-Sep-12	2-Feb-14 - 2-Aug-14
	2006 73,546
5	CLIO	B	$10,750	5.00%	Cargill International S.A., Geneva	22-Feb-12	22-Aug-13 - 22-Feb-14
	2005 73,691
6	CALIPSO	B	$12,250	5.00%	Louis Dreyfus Commodities Suisse S.A., Geneva	11-Oct-11	11-Aug-13 - 11-Dec-13
	2005 73,691

7	PROTEFS	B	$9,000	5.00%	Cargill International S.A., Geneva	14-Sep-12	14-Sep-14 - 14-Feb-15
	2004 73,630
8	THETIS	B	$10,500	5.00%	EDF Trading Limited, UK	22-Feb-12	22-Aug-13 - 22-Jun-14	1
	2004 73,583
9	DIONE	A	$9,700	5.00%	EDF Trading Limited, UK	19-Jul-12	19-Jul-14 - 19-Dec-14
	2001 75,172

10	DANAE	A	$15,600	5.00%	Hyundai Merchant Marine Co., Ltd., Seoul, South Korea	18-Apr-11	10-Mar-13	2,3
			$8,250	5.00%	Intermare Transport GmbH, Hamburg	10-Mar-13	10-Sep-14 - 10-Jan-15
	2001 75,106
11	OCEANIS	A	$9,250	5.00%	Ultrabulk A/S, Copenhagen, Denmark	14-Aug-12	14-Jan-14 - 14-Jul-14
	2001 75,211

12	TRITON	A	$19,500	4.75%	Resource Marine Pte., Ltd, Singapore	11-Dec-10	11-Nov-13 - 11-Feb-14	4
	2001 75,336
13	ALCYON	A	$7,750	5.00%	EDF Trading Limited, UK	21-Dec-12	21-Nov-14 - 21-May-15
	2001 75,247
14	NIREFS	A	$12,250	5.00%	Morgan Stanley Capital Group Inc.	18-Dec-11	29-Jan-13	5,6
			$8,000	5.00%	Intermare Transport GmbH, Hamburg	29-Jan-13	29-Jul-14 - 29-Jan-15
	2001 75,311
15	MELIA	G	$10,900	5.00%	STX Panocean Co., Ltd., Seoul	2-May-12	2-Apr-13 - 2-Jul-13	7
	2005 76,225
16	MELITE	G	$7,750	5.00%	Cargill International S.A., Geneva	28-Dec-12	1-Jul-14 - 1-Jan-15
	2004 76,436

17	LETO		$12,900	5.00%	EDF Trading Limited, UK	17-Jan-12	17-Jan-14 - 17-Nov-14
	2010 81,297
	Kamsarmax Bulk Carriers
18	MAIA	H	$10,900	5.00%	Glencore Grain B.V., Rotterdam	27-Feb-13	12-Aug-14 - 27-Feb-15

	2009 82,193
19	MYRTO	H	$9,000	5.00%	Cargill International S.A., Geneva	25-Jan-13	25-Jul-14 - 25-Jan-15

	2013 82,131
	Post-Panamax Bulk Carriers
20	ALCMENE		$7,000	5.00%	NCS Shipping Fareast Company Limited, British Virgin Islands	26-Dec-12	13-Feb-13	8
			$7,250	5.00%	ADM International Sarl, Rolle, Switzerland	22-Feb-13	7-Aug-14 - 22-Feb-15
	2010 93,193
21	AMPHITRITE		$10,000	5.00%	Bunge S.A., Geneva	15-Aug-12	31-May-14 - 30-Oct-14	9
	2012 98,697
22	POLYMNIA		$8,000	5.00%	Sino East Transportation Ltd, Hong Kong	21-Nov-12	7-Jan-13
			$7,600	5.00%	Augustea Bunge Maritime Limited, Malta	16-Jan-13	16-Jul-14 - 16-Jan-15	10
	2012 98,704
	Capesize Bulk Carriers
23	NORFOLK		$74,750	3.75%	Corus UK Limited	12-Feb-08	16-Jan-13	11
	2002 164,218		$10,700	4.50%	Clearlake Shipping Pte. Ltd., Singapore	16-Jan-13	16-Jul-14 - 16-Jan-15
24	ALIKI		$26,500	5.00%	Minmetals Logistics Group Co. Ltd., Beijing	1-Mar-11	1-Feb-16 - 1-Apr-16
	2005 180,235
25	SALT LAKE CITY		$13,000	5.00%	Morgan Stanley Capital Group Inc.	11-Aug-12	11-Jun-14 - 11-Dec-14
	2005 171,810
26	SIDERIS GS	D	$30,500	5.00%	BHP Billiton Marketing AG	16-Oct-10	14-Mar-13	12
			$13,500	4.75%	Cargill International S.A., Geneva	14-Mar-13	14-Dec-14 - 14-Jun-15
	2006 174,186
27	SEMIRIO	D	$17,350	5.00%	Cargill International S.A., Geneva	30-May-11	19-Mar-13
			$14,000	4.75%		19-Mar-13	19-Jan-15 - 19-Jun-15
	2007 174,261
28	BOSTON	D	$14,000	5.00%	Morgan Stanley Capital Group Inc.	29-Oct-11	29-Aug-13 - 29-Dec-13	13

11 OCEANIS A $19,750 5.00% China National Chartering Co. Ltd. (Sinochart BJ), Beijing 17-Sep-10 17-Aug-12 - 1-Nov-12
2001    75,211

12 TRITON A $19,500 4.75% Resource Marine Pte., Ltd, Singapore 11-Dec-10 11-Nov-13 - 11-Feb-14 4
2001    75,336

13 ALCYON A $34,500 4.75% Cargill International S.A., Geneva 21-Feb-08 21-Nov-12 - 21-Feb-13
2001    75,247

14 NIREFS A $12,250 5.00% Morgan Stanley Capital Group Inc. 18-Dec-11 18-Jan-13 - 18-Apr-13
2001    75,311

15 MINING STAR G $10,900 5.00% STX Panocean Co., Ltd., Seoul 24-Apr-12 24-Mar-13 - 24-Jun-13 5,6
(tbr MELIA)
2005  76,225

16 MELITE G $16,500 5.00% Cargill International S.A., Geneva 1-Feb-11 1-Jan-13 - 1-Mar-13
2004     76,436

17 LETO $12,900 5.00% EDF Trading Limited, London 17-Jan-12 17-Jan-14 - 17-Nov-14
2010     81,297

Post-Panamax Bulk Carrier

18 ALCMENE $20,250 5.00% Cargill International S.A., Geneva 20-Nov-10 5-Oct-12 - 4-Jan-13
2010     93,193

Capesize Bulk Carriers

19 NORFOLK $74,750 3.75% Corus UK Limited 12-Feb-08 12-Jan-13 - 12-Mar-13 7
2002  164,218

20 ALIKI $26,500 5.00% Minmetals Logistics Group Co. Ltd., Beijing 1-Mar-11 1-Feb-16 - 1-Apr-16
2005  180,235

21 SALT LAKE CITY $55,800 5.00% Refined Success Limited 28-Sep-07 28-Aug-12 - 28-Oct-12
2005  171,810

22 SIDERIS GS D $30,500 5.00% BHP Billiton Marketing AG 16-Oct-10 16-Feb-13 - 16-Jun-13
2006  174,186

23 SEMIRIO D $17,350 5.00% Cargill International S.A., Geneva 30-May-11 15-Mar-13 - 14-Aug-13
2007  174,261

24 BOSTON D $14,000 5.00% Morgan Stanley Capital Group Inc. 29-Oct-11 29-Aug-13 - 29-Dec-13 8
2007  177,828

25 HOUSTON D $55,000 4.75% Shagang Shipping Co. 3-Nov-09 3-Oct-14 - 3-Jan-15 9
2009  177,729

26 NEW YORK D $48,000 3.75% Nippon Yusen Kaisha, Tokyo (NYK) 3-Mar-10 3-Jan-15 - 3-May-15
2010  177,773

Newcastlemax Bulk Carrier

27 LOS ANGELES E $18,000 5.00% EDF Trading Limited, London 9-Feb-12 9-Dec-15 - 9-Apr-16
2012  206,104

Vessels Under Construction

28 PHILADELPHIA E $18,000 5.00% EDF Trading Limited, London 30-Apr-12 30-Dec-15 - 30-Jun-16 10,11,12
2012  206,000

29 HULL H2528 F - - - - - - - 10
2013  76,000

30 HULL H2529 F - - - - - - - 10
2013  76,000

	2007 177,828
29	HOUSTON	D	$55,000	4.75%	Shagang Shipping Co.	3-Nov-09	3-Oct-14 - 3-Jan-15	14
	2009 177,729
30	NEW YORK	D	$48,000	3.75%	Nippon Yusen Kaisha, Tokyo (NYK)	3-Mar-10	3-Jan-15 - 3-May-15
	2010 177,773
	Newcastlemax Bulk Carriers
31	LOS ANGELES	E	$18,000	5.00%	EDF Trading Limited, UK	9-Feb-12	9-Dec-15 - 9-Apr-16
	2012 206,104
32	PHILADELPHIA	E	$18,000	5.00%	EDF Trading Limited, UK	17-May-12	17-Jan-16 - 17-Jul-16
	2012 206,040
	Vessels Under Construction
33	HULL H2528	F	-	-	-	-	- - -	15
	2013 76,000
34	HULL H2529	F	-	-	-	-	- - -	15
	2013 76,000

* Each dry bulk carrier is a "sister ship", or closely similar, to other dry bulk carriers that have the same letter.
** Total commission percentage paid to third parties.
*** Charterers' optional period to redeliver the vessel to owners. Charterers have the right to add the off hire days, if any, and therefore the optional period may be extended.
1 ~~The previous charterers, Daelim Corporation,~~Vessel off-hire from September 23, 2012 to October 3, 2012.
2 Vessel off-hire for unscheduled maintenance from March 04, 2013 to March 06, 2013.
3 Huyndai Merchant Marine Co. Ltd., Seoul, ~~have~~South Korea, has agreed to compensate the owners for the early redelivery of the ~~Clio by paying US$17,000 gross per day, minus 5% commission paid to third parties, starting from the date of redelivery to owners,~~vessel on ~~February 22, 2012, to~~March 10, 2013 till the minimum agreed redelivery date, ~~April 8, 2012.~~
~~2 Vessel off-hire for drydocking from~~ March ~~27, 2012 to April 17, 2012.~~
~~3 Vessel off-hire for drydocking from January 28, 2012 to February 22, 2012.~~18, 2013.
4 Resource Marine Pte., Ltd, Singapore is a guaranteed nominee of Macquarie Bank Limited.
5 ~~Expected~~Vessel off-hire for drydocking from September 26, 2012 to ~~be delivered to the Company by the sellers on April 20,~~October 15, 2012.
6 ~~Estimated delivery date~~Vessel off-hire for unscheduled maintenance from October 18, 2012 to ~~charterer.~~November 30, 2012.
7 InVessel off-hire for drydocking from November 27, 2012 to December 10, 2012.
8 Charter includes a one time gross ballast bonus payment of US$390,000.
9 The charterer has the option to employ the vessel for a further 11 to 14 month period at a gross charter rate of US$11,300 per day. The optional period, if exercised, must be declared on or before the end of the 21st month of employment and will only commence at the end of the 24th month.
10 The charterer has the option to further employ the vessel for about 11 to maximum 13 months at a gross charter rate of US$11,000 per day. The optional period, if exercised, must be declared on or before the 22nd month of employment and will only commence at the end of the 24th month.
11 Since September 2010 ~~the charterer's~~charterers' name ~~was~~has changed to Tata Steel UK, Limited.
812 Since October 25, 2012 charterers have changed to BHP Billiton Singapore Pte Ltd.
13 Morgan Stanley Capital Group Inc. has the option to employ the vessel for a further minimum of eleven (11) ~~months~~ to a maximum of thirteen (13) ~~months~~month period at a gross rate of US$15,000 per day starting twenty-four (24) months after delivery of the vessel to the charterer.
914 Shagang Shipping Co. is a guaranteed nominee of the Jiangsu Shagang Group Co.
1015 Year of delivery and dwt are based on shipbuilding contract.
~~11 This newbuilding is also referred to as Hull H1235.~~
~~12 Based on expected date of delivery to owners.~~

Each of our vessels is owned through a separate wholly-owned subsidiary.

Management of Our Fleet

The commercial and technical management of our fleet is carried out by our wholly-owned subsidiary, Diana Shipping Services S.A., which we refer to as DSS, or our fleet manager. In exchange for providing us with commercial and technical services, personnel and office space, we pay our fleet manager a commission that is equal to 2% of our revenues, a fixed management fee of $15,000 per month for each vessel in ~~our operating fleet~~ operation and a fixed monthly fee of $7,500 for vessels under construction and for laid up ~~vessels~~.vessels. These amounts are considered inter-company transactions and, therefore, are eliminated from our consolidated financial statements.

Until March 1, 2013, DSS also ~~provides~~provided to Diana Containerships commercial, technical, accounting, administrative, financial reporting and other services necessary for the operation of its business, pursuant to an Administrative Services Agreement and Vessel Management Agreements. DSS ~~receives~~received a monthly fee of $10,000 for administrative services; a commission of 1% of the gross ~~charterhire~~hire and freight earned by the vessels and a technical management fee of $15,000 per vessel per month for ~~employed vessels; and will receive $20,000 per~~each vessel ~~per month for laid-up vessels, if any, owned by Diana Containerships.~~in operation. For 2010 and until January 18, 2011, such fees received by DSS, relating to the management services offered to Diana Containerships, ~~have been~~were eliminated from our consolidated financial statements as intercompany transactions. ~~However, effective~~Effective January 19, 2011, after the partial spin-off of Diana Containerships, they ~~constitute part of our~~were recorded as other revenues.

Pursuant to the Broker Services Agreement, dated June 1, 2010, DSS ~~has~~ appointed Diana Enterprises, a related party controlled by our Chief Executive Officer and Chairman, Mr. Simeon Palios, as broker to assist it in providing services to us ~~and Diana Containerships. Under the Broker Services Agreement, DSS pays to Diana Enterprises a commission~~for an annual fee of $1.7 million ~~per year~~and Diana Containerships for ~~Diana Shipping Inc. and~~an annual fee of $1.04 million per ~~year for Diana Containerships. Such fees constitute part~~year. Both agreements had a term of ~~our general and administrative expenses. Effective January 19, 2011, after the partial spin-off of Diana Containerships, fees relating to Diana Containerships do not constitute part of our expenses.~~five years. In February 2012, the agreement between DSS and Diana Enterprises was terminated and replaced by a new agreement for the provision of brokerage services with a term of five years, for an increased annual commission of $2.4 million per year, paid quarterly at the beginning of each quarter and with a retroactive effect from January 1, 2012. On March 15, 2013, the agreement between DSS and Diana Enterprises was terminated again and replaced by a new agreement for the provision of brokerage services for a monthly fee of $0.2 million payable quarterly at the beginning of each quarter and with a retroactive effect from March 1, 2013. The new agreement has a term of ~~five years.~~13 months until March 31, 2014.

Effective January 19, 2011, after the partial spin-off of Diana Containerships, fees relating to Diana Containerships did not constitute part of our expenses and on March 1, 2013 the agreement between DSS and Diana Enterprises for Diana Containerships was terminated.

Our Customers

Our customers include national, regional and international companies, such as Cargill International S.A., BHP Billiton, ~~Hanjin Shipping Company Ltd~~Corus UK Limited and EDF Trading Ltd. During 2012, three of our charterers accounted for 40% of our revenues; EDF Trading (10%), Cargill International S.A., (18%) and Corus UK ~~Limited.~~Limited (12%). During 2011, three of our charterers accounted for 41% of our ~~revenues,~~revenues; BHP Billiton (12%), Cargill International S.A., (18%) and Corus UK Limited (11%). During 2010, three of our charterers accounted for 44% of our ~~revenues,~~revenues; BHP Billiton (18%), Cargill International S.A., (16%) and Corus UK Limited (10%).

We charter our dry bulk carriers to customers primarily pursuant to time charters. Under our time charters, the charterer typically pays us a fixed daily charter hire rate and bears all voyage expenses, including the cost of bunkers (fuel oil) and canal and port charges. We remain responsible for paying the chartered vessel's operating expenses, including the cost of crewing, insuring, repairing and maintaining the vessel. We have historically paid commissions that have ranged from 0% to 6.25% of the total daily charter hire rate of each charter to unaffiliated ship brokers and to in-house brokers associated with the charterer, depending on the number of brokers involved with arranging the charter.

We strategically monitor developments in the dry bulk shipping industry on a regular basis and, subject to market demand, seek to adjust the charter hire periods for our vessels according to prevailing market conditions. In order to take advantage of the relatively stable cash flow and high utilization rates associated with long-term time charters, we have fixed 2431 of our vessels on long-term time charters ranging in duration from 1317 months to 62 months. Those of our vessels on short-term time charters provide us with flexibility in responding to market developments. We will continue to evaluate our balance of short- and long-term charters and may extend or reduce the charter hire periods of the vessels in our fleet according to the developments in the dry bulk shipping industry.

The Dry Bulk Shipping Industry

The global dry bulk carrier fleet could be divided into ~~six~~seven categories based on a vessel's carrying capacity. These categories consist of:

●	Very Large Ore Carriers ~~or VLOC~~(VLOC). Very large ore carriers have a carrying capacity of more than 200,000 dwt and are a comparatively new sector of the dry bulk carrier fleet. VLOCs are built to exploit economies of scale on long-haul iron ore routes.

●

Capesize. Capesize vessels have a carrying capacity of 110,000-199,999 dwt. Only the largest ports around the world possess the infrastructure to accommodate vessels of this size. Capesize vessels are primarily used to transport iron ore or coal and, to a much lesser extent, grains, primarily on long-haul routes.

●

Post-Panamax. Post-Panamax vessels have a carrying capacity of 80,000-109,999 dwt. These vessels tend to have a shallower draft and larger beam than a standard Panamax vessel with a higher cargo capacity. These vessels have been designed specifically for loading high cubic cargoes from draught restricted ports, although they cannot transit the Panama Canal.

●

Panamax. Panamax vessels have a carrying capacity of 60,000-79,999 dwt. These vessels carry coal, iron ore, grains, and, to a lesser extent, minor bulks, including steel products, cement and fertilizers. Panamax vessels are able to pass through the Panama Canal, making them more versatile than larger vessels with regard to accessing different trade routes. Most Panamax and Post-Panamax vessels are "gearless," and therefore must be served by shore-based cargo handling equipment. However, there are a small number of geared vessels with onboard cranes, a feature that enhances trading flexibility and enables operation in ports which have poor infrastructure in terms of loading and unloading facilities.

●

Handymax/Supramax. Handymax vessels have a carrying capacity of 40,000-59,999 dwt. These vessels operate in a large number of geographically dispersed global trade routes, carrying primarily grains and minor bulks. Within the Handymax category there is also a sub-sector known as Supramax. Supramax bulk carriers are ships between 50,000 to 59,999 dwt, normally offering cargo loading and unloading flexibility with on-board cranes, or ~~gear,~~"gear," while at the same time possessing the cargo carrying capability approaching conventional Panamax bulk carriers.

●

Handysize. Handysize vessels have a carrying capacity of up to 39,999 dwt. These vessels are primarily involved in carrying minor bulk cargoes. Increasingly, ships of this type operate within regional trading routes, and may serve as trans-shipment feeders for larger vessels. Handysize vessels are well suited for small ports with length and draft restrictions. Their cargo gear enables them to service ports lacking the infrastructure for cargo loading and unloading.

Other size categories occur in regional trade, such as Kamsarmax, with a maximum length of 229 meters, the maximum length that can load in the port of Kamsar in the Republic of ~~Guinea.~~Guinea. Other terms such as Seawaymax, Setouchmax, Dunkirkmax, and Newcastlemax also appear in regional trade.

The supply of dry bulk carriers is dependent on the delivery of new vessels and the removal of vessels from the global fleet, either through scrapping or loss. The level of scrapping activity is generally a function of scrapping prices in relation to current and prospective charter market conditions, as well as operating, repair and survey costs. The average age at which a vessel is scrapped over the last five years has been 31 years.

The demand for dry bulk carrier capacity is determined by the underlying demand for commodities transported in dry bulk carriers, which in turn is influenced by trends in the global economy. Demand for dry bulk carrier capacity is also affected by the operating efficiency of the global fleet, along with port congestion, which has been a feature of the market since 2004, absorbing tonnage and therefore leading to a tighter balance between supply and demand. In evaluating demand factors for dry bulk carrier capacity, the Company believes that dry bulk carriers can be the most versatile element of the global shipping fleets in terms of employment alternatives.

Charter Hire Rates

Charter hire rates fluctuate by varying degrees among dry bulk carrier size categories. The volume and pattern of trade in a small number of commodities (major bulks) affect demand for larger vessels. Therefore, charter rates and vessel values of larger vessels often show greater volatility. Conversely, trade in a greater number of commodities (minor bulks) drives demand for smaller dry bulk carriers. Accordingly, charter rates and vessel values for those vessels are usually subject to less volatility.

Charter hire rates paid for dry bulk carriers are primarily a function of the underlying balance between vessel supply and demand, although at times other factors may play a role. Furthermore, the pattern seen in charter rates is broadly mirrored across the different charter types and the different dry bulk carrier categories. In the time charter market, rates vary depending on the length of the charter period and vessel-specific factors such as age, speed and fuel consumption.

In the voyage charter market, rates are, among other things, influenced by cargo size, commodity, port dues and canal transit fees, as well as commencement and termination regions. In general, a larger cargo size is quoted at a lower rate per ton than a smaller cargo size. Routes with costly ports or canals generally command higher rates than routes with low port dues and no canals to transit. Voyages with a load port within a region that includes ports where vessels usually discharge cargo or a discharge port within a region with ports where vessels load cargo also are generally quoted at lower rates, because such voyages generally increase vessel utilization by reducing the unloaded portion or(or ballast ~~leg,~~leg) that is included in the calculation of the return charter to a loading area.

Within the dry bulk shipping industry, the charter hire rate references most likely to be monitored are the freight rate indices issued by the Baltic Exchange. These references are based on actual charter hire rates under charters entered into by market participants as well as daily assessments provided to the Baltic Exchange by a panel of major shipbrokers. The Baltic Panamax Index is the index with the longest history. The Baltic Capesize Index and Baltic Handymax Index are of more recent origin.

The Baltic Dry Index, or BDI, a daily average of charter rates in 20 shipping routes measured on a time charter and voyage basis and covering Capesize, Panamax, Supramax, and Handysize dry bulk carriers declined from a high of 11,793 in May 2008 to a low of 663 in December 2008. In 2009, BDI ranged from a low of 772 in January 2009 to a high of 4,661 in November 2009, representing an increase of 504%. In 2010, BDI decreased from a high of 4,209 in May 2010 to a low of 1,700 in July 2010 and in 2011 ranged from a low of approximately 1,043 in February 2011 to a high of approximately 2,173 in October 2011. ~~As of April 10,~~In 2012, the BDI ~~stood at 928.~~ranged from a high of 1624 in January to a low of 647 in February. In 2013 BDI started from a low 698 in January and increased to 912 on March 19, 2013.

Vessel Prices

Dry bulk vessel values have declined as a result of the significant deterioration in charter rates. Consistent with these trends, the market value of our dry bulk carriers has also declined. Charter rates and vessel values remain significantly below the highs reached in May to June 2008, and there can be no assurance as to how long charter rates and vessel values will remain at their current levels or whether they will decrease or improve to any significant degree in the near future.

Competition

Our business fluctuates in line with the main patterns of trade of the major dry bulk cargoes and varies according to changes in the supply and demand for these items. We operate in markets that are highly competitive and based primarily on supply and demand. We compete for charters on the basis of price, vessel location, size, age and condition of the vessel, as well as on our reputation as an owner and operator. We compete with other owners of dry bulk carriers in the Panamax, Post-Panamax and smaller class sectors and with owners of Capesize and Newcastlemax dry bulk carriers. Ownership of dry bulk carriers is highly fragmented.

We believe that we possess a number of strengths that provide us with a competitive advantage in the dry bulk shipping industry:

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We own a modern, high quality fleet of dry bulk carriers. We believe that owning a modern, high quality fleet reduces operating costs, improves safety and provides us with a competitive advantage in securing favorable time charters. We maintain the quality of our vessels by carrying out regular inspections, both while in port and at sea, and adopting a comprehensive maintenance program for each vessel.

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Our fleet includes ~~five~~eight groups of sister ships. We believe that maintaining a fleet that includes sister ships enhances the revenue generating potential of our fleet by providing us with operational and scheduling flexibility. The uniform nature of sister ships also improves our operating efficiency by allowing our fleet manager to apply the technical knowledge of one vessel to all vessels of the same series and creates economies of scale that enable us to realize cost savings when maintaining, supplying and crewing our vessels.

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We have an experienced management team. Our management team consists of experienced executives who each have, on average, more than 2627 years of operating experience in the shipping industry and has demonstrated ability in managing the commercial, technical and financial areas of our business. Our management team is led by Mr. Simeon Palios, a qualified naval architect and engineer who has 42more than 40 years of experience in the shipping industry.

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Internal management of vessel operations. We conduct all of the commercial and technical management of our vessels in-house through DSS. We believe having in-house commercial and technical management provides us with a competitive advantage over many of our competitors by allowing us to more closely monitor our operations and to offer higher quality performance, reliability and efficiency in arranging charters and the maintenance of our vessels.

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We benefit from strong relationships with members of the shipping and financial industries. We have developed strong relationships with major international charterers, shipbuilders and financial institutions that we believe are the result of the quality of our operations, the strength of our management team and our reputation for dependability.

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We have a strong balance sheet and a relatively low level of indebtedness. We believe that our strong balance sheet and relatively low level of indebtedness provide us with the flexibility to increase the amount of funds that we may draw under our loan facilities in connection with future acquisitions and enable us to use cash flow that would otherwise be dedicated to debt service for other purposes.

Permits and Authorizations

We are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses and certificates with respect to our vessels. The kinds of permits, licenses and certificates required depend upon several factors, including the commodity transported, the waters in which the vessel operates the nationality of the vessel's crew and the age of a vessel. We have been able to obtain all permits, licenses and certificates currently required to permit our vessels to operate. Additional laws and regulations, environmental or otherwise, may be adopted which could limit our ability to do business or increase the cost of us doing business.

Environmental and Other Regulations

Government regulation significantly affects the ownership and operation of our vessels. We are subject to international conventions and treaties, national, state and local laws and regulations in force in the countries in which our vessels may operate or are registered relating to safety and health and environmental protection including the storage, handling, emission, transportation and discharge of hazardous and non-hazardous materials, and the remediation of contamination and liability for damage to natural resources. Compliance with such laws, regulations and other requirements entails significant expense, including vessel modifications and implementation of certain operating procedures.

A variety of government and private entities subject our vessels to both scheduled and unscheduled inspections. These entities include the local port authorities (such as the U.S. Coast Guard, harbor master or equivalent), classification ~~societies,~~societies; flag state administrations (countries of registry) and charterers, particularly terminal operators. Certain of these entities require us to obtain permits, licenses, certificates or approvals for the operation of our vessels. Failure to maintain necessary permits, licenses, certificates or approvals could require us to incur substantial costs or temporarily suspend the operation of one or more of our vessels.

We believe that the heightened level of environmental and quality concerns among insurance underwriters, regulators and charterers is leading to greater inspection and safety requirements on all vessels and may accelerate the scrapping of older vessels throughout the dry bulk shipping industry. Increasing environmental concerns have created a demand for vessels that conform to the stricter environmental standards. We are required to maintain operating standards for all of our vessels that emphasize operational safety, quality maintenance, continuous training of our officers and crews and compliance with United States and international regulations. We believe that the operation of our vessels is in substantial compliance with applicable environmental laws and regulations and that our vessels have all material permits, licenses, certificates or other approvals necessary for the conduct of our operations as of the date of this annual report. However, because such laws and regulations are frequently changed and may impose increasingly strict requirements, we cannot predict the ultimate cost of complying with these requirements, or the impact of these requirements on the resale value or useful lives of our vessels. In addition, a future serious marine incident, such as the 2010 Deepwater Horizon oil spill, that results in significant oil pollution or otherwise causes significant adverse environmental impact could result in additional legislation or regulation that could negatively affect our profitability.

The laws and regulations discussed below may not constitute a comprehensive list of all such laws and regulations that are applicable to the operation of our vessels.

International Maritime Organization

The United Nations' International Maritime Organization ~~or the IMO,~~(the "IMO") has adopted the International Convention for the Prevention of Marine Pollution from Ships, 1973, as modified by the Protocol of 1978 relating thereto (collectively referred to as MARPOL 73/78 and herein as ~~MARPOL)~~"MARPOL"). MARPOL entered into force on October 2, 1983. It has been adopted by over 150 nations, including many of the jurisdictions in which our vessels operate. MARPOL sets forth pollution-prevention requirements applicable to drybulk carriers, among other vessels, and is broken into six Annexes, each of which regulates a different source of pollution. Annex I relates to oil leakage or spilling; Annexes II and III relate to harmful substances carried, in bulk, in liquid or packaged form, respectively; Annexes IV and V relate to sewage and garbage management, respectively; and Annex VI, lastly, relates to air emissions. Annex VI, ~~was~~ separately adopted by the IMO in September of ~~1997.~~1997, related to air emissions.

Air Emissions

In September of 1997, the IMO adopted Annex VI to MARPOL to address air pollution. Effective May 2005, Annex VI sets limits on nitrogen oxide emissions from ships whose diesel engines were constructed (or underwent major conversions) on or after January 1, 2000. It also prohibits "deliberate emissions" of "ozone depleting substances," defined to include certain halons and chlorofluorocarbons. "Deliberate emissions" are not limited to times when the ship is at sea; they can for example include discharges occurring in the course of the ship's repair and maintenance. Emissions of "volatile organic compounds" from certain tankers, and the shipboard incineration (from incinerators installed after January 1, 2000) of certain substances (such as polychlorinated biphenyls ~~or PCBs)~~(PCBs)) are also prohibited. Annex VI also includes a global cap on the sulfur content of fuel oil (see below).

The IMO's ~~Maritime~~Marine Environment Protection Committee, or MEPC, adopted amendments to Annex VI on October 10, 2008, which amendments were entered into force on July 1, 2010. The amended Annex VI seeks to further reduce air pollution by, among other things, implementing a progressive reduction of the amount of sulphur contained in any fuel oil used on board ships. ByAs of January 1, 2012, the amended Annex VI ~~requires~~required that fuel oil contain no more than 3.50% sulfur (from the current cap of 4.50%). By January 1, 2020, sulfur content must not exceed 0.50%, subject to a feasibility review to be completed no later than 2018.

Sulfur content standards are even stricter within certain "Emission Control ~~Areas," or ECAs.~~Areas" ("ECAs"). By July 1, 2010, ships operating within an ECA ~~may~~were not permitted to use fuel with sulfur content in excess of 1.0% (from 1.50%), which iswill be further reduced to 0.10% on January 1, 2015. Amended Annex VI establishes procedures for designating new ECAs. Currently, the Baltic Sea and the North Sea have been so designated. Effective August 1, 2012, certain coastal areas of North America ~~will also be~~were designated ECAs, as will ~~(effective January 1, 2014),~~applicable areas of the United States Caribbean ~~Sea.~~Sea adjacent to Puerto Rico and the U.S. Virgin Islands, effective January 1, 2014. Ocean-going vessels in these areas will be subject to stringent emissions controls and may cause us to incur additional costs. If other ECAs are approved by the IMO or other new or more stringent requirements relating to emissions from marine diesel engines or port operations by vessels are adopted by the EPA or the states where we operate, compliance with these regulations could entail significant capital expenditures or otherwise increase the costs of our operations.

As of January 1, 2013, MARPOL made mandatory certain measures relating to energy efficiency for ships. It makes the Energy Efficiency Design Index (EEDI) for new ships mandatory and the Ship Energy Efficiency Management Plan (SEEMP) apply to all ships.

Amended Annex VI also establishes new tiers of stringent nitrogen oxide emissions standards for new marine engines, depending on their date of installation. The U.S. Environmental Protection Agency promulgated equivalent (and in some senses stricter) emissions standards in late 2009.

Safety Management System Requirements

The IMO also adopted the International Convention for the Safety of Life at Sea, or SOLAS, and the International Convention on Load Lines, or the LL Convention, which impose a variety of standards that regulate the design and operational features of ships. The IMO periodically revises the SOLAS and LL Convention standards. The Convention on Limitation of Liability for Maritime Claims (LLMC) was recently amended and the amendments are expected to go into effect on June 8, 2015. The amendments alter the limits of liability for loss of life or personal injury claims and property claims against ship-owners.

The operation of our ships is also affected by the requirements set forth in Chapter IX of SOLAS, which sets forth the IMO's International Management Code for the Safe Operation of Ships and Pollution Prevention, or the ISM Code. The ISM Code requires ship owners and bareboat charterers to develop and maintain an extensive "Safety Management ~~System," or SMS,~~System" that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. We rely upon the safety management system that we and our technical manager have developed for compliance with the ISM Code. The failure of a ship owner or bareboat charterer to comply with the ISM Code may subject such party to increased liability, may decrease available insurance coverage for the affected vessels and may result in a denial of access to, or detention in, certain ports. As of the date of this filing, each of our vessels is ISM code-certified.

The ISM Code requires that vessel operators obtain a safety management certificate, or SMC, for each vessel they operate. This certificate evidences compliance by a vessel's operators with the ISM Code requirements for a safety management system, or SMS. No vessel can obtain an SMC under the ISM Code unless its manager has been awarded a document of compliance, or DOC, issued in most instances by the vessel's flag state. Our appointed ship managers have obtained ~~DOCs~~documents of compliance for their offices and ~~SMCs~~safety management certificates for all of our vessels for which the certificates are required by the IMO. The document of compliance, or the DOC, and ship management certificate, or the SMC, are renewed as required.

International ~~Labour~~Labor Organization

The International Labour Organization ~~or ILO,~~(ILO) is a specialized agency of the UN with headquarters in Geneva, Switzerland. The ILO has adopted the Maritime Labor Convention 2006 ~~or MLC 2006.~~(MLC 2006). A Maritime Labor Certificate and a Declaration of Maritime Labor Compliance will be required to ensure compliance with the MLC 2006 for all ships above 500 gross tons in international trade. The MLC 2006 will enter into force one year after 30 countries with a minimum of 33% of the world's tonnage have ratified it. ~~The~~On August 20, 2012, the required number of countries met and MLC 2006 ~~has not yet been ratified, but its~~is expected go come into force on August 20, 2013. The ratification ~~would~~of MLC 2006 may require us to develop new procedures to ensure full ~~compliance with its requirements.~~compliance.

Pollution Control and Liability Requirements

The IMO has negotiated international conventions that impose liability for pollution in international waters and the territorial waters of the signatories to such conventions. For example, the IMO adopted the International Convention for the Control and Management of Ships' Ballast Water and Sediments, or the BWM Convention, in February 2004. The BWM Convention's implementing regulations call for a phased introduction of mandatory ballast water exchange requirements, to be replaced in time with mandatory concentration limits. The BWM Convention will not enter into force until 12 months after it has been adopted by 30 states, the combined merchant fleets of which represent not less than 35% of the gross tonnage of the world's merchant shipping tonnage. To date, there has not been sufficient adoption of this standard for it to take force. However, Panama may adopt this standard in the relatively near future, which would be sufficient for it to take force. Upon entry into force of the BWM Convention, mid-ocean ballast exchange would be mandatory for our vessels. The cost of compliance could increase for ocean carriers, and these costs may be material. Our vessels would be required to be equipped with a ballast water treatment system that meets mandatory concentration limits not later than the first intermediate or renewal survey, whichever occurs first, after the anniversary date of delivery of the vessel in 2014, for vessels with ballast water capacity of 1500-5000 cubic meters, or after such date in 2016, for vessels with ballast water capacity of greater than 5000 cubic meters. If mid-ocean ballast exchange or ballast water treatment requirements become mandatory, the cost of compliance could increase for ocean carriers. Although we do not believe the costs of compliance with mandatory mid-ocean ballast exchange would be material, it is difficult to predict the overall impact of such a requirement on our operations.

The IMO adopted the International Convention on Civil Liability for Bunker Oil Pollution Damage, or the Bunker Convention, to impose strict liability on ship owners for pollution damage in jurisdictional waters of ratifying states caused by discharges of bunker fuel. The Bunker Convention requires registered owners of ships over 1,000 gross tons to maintain insurance for pollution damage in an amount equal to the limits of liability under the applicable national or international limitation regime (but not exceeding the amount calculated in accordance with the Convention on Limitation of Liability for Maritime Claims of 1976, as amended). With respect to non-ratifying states, liability for spills or releases of oil carried as fuel in ship's bunkers typically is determined by the national or other domestic laws in the jurisdiction where the events or damages occur.

In March 2006, the IMO amended Annex I to MARPOL, including a new regulation relating to oil fuel tank protection, which became effective August 1, 2007. The new regulation applies to various ships delivered on or after August 1, 2010. It includes requirements for the protected location of the fuel tanks, performance standards for accidental oil fuel outflow, a tank capacity limit and certain other maintenance, inspection and engineering standards.

Noncompliance with the ISM Code or other IMO regulations may subject the ship owner or bareboat charterer to increased liability, lead to decreases in available insurance coverage for affected vessels or result in the denial of access to, or detention in, some ports. As of the date of this ~~annual~~ report, each of our vessels is ISM Code certified. However, there can be no assurance that such certificate will be maintained.

The IMO continues to review and introduce new regulations. It is impossible to predict what additional regulations, if any, may be passed by the IMO and what effect, if any, such regulations might have on our operations.

The U.S. Oil Pollution Act of 1990 and Comprehensive Environmental Response, Compensation and Liability Act

OPA established an extensive regulatory and liability regime for the protection and cleanup of the environment from oil spills. OPA affects all "owners and operators" whose vessels trade with the United States, its territories and possessions or whose vessels operate in United States waters, which includes the United States' territorial sea and its 200 nautical mile exclusive economic zone around the United States. The United States has also enacted the Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, which applies to the discharge of hazardous substances other than oil, whether on land or at sea. OPA and CERCLA both define "owner and operator" in the case of a vessel as any person owning, operating or chartering by demise, the vessel. Both OPA and CERCLA impact our operations.

Under OPA, vessel owners and operators are "responsible parties" and are jointly, severally and strictly liable (unless the spill results solely from the act or omission of a third party, an act of God or an act of war) for all containment and clean-up costs and other damages arising from discharges or threatened discharges of oil from their vessels. OPA defines these other damages broadly to include:

(i)

injury to, destruction ~~or loss~~ of, or loss of use of, natural resources and related assessment costs;

(ii)

injury to, or economic losses resulting from, the destruction of real and personal property;

(iii)

net loss of taxes, royalties, rents, fees or net profit revenues resulting from injury, destruction or loss of real or personal property, or natural resources;

(iv)

loss of subsistence use of natural resources that are injured, destroyed or lost;

(v)

~~(v)~~

lost profits or impairment of earning capacity due to injury, destruction or loss of real or personal property or natural resources; and

(vi)

net cost of increased or additional public services necessitated by removal activities following a discharge of oil, such as protection from fire, safety or health hazards, and loss of subsistence use of natural resources.

OPA contains statutory caps on liability and damages; such caps do not apply to direct cleanup costs. Effective July 31, 2009, the U.S. Coast Guard adjusted the limits of OPA liability for non-tank vessels (e.g. drybulk) to the greater of $1,000 per gross ton or $854,400 (subject to periodic adjustment for inflation). These limits of liability do not apply if an incident was proximately caused by the violation of an applicable U.S. federal safety, construction or operating regulation by a responsible party (or its agent, employee or a person acting pursuant to a contractual relationship), or a responsible party's gross negligence or willful misconduct. The limitation on liability similarly does not apply if the responsible party fails or refuses to (i) report the incident where the responsibility party knows or has reason to know of the incident; (ii) reasonably cooperate and assist as requested in connection with oil removal activities; or (iii) without sufficient cause, comply with an order issued under the Federal Water Pollution Act (Section 311 (c), (e)) or the Intervention on the High Seas Act.

CERCLA contains a similar liability regime whereby owners and operators of vessels are liable for cleanup, removal and remedial costs, as well as damage for injury to, or destruction or loss of, natural resources, including the reasonable costs associated with assessing same, and health assessments or health effects studies. There is no liability if the discharge of a hazardous substance results solely from the act or omission of a third party, an act of God or an act of war. Liability under CERCLA is limited to the greater of $300 per gross ton or $5.0 million for vessels carrying a hazardous substance as cargo and the greater of $300 per gross ton or $500,000 for any other vessel. These limits do not apply (rendering the responsible person liable for the total cost of response and damages) if the release or threat of release of a hazardous substance resulted from willful misconduct or negligence, or the primary cause of the release was a violation of applicable safety, construction or operating standards or regulations. The limitation on liability also does not apply if the responsible person fails or refused to provide all reasonable cooperation and assistance as requested in connection with response activities where the vessel is subject to OPA.

OPA and CERCLA both require owners and operators of vessels to establish and maintain with the U.S. Coast Guard evidence of financial responsibility sufficient to meet the maximum amount of liability to which the particular responsible person may be subject. Vessel owners and operators may satisfy their financial responsibility obligations by providing a proof of insurance, a surety bond, qualification as a self-insurer or a guarantee.

The 2010 Deepwater Horizon oil spill in the Gulf of Mexico may also result in additional regulatory initiatives or statutes, including the raising of liability caps under OPA. Compliance with any new requirements of OPA may substantially impact our cost of operations or require us to incur additional expenses to comply with any new regulatory initiatives or statutes. For example, on August 15, 2012, the U.S. Bureau of Safety and Environment Enforcement (BSEE) issued a final drilling safety rule for offshore oil and gas operations that strengthens the requirements for safety equipment, well control systems, and blowout prevention practices. Additional legislation or regulations applicable to the operation of our vessels that may be implemented in the future could adversely affect our business.

We currently maintain pollution liability coverage insurance in the amount of $1 billion per incident for each of our vessels. If the damages from a catastrophic spill were to exceed our insurance coverage it could have an adverse effect on our business and results of operation.

OPA specifically permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within their boundaries, provided they accept, at a minimum, the levels of liability established under OPA and some states have enacted legislation providing for unlimited liability for oil spills. In some cases, states which have enacted such legislation have not yet issued implementing regulations defining vessel owners' responsibilities under these laws. We intend to comply with all applicable state regulations in the ports where our vessels call. We believe that we are in substantial compliance with all applicable existing state requirements. In addition, we intend to comply with all future applicable state regulations in the ports where our vessels call.

Other Environmental Initiatives

The U.S. Clean Water Act, or CWA, prohibits the discharge of oil, hazardous substances and ballast water in U.S. navigable waters unless authorized by a duly-issued permit or exemption, and imposes strict liability in the form of penalties for any unauthorized discharges. The CWA also imposes substantial liability for the costs of removal, remediation and damages and complements the remedies available under OPA and CERCLA. Furthermore, many U.S. states that border a navigable waterway have enacted environmental pollution laws that impose strict liability on a person for removal costs and damages resulting from a discharge of oil or a release of a hazardous substance. These laws may be more stringent than U.S. federal law.

The EPA regulates the discharge of ballast water and other substances in U.S. waters under the CWA. EPA regulations require vessels 79 feet in length or longer (other than commercial fishing and recreational vessels) to comply with a Vessel General Permit authorizing ballast water discharges and other discharges incidental to the operation of vessels. The Vessel General Permit imposes technology and water-quality based effluent limits for certain types of discharges and establishes specific inspection, monitoring, recordkeeping and reporting requirements to ensure the effluent limits are met. The EPA has ~~proposed~~issued a ~~draft~~ 2013 Vessel General Permit tothat will go into effect, and replace the current Vessel General Permit upon its expiration, on December 19, ~~2013,~~2013. This permit focuses on authorizing discharges incidental to operations of commercial ~~vessels. The draft permit also~~vessels and the new version contains numeric ballast water discharge limits for most vessels to reduce the risk of invasive species in US waters, more stringent requirements for exhaust gas scrubbers and the use of environmentally acceptable lubricants.

U.S. Coast Guard regulations adopted under the U.S. National Invasive Species Act, or NISA, also impose mandatory ballast water management practices for all vessels equipped with ballast water tanks entering or operating in U.S. waters. ~~On March 23,~~As of June 21, 2012, the U.S. Coast Guard ~~announced that it is amending its~~implemented revised regulations on ballast water management by establishing standards on the allowable concentration of living organisms in ballast water discharged from ships in U.S. waters. The revised ballast water standards are consistent with those adopted by the IMO in ~~2004, and will be effective on or around June 20, 2012.~~2004. Compliance with the EPA and the U.S. Coast Guard regulations could require the installation of certain engineering equipment and water treatment systems to treat ballast water before it is discharged or the implementation of other port facility disposal arrangements or procedures at potentially substantial cost, or may otherwise restrict our vessels from entering U.S. waters.

The U.S. Clean Air Act of 1970 (including its amendments of 1977 and 1990)~~, or the CAA,~~ (the "CAA") requires the EPA to promulgate standards applicable to emissions of volatile organic compounds and other air contaminants. Our vessels are subject to vapor control and recovery requirements for certain cargoes when loading, unloading, ballasting, cleaning and conducting other operations in regulated port areas. Our vessels that operate in such port areas with restricted cargoes are equipped with vapor recovery systems that satisfy these requirements. The CAA also requires states to draft State Implementation Plans ~~or SIPs,~~("SIPs") designed to attain national health-based air quality standards in each state. Although state-specific, SIPs may include regulations concerning emissions resulting from vessel loading and unloading operations by requiring the installation of vapor control equipment. As indicated above, our vessels operating in covered port areas are already equipped with vapor recovery systems that satisfy these existing requirements.

European Union Regulations

In October 2009, the European Union amended a directive to impose criminal sanctions for illicit ship-source discharges of polluting substances, including minor discharges, if committed with intent, recklessly or with serious negligence and the discharges individually or in the aggregate result in deterioration of the quality of water. Aiding and abetting the discharge of a polluting substance may also lead to criminal penalties. Member States were required to enact laws or regulations to comply with the directive by the end of 2010. Criminal liability for pollution may result in substantial penalties or fines and increased civil liability claims. The directive applies to all types of vessels, irrespective of their flag, but certain exceptions apply to warships or where human safety or that of the ship is in danger.

The European Union has adopted several regulations and directives requiring, among other things, more frequent inspections of high-risk ships, as determined by type, age, and flag as well as the number of times the ship has been detained. The European Union also adopted and then extended a ban on substandard ships and enacted a minimum ban period and a definitive ban for repeated offenses. The regulation also provided the European Union with greater authority and control over classification societies, by imposing more requirements on classification societies and providing for fines or penalty payments for organizations that failed to comply.

With effect from January 1, 2010, the Directive 2005/33/EC of the European Parliament and of the Council of July 6, 2005, amending Directive 1999/32/EC came into force. The objective of the directive is to reduce emission of sulfur dioxide and particulate matter caused by the combustion of certain petroleum derived fuels. The directive imposes limits on the sulfur content of such fuels as a condition of their use within a Member State territory. The maximum sulfur content for marine fuels used by inland waterway vessels and ships at berth in ports in EU countries after January 1, 2010, is 0.10% by mass. As of January 1, 2015, all vessels operating within Emissions Control Areas (ECA) worldwide must comply with 0.1% sulfur requirements. Currently, the only grade of fuel meeting 0.1% sulfur content requirement is low sulfur marine gas oil (or LSMGO). As of July 1, 2010, the reduction of applicable sulfur content limits in the North Sea, the Baltic Sea and the English Channel Sulfur Control Areas will be 0.1%. We do not expect that we will be required to modify any of our drilling rigs to meet any of the foregoing low sulfur fuel requirements. On July 15, 2011, the European Commission also adopted a proposal for an amendment to Directive 1999/32/EC which would align requirements with those imposed by the revised MARPOL Annex VI which introduced stricter sulphur limits.

Greenhouse Gas Regulation

Currently, the emissions of greenhouse gases from international shipping are not subject to the Kyoto Protocol to the United Nations Framework Convention on Climate Change, which entered into force in 2005 and pursuant to which adopting countries have been required to implement national programs to reduce greenhouse gas emissions. However, in July 2011, ~~the~~ MEPC adopted two new sets of mandatory requirements to address greenhouse gas emissions from ships that ~~will enter~~entered into force in January 2013. Currently operating ships will be required to develop Ship Energy Efficiency Management Plans, and minimum energy efficiency levels per capacity mile, outlined in the Energy Efficiency Design Index, will apply to new ships. These requirements could cause us to incur additional compliance costs. The IMO is also ~~considering the development of~~planning to implement market-based mechanisms to reduce greenhouse gas emissions from ~~ships.~~ships at an upcoming MEPC session. The European Union has indicated that it intends to propose an expansion of the existing European Union emissions trading scheme to include emissions of greenhouse gases from marine vessels, and in January 2012 the European Commission launched a public consultation on possible measures to reduce greenhouse gas emissions from ships. In the United States, the EPA has issued a finding that greenhouse gases endanger the public health and safety and has adopted regulations to limit greenhouse gas emissions from certain mobile sources and large stationary sources.

Although the mobile source emissions regulations do not apply to greenhouse gas emissions from vessels, such regulation of vessels is foreseeable, and the EPA has in recent years received petitions from the California Attorney General and various environmental groups seeking such regulation. Any passage of climate control legislation or other regulatory initiatives by the IMO, European Union, the U.S. or other countries where we operate, or any treaty adopted at the international level to succeed the Kyoto Protocol, that restrict emissions of greenhouse gases could require us to make significant financial expenditures which we cannot predict with certainty at this time.

Vessel Security Regulations

Since the terrorist attacks of September 11, 2001 in the United States, there have been a variety of initiatives intended to enhance vessel security such as the Maritime Transportation Security Act of 2002, or MTSA. To implement certain portions of the MTSA, in July 2003, the U.S. Coast Guard issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of the United States. The regulations also impose requirements on certain ports and facilities, some of which are regulated by the U.S. Environmental Protection Agency ~~or EPA.~~(EPA).

Similarly, in December 2002, amendments to SOLAS created a new chapter of the convention dealing specifically with maritime security. The new Chapter V became effective in July 2004 and imposes various detailed security obligations on vessels and port authorities, and mandates compliance with the International Ship and Port Facilities Security Code, or the ISPS Code. The ISPS Code is designed to enhance the security of ports and ships against terrorism. To trade internationally, a vessel must attain an International Ship Security Certificate, or ISSC, from a recognized security organization approved by the vessel's flag state. Among the various requirements are:

●

on-board installation of automatic identification systems to provide a means for the automatic transmission of safety-related information from among similarly equipped ships and shore stations, including information on a ship's identity, position, course, speed and navigational status;

	●
	●	on-board installation of ship security alert systems, which do not sound on the vessel but only alert the authorities on shore;

	●
	●	the development of vessel security plans;

	●
	●	ship identification number to be permanently marked on a vessel's hull;

We anticipate that internally generated cash flow will be sufficient to fund the operations of our fleet, including our working capital requirements. As of December 31, ~~2011,~~2012, we had ~~$416.7~~$446.6 million of Cash and cash ~~equivalents, $9.3 million available under our revolving credit facility with the Royal Bank of Scotland~~equivalents. We expect to finance future vessel acquisitions or for working capital purposes and up to $82.6 million available under our loan facility with the Export-Import Bank of China and DnB NOR Bank ASA, to finance part offund the construction cost of our two ~~Newcastlemax~~ vessels ~~one of which was delivered in February 2012~~under construction with cash from operations and ~~the other which is expected in April 2012. When~~ ~~Los Angeles~~ ~~was delivered, we drew down $37.5 million under the related loan facility, therefore the amount available to be drawn, currently, has been reduced to $41.3 million.~~with additional debt.

Cash Flow

Cash and cash equivalents increased to $446.6 million as of December 31, 2012 compared to $416.7 million as of December 31, ~~2011 compared to $345.4 million as of December 31, 2010.~~2011. We consider highly liquid investments such as time deposits and certificates of deposit with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents are primarily held in U.S. dollars. Cash and cash equivalents may also include compensating cash balances kept against the Company's loan facilities that are not deemed to be sufficiently material to require segregation on the balance sheet. Such balances at December 31, 2012 amounted to $15.0 million in the aggregate and consisted of minimum cash deposits required to be maintained at all times under the Company's loan facilities.

Net Cash Provided By Operating Activities

Net cash provided by operating activities decreased by $34.3 million, or 22%, to $119.9 million in 2012 compared to $154.2 million in 2011. The decrease was primarily attributable to the decrease in revenues.

Net cash provided by operating activities decreased by $24.1 million, or 14%, to $154.2 million in 2011 compared to $178.3 million in 2010. The decrease was primarily attributable to the decrease in revenues, an increase in trade receivables and the increase of expenses, which caused an increase in current liabilities.

Net cash provided by operating activities increased by $26.4 million, or 17%, to $178.3 million in 2010 compared to $151.9 million in 2009. The increase was primarily attributable to the increase in revenues due to the addition in our fleet of our vessels ~~Melite~~, ~~New York~~ ~~and~~ ~~Alcmene~~ ~~in January, March and November 2010, respectively and the delivery of the~~ ~~Houston~~ ~~in October 2009 and was partly offset by operating losses incurred by Diana Containerships's fleet.~~

Net Cash Used In Investing Activities

Net cash used in investing activities was $169.9 million in 2012, which consists of $171.2 million paid for the acquisition of six vessels during the year, the payment of a 10% advance for the acquisition of the Myrto and two predelivery installments for the construction of our two Panamax vessels; $2.8 million of dividends received from Diana Containerships during the year and $1.6 million relating to property additions and purchases of furniture, equipment and software development costs.

Net cash used in investing activities was $90.4 million in 2011, which consists of ~~$28.2~~$58.3 million ~~of advances and costs~~ paid for our two vessels under construction, ~~and~~ the advance for the vessel Leto delivered to us in January 2012; ~~$30.1 million of amounts paid~~and the payment for the acquisition during the year of the vessel Arethusa; $12.0 million of cash disposed-off upon the partial spin-off of Diana Containerships; $20.0 million paid to participate in Diana Containerships' public offering in June 2011; $0.1 million of dividends received from Diana Containerships during the year and $0.2 million relating to purchases of furniture, equipment and software development costs.

Net cash used in investing activities was $252.3 million in 2010, which consists of ~~$35.3~~$238.2 million ofpaid for advances for our vessels under ~~construction; $202.9 million of amounts paid~~construction and for vessel acquisitions; ~~$21.5~~$21.8 million for the acquisition of the real estate property which we were leasing as our principal executive offices in ~~Athens;~~Athens and purchases of furniture, equipment and software development costs; $7.7 million of investments in time deposits transferred to cash and cash ~~equivalents; and $0.3 million relating to purchases of furniture, equipment and software development costs.~~equivalents.

Net cash used in investing activities was $73.1 million in 2009, which consists of $65.2 million of advances for vessels under construction; $7.7 million of investments in long term time deposits; and $0.2 million relating to purchases of furniture and equipment.

Net Cash Provided By Financing Activities

Net cash provided by financing activities was $80.0 million in 2012, which consists of $118.6 million of proceeds drawn under our loan facilities and $32.0 million of indebtedness that we repaid; $6.0 million that we paid to repurchase and retire our common stock pursuant to the relevant plan; and $0.6 million that we paid in financing costs relating to our new loan agreements.

Net cash provided by financing activities was $7.5 million in 2011, which consists of $15.0 million of proceeds drawn under our loan facilities and $6.3 million of indebtedness that we repaid; and $1.2 million that we paid to repurchase and retire our common stock pursuant to the relevant plan.

Net cash provided by financing activities was $137.0 million in 2010, which consists of $138.5 million of proceeds drawn under our loan facilities and $35.8 million of indebtedness that we repaid; $35.2 million of contributions received by Diana Containerships from third parties (non-controlling interests) in a private offering in April 2010; $0.1 million proceeds received under our dividend reinvestment plan; and $1.0 million that we paid in financing costs relating to our new loan agreements.

Net cash provided by financing activities was $141.6 million in 2009, which consists of $73.6 million of proceeds drawn under our loan facilities and $30.1 million of indebtedness that we repaid; $98.4 million of proceeds received from an issuance of 6,000,000 shares of common stock in May 2009; $0.1 million proceeds received under our dividend reinvestment plan; and $0.4 million that we paid in financing costs relating to our new loan agreements.

Loan Facilities

The Royal Bank of Scotland Plc.~~, or RBS:~~("RBS"): In February 2005, we entered into a $230.0 million secured revolving credit facility with RBS, which was amended on May 24, 2006, to increase the facility amount to $300.0 million. Our credit facility permits us to borrow up to $50.0 million for working ~~capital of which $9.3 million is currently available.~~capital. In January 2007, we entered into a supplemental agreement with The Royal Bank of Scotland Plc. for a 364-day standby credit facility of up to $200.0 million that expired in March 2008. We draw funds under our $300.0 million credit facility to fund vessel acquisitions.

The $300.0 million revolving credit facility has a term of ten years from May 24, 2006, which we refer to as the availability date, and we are permitted to borrow up to the facility limit, provided that conditions to drawdown are satisfied and that borrowings do not exceed 75% of the aggregate market value of the mortgaged vessels. The amended facility ~~limit~~was available in full until May 24, 2012. Since that date the available amount is ~~$300.0 million for a period~~reducing in semiannual amounts of ~~six years from the availability date, at which time the facility limit will be reduced to $285.0 million. Thereafter, the facility limit will be reduced by~~ $15.0 million ~~semi-annually over a period of four years~~ with a final reduction of $165.0 million together with the last semi-annual ~~reduction.~~reduction on May 24, 2016.

The credit facility has commitment fees of 0.25% per annum on the ~~amount of the~~ undrawn ~~balance~~part of the facility, payable quarterly in arrears. Interest on amounts drawn are payable at a rate ranging from 0.75% to 0.85% per annum over LIBOR.

As of December 31, ~~2011~~2012 and as of the date of this annual report, we had ~~$290.7~~$270.0 million of principal balance outstanding under our $300.0 million revolving credit facility.

The credit facility contains financial and other covenants requiring us, among other things, to ensure that the aggregate market value of the vessels in our fleet that secure our obligations under the credit facility at all times exceeds 120% of the aggregate principal amount of debt outstanding under the facility and the notional or actual cost of terminating any relating hedging arrangements; our total assets minus our debt will not at any time be less than $150 million and at all times will exceed 25% of our total assets; we maintain $0.40 million of liquid funds per vessel in the fleet financed or mortgaged through the credit ~~facility, to the extent that the available working capital portion of the credit facility does not exceed such amount.~~facility.

For the purposes of the credit facility, our "total assets" are defined to include our tangible fixed assets and our current assets, as set forth in our consolidated financial statements.

The credit facility contains general covenants that require us to maintain adequate insurance coverage and to obtain the lender's consent before we acquire new vessels, change the flag, class or management of our vessels, enter into time charters or consecutive voyage charters that have a term that exceeds, or which by virtue of any optional extensions may exceed a certain period, or enter into a new line of business. In addition, the credit facility includes customary events of default, including those relating to a failure to pay principal or interest, a breach of covenants, representation and warranty, a cross-default to other indebtedness and non-compliance with security documents. Our obligations under our credit facility are secured by a first priority or preferred ship mortgage on certain vessels in our fleet and such other vessels that we may from time to time include with the approval of our lenders; and a first assignment of all freights, earnings, insurances and requisition compensation; corporate guarantees; and pledges of the outstanding stock of our subsidiaries. We may grant additional security from time to time in the future. Our credit facility does not prohibit us from paying dividends as long as an event of default has not occurred.

Bremer Landesbank ~~or Bremer:~~("Bremer"): In October 2009, we, through Gala Properties Inc., entered into a loan agreement with Bremer to partly finance or, as the case may be, refinance the contract price of the Houston for an amount of $40.0 million. The loan has a term of ten years and is repayable in 40 quarterly installments of $0.9 million plus one balloon installment of $4.0 million to be paid together with the last installment. The loan bears interest at Libor plus a margin of 2.15% per annum for the first two years, or the Initial Margin Application Period. Upon expiration of the Initial Margin Application Period, Bremer did not propose a new margin for the remaining security period or part thereof, for agreement by Gala Properties ~~Inc.,~~Inc, so the margin of 2.15% remains current. We drew down the loan amount of $40.0 million in November 2009 after the delivery of the Houston in October 2009.

The loan is secured by a first ~~priority or~~ preferred ship mortgage on the vessel, a first priority assignment of all earnings, insurances, and requisition compensation and a corporate guarantee. The lenders may also require additional security in the future in the event we breach certain covenants under the loan agreement and includes restrictions as to changes in management and ownership of the vessel, additional indebtedness, substitute charters in the case the vessel's current charter is prematurely terminated, as well as minimum requirements regarding hull cover ratio (vessel's market value of at least 120% of the outstanding balance of the loan). Furthermore, we are not permitted to pay any dividends if an event of default has occurred and for the duration of the loan we are required to maintain sufficient funds to meet the next repayment installment and interest due at monthly intervals, any other outstanding indebtedness that becomes due with the bank and sufficient funds to cover the anticipated cost of the next special survey of the vessel accumulated at least 12 months prior to such a survey.

As of December 31, ~~2011~~2012 and as of the date of this annual report, we had ~~$32.8~~$29.2 million and ~~$31.9~~$28.3 million, respectively, of principal balance outstanding under our $40.0 million loan facility with ~~Bremer.~~Bremer Landesbank.

Deutsche Bank AG ~~or Deutsche:~~("Deutsche"): In October 2009, we, through Bikini Shipping Company Inc., entered into a loan agreement with Deutsche to partly finance or, as the case may be, refinance the contract price of the New York for an amount of $40.0 million but not exceeding 80% of the fair value of the vessel. The loan has a term of five years and is repayable in 19 quarterly installments of $0.6 million, or the 1.50% of the loan amount and a 20th installment equal to the remaining outstanding balance of the loan. The loan bears interest at Libor plus a margin of 2.40% per annum. We drew down the loan amount of $40.0 million in March 2010 on the delivery of the New York.

The loan is secured by a first ~~priority or~~ preferred ship mortgage on the vessel, a first priority assignment of all earnings, insurances, and requisition compensation and a corporate guarantee. The lenders may also require additional security in the future in the event we breach certain covenants including restrictions as to changes in management and ownership of the vessel, additional indebtedness, as well as minimum requirements regarding hull cover ratio (vessel's market value of at least 125% of the outstanding balance of the loan), minimum liquidity of $0.4 million, average cash balance of $10.0 million, and other financial covenants. Furthermore, we are not permitted to pay any dividends ~~that~~which would result in a breach of financial covenants or if an event of default has occurred and is continuing. As at December 31, 2012, we were not in compliance with the ~~financial covenants.~~hull cover ratio requirement of the loan for which in January 2013, we obtained a waiver of the covenant breach until April 5, 2013, at which time we expect to be able to comply with this covenant by providing additional security.

As of December 31, ~~2011~~2012 and as of the date of this annual report, we had ~~$35.8~~$33.4 million and ~~$35.2~~$32.8 million, respectively, of principal balance outstanding under our $40.0 million loan facility with ~~Deutsche.~~Deutsche Bank.

On March 19, 2013, we also signed a commitment letter with Deutsche Bank, for a loan of $18.0 million to partly finance the acquisition cost of the Myrto and Maia, delivered to us in January and February 2013, respectively. Both vessels will be cross-collateralized with New York.

DnB NOR Bank ASA or ("DnB ~~NOR:~~NOR"): In July 2010, Diana Containerships through its subsidiaries Likiep Shipping Company Inc. and Orangina Inc., entered into a loan agreement with DnB NOR to finance part of the acquisition cost of the vessels Sagitta and Centaurus for an amount of up to $40.0 million in two advances for each vessel with each advance not exceeding the lower of $10.0 million and the 25% of the market value of the vessel relevant to it.

The repayment of the loan was in 24 quarterly installments of $165,000 for each advance and a balloon of ~~$6.04~~$6.0 million payable together with the last installment. The loan bore interest at LIBOR plus a margin of 2.40% per annum. An arrangement fee of $0.4 million was paid on signing the facility agreement. The loan bore commitment fees of 0.96%, on the undrawn part of the loan.

Diana Containerships and its subsidiaries are no longer consolidated to our consolidated financial statements, after its partial spin-off in January 2011.

Export-Import Bank of China and DnB NOR Bank ASA or ("CEXIM and ~~DnB NOR:~~DnB"): In October 2010, we, through our wholly owned subsidiaries, Lae Shipping Company Inc. ("Lae") and Namu Shipping Company Inc., ("Namu") entered into a loan agreement with CEXIM and DnB NOR to finance part of the acquisition cost of ~~our newbuildings~~ ~~Hull 1234,~~ orthe Los Angeles, and the~~Hull 1235, to be named~~ Philadelphia, for an amount of up to $82.6 million. ~~The~~

On February 15, and May 18, 2012, Lae and Namu drew down an aggregate of $72.1 million of the loan, ~~is available until November 30, 2012 in two advances with each advance not exceeding the lower of $41.3 million and the~~which represents 70% of the vessels' market value ~~of the ship relevant to it.~~ on delivery.

The ~~repayment of the loan~~Lae advance is repayable in 40 quarterly installments of ~~$692,500 for each advance~~$627,945 and a balloon of ~~$13.6~~$ 12.3 million payable together with the last ~~installment.~~installment on February 15, 2022 and the Namu advance is repayable in 40 quarterly installments of $580,996 and a balloon of $ 11.4 million payable together with the last installment on May 18, 2022. Each Bank has the right to demand repayment of the outstanding balance of any advance 72 months after the respective advance drawdown. Such demand shall be subject to written notification to be made no earlier than 54 months and not later than 60 months after the respective drawdown date for that advance. The loan bears interest at LIBOR plus a margin of 2.50% per ~~annum. The loan bears commitment fees of 0.50% per~~ annum ~~on the undrawn portion of the loan~~ and an agency fee of $10,000 is paid annually until its full ~~repayment of the loan. An arrangement and structuring fee of $0.6 million was paid on signing the agreement along with the payment of the annual agency fee.~~repayment.

The loan is secured by a first preferred ship mortgage on the vessels, general assignments, charter assignments, operating account assignments, a corporate guarantee from Diana Shipping Inc. and manager's undertakings. The lender may also require additional security, if at any time the market value of the ships becomes less than the 125% of the aggregate of (a) the ~~loan~~Loan and (b) the ~~swap exposure.~~Swap Exposure. Additionally, the borrowers are required to maintain minimum liquidity of $0.4 million at each operating account, and the guarantor is required to maintain net worth of not less than $150.0 million and at least 25% of the total assets and an average cash balance of $10.0 million.

As atof December 31, ~~2011, we did not have any balance outstanding under the loan, however~~2012 and as of the date of this annual report, we had ~~$37.5~~$69.1 million and $67.8 million, respectively, of principal balance outstanding ~~which we drew down to finance part of the construction cost of the~~ ~~Los Angeles~~ ~~delivered in February 2012. Because the tranche that was drawn was at the 70% of the market value of the vessel the related repayment installments will be reduced proportionately.~~under our loan facility with Cexim and DnB.

Emporiki Bank of Greece S.A. ("Emporiki") replaced by Credit Agricole Corporate and Investment Bank ("Credit Agricole"): On September 13, 2011, Bikar entered into a loan agreement with ~~Emporiki Bank of Greece S.A., or~~ Emporiki for a loan of up to $15.0 million to refinance part of the acquisition cost of the Arethusa. On December 13, 2012, Bikar, the Company, DSS and Credit Agricole, entered into a supplemental loan agreement to set out amendments of the loan agreement to which the parties entered into in a supplemental agreement on December 11, 2012, to provide applicability of the English law and exclusive jurisdiction of English courts and to a deed of novation to transfer the outstanding loan balance, the ISDA master swap agreement and the existing security documents from Emporiki to Credit Agricole.

The loan is repayable in ~~twenty~~20 equal semiannual installments of $0.5 million each ~~starting six months from drawdown~~ and a balloon payment of $5.0 million to be paid together with the last installment ~~not later than ten years from the drawdown date.~~on September 15, 2021. The loan bears interest at LIBOR plus a margin of 2.5% per annum, or 1% for such loan amount that is equivalently secured by cash pledge in favor of the bank. As at December 31, 2011, the loan amount was equivalently secured by cash pledged in favor of the bank and as such the loan bore interest at LIBOR plus 1% margin. The loan also bore commitment fees of 0.50% per annum, on the undrawn portion of the loan. An arrangement fee of $45,000 was paid on signing the agreement.

The loan, which is secured by an equivalent amount of cash collateral, is secured with a first priority mortgage on the Arethusa, charter assignment on all charters exceeding 12 months, first priority general assignment of all earnings, insurances and requisition compensation on the vessel, a corporate guarantee from ~~us,~~DSI, manager's undertaking and a first priority pledge on the earnings account and the cash collateral account. The lender may also require additional security, if at any time the market value of the vessel and the cash standing in a pledged account with the bank becomes less than the 120% of the aggregate of (a) the Loan and (b) the Swap Exposure, if any. The loan also has other non-financial and financial covenants, including minimum net worth, minimum cash of $10.0 million to be held by usDSI and $0.5 million to be held by Bikar and/or the guarantor and maximum leverage.

As of December 31, ~~2011~~2012 and as of the date of this annual report, we had ~~$15.0~~$14.0 million and ~~$14.5~~$13.5 million, respectively, of principal balance outstanding under our $15.0 million loan facility with ~~Emporiki.~~Credit Agricole.

Nordea Bank Finland Plc.("Nordea"): On February 7, 2012, ~~we, through our wholly owned subsidiary~~ Jemo Shipping Company Inc., (the "Borrower" or ~~Jemo,~~"Jemo") entered into an agreement with Nordea Bank Finland Plc, London Branch, ~~or Nordea,~~ for a secured term loan facility in the principal amount of $16.1 million drawn down in February 2012, to partly finance the acquisition cost of the ~~Vathy,~~ ~~renamed~~ Leto. The loan ~~which was drawn on February 7, 2012~~ has a term of five years and is repayable in 20 consecutive equal quarterly installments of ~~approximately $0.25 million, commencing 3 months after the initial borrowing date~~$252,000 and a balloon payment of ~~approximately~~ $11.1 million payable together with the final quarterly ~~installment.~~installment on February 7, 2017. On June 21, 2012, the agreement between Jemo and Nordea Bank Finland Plc, was restated and amended by a supplemental agreement in order to include Mandaringina as a new borrower and increase the loan amount to up to $26.5 million for the purpose of financing part of the acquisition cost of the Melia. The additional advance for Mandaringina of $10.3 million drawn down in June 2012 is repayable in 20 consecutive equal quarterly installments of $234,660 and a balloon of $5.6 million payable together with the last installment on May 7, 2017. The loan bears interest at ~~Libor~~LIBOR plus a margin of 2.5%.

On December 20, 2012, Palau Shipping Company Inc. and Guam Shipping Company Inc., ~~has commitment fees~~entered into a new loan agreement with Nordea for an amount of ~~0.5% per annum~~$20.0 million, drawn down on ~~the undrawn amount under the facility from the date~~December 21, 2012, to finance part of the ~~commitment letter until drawdown and an arrangement fee of 1.2%~~acquisition cost of the ~~facility amount that was paid~~Amphitrite and the Polymnia. The loan is repayable in 20 consecutive quarterly installments of $312,500 and a balloon installment of $13.8 million payable together with the last installment on ~~signing~~December 21, 2017. The loan bears interest at LIBOR plus a margin of ~~the agreement.~~2.9%.

The ~~loan is~~loans are secured with a corporate guarantee from ~~us,~~DSI, a first priority or first preferred mortgage on the ~~vessel~~ ~~Leto~~,vessels, first priority assignment of earnings, first priority pledge of the earnings account, first priority assignment of the ~~vessel's~~vessels' current time ~~charter~~charters and any subsequent charter contracts with a duration of 12 months or more, first priority assignment of insurances, first priority pledge over the shares of ~~Jemo~~the borrowers and manager's letter of subordination of rights. The loan also has financial covenants such as minimum liquidity of $0.5 million per vessel owned by the guarantor, minimum market-adjusted equity ratio of 25%, minimum market-adjusted net worth of $150 million and minimum hull value of 125% of the outstanding principal amount. Finally, we are not permitted to pay any dividends that would result in ~~breach~~an event of ~~financial~~default or ~~other covenants.~~if an event of default has occurred and is continuing.

As of December 31, 2012 and as of the date of this annual report, we had $25.2 million and $24.7 million, respectively, of principal balance outstanding under our amended and restated $26.5 million loan facility with Nordea Bank Finland Plc. dated on June 21, 2012

As of December 31, 2012 and as of the date of this annual report, we had $20.0 million of principal balance outstanding under our $20 million loan facility with Nordea Bank Finland Plc. dated on December 20, 2012

Currently, ~~fourteen~~all of our vessels, except for five, have been provided as collateral to secure our credit facility with RBS; one vessel has been provided as collateral to secure our loan facility with Bremer; one vessel to secure our loan facility with Deutsche; one vessel to secure our loan facility with Emporiki; one vessel to secure our loan facility with CEXIM and DnB NOR and one vessel to secure our loan facility with Nordea.facilities.

~~For the year ended December 31, 2011 we obtained waivers from RBS, Deutsche, DnB NOR and Emporiki for our share repurchase program.~~ Currently, we believe we are in compliance with all covenants relating to our loan facilities.

As of December 31, 2012, 2011 ~~2010~~ and ~~2009~~2010 and as of the date of this annual report, we did not and have not designated any financial instruments as accounting hedging instruments. In May 2009, we entered into a five-year zero cost collar agreement, novated in March 2012, with a floor at 1% and a cap at 7.8% of a notional amount of $100.0 million to manage our exposure to interest rate changes related to our borrowings. The collar agreement is considered as an economic hedge agreement as it does not meet the criteria of hedge accounting; therefore, the change in its fair value is recognized in earnings. As of December 31, 2012 and 2011 the fair value of the ~~floor resulted in losses of $1.1 million and the cap in gains of $23,000 resulting to an aggregate loss of~~swap was $1.0 ~~million equal to losses incurred in 2010.~~million. Also ~~during 2011, 2010 and 2009~~ we incurred unrealized ~~losses from the swap amounting to about $39,000,~~gain of $36,495 in 2012, unrealized loss of $39,410 in 2011 and unrealized loss of $0.8 million ~~and $0.2~~in 2010. Realized loss was $0.6 million ~~respectively,~~for 2012, and ~~realized losses of~~ $0.7 million ~~$0.7 million~~for 2011 and ~~$0.3 million, respectively.~~

2010.

Capital Expenditures

We make capital expenditures from time to time in connection with our vessel acquisitions which we finance with cash from operations, debt under loan facilities that provide necessary funds at terms acceptable to us, or with funds from equity issuances. Currently, we have contractual obligations relating to the construction of three newbuildings, amounting to $84.1 million. We will fund part of the construction cost of our Newcastlemax vessel with funds under our loan agreement with CEXIM and DnB NOR and with cash on hand. We expect to fund the construction cost of our two ice class Panamax dry bulk vessels, ~~and the Panamax dry bulk vessel we have agreed~~amounting to ~~acquire with cash on hand. We also expect to incur capital expenditures relating to improvements to our office building,~~$45.0 million which we ~~will~~expect to fund with cash on ~~hand.~~hand and debt.

We incur additional capital expenditures when our vessels undergo surveys. This process of recertification may require us to reposition these vessels from a discharging port to shipyard facilities, which will reduce our operating days during the period. The loss of earnings associated with the decrease in operating days, together with the capital needs for repairs and upgrades results in increased cash flow needs which we fund with cash on hand.

C. Research and development, patents and licenses

We incur from time to time expenditures relating to inspections for acquiring new vessels that meet our standards. Such expenditures are insignificant and they are expensed as they incur.

D. Trend information

Our results of operations depend primarily on the charter hire rates that we are able to realize, and the demand for drybulk vessel services. After reaching historical highs in mid-2008, charter hire rates for Panamax and Capesize drybulk vessels reached near historically low levels. For example, the ~~BDI~~Baltic Drybulk Index, or "BDI," declined from a high of 11,793 in May 2008 to a low of 663 in December 2008, which represents a decline of 94% within a single calendar year. During 2011, the BDI remained volatile, reaching a low of 1,043 on February 4, 2011 and a high of 2,173 on October 14,

2011. On February 3, 2012, the BDI reached a 26 year low of 647, due to a combination of weak demand and further growth in vessel supply. AsIn 2012 fall from 1624 to 647 and as of ~~April 10, 2012,~~March 19, 2013, the BDI stood at ~~928.~~912.

The decline and volatility in charter rates in the drybulk market reflects in part the fact that the supply of drybulk vessels in the market has been increasing, and the number of newbuild drybulk vessels on order is near historic highs. Demand for drybulk vessel services is influenced by global financial conditions. The recovery in China and India positively influenced the charter rates; however, global financial conditions remain volatile and demand for drybulk services may decrease in the future. The combination of increasing drybulk capacity (both current and expected) and decreasing demand or demand which is not offset by the increase in drybulk capacity is likely to result in reductions in charter hire rates and, as a consequence, adversely affect our operating results.

Additionally, we believe we have structured our capital expenditure requirements, debt commitments and liquidity resources isin a way that will provide us with financial flexibility (see "Item ~~5.B~~5. Operating and Financial Review and Prospects — B. Liquidity and Capital Resources" for more information).

E. Off-balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

F. Tabular Disclosure of Contractual Obligations

The following table sets forth our contractual obligations, in thousands of U.S. dollars, and their maturity dates as of December 31, ~~2011,~~2012, as adjusted to ~~reflect~~reflect: (i) ~~the drawdown of $16.1 million under our loan with Nordea; (ii) the drawdown of $37.5 million under our loan with CEXIM and DnB NOR; (iii)~~ the delivery of ~~our Newcastlemax dry bulk vessel~~the ~~Los Angeles~~Myrto in ~~February 2012 and~~January 2013; (ii) the payment in March ~~2012,~~2013, of one additional predelivery installment for the construction offor hull ~~H1235~~ ~~to be named~~ ~~Philadelphia~~H2528, amounting to ~~$5.8~~$4.4 million; ~~(iv)~~and (iii) the new Brokerage Services Agreement between DSS and Diana Enterprises, dated ~~February 22, 2012,~~March 15, 2013, but with effect from ~~January~~March 1, 2012; (v) the two contracts we entered into in March 2012 for the construction of two Panamax dry bulk carriers for an aggregate contract price of $58.0 million; and (vi) the memorandum of agreement we entered into in March 2012 for the acquisition of one Panamax dry bulk carrier for $20.65 million:2013.

	Payments due by period										Payments due by period
Contractual Obligations	Total Amount		Less than 1 year		2-3 years		4-5 years		More than 5 years		Total Amount		Less than 1 year		2-3 years		4-5 years		More than 5 years
	(in thousands of US dollars)										(in thousands of US dollars)
Loan Agreements (1)	$	427,875	$	30,340	$	81,040	$	254,840	$	61,655	$	460,878	$	45,032	$	116,265	$	234,506	$	65,075
Estimated Interest Payments on Loan Agreements (1)												31,340	$	7,917	$	12,931	$	5,766	$	4,726
Construction contracts (2)		84,100		34,800		49,300		-		-		44,950		44,950		-		-		-
Memorandum of Agreement (3)		20,650		20,650		-		-		-
Broker services agreement ~~(4)~~(3)		12,260		2,384		4,768		4,768		340		3,106		2,481		625		-		-

Total	$	544,885	$	88,174	$	135,108	$	259,608	$	61,995	$	540,274	$	100,380	$	129,821	$	240,272	$	69,801

(2)

As of December 31, ~~2011,~~2012, we had paid ~~four~~one predelivery ~~installments~~installment for the construction of ~~hull~~ ~~H1234, or~~ ~~Los Angeles~~,each of our two Panamax dry bulk carriers, amounting to ~~$31.9~~$8.7 million and ~~the three predelivery installments for the construction of hull~~ ~~H1235, to be renamed~~ ~~Philadelphia, amounting to $26.1 million.~~ ~~Los Angeles~~ ~~was delivered to us~~ in ~~February 2012, for which we paid a delivery installment of $26.1 million. In~~ March ~~2012,~~2013, we paid one additional predelivery installment of ~~$5.8~~$4.4 million for ~~the construction of~~ hull ~~H1235~~H2528~~, to be renamed~~ ~~Philadelphia, and~~. We expect to ~~pay $26.1 million on the~~take delivery of ~~the vessel in April 2012. In March 2012, we also entered into two contracts for the construction of two additional Panamax dry bulk carriers for the price of $29.0 each, expected to be delivered~~both vessels in the fourth quarter of 2013.

(3)

~~In March~~On February 22, 2012, ~~we entered into a Memorandum of Agreement to purchase from an unaffiliated third party a 2005 built Panamax dry bulk carrier of 76,225 dwt for a price of $20.65 million. The vessel, to be renamed~~ ~~Melia, is expected to be delivered to us by the sellers on or about April 24, 2012.~~

~~(4)~~

~~On June 1, 2010,~~ DSS entered into an agreement with Diana Enterprises, a related party company, for the provision of brokerage services for an annual fee of ~~$1.7 million.~~$2.4 million effective from January 1, 2012. The agreement had a term of five years and the fee was paid quarterly in advance This agreement was terminated on ~~February 22, 2012~~March 15, 2013 and was replaced with an agreement for the provision of brokerage services ~~and~~ for ~~an annual~~a monthly fee of ~~$2.4~~$0.2 million effective from ~~January~~March 1, ~~2012.~~2013. The agreement has a term of ~~five years~~thirteen months until March 31, 2014 and the fee is ~~paid~~payable quarterly in advance.

G. Safe Harbor

See section ~~"Forward Looking Statements"~~"forward looking statements" at the beginning of this annual report.

A.Item 6. Directors, Senior Management and Employees

A. Directors and Senior Management

Set forth below are the names, ages and positions of our directors and executive officers. Our board of directors is elected annually on a staggered basis, and each director elected holds office for a three year term. Officers are appointed from time to time by our board of directors and hold office until a successor is appointed or their employment is terminated.

Name	Age	Position
Simeon Palios	7071	Class I Director, Chief Executive Officer and Chairman
Anastasios Margaronis	5657	Class I Director and President
Ioannis Zafirakis	4041	Class I Director, Executive Vice President and Secretary
Andreas Michalopoulos	4041	Chief Financial Officer and Treasurer
Maria Dede	3940	Chief Accounting Officer
William (Bill) Lawes	6869	Class II Director
Konstantinos Psaltis	7374	Class II Director
Boris Nachamkin	7879	Class III Director
Apostolos Kontoyannis	6364	Class III Director

The term of our Class I directors expires in ~~2012,~~2015, the term of our Class II directors expires in 2013 and the term of our Class III directors expires in 2014.

The business address of each officer and director is the address of our principal executive offices, which are located at Pendelis 16, 175 64 Palaio Faliro, Athens, Greece.

Biographical information with respect to each of our directors and executive officers is set forth below.

Simeon P. Palios has served as our Chief Executive Officer and Chairman since February 21, 2005 and as a Director since March 9, 1999 and has served as the Chief Executive Officer and Chairman of Diana Containerships Inc. since January 13, 2010. Mr. Palios also serves as an employee of ~~DSS.~~Diana Shipping Services S.A. Prior to November 12, 2004, Mr. Palios was the Managing Director of Diana Shipping Agencies S.A. and performed on our behalf the services he now performs as Chief Executive Officer. Since 1972, when he formed Diana Shipping Agencies, Mr. Palios has had the overall responsibility of our activities. Mr. Palios has ~~42 years~~ experience in the shipping industry since 1969 and expertise in technical and operational issues. He has served as an ensign in the Greek Navy for the inspection of passenger boats on behalf of Ministry of Merchant Marine and is qualified as a naval architect and engineer. Mr. Palios is a member of various leading classification societies worldwide and he is a member of the board of directors of the United Kingdom Freight Demurrage and Defense Association Limited. He holds a bachelor's degree in Marine Engineering from Durham University.

Anastasios C. Margaronis has served as our President and as a Director since February 21, 2005 and has served as the Director and President of Diana Containerships Inc. since January 13, 2010. Mr. Margaronis also serves as an employee of ~~DSS.~~Diana Shipping Services S.A. Prior to February 21, 2005, Mr. Margaronis was employed by Diana Shipping Agencies S.A. and performed on our behalf the services he now performs as President. He joined Diana Shipping Agencies S.A. in 1979 and has been responsible for overseeing our insurance matters, including hull and machinery, protection and indemnity and war risks cover. Mr. Margaronis has ~~29 years of~~ experience in the shipping industry, including in ship finance and ~~insurance.~~insurance, since 1980. He is a member of the ~~Governing Council~~Greek National Committee of the ~~Greek Shipowner's Union~~American Bureau of Shipping and a member of the board of directors of the United Kingdom Mutual Steam Ship Assurance Association (Bermuda) Limited. He holds a bachelor's degree in Economics from the University of Warwick and a master's of science degree in Maritime Law from the Wales Institute of Science and Technology.

Ioannis G. Zafirakis has served as our Executive Vice President and Secretary since February 14, 2008, as our Vice President and Secretary since February 21, 2005 and as a Director since March 9, 1999 and has served as the Director, Chief Operating Officer and Secretary of Diana Containerships Inc. since January 13, 2010. Mr. Zafirakis also serves as an employee of ~~DSS.~~Diana Shipping Services S.A. Prior to February 21, 2005, Mr. Zafirakis was employed by Diana Shipping Agencies S.A. and performed on our behalf the services he now performs as Executive Vice President. He joined Diana Shipping Agencies S.A. in 1997 where he held a number of positions in its finance and accounting department. Mr Zafirakis is also a member of the Business Advisory Committee of the MSc in International Shipping and Finance at ICMA Centre, Henley Business School, University of Reading. He holds a bachelor's degree in Business Studies from City University Business School in London and a master's degree in International Transport from the University of Wales in Cardiff.

Andreas Michalopoulos has served as our Chief Financial Officer and Treasurer since March 8, 2006 and has served in these positions with Diana Containerships Inc. since January 13, 2010. Mr. Michalopoulos started his career in 1993 when he joined Merrill Lynch Private Banking in Paris. In 1995, he became an International Corporate Auditor with Nestle SA based in Vevey, Switzerland and moved in 1998 to the position of Trade Marketing and Merchandising Manager. From 2000 to 2002, he worked for McKinsey and Company in Paris, France as an Associate Generalist Consultant before joining a major Greek Pharmaceutical Group with U.S. R&D activity as a Vice President of International Business Development and Member of the Executive Committee in 2002 where he remained until 2005. From 2005 to 2006, he joined Diana Shipping Agencies S.A. as a Project Manager. Mr. Michalopoulos graduated from Paris IX Dauphine University with Honors in 1993 obtaining an MSc in Economics and a master's degree in Management Sciences specialized in Finance. In 1995, he also obtained a master's degree in ~~business administration~~Business Administration from Imperial College, University of London. Mr. Andreas Michalopoulos is married to the youngest daughter of Mr. Simeon Palios.

Maria Dede has served as our Chief Accounting Officer since September 1, 2005 during which time she has been responsible for all financial reporting requirements. Mrs. Dede has also served as an employee of ~~DSS~~Diana Shipping Services S.A since March 2005. In 2000, Mrs. Dede joined the Athens branch of Arthur Andersen, which merged with Ernst and Young (Hellas) in 2002, where she served as an external auditor of shipping companies until 2005. From 1996 to 2000, Mrs. Dede was employed by Venus Enterprises SA, a ship-management company, where she held a number of positions primarily in accounting and supplies. Mrs. Dede holds a bachelor's degree in Maritime Studies from the University of Piraeus and a master's degree in business administration from ALBA.

William (Bill) Lawes has served as a Director and the Chairman of our Audit Committee since March 2005. Mr. Lawes served as a Managing Director and a member of the Regional Senior Management Board of JPMorgan Chase (London) from 1987 until 2002. Prior to joining JPMorgan Chase, he was Global Head of Shipping Finance at Grindlays Bank. Since December 2007, he serves as an independent member of the Board of Directors and Chairman of the Audit Committee of Teekay Tankers Ltd. Mr. Lawes is qualified as a member of the Institute of Chartered Accountants of Scotland.

Konstantinos Psaltis has served as a Director since March 2005. Since 1981, Mr. Psaltis has served as Managing Director of Ormos Compania Naviera S.A., a company that specializes in operating and managing multipurpose container vessels. Prior to joining Ormos Compania Naviera S.A., Mr. Psaltis simultaneously served as a technical manager in the textile manufacturing industry and as a shareholder of shipping companies managed by M.J. Lemos. From 1961 to 1964, he served as ensign in the Royal Hellenic Navy. Mr. Psaltis is a member of the Germanischer Lloyds Hellas Committee. He holds a degree in Mechanical Engineering from Technische Hochschule Reutlingen & Wuppertal and a bachelor's degree in Business Administration from Tubingen University in Germany.

Boris Nachamkin has served as a Director and as a member of our Compensation Committee since March 2005. Mr. Nachamkin was with Bankers Trust Company, New York, for 37 years, from 1956 to 1993 and was posted to London in 1968. Upon retirement in 1993, he acted as Managing Director and Global Head of Shipping at Bankers Trust. Mr. Nachamkin was also the UK Representative of Deutsche Bank Shipping from 1996 to 1998 and Senior Executive and Head of Shipping for Credit Agricole Indosuez, based in Paris, between 1998 and 2000. Previously, he was a Director of Mercur Tankers, a company which was listed on the Oslo Stock Exchange, and Ugland International, a shipping company. He also serves as Managing Director of Seatrust Shipping Services Ltd., a private consulting ~~firm.~~firm and as a U.K. Director of Marine Money, a U.S. - based ship finance publication.

Apostolos Kontoyannis has served as a Director and as the Chairman of our Compensation Committee and a member of our Audit Committee effective since March 2005. Since 1987, Mr. Kontoyannis has been the Chairman of Investments and Finance Ltd., a financial consultancy firm he founded, that specializes in financial and structuring issues relating to the Greek maritime industry, with offices in Piraeus and London. He was employed by Chase Manhattan Bank N.A. in Frankfurt (Corporate Bank), London (Head of Shipping Finance South Western European Region) and Piraeus (Manager, Ship Finance Group) from 1975 to 1987. He is an independent member of the Board of Directors of Excel Maritime Carriers Ltd. Mr. Kontoyannis holds a bachelor's degree in Finance and Marketing and a master's degree in business administration in Finance from Boston University.

B. Compensation

The aggregate executives' compensation ~~to members of our senior management~~(including Diana Enterprises) for ~~2011, 2010 and 2009 was $0.8 million, $1.4 million and $2.3 million, respectively. In~~ 2012, 2011 and 2010 ~~our senior management received a cash bonus of $0.4~~was $4.4 million, ~~$0.4~~$3.7 million and ~~$1.2~~$4.2 million, ~~respectively, relating to 2011, 2010 and 2009 performance,~~ respectively. Since June 1, 2010, DSS entered into two Broker Services Agreements with Diana Enterprises, a related party, to provide brokerage services to us and Diana Containerships. Under these agreements, which are described in Item 7B. "Related Party Transactions", we ~~pay~~paid an annual fee of $1.7 million until December 31, 2011, increased to $2.4 million as of January 1, 2012, and will pay $0.2 million per month effective March 1, 2013. Diana Containerships paid during 2010 and until January 18, 2011 that was consolidated in our financial statements annual fees of $1.04 million. We consider that fees paid under those agreements to be part of our executive compensation due to the affiliation with Diana Enterprises. In 2011 and 2010, brokerage services amounted to $1.7 million and $1.6 million, respectively. In 2012 and 2011, Diana Enterprises also received an amount of $0.8 million for each year, as bonus for the performance of 2011 and 2010.

Non-employee directors receive annual fees in the amount of $52,000 plus reimbursement of their out-of-pocket expenses, since January 1, 2009. Until then their annual fees amounted to $40,000. In addition, each non-executive serving as chairman or member of the committees receives annual fees of $26,000 and $13,000, respectively, plus reimbursement of his/her out-of-pocket expenses, since January 1, 2009 compared to $20,000 and $10,000, respectively, plus reimbursement of his/her out-of-pocket expenses until 2008. For 2012, 2011 ~~2010~~ and ~~2009~~2010 fees and expenses of our non-executive directors amounted to ~~$0.4~~$0.3 million, $0.4 million and ~~$0.3~~$0.4 million, respectively.

Since 2008 and until the date of this annual report, our board of directors has awarded an aggregate amount of ~~2,843,295~~3,451,241 shares of restricted common stock, of which ~~2,335,123~~2,800,657 shares to senior management and ~~508,172~~650,584 shares to non-employee directors. All restricted shares vest ratably over three years, except for 600,000 shares awarded in 2008 which vest ratably over a period of six years. The restricted shares are subject to forfeiture until they become vested. Unless they forfeit their shares, grantees have the right to vote, to receive and retain all dividends paid and to exercise all other rights, powers and privileges of a holder of shares.

In 2012, 2011 ~~2010~~ and ~~2009,~~2010, compensation cost relating to the aggregate amount of restricted stock awards amounted to $8.6 million, $8.1 million ~~$7.5 million~~ and ~~$3.9~~$7.5 million, respectively. Of this compensation cost, an amount of $39,353 in 2011 and $1.3 million in 2010 related to shares awarded by Diana Containerships to members of its senior management.

We do not have a retirement plan for our officers or directors.

Equity Incentive Plan

In February 2005, we adopted an equity incentive plan or(the "Plan") for 2,800,000 common shares, which was amended and restated on October 21, 2008 and terminated in 2012 as all shares reserved had been issued. On May 2, 2011, our board of directors approved the Diana Shipping Inc. 2011 Equity Incentive Plan (the "2011 Plan"), with substantially the same terms and provisions as the amended and restated 2005 Plan. Under the 2011 Plan, ~~pursuant to~~an aggregate of 5,000,000 common shares are reserved for issuance, of which ~~our employees, officers and directors have received options to acquire our common stock. A total of 2,800,000~~4,348,759 shares of common stock are ~~reserved~~currently available for ~~issuance under~~issuance.

The plan entitles the ~~2005 Plan. The 2005 Plan~~Company's employees, officers and directors to receive options to acquire the Company's common stock and is administered by the Compensation Committee of the Company's Board Directors or such other committee of ~~Directors.~~the Board as may be designated by the Board to administer the Plan. Under the terms of the ~~2005~~2011 Plan, the Company's Board of Directors is able to grant a) incentive stock options, b) non-qualified stock options, c) stock appreciation rights, d) dividend equivalent rights, e) restricted stock, f) unrestricted stock, g) restricted stock units, and h) performance shares. No options, stock appreciation rights or restricted stock units can be exercisable prior to the first anniversary or subsequent to the tenth anniversary of the date on which such award was granted. The ~~2005~~2011 Plan will expire 10 years from ~~the~~its adoption ~~of the 2005 Plan~~ by the Board of Directors. ~~On October 21, 2008, the 2005 Plan was amended and restated.~~ Under the ~~2005~~2011 Plan, ~~as amended and restated,~~ the Administrator may waive or modify the application of forfeiture of awards of restricted stock and performance shares in connection with cessation of service with ~~us. Our board of directors delegated to~~ the members of the compensation committee its authority as Administrator of the 2005 Plan to vest restricted stock awards granted under the 2005 Plan in the event of the grantee's death. No shares remain available for issuance under the 2005 Plan.

On May 2, 2011, our board of directors approved the Diana Shipping Inc. 2011 Equity Incentive Plan, or the 2011 Plan, with substantially the same terms and provisions as the amended and restated 2005 Plan. Under the 2011 Plan, an aggregate of 5,000,000 common shares are reserved for issuance under the 2011 Plan, of which 4,956,705 shares of common stock are currently available for issuance under the 2011 Plan.Company.

C. Board Practices

We have established an Audit Committee, comprised of two board members, which is responsible for reviewing our accounting controls, recommending to the board of directors the engagement of our independent auditors, and pre-approving audit and audit-related services and fees. Each member is an independent director. As directed by its written charter, the Audit Committee is responsible for appointing, and overseeing the work of the independent auditors, including reviewing and approving their engagement letter and all fees paid to our auditors, reviewing the adequacy and effectiveness of the Company's accounting and internal control procedures and reading and discussing with management and the independent auditors the annual audited financial statements.

In addition, we have established a Compensation Committee comprised of two members, which is responsible for establishing executive officers' compensation and benefits. The members of the Audit Committee are Mr. William Lawes (Chairman and financial expert) and Mr. Apostolos Kontoyannis (member and financial expert) and the members of the Compensation Committee are Mr. Apostolos Kontoyannis (Chairman) and Mr. Boris Nachamkin (member).

We have established an Executive Committee comprised of the three executive directors, Mr. Simeon Palios, Mr. Anastasios Margaronis and Mr. Ioannis Zafirakis. The Executive Committee has, to the extent permitted by law, the powers of the Board of Directors in the management of the business and affairs of the Company.

We also maintain directors' and officers' insurance, pursuant to which we provide insurance coverage against certain liabilities to which our directors and officers may be subject, including liability incurred under U.S. securities law. Our executive directors have employment agreements, which, if terminated without cause, entitle them to continue receiving their basic salary through the date of the agreement's expiration.

D. Crewing and Shore Employees

We crew our vessels primarily with Greek officers and Filipino officers and seamen. We are responsible for identifying our Greek officers, which are hired by our vessel owning subsidiaries. Our Filipino officers and seamen are referred to us by Crossworld Marine Services Inc., an independent crewing agency. The crewing agency handles each seaman's training, travel and payroll. We ensure that all our seamen have the qualifications and licenses required to comply with international regulations and shipping conventions. Additionally, our seafaring employees perform most commissioning work and supervise work at shipyards and drydock facilities. We typically man our vessels with more crew members than are required by the country of the vessel's flag in order to allow for the performance of routine maintenance duties.

The following table presents the number of shoreside personnel employed by our fleet manager and the average number of seafaring personnel employed by our vessel owning subsidiaries during the periods indicated.

Year Ended December 31,
2011 2010 2009
Shoreside 68 58 46
Seafaring 558 577 445
Total 626 635 491

	Year Ended December 31,
	2012		2011		2010
Shoreside		82		68		58
Seafaring		558		558		577
Total		640		626		635

E. Share Ownership

With respect to the total amount of common stock owned by all of our officers and directors, individually and as a group, see Item 7.7 "Major ~~Shareholders"~~Shareholders and ~~"Related~~Related Party Transactions".

Item 7. Major Shareholders and Related Party Transactions

Major Shareholders

The following table sets forth current information regarding (i) the owners of more than five percent of our common stock that we are aware of and (ii) the total amount of common stock owned by all of our officers and directors, individually and as a group. All of the shareholders, including the shareholders listed in this table, are entitled to one vote for each share of common stock held.

Title of Class Identity of Person or Group
Number of
Shares Owned
Percent of Class
Common Stock, par value $0.01 Simeon Palios (1) 15,112,717 18.2 %
Seizert Capital Partners, LLC (2) 5,219,824 6.3 %

All officers and directors as a group (3) 16,711,068 20.1 %

Title of Class	Identity of Person or Group	Number of Shares Owned		Percent of Class
Common Stock, par value $0.01	Simeon Palios (1)		15,278,977		18.4	%
	Seizert Capital Partners, LLC (2)		5,228,578		6.3	%
	B. Manning & Napier Advisors, LLC (3)		5,918,951		7.1	%
	Massachusetts Financial Services Company (4)		6,497,810		7.8	%

	All officers and directors as a group (5)		16,909,086		20.4	%

(1)

Currently, Mr. Simeon Palios beneficially owns ~~826,177~~992,437 restricted common shares granted through the Company's Equity Incentive Plan and 14,286,540 shares indirectly through Corozal Compania Naviera S.A.~~, or Corozal,~~ ("Corozal") and Ironwood Trading Corp.~~, or Ironwood,~~ ("Ironwood") over which Mr. Simeon Palios exercises sole voting and dispositive power. As of December 31, ~~2009,~~ 2010, 2011, 2012 and currently, Mr. Simeon Palios owned indirectly through Corozal and Ironwood ~~17.5%,~~ 17.4%, 17.3%, 17.4% and 17.2%, respectively, of our outstanding common stock.

(2)

Seizert Capital Partners, LLC is an investment adviser that has filed a Schedule ~~13G~~13G/A on February ~~13, 2012~~4, 2013 reporting their ownership of 6.3% of our outstanding common stock as of December 31, ~~2011.~~2012.

(3)

Manning & Napier Advisors, LLC has filed a Schedule 13G on January 23, 2013 reporting their ownership of 7.2% of our outstanding common stock as of December 31, 2012.

(4)

Massachusetts Financial Services Company ("MFS") has filed a Schedule 13G on March 14, 2013 reporting their ownership of 7.8% of our outstanding common stock as of December 31, 2012.

~~(3)~~(5)

Mr. Simeon Palios is our only director or officer that beneficially owns 1%5% or more of our outstanding common stock. Mr. Anastasios Margaronis, our President and a member of our board of directors, and Mr. Ioannis Zafirakis, our Executive Vice President and a member of our board of directors, are indirect shareholders through ownership of stock held in Corozal Compania Naviera S.A., which is the registered owner of some of our common stock. Mr. Margaronis and Mr. Zafirakis do not have dispositive or voting power with regard to shares held by Corozal Compania S.A. and, accordingly, are not considered to be beneficial owners of our common shares held through Corozal Compania Naviera S.A. Messrs. Lawes, Psaltis, Nachamkin and Kontoyannis, each a non-executive director of ours, and Messrs. Margaronis, Zafirakis and Michalopoulos, each executive officers of ours, each own less than 1% of our outstanding common stock.

As of March 20, 2013, we had 161 shareholders of record, 146 of which were located in the United States and held an aggregate of 65,820,605 of our common shares, representing 80% of our outstanding common shares. However, one of the U.S. shareholders of record is CEDE & CO., a nominee of The Depository Trust Company, which held 65,786,143 of our common shares as of March 20, 2013. Accordingly, we believe that the shares held by CEDE & CO. include common shares beneficially owned by both holders in the United States and non-U.S. beneficial owners. We are not aware of any arrangements the operation of which may at a subsequent date result in our change of control.

B. Related Party Transactions

Diana Enterprises Inc.

On June 1, 2010, DSS entered into two agreements with Diana Enterprises, a company controlled by our Chairman and Chief Executive Officer, Mr. Simeon Palios, to provide brokerage services. The first agreement was made on behalf of Diana Shipping Inc. for an annual fee of $1.7 million and the second agreement was made on behalf of Diana Containerships, for an annual fee of $1.04 million. During 2011 and 2010, brokerage fees amounted to $1.7 million and $1.6 million, respectively (of which 52,000 and $0.6 million, respectively, related to Diana Containerships). Effective January 19, 2011 after the partial spin-off of Diana Containerships, the relevant fees relating to Diana Containerships are being reimbursed to us by Diana Containerships and do not constitute part of our expenses. In 2012 and 2011, Diana Enterprises also received an amount of $0.8 million for each year as bonus for 2011 and 2010 performance. In February 2012, the agreement between Diana Enterprises and DSS was terminated and replaced with a new agreement under which Diana Enterprises ~~will provide~~provides brokerage services for an annual fee of $2.4 million to be applied retroactively from January 1, 2012. Our agreement with Diana Enterprises ~~has~~had a term of five years and the fees ~~are~~were paid quarterly in advance. Effective January 19, 2011 after the partial spin-off of Diana Containerships, the fees relating to Diana Containerships were reimbursed to us by Diana Containerships and did not constitute part of our expenses, until March 1, 2013, when the agreement was terminated. During 2012, 2011 and 2010 brokerage fees amounted to $2.4 million, $1.7 million and $1.6 million, respectively. In March 2013, the agreement between DSS and Diana Enterprises, for the services provided to us, was also terminated and it was replaced by a new agreement with effect from March 1, 2013 until March 31, 2014 and for a monthly fee of $0.2 million payable quarterly in advance.

Altair Travel Agency S.A.

Altair Travel Agency S.A., or Altair, an affiliated entity that is controlled by our Chairman and Chief Executive Officer, Mr. Simeon Palios, provides us with travel related services. Travel related expenses in 2012, 2011 ~~2010~~ and ~~2009~~2010 amounted to $3.0 million, $1.8 million ~~$1.6 million~~ and ~~$1.4~~$1.6 million, respectively. We believe that the fees that we pay to Altair Travel Agency S.A. are no greater than fees we would pay to an unrelated third party for comparable services in an arm's length transaction. Until September 30, 2010, we were also paying rent to Altair for the lease of office and parking space, which for 2010 ~~and 2009~~ amounted to about $76,000, and ~~$19,000, respectively,~~was classified in General and administrative expenses. InOn September 30, 2010, Altair sold its property to Universal Shipping and Real Estates Inc. and as of that date our lease agreement with Altair was terminated.

Administrative Services Agreement

On April 6, 2010, Diana Containerships entered into an Administrative Services Agreement with DSS, whereby DSS ~~as the Manager, provides~~provided to it accounting, administrative, financial reporting and other services necessary for the operation of its business. Diana Containerships ~~pays~~paid DSS a monthly fee of $10,000 for these administrative services. The initial term of the agreement iswas for a period of one year and ~~will~~ automatically ~~renew~~renewed for successive twelve month periods unless the agreement is terminated as provided therein. The agreement may be terminated by Diana Containerships (i) upon thirty days' written notice to the Manager; (ii) if the Manager materially breaches the agreement and such breach is not resolved within ninety days; (iii) if the Manager has been convicted of or entered a plea of guilty or nolo contendere with respect to a crime and such occurrence is materially injurious to Diana Containerships; (iv) if the holders of a majority of Diana Containerships's outstanding common shares elect to terminate the agreement; (v) if the Manager commits fraud, gross negligence or commits an act of willful misconduct, and Diana Containerships is materially injured thereby; (vi) if the Manager becomes insolvent; or (vi) if there is a "change of control" (as defined therein) of the Manager. The Administrative Services Agreement may be terminated by the Manager (i) after the expiration of the initial term, with six months' notice to Diana Containerships; (ii) if Diana Containerships materially breaches the agreement and such breach is not resolved within ninety days; or (iii) at any time upon the earlier to occur of (a) the occurrence of a change of control of Diana Containerships or (b) the Manager's receipt of written notice from Diana Containerships that a change of control will occur until sixty (60) days after the later of (1) the occurrence of such a change of control or (2) the Manager's receipt of the written notice in the preceding clause (b). If Diana Containerships has knowledge that a change of control of Diana Containerships will occur, it is required to give prompt written notice thereof to the Manager.its termination on March 1, 2013.

Prior to the partial spin-off of Diana Containerships on January 18, 2011 and its consequent de-consolidation from our financial statements, such administrative services fees received by DSS ~~have been~~were eliminated from our consolidated financial statements as intercompany transactions. ~~However, after~~After the de-consolidation of Diana Containerships and until March 1, 2013, such fees ~~constitute~~constituted part of our revenues and ~~are~~have been included in Other ~~Revenues, in the amount~~revenues. For 2012 and 2011, Other revenues amounted to of $2.4 million and of $1.1 million, ~~for 2011.~~respectively.

Vessel Management Agreements

DSS also ~~provides~~provided commercial and technical management services for Diana ~~Containerships's~~Containerships' vessels under separate vessel management agreements with Diana ~~Containerships's~~Containerships' vessel owning subsidiaries. The vessel management agreements ~~continue unless~~were terminated by either party giving three months' written notice; provided that Diana Containerships may terminate the agreement without such notice upon payment to the Manager of a fee equal to the average management fees paid to the Manager during the last three full months immediately preceding such termination.on March 1, 2013. Commercial management ~~includes,~~included, among other things, negotiating charters for vessels, monitoring the performance of vessels under charter, and managing Diana ~~Containerships's~~Containerships' relationships with charterers, obtaining insurance coverage for Diana ~~Containerships's~~Containerships' vessels, as well as supervision of the technical management of the vessels. Technical management ~~includes~~included managing day-to-day vessel operations, performing general vessel maintenance, ensuring regulatory and classification society compliance, supervising the maintenance and general efficiency of vessels, arranging the hire of qualified officers and crew, arranging and supervising drydocking and repairs, arranging for the purchase of supplies, spare parts and new equipment for vessels, appointing supervisors and technical consultants and providing technical support. Pursuant to each vessel management agreement, DSS ~~receives~~received a commission of 1% of the gross ~~charterhire~~hire and freight earned by ~~the~~each vessel and a technical management fee of $15,000 per vessel per month for ~~employed~~ vessels ~~and will receive $20,000 per vessel per month for laid-up vessels, if any.~~in operation.

Prior to the partial spin-off of Diana Containerships on January 18, 2011 and its consequent de-consolidation from our financial statements, such management fees received by DSS ~~have been~~were eliminated from our consolidated financial statements as intercompany transactions. ~~However, after~~After the de-consolidation of Diana Containerships and until March 1, 2013, such fees ~~constitute~~constituted part of our revenues and ~~are~~have been included in Other revenues. For 2012 and 2011, Other revenues ~~in the amount~~amounted to of $2.4 million and of $1.1 million, ~~for 2011.~~respectively.

C. Interests of Experts and Counsel

Not Applicable.

Item 8. Financial information

A. Consolidated statements and other financial information

See Item 18.

Legal Proceedings

DSS was indicted on March 20, 2013 by a federal grand jury in Norfolk, Virginia for alleged violations of law concerning maintenance of books and records and the handling of waste oils on the Thetis. The chief engineer and second assistant engineer of the vessel were also named as co-defendants in the indictment.

DSS has cooperated with the Department of Justice since notice of the alleged violations was received in September 2012, and intends to continue to cooperate with the Department of Justice as appropriate. If this matter results in a trial, DSS intends to defend any charges vigorously. We do not expect that these charges will have any material effect on our ongoing business, our relationships with its charterers or our other contractual arrangements. We remain committed to maintaining the highest level of operational standards on board our vessels.

WeExcept as described above, we have not been involved in any legal proceedings which may have, or have had, a significant effect on our business, financial position, results of operations or liquidity, nor are we aware of any proceedings that are pending or threatened which may have a significant effect on our business, financial position, results of operations or liquidity. From time to time, we may be subject to legal proceedings and claims in the ordinary course of business, principally personal injury and property casualty claims. We expect that these claims would be covered by insurance, subject to customary deductibles. Those claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources.

Dividend Policy

Our board of directors reviews and amends our dividend policy from time to time in light of our plans for future growth and other factors. As a result of market conditions in the international shipping industry and in line with our dividend policy, as of November 2008, our board of directors has suspended the payment of dividends. We believe that this suspension enhances our flexibility by permitting cash flow that would have been devoted to dividends to be used for opportunities that may arise in the current marketplace, such as funding our operations, acquiring vessels or servicing our debt. In December 2010, we distributed 2,667,015 shares of Diana Containerships, or 80% of our interest, as a stock dividend to all shareholders on a pro-rata basis and on January 3, 2011, Diana Containerships started to trade in the Nasdaq Global Market on a "when issued" basis and on January 19, 2011, on a "regular way" basis. As a result of this partial spin-off, Diana Containerships, effective January 19, 2011, is no longer consolidated to our consolidated financial statements.

Marshall Islands law generally prohibits the payment of dividends other than from surplus or when a company is insolvent or if the payment of the dividend would render the company insolvent. Also our credit facilities prohibit the payment of dividends should an event of default arise.

We believe that, under current law, any dividends that we have paid and may pay in the future from earnings and profits constitute "qualified dividend income" and as such are generally subject to a 15% United States federal income tax rate with respect to non-corporate United States shareholders. Distributions in excess of our earnings and profits will be treated first as a non-taxable return of capital to the extent of a United States shareholder's tax basis in its common stock on a dollar-for-dollar basis and thereafter as capital gain. We note that legislation was previously introduced in the United States Congress, which, if enacted in its present form, would preclude dividends received after the date of enactment from qualifying as "qualified dividend income." Please see the section of this annual report entitled "Taxation" under Item 10.E for additional information relating to the tax treatment of our dividend payments.

B. Significant Changes

There have been no significant changes since the date of the annual consolidated financial statements included in this annual report.

Item 9. The Offer and Listing

The trading market for shares of our common stock is the New York Stock Exchange, on which our shares trade under the symbol "DSX". The following table sets forth the required disclosure ~~for the last five full financial years~~ with respect to the high and low closing prices for shares of our common stock, as reported by the New York Stock Exchange:

	2012				2011				2010				2009				2008				2007					2013				2012				2011				2010				2009				2008
Period	High		Low		High		Low		High		Low		High		Low		High		Low		High		Low			High		Low		High		Low		High		Low		High		Low		High		Low		High		Low
Annual					$	12.64	$	6.93	$	16.27	$	11.19	$	18.52	$	10.15	$	31.66	$	7.24	$	44.82	$	15.79						$	9.87	$	6.31	$	12.64	$	6.93	$	16.27	$	11.19	$	18.52	$	10.15	$	31.66	$	7.24

1st quarter	$	9.87	$	7.80	$	12.64	$	11.50	$	16.27	$	13.26																		$	9.87	$	7.80	$	12.64	$	11.50
2nd quarter						12.13		10.70		15.82		11.19																			8.90		7.07		12.13		10.70
3rd quarter						11.13		7.42		13.39		11.46																			8.09		6.31		11.13		7.42
4th quarter						8.54		6.93		14.08		11.82																			7.64		6.53		8.54		6.93

September																														$	7.24	$	6.46
October					$	8.45	$	6.93																							7.24		6.53
November						8.54		7.25																							7.64		7.06
December						8.07		7.48																							7.50		7.20
January	$	8.44	$	7.80																						$	9.01	$	7.47
February		9.87		8.11																							9.05		8.44
March		9.24		8.41
April*		8.90		7.52
March*																											9.24		8.35

* For the period from April 1, 2012 until April 19, 2012.
* For the period from March 1, 2013 until March 20, 2013.																									* For the period from March 1, 2013 until March 20, 2013.

Item 10. Additional Information

A. Share Capital

Not Applicable.

B. Memorandum and articles of association

Our current amended and restated articles of incorporation have been filed as exhibit 1 to our Form 6-K filed with the Securities and Exchange Commission on May 29, 2008 with file number 001-32458, and our current amended and restated bylaws have been filed as exhibit 1.2 to our Form 6-K filed with the Securities and Exchange Commission on December 4, 2007 with file number 001-32458. The information contained in these exhibits is incorporated by reference herein.

Information regarding the rights, preferences and restrictions attaching to each class of the shares is described in section "Description of Capital Stock" in our Registration Statement on Form F-1 filed with the Securities and Exchange Commission on November 23, 2005 with file number 333-129726, provided that since the date of that Registration Statement, the number of our outstanding shares of common stock has increased to ~~82,989,667.~~82,841,370. We have also filed with the Securities and Exchange Commission our amended and restated stockholders rights agreement as exhibit 4.5 to our Form 8-A12B/A filed on October 7, 2008 and amended on October 10, 2008, with file number 001-32458.

C. Material Contracts

Attached as exhibits to this annual report are the contracts we consider to be both material and not entered into in the ordinary course of business. Other than these agreements, we have no material contracts, other than contracts entered into in the ordinary course of business, to which the Company or any member of the group is a party. A description of these is included in our description of our agreements generally: we refer you to Item ~~5. "Loan Facilities"~~
5.B for a discussion of our loan facilities, ~~Item 4.A for a discussion of our agreement with 4 Sweet Dreams S.A.,~~ and item 7.B for a discussion of our agreements with companies controlled by our Chairman and Chief Executive Officer, Mr. Simeon Palios and by Diana Containerships.

D. Exchange Controls

Under Marshall Islands, Panamanian, Cypriot and Greek law, there are currently no restrictions on the export or import of capital, including foreign exchange controls or restrictions that affect the remittance of dividends, interest or other payments to non-resident holders of our common stock.

E. Taxation

United States Taxation

The following discussion is based upon the provisions of the U.S. Internal Revenue Code of 1986, as amended ~~or the Code,~~(the "Code"), existing and proposed U.S. Treasury Department regulations, ~~or the Treasury Regulations,~~(the "Treasury Regulations"), administrative rulings, pronouncements and judicial decisions, all as of the date of this ~~annual report.~~Annual Report. This discussion assumes that we do not have an office or other fixed place of business in the United States. Unless the context otherwise requires, the reference to Company below shall be meant to refer to both the Company and its vessel owning and operating subsidiaries.

Taxation of the Company's Shipping Income

In General

The Company anticipates that it will derive substantially all of its gross income from the use and operation of vessels in international commerce and that this income will principally consist of freights from the transportation of cargoes, hire or lease from time or voyage charters and the performance of services directly related thereto, which the Company refers to as "Shipping Income."

Shipping Income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States will be considered to be 50% derived from sources within the United States. Shipping Income attributable to transportation that both begins and ends in the United States will be considered to be 100% derived from sources within the United States. The Company is not permitted by law to engage in transportation that gives rise to 100% U.S. source Shipping Income. Shipping Income attributable to transportation exclusively between non-U.S. ports will be considered to be 100% derived from sources outside the United States. Shipping Income derived from sources outside the United States will not be subject to U.S. federal income tax.

Based upon the Company's anticipated shipping operations, the Company's vessels will operate in various parts of the world, including to or from U.S. ports. Unless exempt from U.S. federal income taxation under Section 883 of the Code, the Company will be subject to U.S. federal income taxation, in the manner discussed below, to the extent its Shipping Income is considered derived from sources within the United States.

In the year ended December 31, ~~2011,~~2012, approximately ~~4.2%~~6.5% of the Company's shipping income was attributable to the transportation of cargoes either to or from a U.S. port. Accordingly, ~~2.1%~~3.3% of the Company's shipping income would be treated as derived from U.S. sources for the year ended December 31, ~~2011.~~2012. In the absence of exemption from U.S. federal income tax under Section 883 of the Code, the Company would have been subject to a 4% tax on its gross U.S. source Shipping Income, equal to approximately ~~$0.2 million~~$289 thousand for the year ended December 31, ~~2011.~~2012.

Application of Exemption under Section 883 of the Code

Under the relevant provisions of Section 883 of the Code and the final Treasury Regulations promulgated thereunder, a foreign corporation will be exempt from U.S. federal income taxation on its U.S. source Shipping Income if:

(1)

It is organized in a qualified foreign country which, as defined, is one that grants an equivalent exemption from tax to corporations organized in the United States in respect of the Shipping Income for which exemption is being claimed under Section 883 of the Code, or the ~~Country~~"Country of Organization ~~Requirement;~~Requirement"; and

(2)

It can satisfy any one of the following two stock ownership requirements:

●

more than 50% of its stock, in terms of value, is beneficially owned by qualified shareholders which, as defined, includes individuals who are residents of a qualified foreign country, or the ~~50%~~"50% Ownership ~~Test;~~Test"; or

●

its stock is "primarily and regularly" traded on an established securities market located in the United States or a qualified foreign country, or the ~~Publicly~~"Publicly Traded ~~Test.~~Test".

The U.S. Treasury Department has recognized the Marshall Islands, Panama and Cyprus the countries of incorporation of each of the Company and its subsidiaries that earns Shipping Income, as a qualified foreign country. Accordingly, the Company and each of the subsidiaries satisfy the Country of Organization Requirement.

For the ~~2011 tax~~2012 taxable year, the Company believes that it is unlikely that the 50% Ownership Test was satisfied. Therefore, the eligibility of the Company and each subsidiary to qualify for exemption under Section 883 of the Code is wholly dependent upon the Company's ability to satisfy the Publicly Traded Test.

Under the Treasury Regulations, stock of a foreign corporation is considered "primarily traded" on an established securities market in a country if the number of shares of each class of stock that is traded during the taxable year on all established securities markets in that country exceeds the number of shares in each such class that is traded during that year on established securities markets in any other single country. The Company's common stock, which is the sole class of issued and outstanding stock, was "primarily traded" on the New York Stock Exchange, or "NYSE", during the ~~2011~~2012 taxable year.

Under the Treasury Regulations, the Company's common stock will be considered to be "regularly traded" on the NYSE if: (1) more than 50% of its common stock, by voting power and total value, is listed on the NYSE, referred to as the "Listing Threshold", (2) its common stock is traded on the NYSE, other than in minimal quantities, on at least 60 days during the taxable year (or one-sixth of the days during a short taxable year), which is referred to as the "Trading Frequency Test"; and (3) the aggregate number of shares of its common stock traded on the NYSE during the taxable year is at least 10% of the average number of shares of its common stock outstanding during such taxable year (as appropriately adjusted in the case of a short taxable year), which is referred to as the "Trading Volume Test". The Trading Frequency Test and Trading Volume Test are deemed to be satisfied under the Treasury Regulations if the Company's common stock is regularly quoted by dealers making a market in the common stock.

The Company believes that its common stock has satisfied the Listing Threshold, as well as the Trading Frequency Test and Trading Volume Tests, during the ~~2011~~2012 taxable year.

Notwithstanding the foregoing, the Treasury Regulations provide, in pertinent part, that stock of a foreign corporation will not be considered to be "regularly traded" on an established securities market for any taxable year during which 50% or more of such stock is owned, actually or constructively under specified stock attribution rules, on more than half the days during the taxable year by persons, or "5% Shareholders", who each own 5% or more of the value of such stock, or the "5% Override Rule." For purposes of determining the persons who are 5% Shareholders, a foreign corporation may rely on Schedules 13D and 13G filings with the U.S. Securities and Exchange Commission.

~~For more than half~~During the ~~days during the 2011~~2012 taxable year, only ~~18.1%~~39.7% of the Company's common stock was owned by 5% Shareholders. Therefore, the Company is not subject to the 5% Override Rule, and therefore the Company believes that it has satisfied the Publicly Traded Test for the ~~2011~~2012 taxable year. However, there is no assurance that the Company will continue to satisfy the Publicly Traded Test in future taxable years. For example, the Company could be subject to the 5% Override Rule if another 5% Shareholder in combination with the Company's existing 5% Shareholders were to own 50% or more of the Company's common stock. In such a case, the Company would be subject to the 5% Override Rule unless it could establish that, among the shares of the common stock owned by the 5% Shareholders, sufficient shares are owned by qualified shareholders, for purposes of Section 883 of the Code, to preclude non-qualified shareholders from owning 50% or more of the Company's common stock for more than half the number of days during the taxable year. The requirements of establishing this exception to the 5% Override Rule are onerous and there is no assurance the Company will be able to satisfy them.

Based on the foregoing, the Company believes that it satisfied the Publicly Traded Test and therefore believes that it was exempt from U.S. federal income tax under Section 883 of the Code, during the ~~2011~~2012 taxable year, and intends to take this position on its ~~2011~~2012 U.S. federal income tax returns.

Taxation in Absence of Exemption Under Section 883 of the Code

To the extent the benefits of Section 883 of the Code are unavailable with respect to any item of U.S. source Shipping Income, the Company and each of its subsidiaries would be subject to a 4% tax imposed on such income by Section 887 of the Code on a gross basis, without the benefit of deductions, which is referred to as the "4% Gross Basis Tax Regime". Since under the sourcing rules described above, no more than 50% of the Company's Shipping Income would be treated as being derived from U.S. sources, the maximum effective rate of U.S. federal income tax on the Company's Shipping Income would never exceed 2% under the 4% Gross Basis Tax Regime.

Based on its U.S. source Shipping Income for the ~~2011~~2012 taxable year and in the absence of exemption under Section 883 of the Code, the Company would be subject to approximately ~~$0.2 million~~$289 thousand of U.S. federal income tax under the 4% Gross Basis Tax Regime.

The 4% Gross Basis Tax Regime would not apply to U.S. source Shipping Income to the extent considered to be "effectively connected" with the conduct of a U.S. trade or business. In the absence of exemption under Section 883 of the Code, such "effectively connected" U.S. source Shipping Income, net of applicable deductions, would be subject to U.S. federal income tax currently imposed at corporate rates of up to 35%. In addition, earnings "effectively connected" with the conduct of such U.S. trade or business, as determined after allowance for certain adjustments, and certain interest paid or deemed paid attributable to the conduct of the U.S. trade or business may be subject to U.S. federal branch profits tax imposed at a rate of 30%. The Company's U.S. source Shipping Income would be considered "effectively connected" with the conduct of a U.S. trade or business only if: (1) the Company has, or is considered to have, a fixed place or business in the United States involved in the earning of Shipping Income; and (2) substantially all of the Company's U.S. source Shipping Income is attributable to regularly scheduled transportation, such as the operation of a vessel that followed a published schedule with repeated sailings at regular intervals between the same points for voyages that begin or end in the United States, or, in the case of income from the chartering of a vessel, is attributable to a fixed place of business in the United States.

We do not intend to have, or permit circumstances that would result in having a vessel operating to the United States on a regularly scheduled basis. Based on the foregoing and on the expected mode of our shipping operations and other activities, we believe that none of our U.S. source Shipping Income will be effectively connected with the conduct of a U.S. trade or business.

Gain on Sale of Vessels

Regardless of whether we qualify for exemption under Section 883 of the Code, we will not be subject to U.S. federal income taxation with respect to gain realized on a sale of a vessel, provided the sale is considered to occur outside of the United States under U.S. federal income tax principles. In general, a sale of a vessel will be considered to occur outside of the United States for this purpose if title to the vessel, and risk of loss with respect to the vessel, pass to the buyer outside of the United States. It is expected that any sale of a vessel by us will be considered to occur outside of the United States.

Taxation of U.S. Holders

The following is a discussion of the material U.S. federal income tax considerations relevant to an investment decision by a U.S. Holder, as defined below, with respect to our common stock. This discussion does not purport to deal with the tax consequences of owning our common stock to all categories of investors, some of which may be subject to special rules. You are encouraged to consult your own tax advisors concerning the overall tax consequences arising in your own particular situation under U.S. federal, state, local or foreign law of the ownership of our common stock.

As used herein, the term "U.S. Holder" means a beneficial owner of our common stock that (i) is a U.S. citizen or resident, a U.S. corporation or other U.S. entity taxable as a corporation, an estate, the income of which is subject to U.S. federal income taxation regardless of its source, or a trust if a court within the United States is able to exercise primary jurisdiction over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust and (ii) owns the common stock as a capital asset, generally, for investment purposes.

If a partnership holds our common stock, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. If you are a partner in a partnership holding our common stock, you are encouraged to consult your own tax advisor on this issue.

Distributions

Subject to the discussion of passive foreign investment companies below, any distributions made by the Company with respect to its common stock to a U.S. Holder will generally constitute dividends, which may be taxable as ordinary income or "qualified dividend income" as described in more detail below, to the extent of the Company's current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of the Company's earnings and profits will be treated first as a non-taxable return of capital to the extent of the U.S. Holder's tax basis in his common stock on a dollar-for-dollar basis and thereafter as capital gain. Because the Company is not a U.S. corporation, U.S. Holders that are corporations will not be entitled to claim a dividends-received deduction with respect to any distributions they receive from the Company.

Dividends paid to a U.S. Holder which is an individual, trust, or estate, (areferred to herein as a "U.S. Non-Corporate ~~Holder")~~Holder," will generally be treated as "qualified dividend income" that is taxable to Holders at preferential U.S. federal income tax rates, ~~(currently through the end of 2012)~~ provided that (1) the common stock is readily tradable on an established securities market in the United States (such as the NYSE on which the common stock is listed); (2) the Company is not a passive foreign investment company for the taxable year during which the dividend is paid or the immediately preceding taxable year (which the Company does not believe it is, has been or will be); (3) the U.S. Non-Corporate Holder has owned the common stock for more than 60 days in the 121-day period beginning 60 days before the date on which the common stock becomes ex-dividend; and (4) the U.S. Non-Corporate Holder is not under an obligation (whether pursuant to a short sale or otherwise) to make payments with respect to positions in substantially similar or related property. There is no assurance that any dividends paid on our common stock will be eligible for these preferential rates in the hands of a U.S. Non-Corporate Holder. Legislation has been previously introduced in the U.S. Congress which, if enacted in its present form, would preclude the dividends paid by the Company from qualifying for such preferential rates prospectively from the date of the enactment. Further, in the absence of legislation extending the term of the preferential tax rates for qualified dividend income, all dividends received by a taxpayer in tax years beginning on January 1, 2013 or later will be taxed at ordinary graduated tax rates. Any dividends paid by the Company which are not eligible for these preferential rates will be taxed as ordinary income to a U.S. Non-Corporate Holder.

Sale, Exchange or other Disposition of Common Stock

Assuming the Company does not constitute a passive foreign investment company for any taxable year, a U.S. Holder generally will recognize taxable gain or loss upon a sale, exchange or other disposition of the Company's common stock in an amount equal to the difference between the amount realized by the U.S. Holder from such sale, exchange or other disposition and the U.S. Holder's tax basis in such stock. Such gain or loss will be treated as long-term capital gain or loss if the U.S. Holder's holding period in the common stock is greater than one year at the time of the sale, exchange or other disposition. Long-term capital gain of a U.S. Non-Corporate Holder are taxable at preferential U.S. Federal income tax rates. A U.S. Holder's ability to deduct capital losses is subject to certain limitations.

3.8% Tax on Net Investment Income

For taxable years beginning after December 31, 2012, a U.S. Holder that is an individual, estate, or, in certain cases, a trust, will generally be subject to a 3.8% tax on the lesser of (1) the U.S. Holder's net investment income for the taxable year and (2) the excess of the U.S. Holder's modified adjusted gross income for the taxable year over a certain threshold (which in the case of individuals is between $125,000 and $250,000). A U.S. Holder's net investment income will generally include distributions made by the Company which constitute a dividend for U.S. federal income tax purposes and gain realized from the sale, exchange or other disposition of our common stock. This tax is in addition to any income taxes due on such investment income.

If you are a U.S. Holder that is an individual, estate or trust, you are encouraged to consult your tax advisors regarding the applicability of the 3.8% tax on net investment income to the ownership and disposition of our common stock.

Passive Foreign Investment Company Status and Significant Tax Consequences

Special U.S. federal income tax rules apply to a U.S. Holder that holds stock in a foreign corporation classified as a passive foreign investment company, or a "PFIC", for U.S. federal income tax purposes. In general, the Company will be treated as a PFIC with respect to a U.S. Holder if, for any taxable year in which such Holder held the Company's common stock, either:

●

at least 75% of the Company's gross income for such taxable year consists of passive income (e.g., dividends, interest, capital gains and rents derived other than in the active conduct of a rental business), or

●

at least 50% of the average value of the assets held by the corporation during such taxable year produce, or are held for the production of, such passive income.

For purposes of determining whether the Company is a PFIC, the Company will be treated as earning and owning its proportionate share of the income and assets, respectively, of any of its subsidiary corporations in which it owns at least 25% of the value of the subsidiary's stock. Income earned, or deemed earned, by the Company in connection with the performance of services would not constitute passive income. By contrast, rental income would generally constitute passive income unless the Company is treated under specific rules as deriving its rental income in the active conduct of a trade or business.

Based on the Company's current operations and future projections, the Company does not believe that it is, nor does it expect to become, a PFIC with respect to any taxable year. Although there is no legal authority directly on point, the Company's belief is based principally on the position that, for purposes of determining whether the Company is a PFIC, the gross income the Company derives or is deemed to derive from the time chartering and voyage chartering activities of its wholly-owned subsidiaries should constitute services income, rather than rental income. Correspondingly, the Company believes that such income does not constitute passive income, and the assets that the Company or its wholly-owned subsidiaries own and operate in connection with the production of such income, in particular, the vessels, do not constitute assets that produce or are held for the production of passive income for purposes of determining whether the Company is a PFIC. The Company believes there is substantial legal authority supporting its position consisting of case law and Internal Revenue Service, or the "IRS", pronouncements concerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes. However, there is also authority which characterizes time charter income as rental income rather than services income for other tax purposes. It should be noted that in the absence of any legal authority specifically relating to the statutory provisions governing PFICs, the IRS or a court could disagree with this position. In addition, although the Company intends to conduct its affairs in a manner to avoid being classified as a PFIC with respect to any taxable year, there can be no assurance that the nature of its operations will not change in the future.

As discussed more fully below, if the Company were to be treated as a PFIC for any taxable year, a U.S. Holder would be subject to different U.S. federal income taxation rules depending on whether the U.S. Holder makes an election to treat the Company as a "Qualified Electing Fund," which election is referred to as a "QEF Election." As discussed below, as an alternative to making a QEF Election, a U.S. Holder should be able to make a "mark-to-market" election with respect to the common stock, which election is referred to as a "Mark-to-Market Election". In addition, if the Company were to be treated as a PFIC, ~~for any taxable year after 2010,~~ a U.S. Holder would be required to ~~file~~make an ~~annual report with the IRS for that year with~~informational return filing in respect ~~to such Holder's~~of his common ~~shares.~~stock.

Taxation of U.S. Holders Making a Timely QEF Election

If a U.S. Holder makes a timely QEF Election, which U.S. Holder is referred to as an "Electing Holder", the Electing Holder must report each year for U.S. federal income tax purposes his pro rata share of the Company's ordinary earnings and net capital gain, if any, for the Company's taxable year that ends with or within the taxable year of the Electing Holder, regardless of whether or not distributions were received by the Electing Holder from the Company. The Electing Holder's adjusted tax basis in the common stock will be increased to reflect amounts included in the Electing Holder's income. Distributions received by an Electing Holder that had been previously taxed will result in a corresponding reduction in the adjusted tax basis in the common stock and will not be taxed again once distributed. An Electing Holder would generally recognize capital gain or loss on the sale, exchange or other disposition of the common stock.

Taxation of U.S. Holders Making a Mark-to-Market Election

Alternatively, if the Company were to be treated as a PFIC for any taxable year and, as anticipated, the common stock is treated as "marketable stock," a U.S. Holder would be allowed to make a Mark-to-Market Election with respect to the Company's common stock. If that election is made, the U.S. Holder generally would include as ordinary income in each taxable year the excess, if any, of the fair market value of the common stock at the end of the taxable year over such Holder's adjusted tax basis in the common stock. The U.S. Holder would also be permitted an ordinary loss in respect of the excess, if any, of the U.S. Holder's adjusted tax basis in the common stock over its fair market value at the end of the taxable year, but only to the extent of the net amount previously included in income as a result of the Mark-to-Market Election. A U.S. Holder's tax basis in his common stock would be adjusted to reflect any such income or loss amount. Gain realized on the sale, exchange or other disposition of the common stock would be treated as ordinary income, and any loss realized on the sale, exchange or other disposition of the common stock would be treated as ordinary loss to the extent that such loss does not exceed the net mark-to-market gains previously included by the U.S. Holder.

Taxation of U.S. Holders Not Making a Timely QEF Election or Mark-to-Market Election

Finally, if the Company were to be treated as a PFIC for any taxable year, a U.S. Holder who does not make either a QEF Election or a Mark-to-Market Election for that year, whom is referred to as a "Non-Electing Holder", would be subject to special U.S. federal income tax rules with respect to (1) any excess distribution (i.e., the portion of any distributions received by the Non-Electing Holder on the common stock in a taxable year in excess of 125% of the average annual distributions received by the Non-Electing Holder in the three (3) preceding taxable years, or, if shorter, the Non-Electing Holder's holding period for the common stock), and (2) any gain realized on the sale, exchange or other disposition of the common stock. Under these special rules:

●

the excess distribution or gain would be allocated ratably over the Non-Electing Holder's aggregate holding period for the common stock;

●

the amount allocated to the current taxable year and any taxable years before the Company became a PFIC would be taxed as ordinary income; and

●

the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed tax deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year.

These penalties would not apply to a pension or profit sharing trust or other tax-exempt organization that did not borrow funds or otherwise utilize leverage in connection with its acquisition of the common stock. If a Non-Electing Holder who is an individual dies while owning the common stock, such Holder's successor generally would not receive a step-up in tax basis with respect to such stock.

U.S. Federal Income Taxation of "Non-U.S. Holders"

A beneficial owner of our common stock that is not a U.S. Holder (other than a partnership) is referred to herein as a "Non-U.S. Holder."

Dividends on Common Stock

Non-U.S. Holders generally will not be subject to U.S. federal income or withholding tax on dividends received from us with respect to our common stock, unless that income is effectively connected with the Non-U.S. Holder's conduct of a trade or business in the United States. If the Non-U.S. Holder is entitled to the benefits of a U.S. income tax treaty with respect to those dividends, that income is taxable in the United States only if attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States.

Sale, Exchange or Other Disposition of Common Stock

Non-U.S. Holders generally will not be subject to U.S. federal income or withholding tax on any gain realized upon the sale, exchange or other disposition of our common stock, unless:

●

the gain is effectively connected with the Non-U.S. Holder's conduct of a trade or business in the United States. If the Non-U.S. Holder is entitled to the benefits of a U.S. income tax treaty with respect to that gain, the gain is taxable in the United States only if attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States; or

●

the Non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition and other conditions are met.

If the Non-U.S. Holder is engaged in a U.S. trade or business for U.S. federal income tax purposes, the income from our common stock, including dividends and the gain from the sale, exchange or other disposition of the common stock, that is effectively connected with the conduct of that U.S. trade or business will generally be subject to U.S. federal income tax in the same manner as discussed in the previous section relating to the taxation of U.S. Holders. In addition, in the case of a corporate Non-U.S. Holder, such Holder's earnings and profits that are attributable to the effectively connected income, subject to certain adjustments, may be subject to an additional U.S. federal branch profits tax at a rate of 30%, or at a lower rate as may be specified by an applicable U.S. income tax treaty.

Backup Withholding and Information Reporting

In general, dividend payments, or other taxable distributions, made within the United States to a ~~Holder~~holder will be subject to U.S. federal information reporting requirements. Such payments will also be subject to U.S. federal "backup withholding" if paid to a non-corporate U.S. ~~Non-Corporate Holder~~holder who:

●

fails to provide an accurate taxpayer identification number;

●

is notified by the IRS that he has failed to report all interest or dividends required to be shown on his U.S. federal income tax returns; or

●

in certain circumstances, fails to comply with applicable certification requirements.

If a ~~Holder~~holder sells his common stock to or through a U.S. office of a broker, the payment of the proceeds is subject to both backup withholding and information reporting unless the ~~Holder~~holder establishes an exemption. If a ~~Holder~~holder sells his common stock through a non-U.S. office of a non-U.S. broker and the sales proceeds are paid to the ~~Holder~~holder outside the United States, then information reporting and backup withholding generally will not apply to that payment. However, information reporting requirements, but not backup withholding, will apply to a payment of sales proceeds, including a payment made to a ~~Holder~~holder outside the United States, if the ~~Holder~~holder sells his common stock through a non-U.S. office of a broker that is a U.S. person or has some other contacts with the United States.

Backup withholding is not an additional tax. Rather, a taxpayer generally may obtain a refund of any amounts withheld under backup withholding rules that exceed the taxpayer's U.S. federal income tax liability by filing a refund claim with the IRS.

Pursuant to recently enacted legislation, ~~individuals~~U.S. Holders who are ~~U.S. Holders~~individuals (and to the extent specified in applicable Treasury ~~regulations, certain individuals who are Non-U.S. Holders and~~Regulations, certain U.S. entities) who hold "specified foreign financial assets" (as defined in Section 6038D of the Code) are required to file IRS Form 8938 with information relating to the asset for each taxable year in which the aggregate value of all such assets exceeds $75,000 at any time during the taxable year or $50,000 on the last day of the taxable year (or such higher dollar amount as prescribed by applicable Treasury ~~regulations)~~Regulations). Specified foreign financial assets would include, among other assets, our common ~~shares,~~stock, unless the ~~shares~~common stock is held through an account maintained with a U.S. financial institution. Substantial penalties apply to any failure to timely file IRS Form 8938, unless the failure is shown to be due to reasonable cause and not due to willful neglect. Additionally, in the event a U.S. Holder who is an individual ~~U.S. Holder~~ (and to the extent specified in applicable Treasury regulations, ~~an individual Non-U.S. Holder or~~ a U.S. entity) that is required to file IRS Form 8938 does not file such form, the statute of limitations on the assessment and collection of U.S. federal income taxes of such holder for the related tax year may not close until three (3) years after the date that the required information is filed. ~~U.S. Holders (including U.S. entities) and Non-U.S. Holders are encouraged consult their own tax advisors regarding their reporting obligations under this legislation.~~

Marshall Islands Tax Considerations

We are incorporated in the Marshall Islands. Under current Marshall Islands law, we are not subject to tax on income or capital gains, and no Marshall Islands withholding tax will be imposed upon payments of dividends by us to our shareholders.

F.Dividends and paying agents

Not Applicable.

G. Statement by experts

Not Applicable.

H. Documents on display

We file reports and other information with the SEC. These materials, including this annual report and the accompanying exhibits, may be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549, or from the SEC's website http://www.sec.gov. You may obtain information on the operation of the public reference room by calling 1 (800) SEC-0330 and you may obtain copies at prescribed rates.

I. Subsidiary information

Not Applicable.

Item 11. Quantitative and Qualitative Disclosures about Market Risk

Interest Rates

We are exposed to market risks associated with changes in interest rates relating to our loan facilities. At December 31, ~~2011,~~2012, we had ~~$374.3~~$460.9 million of principal balance outstanding under our loan agreements of which $290.7 million was under our revolving credit facility with the Royal Bank of Scotland; $32.8 million was under our loan facility with Bremer Landesbank, $35.8 million was under our loan facility with Deutsche Bank AG and $15.0 million was under the loan facility with the Emporiki Bank of Greece S.A. Total interest incurred under our long-term debt in 2011 amounted to $5.1 million, out of which $0.6 million was capitalized. Interest costs, net of interest capitalized, are included in Interest and finance costs in our consolidated statement of income.as follows:

In 2011, the weighted average interest rate for our facilities was 1.37% and the respective interest rates ranged from 1.0% to 2.9%, including margins. An average increase of 1% in 2011 interest rates would have resulted in interest costs of $8.8 million, instead of $5.1 million, an increase of 73%.

The weighted average interest rate relating to our revolving credit facility with The Royal Bank of Scotland was 1.07% and the respective interest rates ranged from 1.0% to 1.1%, including margins. An average increase of 1% in 2011 interest rates would have resulted in interest expenses of $6.1 million, instead of $3.1 million, an increase of 97%.

The weighted average interest rate relating to our loan facility with Bremer Landesbank was 2.46% and the respective interest rates ranged from 2.4% to 2.6%, including margins. An average increase of 1% in 2011 interest rates would have resulted in interest expenses of $1.2 million, instead of $0.9 million, an increase of 33%.

The weighted average interest rate relating to our loan facility with Deutsche Bank was 2.71% and the respective interest rates ranged from 2.7% to 2.9%, including margins. An average increase of 1% in 2011 interest rates would have resulted in interest expenses of $1.4 million, instead of $1.0 million, an increase of 40%.

The weighted average interest rate relating to our loan facility with Emporiki Bank of Greece S.A. was 1.34% and the respective interest rate was 1.3% including margins. An average increase of 1% in 2011 interest rates would have resulted in the same interest expenses of $0.1 million.

	Total			RBS			Bremer			Deutsche			C-exim / DnB			Credit Agricole			Nordea
	Amounts in millions of U.S. Dollars
Loan outstanding	$	460.9		$	270.0		$	29.2		$	33.4		$	69.1		$	14.0		$	45.2
Weighted average interest rate		1.6	%		1.1	%		2.6	%		2.9	%		2.9	%		1.2	%		2.7	%
Interest rate range	1.1% to 3.1%			1.1% to 1.1%			2.5% to 2.7%			2.7% to 2.9%			2.8% to 3.0%			1.2% to 1.3%			2.7% to 3.1%
Total interest	$	7.3		$	3.2		$	0.8		$	1.0		$	1.6		$	0.2		$	0.5
Interest capitalized	$	0.3
Interest expense given 1% increase on interest rates	$	11.8		$	6.1		$	1.1		$	1.4		$	2.1		$	0.3		$	0.8

Currently, we have ~~$290.7~~$270.0 million of the principal balance outstanding under our credit facility with the RBS; ~~$31.9~~$28.3 million outstanding under our facility with Bremer, ~~$35.2~~$32.8 million outstanding under our facility with Deutsche, ~~$14.5~~$67.8 million outstanding under our facility with ~~Emporiki, $37.5~~China Export-Import Bank and DnB Bank, $13.5 million outstanding under our facility with ~~CEXIM~~Credit Agricole and ~~DnB NOR and $16.1~~$44.7 million outstanding under our ~~facility~~facilities with Nordea.

We will continue to have debt outstanding, which could impact our results of operations and financial condition. We expect to manage any exposure in interest rates through our regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments.

In May 2009, we entered into a five-year zero cost collar agreement, novated in March 2012, with a floor at 1% and a cap at 7.8% of a notional amount of $100.0 million to manage our exposure to interest rate changes related to our borrowings. The collar agreement is considered as an economic hedge agreement as it does not meet the criteria of hedge accounting; therefore, the changes in its fair value are recognized in earnings. As of December 31, 2012 and 2011 ~~and 2010~~ the ~~aggregate~~ fair value of the ~~collar resulted in a loss of~~swap was $1.0 ~~million and $1.0 million, respectively.~~million. Also ~~during 2011, 2010 and 2009~~ we incurred unrealized ~~losses from the swap amounting to about $39,000,~~gain of $36,495 in 2012, unrealized loss of $39,410 in 2011 and unrealized loss of $0.8 million ~~and $0.2~~in 2010. Realized loss was $0.6 million ~~respectively,~~for 2012, and ~~realized losses of~~ $0.7 million ~~$0.7 million~~for 2011 and ~~$0.3 million, respectively.~~2010. Should LIBOR interest rates remain at levels below 1% which is our floor, we will continue to incur losses from this financial instrument.

Currency and Exchange Rates

We generate all of our revenues in U.S. dollars but currently incur about half of our operating expenses (around ~~47%~~46% in ~~2011)~~2012) and a significant portion of our general and administrative expenses (around ~~41%~~38% in ~~2011)~~2012) in currencies other than the U.S. dollar, primarily the Euro. For accounting purposes, including throughout this annual report, expenses incurred in Euros are converted into U.S. dollars at the exchange rate prevailing on the date of each transaction. Because a significant portion of our expenses are incurred in currencies other than the U.S. dollar, our expenses may from time to time increase relative to our revenues as a result of fluctuations in exchange rates, particularly between the U.S. dollar and the Euro, which could affect the amount of net income that we report in future periods.

While we historically have not mitigated the risk associated with exchange rate fluctuations through the use of financial derivatives, we may determine to employ such instruments from time to time in the future in order to minimize this risk. Our use of financial derivatives would involve certain risks, including the risk that losses on a hedged position could exceed the nominal amount invested in the instrument and the risk that the counterparty to the derivative transaction may be unable or unwilling to satisfy its contractual obligations, which could have an adverse effect on our results. Currently, we do not consider the risk from exchange rate fluctuations to be material for our results of operations and therefore, we are not engaged in extensive derivative instruments to hedge a considerable part of those expenses.

Item 12. Description of Securities Other than Equity Securities

Not Applicable.

PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies

None.

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

None.

Item 15. Controls and Procedures

a) Disclosure Controls and Procedures

Management, including our Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this annual report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that it files or submits to the SEC under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

b) Management's Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. The Company's internal control over financial reporting is a process designed under the supervision of the Company's Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States.

Management has conducted an assessment of the effectiveness of the Company's internal control over financial reporting based on the framework established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has determined that the Company's internal control over financial reporting as of December 31, ~~2011~~2012 is effective.

The registered public accounting firm that audited the financial statements included in this annual report containing the disclosure required by this Item has issued an attestation report on management's assessment of our internal control over financial reporting.

~~c) Attestation Report of Independent Registered Public Accounting Firm~~

~~F-22~~

~~DIANA SHIPPING INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~December 31, 2011~~

~~(Expressed in thousands of U.S. Dollars – except share and per share data, unless otherwise stated)~~$112.

In July 2012, Guam entered into a memorandum of agreement to purchase from an unaffiliated third party, a Post-Panamax dry bulk carrier, for the purchase price of $25,000. The vessel, was renamed "Amphitrite" and was delivered to the Company by the sellers on August 14, 2012. Pre-delivery expenses amounted to $96.

In October 2012, Palau entered into a memorandum of agreement to purchase from an unaffiliated third party, a Post-Panamax dry bulk carrier, for the purchase price of $24,600. The vessel, was renamed "Polymnia" and was delivered to the Company by the sellers on November 20, 2012. Pre-delivery expenses amounted to $119.

~~Fourteen~~As of December 31, 2012, part of the Company's ~~vessels,~~fleet, having ~~a total~~an aggregate carrying value of $397,547 as of December 31, 2011, have been provided as collateral to secure the revolving credit facility with the Royal Bank of Scotland discussed in Note 9. The vessels "Houston", "New York" and "Arethusa", having a carrying value of $57,651, $58,609 and $29,456, respectively, as of December 31, 2011 have$894,019 has been provided as collateral to secure the loan facilities ~~with Bremer Landesbank, Deutsche Bank AG and Emporiki Bank of Greece S.A., respectively,~~ discussed in Note 9.

7.	Property and equipment, net

The amounts in the accompanying consolidated balance sheets are analyzed as follows:

Property and Equipment Accumulated Depreciation Net Book Value

Balance, December 31, 2009 $ 518 $ (318 ) $ 200

- Land 11,109 - 11,109
- Building acquisition 10,391 10,391
- Additions in equipment 314 314
- Depreciation for the period - (172 ) (172 )
Balance, December 31, 2010 $ 22,332 $ (490 ) $ 21,842

- Additions in equipment and building improvements 220 - 220
- Depreciation for the period - (403 ) (403 )
Balance, December 31, 2011 $ 22,552 $ (893 ) $ 21,659

On October 21, 2010, the Company's wholly owned subsidiaries Universal and DSA, which were acquired from Poinsettia Management Ltd. ("Poinsettia"), an entity affiliated with the Company's CEO and Chairman and with other executives, transferred to DSS their property in land of an aggregate value of $11,109 and building of an aggregate value of $10,391.

	Property and Equipment		Accumulated Depreciation			Net Book Value

Balance, December 31, 2010	$	22,332	$	(490	)	$	21,842

- Additions in equipment and building improvements		220		-			220
- Depreciation for the year		-		(403	)		(403	)
Balance, December 31, 2011	$	22,552	$	(893	)	$	21,659

- Additions in equipment and building improvements		1,553		-			1,553
- Depreciation for the year		-		(438	)		(438	)
Balance, December 31, 2012	$	24,105	$	(1,331	)	$	22,774

8.	Prepaid charter revenue, current and non-current

The amounts shown in the accompanying consolidated balance sheets reflect the unamortized balance of an

F-20

DIANA SHIPPING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012

(Expressed in thousands of U.S. Dollars – except share and per share data, unless otherwise stated)

asset recognized by the Company pursuant to the acquisition of Gala in May 2009 and the amount paid in excess of the predelivery installments for the construction of the vessel "Houston". Gala has time chartered the "Houston" to Jiangsu Shagang Group Co. ("Shagang") at a gross charter hire rate of $55 per day for a period of a minimum of 59 months and a maximum of 62 months which commenced in November 2009.

The amount recognized as prepaid charter revenue is amortized in revenues over the duration of the time charter contract beginning on the delivery of the vessel to the time charterers. ~~As of December 31, 2011 and 2010,~~The amounts in the unamortized balance of the account, net of accumulated amortization of $6,591 and $3,541, respectively, was $8,409 ($3,058 of current and $5,351 of non-current portion) and $11,459 ($3,050 of current and $8,409 of non-current portion), respectively.consolidated financial statements are analyzed as follows:

	Amount		Accumulated Amortization			Net
Balance, December 31, 2010	$	15,000	$	(3,541	)	$	11,459
Amortization in the year		-		(3,050	)		(3,050	)
Balance, December 31, 2011	$	15,000	$	(6,591	)	$	8,409
Amortization in the year		-		(3,056	)		(3,056	)
Balance, December 31, 2012	$	15,000	$	(9,647	)	$	5,353

The amortization ~~to revenues~~of prepaid charter revenue for 2012, 2011 ~~2010~~ and ~~2009~~2010 amounted to $3,056, $3,050 ~~$3,048~~ and ~~$493,~~$3,048, respectively, and is included in Time charter revenues in the accompanying consolidated statements of income.

~~F-23~~

~~DIANA SHIPPING INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~December 31, 2011~~

~~(Expressed in thousands of U.S. Dollars – except share and per share data, unless otherwise stated)~~

The estimated amortization expense for each of the succeeding years is as follows:

Period

Amount

Period

Amount

January 1, 2012

December 31, 2012

3,058

January 1, 2013

December 31, 2013

3,050

December 31, 2013

3,050

January 1, 2014

October 3, 2014

2,301

October 3, 2014

2,303

9. Long-term debt, current and non-current

The amount of long-term debt shown in the accompanying consolidated balance sheets is analyzed as follows:

	2011			2010			2012			2011
Royal Bank of Scotland revolving credit facility	$	290,700		$	290,700		$	270,000		$	290,700
Bremer Landesbank loan facility		32,800			36,400			29,200			32,800
Deutsche Bank AG loan facility		35,800			38,200			33,400			35,800
DnB NOR Bank ASA loan facility		-			19,670
Emporiki Bank of Greece S.A.		15,000			-
Credit Agricole Corporate and Investment Bank (transfer from Emporiki Bank of Greece S.A.)								14,000			15,000
Export-Import Bank of China and DnB Bank ASA loan facility								69,054			-
Nordea Bank Finland Plc loan facilities								45,224			-
Total debt outstanding	$	374,300		$	384,970		$	460,878		$	374,300
Less related deferred financing costs		(962	)		(1,347	)		(1,766	)		(962	)
Total debt, net of deferred financing costs	$	373,338		$	383,623		$	459,112		$	373,338
Current portion of long term debt	$	(27,700	)	$	(7,320	)	$	(45,032	)	$	(27,700	)
Long-term debt, non current portion	$	345,638		$	376,303		$	414,080		$	345,638

F-21

DIANA SHIPPING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012

(Expressed in thousands of U.S. Dollars – except share and per share data, unless otherwise stated)

Royal Bank of Scotland ("~~Royal Bank"~~RBS") revolving credit facility: InOn February 18, 2005, the Company entered into ~~an agreement~~a secured revolving credit facility with the Royal Bank for a $230,000 ~~secured revolving credit facility,~~which was increased to ~~finance the acquisition of additional dry bulk carrier vessels or cellular container ships, the acquisition of DSS (Note 1) and for working capital. On~~$300,000 on May 24, 2006 ~~the Company entered into~~with an amended ~~agreement to extend the facility amount to $300,000. Pursuant to the amended agreement, the~~agreement. The Company is permitted to borrow amounts up to the facility limit, ~~provided that certain pre-conditions are satisfied and that borrowings do~~but not exceed 75% of the aggregate market value of the mortgaged vessels. The ~~maturity of the credit facility is ten years and the~~ interest rate on amounts drawn is at LIBOR plus a margin ranging from 0.75% to 0.85%. The loan bears commitment fees on the undrawn part of the facility, if any, of 0.25% per annum.

The amended facility is available in full for six years from May 24, 2006, the new availability date. At the end of the sixth year and over the remaining period of four years will be reducing in semiannually by $15,000 with a final reduction of $165,000 together with the last semi-annual reduction.

As of December 31, 2011 and December 31, 2010, there was a balance of $20,700 and $0, respectively, included in current portion of long-term debt and $270,000 and $290,700, respectively, included in non-current portion of long-term debt.The unused portion of the facility as at December 31, 2011 and December 31, 2010 amounted to $9,300. The weighted average interest rate of the revolving credit facility as at December 31, 2012 and 2011 was 1.1% and ~~2010 was 1.07% and 1.10%~~1.1%, respectively.

The amended facility was available in full until May 24, 2012. Since that date the available amount is reducing in semiannual amounts of $15,000 with a final reduction of $165,000 together with the last semi-annual reduction on May 24, 2016.

The credit facility is secured by a first priority or preferred ship mortgage on ~~fourteen~~16 vessels of the Company's fleet (Note 6)18), assignment of all freights, earnings, insurances and requisition compensation. The lenders may also require additional security ~~in the future~~ in the event the Company breaches certain covenants under the credit facility, including a shortfall in the hull cover ratio, as described below.

~~F-24~~

~~DIANA SHIPPING INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~December 31, 2011~~

~~(Expressed in thousands of U.S. Dollars – except share and per share data, unless otherwise stated)~~

The credit facility contains covenants including restrictions as to changes in management and ownership of the vessels, additional indebtedness, as well as minimum requirements regarding hull cover ratio, ~~(mortgaged vessels' market values at least 120% of the outstanding balance of the credit facility),~~ minimum liquidity of $400 per each vessel in the fleet mortgaged under or financed through the credit facility ~~unless the available credit facility for working capital exceeds this amount~~ and other financial covenants. As at December 31, 2012 and 2011, ~~and December 31, 2010,~~ the ~~available credit facility for working capital~~minimum liquidity requirement amounted to ~~$9,300, thus exceeding minimum liquidity required amounting to~~$6,800 and $6,000, ~~as of December 31, 2011 and $5,200 as of December 31, 2010.~~respectively. Furthermore, the Company is not permitted to pay any dividends that would result in a breach of the financial covenants of the facility. ~~As at December 31, 2011, the Company obtained a waiver from the bank with regards to its share repurchase program (Note 12).~~

Bremer Landesbank ("Bremer") loan facility: On October 22, 2009, Gala entered into a loan agreement with Bremer to partly finance, or, as the case may be, refinance, the contract price of the vessel "Houston" for an amount of $40,000. The ~~term of the loan is ten years starting from the delivery of the vessel in October 2009. The~~ loan is repayable in 40 quarterly installments of $900 plus one balloon installment of $4,000 to be paid together with the last ~~installment.~~installment on November 12, 2019. The loan bears interest at LIBOR plus a margin of 2.15% ~~per annum for the first two years (the "Initial Margin Application Period")~~. However, upon expiration of the Initial Margin Application Period in November 2011, Bremer did not propose a new margin for the remaining security period or part thereof, for agreement by Gala. An arrangement fee of $150 was paid upon signingThe weighted average interest rate of the loan ~~agreement~~facility as at December 31, 2012 and ~~has been recorded as a contra to debt. The loan bore commitment fees of 0.20% on the undrawn part of the loan, payable quarterly.~~2011 was 2.6% and 2.5%, respectively.

The loan is secured by a first ~~priority or~~ preferred ship mortgage on the vessel ~~(Note 6)~~"Houston", a first priority assignment of all earnings, insurances, and requisition compensation and a corporate guarantee. The lenders may also require additional security in the future in the event the Company breaches certain covenants under the loan agreement and includes restrictions as to changes in management and ownership of the vessel, additional indebtedness, substitute charters in the case the vessel's current charter is prematurely terminated, as well as minimum requirements regarding hull cover ~~ratio (vessel's market value of at least 120% of the outstanding balance of the loan).~~ratio. Furthermore, the Company is not permitted to pay any dividends from the earnings of the vessel following the occurrence of an event of default. Also, Gala is required for the duration of the loan to maintain in its current account with the Bank sufficient funds to meet the next repayment installment and interest due at monthly intervals, any other outstanding indebtedness that becomes due with the bank and sufficient funds to cover the anticipated cost of the next special ~~survey of the vessel accumulated at least a year prior to such a~~ survey. As at December 31, ~~2011~~2012 and ~~December 31, 2010,~~2011, such funds amounted to ~~$744~~$721 and ~~$754, respectively.~~

As of December 31, 2011 and December 31, 2010, there was a balance of $3,600 and $3,600, respectively, included in current portion of long-term debt and $29,200 and $32,800, respectively, included in non-current portion of long-term debt. The weighted average interest rate of the loan facility as at December 31, 2011 and 2010 was 2.46% and 2.48%,$744, respectively.

Deutsche Bank AG ("Deutsche") loan facility: On October 8, 2009, Bikini entered into a loan agreement with Deutsche to partly finance, or, as the case may be, refinance, the contract price of the vessel "New York" (Hull H1107), for an amount of $40,000, but not exceeding 80% of the fair value of the vessel. The ~~term of the loan is five years commencing at vessel delivery in March 2010. The~~ loan is repayable in 19 quarterly installments of $600 and a 20thfinal installment ~~equal~~ ~~to remaining outstanding balance~~ of ~~the loan.~~$28,600 on March 10, 2015. The loan bears interest at LIBOR plus a margin of 2.40% per annum. ~~An arrangement fee of $300 was paid on signing the facility agreement.~~ The ~~loan bore commitment fees of 0.50%, on the undrawn part~~weighted average interest rate of the loan ~~payable quarterly in arrears~~facility as at December 31, 2012 and ~~until the drawdown date.~~2011 was 2.9% and 2.7%, respectively.

~~F-25~~F-22

DIANA SHIPPING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2011~~2012

(Expressed in thousands of U.S. Dollars – except share and per share data, unless otherwise stated)

The loan is secured by a first ~~priority or~~ preferred ship mortgage on the vessel ~~(Note 6)~~"New York", a first priority assignment of all earnings, insurances, and requisition compensation and a corporate guarantee. The lenders may also require additional security in the future in the event the Company breaches certain covenants including restrictions as to changes in management and ownership of the vessel, additional indebtedness, as well as minimum requirements regarding hull cover ratio, ~~(vessel's market value of at least 125% of the outstanding balance of the loan),~~ minimum liquidity of $400 for the borrower, average cash balance of $10,000 for the guarantor, and ~~other~~ financial covenants. Furthermore, the Company is not permitted to pay any dividends ~~that~~which would result in a breach of ~~the~~ financial ~~covenants.~~

Ascovenants or if an event of ~~December 31, 2011~~default has occurred and December 31, 2010, there was a balance of $2,400 and $2,400, respectively, included in current portion of long-term debt and $33,400 and $35,800, respectively, included in non-current portion of long-term debt. The weighted average interest rate of the loan facility as at December 31, 2011 and 2010 was 2.71% and 2.76%, respectively.is continuing. As at December 31, ~~2011,~~2012, the Company ~~obtained a waiver from~~was not in compliance with the ~~bank~~hull cover ratio requirement of the loan facility. In this respect and in connection with ~~regards~~the term sheet signed on March 19, 2013 for the partial refinancing of the vessels Myrto and Maia (Note 18), the Company accepted to ~~its share repurchase program (Note 12).~~cross collateralize the vessels New York, Myrto and Maia against the Deutsche loan facilities and thereby to remedy any event of noncompliance by combining the security cover of the two Deutsche facilities.

Export-Import Bank of China and DnB ~~NOR~~ Bank ASA ("~~CEXIM~~Cex-Im and ~~DnB NOR"~~DnB"): On October 2, 2010, Lae and Namu entered into a loan agreement with ~~CEXIM~~the Export – Import Bank of China and DnB Bank ASA (formerly known as DnB NOR Bank ASA) to finance part of the ~~acquisition~~construction cost of the ~~newbuildings H1234 to be named~~ "Los Angeles" and ~~H1235 to be named~~the "Philadelphia", for an amount of up to $82,600. ~~The~~On February 15, and May 18, 2012, Lae and Namu drew down an aggregate of $72,100 of the loan, ~~is available until November 30, 2012 in two advances with each advance not exceeding the lower of $41,300 and the~~which represents 70% of the vessels' market value ~~of the ship relevant to it.~~ on delivery.

The ~~repayment of the loan will be made~~Lae advance is repayable in 40 quarterly installments of ~~$692.5 for each advance~~$628 and a balloon of ~~$13,600~~$12,330 payable together with the last ~~installment.~~installment on February 15, 2022 and the Namu advance is repayable in 40 quarterly installments of $581 and a balloon of $11,410 payable together with the last installment on May 18, 2022. Each Bank has the right to demand repayment of the outstanding balance of any advance 72 months after the respective advance drawdown. Such demand shall be subject to written notification to be made no earlier than 54 months and not later than 60 months after the respective drawdown date for that advance. The loan ~~will bear~~bears interest at LIBOR plus a margin of 2.50% per ~~annum. The loan bears commitment fees of 0.50% per~~ annum ~~on the undrawn portion of the loan~~ and an agency fee of $10 ~~to be~~is paid annually until its full ~~repayment~~repayment. The weighted average interest rate of the ~~loan. An arrangement and structuring fee of $619.5~~loan facility as at December 31, 2012 was ~~paid on signing the agreement along with the payment of the annual agency fee.~~2.9%.

The loan ~~will be~~is secured by a first preferred ship mortgage on the vessels, general assignments, charter assignments, operating account assignments, hull cover ratio, a corporate guarantee from DSI and manager's undertakings. The lender may also require additional security, if at any time the market value of the ships becomes less than the 125% of the aggregate of (a) the Loan and (b) the Swap Exposure, if any. Additionally, the borrowers upon drawdown of the loan ~~are required to maintain~~requires minimum liquidity of $400 atfor each ~~operating account, and the guarantor is required to maintain net worth of not less than $150,000 and at least 25% of the total assets and~~borrower, an average cash balance of ~~$10,000. As at December 31, 2011,~~$10,000 for the guarantor and financial covenants. The Company ~~obtained a waiver from the banks with regards~~is not permitted to ~~its share repurchase program (Note 12).~~pay any dividends that would result in an event of default or if an event of default has occurred and is continuing.

~~DnB NOR~~Emporiki Bank ~~ASA~~of Greece S.A. ("~~DnB NOR"~~Emporiki") replaced by Credit Agricole Corporate and Investment Bank ("Credit Agricole"):: On ~~July 7, 2010, the Company's then beneficially owned subsidiary, Diana Containerships (Note 3),~~September 13, 2011, Bikar entered ~~through its wholly-owned ship-owning subsidiaries Likiep Shipping Company Inc. and Orangina Inc.,~~ into a loan agreement with ~~DnB NOR~~Emporiki for a loan of up to ~~finance~~$15,000 to refinance part of the acquisition cost of m/v "Arethusa". On December 13, 2012, Bikar, the ~~vessels "Sagitta"~~Company, DSS and ~~"Centaurus" for an amount of up~~Credit Agricole, entered into a supplemental loan agreement to $40,000. The loan was available until July 31, 2011 in two advances for each vessel with each advance not exceeding the lower of $10,000 and the 25% of the market value of the ship relevant to it. The repaymentset out amendments of the loan ~~would be~~agreement to which the parties entered into in ~~24 quarterly~~a supplemental agreement on December 11, 2012, to provide applicability of the English law and exclusive jurisdiction of English courts and to a deed of novation to transfer the outstanding loan balance, the ISDA master swap agreement and the existing security documents from Emporiki to Credit Agricole.

The loan is repayable in 20 equal semiannual installments of ~~$165 for~~$500 each ~~advance,~~ and a balloon payment of ~~$6,040 payable~~ $5,000 to be paid together with the last ~~installment.~~installment on September 15, 2021. The loan ~~bore~~bears interest at LIBOR plus a margin of ~~2.40%~~2.5% per ~~annum. An arrangement fee of $400 was paid on signing the facility agreement. The loan bore commitment fees of 0.96%, on the undrawn part of the loan.~~

~~F-26~~F-23

DIANA SHIPPING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2011~~2012

(Expressed in thousands of U.S. Dollars – except share and per share data, unless otherwise stated)

As of December 31, 2010, there was a balance of $1,320, included in current portion of long-term debt and $18,350, included in non-current portion of long-term debt. The weighted average interest rate of the loan facility as at December 31, 2010 was 2.82%. On January 10, 2011, Likiep and Orangina repaid $330 of the outstanding loan balance. Following the partial spin-off on January 18, 2011 (Note 3), Diana Containerships Inc. and its subsidiaries are no longer consolidated in the Company's consolidated financial statements and as such, there is no balance outstanding under the DnB loan in the Company's consolidated balance sheet as at December 31, 2011.

~~Emporiki Bank of Greece S.A.:~~ On September 13, 2011, Bikar entered into a loan agreement with Emporiki Bank of Greece S.A., for a loan of up to $15,000 to refinance part of the acquisition cost of m/v "Arethusa". The loan is repayable in twenty equal semiannual installments of $500 each, starting six months from drawdown and a balloon payment of $5,000 to be paid together with the last installment not later than ten years from the drawdown date. The loan bears interest at LIBOR plus a margin of 2.5% per annum, or 1% for such loan amount that is equivalently secured by cash pledge in favor of the bank. The ~~loan bore commitment fees of 0.50% per annum, on the undrawn portion~~weighted average interest rate of the ~~loan. An arrangement fee of $45~~loan facility as at December 31, 2012 and 2011 was ~~paid on signing the agreement.~~1.2% and 1.3%, respectively.

The loan, which is secured by an equivalent amount of cash collateral, is also secured with a first priority mortgage on the ~~m/v~~vessel "Arethusa" ~~(Note 6)~~, charter assignment on ~~all~~long term charters, ~~exceeding 12 months,~~ first priority general assignment of all earnings, insurances and requisition compensation on the vessel, a corporate guarantee from DSI, manager's undertaking and a first priority pledge on the earnings account and the cash collateral account. The lender may also require additional security, if at any time the market value of the vessel and the cash standing in a pledged account with the bank becomes less than the ~~120% of the aggregate of (a) the Loan and (b) the Swap Exposure, if any.~~required hull cover ratio. The loan also has other non-financial and financial covenants, ~~including minimum net worth,~~ minimum cash of $10,000 to be held by DSI and $500 to be held by Bikar and/or the ~~guarantor~~guarantor. The Company is not permitted to pay any dividends, that would result in an event of default or if an event of default has occurred and ~~maximum leverage.~~

On September 15, 2011, Bikar drew down $15,000 and as of December 31, 2011, there was a balance of $1,000 included in current portion of long-term debt and $14,000 included in non-current portion of long-term debt. The weighted average interest rate of the loan facility as at December 31, 2011 was 1.34%. As at December 31, 2011, the Company obtained a waiver from the bank with regards to its share repurchase program (Note 12).is continuing.

Nordea Bank Finland Plc.("Nordea"): On ~~December 22, 2011,~~February 7, 2012, Jemo (the "Borrower") ~~accepted a term sheet from~~entered into an agreement with Nordea Bank Finland Plc, London Branch, for a secured term loan facility in the principal amount of $16,125, drawn down in February 2012, to partly finance the acquisition cost of ~~M/V "Vathy" renamed to~~ "Leto" ~~(Notes 5 and 18)~~. The loan ~~will be available in a single drawdown no later than February 29, 2012 and will have~~has a term of five ~~years. It will be repaid~~years and is repayable in 20 consecutive equal quarterly ~~instalments~~installments of $252 ~~commencing three months after the initial borrowing date~~ and a balloon payment of $11,085 payable together with the final quarterly ~~instalment.~~installment on February 7, 2017. On June 21, 2012, the agreement between Jemo and Nordea Bank Finland Plc, was restated and amended by a supplemental agreement in order to include Mandaringina as a new borrower and increase the loan amount to up to $26,450 for the purpose of financing part of the acquisition cost of Melia. The additional advance for Mandaringina of $10,325, drawn down in June 2012, is repayable in 20 consecutive equal quarterly installments of $235 and a balloon of $5,625 payable together with the last installment on May 7, 2017. The loan ~~will bear~~bears interest at ~~Libor~~LIBOR plus a margin of 2.5% and ~~commitment fees of 0.5% per annum on~~ the ~~undrawn amount under the facility from the date of the commitment letter until drawdown. (Note 18)~~weighted average interest rate as at December 31, 2012 was 2.7%.

~~F-27~~

~~DIANA SHIPPING INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

On December 20, 2012, Palau and Guam entered into a new loan agreement with Nordea for an amount of $20,000, drawn down on December 21, 2012, to finance part of the acquisition cost of the vessels "Amphitrite" and "Polymnia". The loan is repayable in 20 consecutive quarterly installments of $312 and a balloon installment of $13,760 payable together with the last installment on December 21, 2017. The loan bears interest at LIBOR plus a margin of 2.9% and the weighted average interest rate of the loan facilities as at December 31, ~~2011~~

~~(Expressed in thousands of U.S. Dollars – except share and per share data, unless otherwise stated)~~2012 was 3.1%.

~~The loan will be~~Both loans are secured with a corporate guarantee from DSI, a first priority or first preferred mortgage on the ~~vessel M/V "Leto",~~vessels, first priority assignment of earnings, first priority pledge of the earnings ~~account,~~accounts, first priority assignment of the time ~~charter (Note 11)~~charters and any subsequent long term charter contracts, ~~with a duration of one year or more,~~ first priority assignment of insurances, first priority pledge over the shares of ~~Jemo~~the borrowers and manager's letter of subordination of ~~rights.~~rights and minimum hull value. The ~~loan will~~loans also have financial covenants ~~such as~~and require minimum liquidity of $500 per vessel owned by the ~~guarantor, minimum market-adjusted equity ratio of 25%, minimum market-adjusted net worth of $150 million and minimum hull value of 125% of the outstanding principal amount.~~guarantor. Finally, ~~the~~The Company is not permitted to pay any dividends, that would result in ~~breach~~an event of ~~financial~~default or ~~other covenants.~~

if an event of default has occurred and is continuing.

Total interest incurred on long-term debt for 2012, 2011 ~~2010~~ and ~~2009~~2010 amounted to $7,342, $5,129, ~~$4,982,~~ and ~~$3,307,~~$4,982, respectively. Of the above amounts, $321, $635, ~~$340,~~ and ~~$363,~~$340, respectively, were capitalized and included in Vessels and in Advances for vessels under construction and acquisitions and other vessel costs in the accompanying consolidated balance sheets. Interest expense on long-term debt, net of interest capitalized, is included in Interest and finance costs in the accompanying consolidated statements of income. The Company pays commitment fees on the undrawn portion of the facilities, which for 2012, 2011, ~~2010~~ and ~~2009~~2010 amounted to $122, $468, ~~$361,~~ and ~~$395,~~$361, respectively of which $103, $422, ~~$110,~~

F-24

DIANA SHIPPING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012

(Expressed in thousands of U.S. Dollars – except share and ~~$175,~~per share data, unless otherwise stated)

and $110, respectively, are included in Vessels and in Advances for vessels under construction and acquisition and other vessel costs.

The maturities of the Company's debt facilities described above, as at December 31, ~~2011,~~2012, and throughout their term are as follows:

Period

Principal Repayment

Period

Principal Repayment

January 1, 2012

December 31, 2012

27,700

January 1, 2013

December 31, 2013

37,000

December 31, 2013

45,032

January 1, 2014

December 31, 2014

37,000

December 31, 2014

45,033

January 1, 2015

December 31, 2015

63,200

December 31, 2015

71,232

January 1, 2016

December 31, 2016

184,600

December 31, 2016

192,632

January 1, 2017

and thereafter

24,800

December 31, 2017

41,874

January 1, 2018

and thereafter

65,075

Total

374,300

Total

460,878

Title of each class		Name of each exchange on which registered
Common stock, $0.01 par value		New York Stock Exchange
Preferred stock purchase rights		New York Stock Exchange


PART III
Item 17.	Financial Statements	9493
Item 18.	Financial Statements	9493
Item 19.	Exhibits	94

~~INDEX TO FINANCIAL STATEMENTS~~		~~F-1~~93

	As of and for the
	Year Ended December 31,
	2011			2010			2009			2008			2007
	(in thousands of U.S. dollars,
	except for share and per share data and average daily results)
Income Statement Data:
Time charter revenues	$	255,669		$	275,448		$	239,342		$	337,391		$	190,480
Other revenues		1,117			-			-			-			-
Voyage expenses		10,597			12,392			11,965			15,003			8,697
Vessel operating expenses		55,375			52,585			41,369			39,899			29,332
Depreciation and amortization of deferred charges		55,278			53,083			44,686			43,259			24,443
General and administrative expenses		25,123			25,347			17,464			13,831			11,718
Gain on vessel sale		-			-			-			-			(21,504	)
Foreign currency gains		(503	)		(1,598	)		(478	)		(438	)		(144	)

Operating income		110,916			133,639			124,336			225,837			137,938
Interest and finance costs		(4,924	)		(5,213	)		(3,284	)		(5,851	)		(6,394	)
Interest income		1,033			920			951			768			2,676

	As of and for the
	Year Ended December 31,
	2012			2011			2010			2009			2008
	(in thousands of U.S. dollars,
	except for share and per share data, fleet data and average daily results)
Income Statement Data:
Time charter revenues	$	220,785		$	255,669		$	275,448		$	239,342		$	337,391
Other revenues		2,447			1,117			-			-			-
Voyage expenses		8,274			10,597			12,392			11,965			15,003
Vessel operating expenses		66,293			55,375			52,585			41,369			39,899
Depreciation and amortization of deferred charges		62,010			55,278			53,083			44,686			43,259
General and administrative expenses		24,913			25,123			25,347			17,464			13,831
Foreign currency gains		(1,374	)		(503	)		(1,598	)		(478	)		(438	)

Operating income		63,116			110,916			133,639			124,336			225,837
Interest and finance costs		(7,618	)		(4,924	)		(5,213	)		(3,284	)		(5,851	)
Interest income		1,432			1,033			920			951			768

	Average estimated daily time charter equivalent rate used		Average break even rate
Panamax/Post-Panamax	$	27,462	$	13,475
Capesize/Newcastlemax	$	50,346	$	20,369

Large accelerated filer xo	Accelerated filer ox	Non-accelerated filer o

U.S. GAAP x	International Financial Reporting Standards as issued ~~Other~~ o by the International Accounting Standards Board o
	Other o

FORWARD-LOOKING STATEMENTS		4

PART I
Item 1.	Identity of Directors, Senior Management and Advisers	5
Item 2.	Offer Statistics and Expected Timetable	5
Item 3.	Key Information	5
Item 4.	Information on the Company	2928
Item 4A.	Unresolved Staff Comments	49
Item 5.	Operating and Financial Review and Prospects	49
Item 6.	Directors, Senior Management and Employees	70
Item 7.	Major Shareholders and Related Party Transactions	74
Item 8.	Financial Information	77
Item 9.	The Offer and Listing	78
Item 10.	Additional Information	78
Item 11.	Quantitative and Qualitative Disclosures about Market Risk	87
Item 12.	Description of Securities Other than Equity Securities	88

PART II
Item 13.	Defaults, Dividend Arrearages and Delinquencies	89
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	89
Item 15.	Controls and Procedures	89
Item 16A.	Audit Committee Financial Expert	90
Item 16B.	Code of Ethics	90
Item 16C.	Principal Accountant Fees and Services	9091
Item 16D.	Exemptions from the Listing Standards for Audit Committees	91
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	91
Item 16F.	Change in Registrant's Certifying Accountant	9192
Item 16G.	Corporate Governance	9192

	Fleet Employment Profile (As of April 15, 2012)
	Currently Diana's fleet is employed as follows:

	Vessel	Sister Ships*	Gross Rate (USD Per Day)	Com**	Charterer	Delivery Date to Charterer	Redelivery Date to Owners***	Notes
	BUILT DWT
	Panamax Bulk Carriers

1	CORONIS	C	$24,000	5.00%	Siba Ships Asia Pte. Ltd.	6-Apr-10	12-Mar-12
	2006 74,381		$10,600	5.00%	EDF Trading Limited, London	12-Mar-12	27-Nov-13 - 27-Jun-14

2	ERATO	C	$12,200	5.00%	Hyundai Merchant Marine Co., Ltd., Seoul, South Korea	26-Nov-11	26-Dec-12 - 10-Apr-13
	2004 74,444

3	ARETHUSA	B	$13,250	5.00%	Cargill International S.A., Geneva	8-Jul-11	24-May-12 - 23-Aug-12
	2007 73,593

4	NAIAS	B	$19,750	5.00%	J. Aron & Company, New York	24-Sep-10	24-Aug-12 - 24-Oct-12
	2006 73,546

5	CLIO	B	$25,000	5.00%	Daelim Corporation, Seoul	8-May-10	22-Feb-12	1
			$10,750	5.00%	Cargill International S.A., Geneva	22-Feb-12	22-Aug-13 - 22-Feb-14
	2005 73,691

6	CALIPSO	B	$12,250	5.00%	Louis Dreyfus Commodities Suisse S.A., Geneva	11-Oct-11	11-Aug-13 - 11-Dec-13	2
	2005 73,691

7	PROTEFS	B	$11,750	4.75%	Cargill International S.A., Geneva	6-Aug-11	6-Jul-12 - 6-Oct-12
	2004 73,630

8	THETIS	B	$13,750	5.00%	Cargill International S.A., Geneva	23-Feb-11	28-Jan-12	3
			$10,500	5.00%	EDF Trading Limited, London	22-Feb-12	22-Aug-13 - 22-Jun-14
	2004 73,583

9	DIONE	A	$20,500	5.00%	Louis Dreyfus Commodities Suisse S.A., Geneva	26-Sep-10	26-Jul-12 - 26-Nov-12
	2001 75,172

10	DANAE	A	$15,600	5.00%	Hyundai Merchant Marine Co., Ltd., Seoul, South Korea	18-Apr-11	18-Mar-13 - 18-May-13
	2001 75,106


	●	a continuous synopsis record kept onboard showing a vessel's history including the name of the ship, the state whose flag the ship is entitled to fly, the date on which the ship was registered with that state, the ship's identification number, the port at which the ship is registered and the name of the registered owner(s) and their registered address; and


	●	compliance with flag state security certification requirements.

Vessel	Vessel	Dwt	Year Built	Carrying Value (in millions of US dollars)	Vessel	Dwt	Year Built	Carrying Value (in millions of US dollars)
								2012	2011
Dry bulk vessels
1	Nirefs	75,311	2001	12.3	Nirefs	75,311	2001	11.6 *	12.3
2	Alcyon	75,247	2001	12.3	Alcyon	75,247	2001	11.6 *	12.3
3	Triton	75,336	2001	12.5	Triton	75,336	2001	11.7 *	12.5
4					Oceanis	75,211	2001	11.8 *	12.5
5					Dione	75,172	2001	13.4 *	14.3
6					Danae	75,106	2001	13.6 *	14.4
7					Protefs	73,630	2004	14.8 *	15.5
8					Calipso	73,691	2005	15.1 *	15.8
9					Clio	73,691	2005	15.5 *	16.3
10					Thetis	73,583	2004	27.8 *	29.4 *
11					Erato	74,444	2004	28.0 *	29.5 *
12					Coronis	74,381	2006	31.0 *	32.6 *
13					Naias	73,546	2006	29.9 *	31.5 *
14					Sideris GS	174,186	2006	69.8 *	73.3 *
15					Aliki	180,235	2005	83.7 *	88.3 *
16					Semirio	174,261	2007	77.2 *	81.0 *
17					Boston	177,828	2007	88.4 *	92.7 *
18					Salt Lake City	171,810	2005	129.5 *	136.6 *
19					Norfolk	164,218	2002	102.5 *	109.3 *
20					Houston	177,729	2009	55.3 *	57.7 *
21					Melite	76,436	2004	30.1 *	31.8 *
22					New York	177,773	2010	56.2 *	58.6 *
23					Alcmene	93,193	2010	37.5 *	39.1 *
24					Arethusa	73,593	2007	28.1 *	29.4 *
25					Leto	81,297	2010	31.1 *
26					Los Angeles	206,104	2012	57.9 *
27					Philadelphia	206,040	2012	58.7 *
28					Melia	76,225	2005	20.0 *
29					Amphitrite	98,697	2012	24.7
30					Polymnia	98,704	2012	24.6
					Total	3,376,678		1,211.1	1,046.7

	1-year (period)		Impairment charge (in USD million)		3-year (period)		Impairment charge (in USD million)		5-year (period)		Impairment charge (in USD million)
Panamax/Post-Panamax	$	9,706		123.6	$	16,309		-	$	24,543		-
Capesize/Newcastlemax	$	13,685		423.2	$	21,197		304.6	$	41,679		-

Issuer purchases of equity securities for the year ended December 31, 2011
Issuer purchases of equity securities for the year ended December 31, 2012					Issuer purchases of equity securities for the year ended December 31, 2012
Period	Total Number of Shares Purchased	Average Price Paid Per Share	Total Number of Shares Purchased as Part of Publicly Announced Programs	Maximum Amount in U.S. $ that may Yet Be Expected on Share Repurchases Under Programs		Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs		Maximum Amount in U.S. $ that may Yet Be Expected on Share Repurchases Under Programs
December 2011	154,091	$7.71	154,091	$0

January 2012							97,364	$	7.63		97,364	$	0
February 2012							-		-		-		-
June 2012							461,979	$	7.25		461,979	$	0
July 2012							43,188	$	7.28		43,188	$	0
August 2012							-		-		-		-
September 2012							24,203	$	6.53		24,203	$	0
October 2012							226,873	$	6.52		226,873	$	0
Total				$0			853,607	$	7.08		853,607	$	0

Exhibit Number	Description
1.1	Amended and Restated Articles of Incorporation of Diana Shipping Inc. (originally known as Diana Shipping Investment Corp.) (1)
1.2	Amended and Restated By-laws of the Company (2)
2.1	Form of Share Certificate (10)
4.1	Second Amended and Restated Stockholders Rights Agreement dated October 7, 2008 (4)
4.2	Amended and Restated 2005 Stock Incentive Plan (6)
4.3	2011 Stock Incentive Plan (11)
4.4	Form of Technical Manager Purchase Option Agreement (5)
4.5	Form of Management Agreement (3)
4.6	Loan Agreement with Royal Bank of Scotland dated February 18, 2005 (5)
4.7	Amending and Restating Loan Agreement with Royal Bank of Scotland dated May 24, 2006 (8)
4.8	Supplemental Agreement with the Royal Bank of Scotland dated January 30, 2007 (7)
4.9	Sales Agency Financing Agreement dated April 23, 2008 (9)
4.10	Loan Agreement with Deutsche Bank dated October 8, 2009 (10)
4.11	Loan Agreement with Bremer Landesbank dated October 22, 2009 (10)
4.12	Loan Agreement with the Export-Import Bank of China and DnB Nor Bank ASA dated October 2, 2010 (10)
4.13	Loan Agreement with Emporiki Bank of Greece S.A. dated September 13, 2011 (11)
4.14	Loan Agreement with Nordea Bank Finland Plc dated February 7, 2012 (11)
4.15	Supplemental Loan Agreement with Nordea Bank Finland Plc dated June 21, 2012
4.16	Loan Agreement with Nordea Bank Finland Plc dated December 20, 2012
8.1	Subsidiaries of the Company
11.1	Code of Ethics (10)
12.1	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer
12.2	Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer
13.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
15.1	Consent of Independent Registered Public Accounting Firm
101	The following materials from the Company's Annual Report on Form 20-F for the fiscal year ended December 31, 2012, formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets as of December 31, 2011 and 2012; (ii) Consolidated Statements of Operations for the years ended December 31, 2010, 2011 and 2012; (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2010, 2011 and 2012; (iv) Consolidated Statements of Stockholders' Equity for the years ended December 31, 2010, 2011 and 2012; (v) Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2011 and 2012; and (v) the Notes to Consolidated Financial Statements

(10)	Filed as an Exhibit to the Company's Annual Report filed on Form 20-F on March 30, 2010.
(11)	Filed as an Exhibit to the Company's Annual Report filed on Form 20-F on April 20, 2012.

		Page

Report of Independent Registered Public Accounting Firm		F-2

Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting		F-3

Consolidated Balance Sheets as of December 31, ~~2011~~2012 and ~~2010~~2011		F-4

Consolidated Statements of Income for the years ended December 31, 2012, 2011 ~~2010~~ and ~~2009~~2010		F-5

Consolidated Statements of Comprehensive Income for the years ended December 31, 2012, 2011 ~~2010~~ and ~~2009~~2010		F-6

Consolidated Statements of Stockholders' Equity for the years ended December 31, 2012, 2011 ~~2010~~ and ~~2009~~2010		F-7

Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011 ~~2010~~ and ~~2009~~2010		F-8

Notes to Consolidated Financial Statements		F-9

DIANA SHIPPING INC.
CONSOLIDATED BALANCE SHEETS
December 31, 2011 and 2010
December 31, 2012 and 2011
(Expressed in thousands of U.S. Dollars – except for share and per share data)

		2011			2010				2012			2011
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	416,674		$	345,414
Cash and cash equivalents (Note 2(e))									$	446,624		$	416,674
Accounts receivable, trade (Note 2(f))			5,568			467				6,590			5,568
Due from related party (Note 4)			263			-
Due from a related party (Note 4)										613			263
Inventories (Note 2(g))			4,808			4,068				5,275			4,808
Prepaid expenses and other assets			2,320			1,650				4,834			2,320
Prepaid charter revenue (Note 8)			3,058			3,050				3,050			3,058
Total current assets			432,691			354,649				466,986			432,691

FIXED ASSETS:
Advances for vessels under construction and acquisitions and other vessel costs (Note 5)			63,440			35,280				11,502			63,440

Vessels (Note 6)			1,292,237			1,355,644				1,515,370			1,292,237
Accumulated depreciation (Note 6)			(245,518	)		(194,794	)			(304,232	)		(245,518	)
Vessels' net book value (Note 6)			1,046,719			1,160,850				1,211,138			1,046,719
Property and equipment, net (Note 7)			21,659			21,842				22,774			21,659
Total fixed assets			1,131,818			1,217,972				1,245,414			1,131,818
OTHER NON-CURRENT ASSETS:
Deferred charges, net			4,769			4,359
Deferred charges, net (Notes 2(n) and 2(o))										3,365			4,769
Prepaid charter revenue, non-current (Note 8)			5,351			8,409				2,303			5,351
Investment in Diana Containerships Inc. (Note 3)			29,842			-				24,734			29,842
Total assets		$	1,604,471		$	1,585,389			$	1,742,802		$	1,604,471

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt (Note 9)		$	27,700		$	7,320			$	45,032		$	27,700
Accounts payable, trade and other			7,127			5,759				6,993			7,127
Due to related parties (Note 4)			226			279				264			226
Accrued liabilities			4,751			5,329				5,284			4,751
Deferred revenue, current portion (Note 10)			8,136			13,662
Deferred revenue (Note 10)										2,827			8,136
Fair value of derivative instruments, current portion (Note 17)										994			-
Other current liabilities			155			161				83			155
Total current liabilities			48,095			32,510				61,477			48,095

Long-term debt, non-current portion (Note 9)			345,638			376,303
Deferred revenue, non-current portion (Note 10)			-			4,227
Long-term debt, net of current portion and deferred financing costs (Note 9)										414,080			345,638
Other non-current liabilities			830			1,428				821			830
Fair value of derivative instruments (Note 17)			1,030			991
Commitments and contingencies			-			-
Fair value of derivative instruments, non-current portion (Note 17)										-			1,030
Commitments and contingencies (Note 11)										-			-

STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value; 25,000,000 shares authorized, none issued			-			-				-			-
Common stock, $0.01 par value; 200,000,000 shares authorized and 82,419,417 and 81,955,813 issued and outstanding at December 31,2011 and 2010, respectively (Note 12)			824			820
Common stock, $0.01 par value; 200,000,000 shares authorized and 82,233,424 and 82,419,417 issued and outstanding at December 31,2012 and 2011, respectively (Note 12)										822			824
Additional paid-in capital			915,404			908,467				918,007			915,404
Other comprehensive income / (loss) (Note 2(c))			(112	)		(16	)			194			(112	)
Retained earnings			292,762			222,246				347,401			292,762
Stockholders' equity of Diana Shipping Inc.			1,208,878			1,131,517

Non-controlling interests (Notes 1 and 3)			-			38,413

Total stockholders' equity			1,208,878			1,169,930				1,266,424			1,208,878

Total liabilities and stockholders' equity		$	1,604,471		$	1,585,389			$	1,742,802		$	1,604,471
The accompanying notes are an integral part of these consolidated financial statements.	The accompanying notes are an integral part of these consolidated financial statements.							The accompanying notes are an integral part of these consolidated financial statements.

DIANA SHIPPING INC.
CONSOLIDATED STATEMENTS OF INCOME	CONSOLIDATED STATEMENTS OF INCOME										CONSOLIDATED STATEMENTS OF INCOME
For the years ended December 31, 2011, 2010 and 2009
For the years ended December 31, 2012, 2011 and 2010											For the years ended December 31, 2012, 2011 and 2010
(Expressed in thousands of U.S. Dollars – except for share and per share data)	(Expressed in thousands of U.S. Dollars – except for share and per share data)										(Expressed in thousands of U.S. Dollars – except for share and per share data)

		2011			2010			2009

												2012			2011			2010
REVENUES:
Time charter revenues		$	255,669		$	275,448		$	239,342			$	220,785		$	255,669		$	275,448
Other revenues (Note 4)			1,117			-			-				2,447			1,117			-

EXPENSES:
Voyage expenses (Note 13)			10,597			12,392			11,965				8,274			10,597			12,392
Vessel operating expenses (Note 13)			55,375			52,585			41,369				66,293			55,375			52,585
Depreciation and amortization of deferred charges (Note 2)			55,278			53,083			44,686				62,010			55,278			53,083
General and administrative expenses			25,123			25,347			17,464				24,913			25,123			25,347
Foreign currency gains			(503	)		(1,598	)		(478	)			(1,374	)		(503	)		(1,598	)
Operating income		$	110,916		$	133,639		$	124,336			$	63,116		$	110,916		$	133,639

OTHER INCOME / (EXPENSES):
Interest and finance costs (Note 14)		$	(4,924	)	$	(5,213	)		(3,284	)			(7,618	)		(4,924	)		(5,213	)
Interest income			1,033			920			951				1,432			1,033			920
Loss from derivative instruments (Note 17)			(737	)		(1,477	)		(505	)			(518	)		(737	)		(1,477	)
Income from investment in Diana Containerships Inc. (Note 3)			1,207			-			-
Income / (loss) from investment in Diana Containerships Inc. (Note 3)													(1,773	)		1,207			-
Total other expenses, net		$	(3,421	)	$	(5,770	)	$	(2,838	)		$	(8,477	)	$	(3,421	)	$	(5,770	)

Net income		$	107,495		$	127,869		$	121,498			$	54,639		$	107,495		$	127,869

Loss assumed by non-controlling interests			2			910			-				-			2			910

Net income attributed to Diana Shipping Inc.		$	107,497		$	128,779		$	121,498			$	54,639		$	107,497		$	128,779

Earnings per common share, basic (Note 15)		$	1.33		$	1.60		$	1.55			$	0.67		$	1.33		$	1.60

Earnings per common share, diluted (Note 15)		$	1.33		$	1.59		$	1.55			$	0.67		$	1.33		$	1.59

Weighted average number of common shares, basic (Note 15)			81,081,774			80,682,770			78,282,775				81,083,485			81,081,774			80,682,770

Weighted average number of common shares, diluted (Note 15)			81,124,348			80,808,232			78,385,464				81,083,485			81,124,348			80,808,232

The accompanying notes are an integral part of these consolidated financial statements.

a/a	Company	Vessel	Flag	Dwt	Date Built	Date Acquired	Place of Incorporation
PANAMAX VESSELS
1	Panama Compania Armadora SA	Oceanis	Bahamas	75,211	May 2001	May 2001	Panama
2	Husky Trading SA	Triton	Bahamas	75,336	Mar 2001	Mar 2001	Panama
3	Changame Compania Armadora SA	Thetis	Bahamas	73,583	Aug 2004	Nov 2005	Panama
4	Buenos Aires Compania Armadora SA	Alcyon	Bahamas	75,247	Feb 2001	Feb 2001	Panama
5	Skyvan Shipping Company SA	Nirefs	Bahamas	75,311	Jan 2001	Jan 2001	Panama
6	Cypres Enterprises Corp.	Protefs	Bahamas	73,630	Aug 2004	Aug 2004	Panama
7	Urbina Bay Trading SA	Erato	Bahamas	74,444	Aug 2004	Nov 2005	Panama
8	Chorrera Compania Armadora SA	Dione	Greek	75,172	Jan 2001	May 2003	Panama
9	Darien Compania Armadora SA	Calipso	Bahamas	73,691	Feb 2005	Feb 2005	Panama
10	Texford Maritime SA	Clio	Bahamas	73,691	May 2005	May 2005	Panama
11	Eaton Marine SA	Danae	Greek	75,106	Jan 2001	Jul 2003	Panama
12	Vesta Commercial SA	Coronis	Bahamas	74,381	Jan 2006	Jan 2006	Panama
13	Ailuk Shipping Company Inc.	Naias	Marshall Islands	73,546	Jun 2006	Aug 2006	Marshall Islands
14	Taka Shipping Company Inc.	Melite	Marshall Islands	76,436	Jun 2004	Jan 2010	Marshall Islands
15	Bikar Shipping Company Inc.	Arethusa	Greek	73,593	Jan 2007	Jul 2011	Marshall Islands
16	Mandaringina Inc.	Melia	Marshall Islands	76,225	Feb 2005	May 2012	Marshall Islands
17	Jemo Shipping Company Inc.	Leto	Bahamas	81,297	Feb 2010	Jan 2012	Marshall Islands
KAMSARMAX VESSELS
18	Tuvalu Shipping Company Inc. (Notes 5 and 18)	Myrto	Marshall Islands	82,131	Jan 2013	Jan 2013	Marshall Islands
POST-PANAMAX VESSELS
19	Majuro Shipping Company Inc.	Alcmene	Marshall Islands	93,193	Jan 2010	Nov 2010	Marshall Islands
20	Guam Shipping Company Inc.	Amphitrite	Marshall Islands	98,697	Aug 2012	Aug 2012	Marshall Islands
21	Palau Shipping Company Inc.	Polymnia	Marshall Islands	98,704	Nov 2012	Nov 2012	Marshall Islands
CAPESIZE VESSELS
22	Jaluit Shipping Company Inc.	Sideris GS	Marshall Islands	174,186	Nov 2006	Nov 2006	Marshall Islands
23	Bikini Shipping Company Inc.	New York	Marshall Islands	177,773	Mar 2010	Mar 2010	Marshall Islands
24	Gala Properties Inc.	Houston	Marshall Islands	177,729	Oct 2009	Oct 2009	Marshall Islands
25	Kili Shipping Company Inc.	Semirio	Marshall Islands	174,261	Jun 2007	Jun 2007	Marshall Islands
26	Knox Shipping Company Inc.	Aliki	Marshall Islands	180,235	Mar 2005	Apr 2007	Marshall Islands
27	Lib Shipping Company Inc.	Boston	Marshall Islands	177,828	Nov 2007	Nov 2007	Marshall Islands
28	Marfort Navigation Company Ltd.	Salt Lake City	Cyprus	171,810	Sep 2005	Dec 2007	Cyprus
29	Silver Chandra Shipping Company Ltd.	Norfolk	Cyprus	164,218	Aug 2002	Feb 2008	Cyprus
NEWCASTLEMAX VESSELS
30	Lae Shipping Company Inc.	Los Angeles	Marshall Islands	206,104	Feb 2012	Feb 2012	Marshall Islands
31	Namu Shipping Company Inc.	Philadelphia	Marshall Islands	206,040	May 2012	May 2012	Marshall Islands
VESSELS UNDER CONSTRUCTION
32	Erikub Shipping Company Inc.	H2528		76,000			Marshall Islands
33	Wotho Shipping Company Inc.	H2529		76,000			Marshall Islands
OTHER SUBSIDIARIES
34	Cerada International SA	Dormant					Panama
35	Diana Shipping Services SA	Manager					Panama
36	Bulk Carriers (USA) LLC	Company's representative in the US					Delaware - USA

	2011		2010
Beginning balance	$	35,280	$	29,630
- Advances for vessels under construction and other vessel costs		24,919		72,111
- Advances for vessel acquisitions and other vessel costs		3,241		31,647
- Transferred to vessel cost (Note 6)		-		(98,108	)
Ending balance	$	63,440	$	35,280

	Vessel Cost			Accumulated Depreciation			Net Book Value			Vessel Cost			Accumulated Depreciation			Net Book Value


Balance, December 31, 2009	$	1,123,105		$	(143,762	)	$	979,343

- Transfer from advances for vessels under construction and acquisition and other vessel costs		98,108			-			98,108
- Acquisition and other vessel costs		134,431			-			134,431
- Depreciation for the year		-			(51,032	)		(51,032	)
Balance, December 31, 2010	$	1,355,644		$	(194,794	)	$	1,160,850		$	1,355,644		$	(194,794	)	$	1,160,850

- Deconsolidation of Diana Containerships Inc. (Note 3)		(93,531	)		1,599			(91,932	)		(93,531	)		1,599			(91,932	)
- Acquisition and other vessel costs		30,124			-			30,124			30,124			-			30,124
- Depreciation for the year		-			(52,323	)		(52,323	)		-			(52,323	)		(52,323	)
Balance, December 31, 2011	$	1,292,237		$	(245,518	)	$	1,046,719		$	1,292,237		$	(245,518	)	$	1,046,719

- Transfer from advances for vessels under construction and acquisition and other vessel costs (Note 5)											152,314			-			152,314
- Acquisition, improvements and other vessel costs											70,819			-			70,819
- Depreciation for the year											-			(58,714	)		(58,714	)
Balance, December 31, 2012										$	1,515,370		$	(304,232	)	$	1,211,138

Vessel Name	Daily time charter gross rate (in U.S. Dollars)		Date delivered to charterer	Charterer redelivery option periods
Nirefs	$	12,250	18-Dec-11	18-Jan-13	-	18-Apr-13
Alcyon	$	34,500	21-Feb-08	21-Nov-12	-	21-Feb-13
Triton	$	19,500	11-Dec-10	11-Nov-13	-	11-Feb-14
Oceanis	$	19,750	17-Sep-10	17-Aug-12	-	1-Nov-12
Dione	$	20,500	26-Sep-10	26-Jul-12	-	26-Nov-12
Danae	$	15,600	18-Apr-11	18-Mar-13	-	18-May-13
Protefs	$	11,750	6-Aug-11	6-Jul-12	-	6-Oct-12
Calipso	$	12,250	11-Oct-11	11-Aug-13	-	11-Dec-13
Clio	$	25,000	8-May-10	8-Apr-12	-	8-Jun-12
Erato	$	12,200	26-Nov-11	26-Dec-12	-	10-Apr-13
Thetis	$	13,750	23-Feb-11	28-Jan-12	-	28-Jan-12
Coronis	$	24,000	6-Apr-10	6-Mar-12	-	21-Jun-12
Naias	$	19,750	24-Sep-10	24-Aug-12	-	24-Oct-12
Sideris	$	30,500	16-Oct-10	16-Feb-13	-	16-Jun-13
Aliki	$	26,500	1-Mar-11	1-Feb-16	-	1-Apr-16
Semirio	$	17,350	30-May-11	15-Mar-13	-	14-Aug-13
Boston	$	14,000	29-Oct-11	29-Aug-13	-	29-Dec-13
SLC	$	55,800	28-Sep-07	28-Aug-12	-	28-Oct-12
Norfolk	$	74,750	12-Feb-08	12-Jan-13	-	12-Mar-13
New York	$	48,000	3-Mar-10	3-Jan-15	-	3-May-15
Melite	$	16,500	1-Feb-11	1-Jan-13	-	1-Mar-13
Houston	$	55,000	3-Nov-09	3-Oct-14	-	3-Jan-15
Alcmene	$	20,250	20-Nov-10	5-Oct-12	-	4-Jan-13
Arethusa	$	13,250	8-Jul-11	24-May-12	-	23-Aug-12
Leto	$	12,900	17-Jan-12	17-Jan-14	-	17-Nov-14
Los Angeles	$	18,000	9-Feb-12	9-Dec-15	-	9-Apr-16
Philadelphia	$	18,000	30-Apr-12	30-Dec-15	-	30-Jun-16

Period	Amount
Year 1	$	127,428
Year 2		70,948
Year 3		22,495
Year 4		1,110
Total		221,981

	Number of Shares			Weighted Average Grant Date Price		Number of Shares			Weighted Average Grant Date Price
Outstanding at December 31, 2008		675,500		$	19.07
Granted		364,200		$	12.10
Vested		(125,167	)	$	20.28
Forfeited or expired		-		$	-
Outstanding at December 31, 2009		914,533		$	16.13		914,533		$	16.13
Granted		519,926		$	14.29		519,926			14.29
Vested		(246,572	)	$	16.25		(246,572	)		16.25
Forfeited or expired		-		$	-		-			-
Outstanding at December 31, 2010		1,187,887		$	15.30		1,187,887		$	15.30
Granted		616,055		$	12.64		616,055			12.64
Vested		(419,880	)	$	15.44		(419,880	)		15.44
Forfeited or expired		-		$	-		-			-
Outstanding at December 31, 2011		1,384,062		$	14.07		1,384,062		$	14.07
Granted							667,614			9.13
Vested							(600,051	)		13.83
Forfeited or expired							-			-
Outstanding at December 31, 2012							1,451,625		$	11.90