##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For
the transition period from                     to
 
 Commission File Number 00133831
 EAGLE BULK SHIPPING INC.
  Republic of the Marshall Islands
    
    980453513(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 477 Madison Avenue
New York, New York 10022
 (212) 7852500
 þ o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ
 Indicate the number of shares outstanding of each of the issuers classes of common stock, as of
the latest practicable date.




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##### 



TABLE OF CONTENTS
 PagePART I
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsConsolidated Balance Sheets as of September 30, 2008 (unaudited) and
December 31, 2007
    
    3Consolidated Statements of Operations (unaudited) for the three and nine
months ended September 30, 2008 and 2007
    
    4Consolidated Statement of Stockholders Equity (unaudited) for the nine
months ended September 30, 2008
    
    5Consolidated Statements of Cash Flows (unaudited) for the nine months
ended September 30, 2008 and 2007
    
    6Notes to Consolidated Financial Statements (unaudited)
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    16Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risks
    
    29Item 4.
    
    Controls and Procedures
    
    29PART II
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    31Item 1A.
    
    Risk Factors
    
    31Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    33Item 3.
    
    Defaults upon Senior Securities
    
    33Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    33Item 5.
    
    Other Information
    
    33Item 6.
    
    Exhibits
    
    33Signatures
    
    34EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION
  2




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##### Table of Contents



Part 1 : FINANCIAL INFORMATION
 
 Item 1 : Financial Statements
 EAGLE BULK SHIPPING INC.
 
 CONSOLIDATED BALANCE SHEETS
 September 30, 2008
    
    
    December 31, 2007(Unaudited)ASSETS:Current assets:Cash and cash equivalents
    
    $
    32,984,370
    
    
    $
    152,903,692Accounts receivable
    
    
    3,881,674
    
    
    
    3,392,461Prepaid expenses
    
    
    3,567,676
    
    
    
    1,158,113Total current assets
    
    
    40,433,720
    
    
    
    157,454,266Noncurrent assets:Vessels and vessel improvements, at cost, net of accumulated
depreciation of $74,550,222 and $52,733,604, respectively
    
    
    785,983,783
    
    
    
    605,244,861Advances for vessel construction
    
    
    448,939,895
    
    
    
    344,854,962Restricted cash
    
    
    10,776,056
    
    
    
    9,124,616Deferred drydock costs, net of accumulated amortization of
$4,355,533
and $2,453,253, respectively
    
    
    3,716,768
    
    
    
    3,918,006Deferred financing costs
    
    
    13,811,706
    
    
    
    14,479,024Fair value above contract value of time charters acquired
    
    
    4,531,115
    
    
    
    Other assets
    
    
    5,983,420
    
    
    
    932,638Total noncurrent assets
    
    
    1,273,742,743
    
    
    
    978,554,107Total assets
    
    $
    1,314,176,463
    
    
    $
    1,136,008,373LIABILITIES & STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    332,710
    
    
    $
    3,621,559Accrued interest
    
    
    4,297,289
    
    
    
    455,750Other accrued liabilities
    
    
    2,919,861
    
    
    
    1,863,272Unearned charter hire revenue
    
    
    8,293,669
    
    
    
    4,322,024Total current liabilities
    
    
    15,843,529
    
    
    
    10,262,605Noncurrent liabilities:Long-term debt
    
    
    741,967,857
    
    
    
    597,242,890Fair value below contract value of time charters acquired
    
    
    32,603,867
    
    
    
    Other liabilities
    
    
    15,379,722
    
    
    
    13,531,883Total noncurrent liabilities
    
    
    789,951,446
    
    
    
    610,774,773Total liabilities
    
    
    805,794,975
    
    
    
    621,037,378Commitment and contingenciesStockholders equity:Preferred stock, $.01 par value, 25,000,000 shares
authorized, none issued
    
    
    
    
    
    
    Common shares, $.01 par value, 100,000,000 shares
authorized, 46,770,486 and 46,727,153 shares issued and
outstanding, respectively
    
    
    467,704
    
    
    
    467,271Additional paid-in capital
    
    
    610,932,876
    
    
    
    602,929,530Retained earnings (net of dividends declared of $238,674,545
and $168,525,482, respectively)
    
    
    (93,502,067
    )
    
    
    (75,826,561
    )Accumulated other comprehensive loss
    
    
    (9,517,025
    )
    
    
    (12,599,245
    )Total stockholders equity
    
    
    508,381,488
    
    
    
    514,970,995Total liabilities and stockholders equity
    
    $
    1,314,176,463
    
    
    $
    1,136,008,373
  3




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##### Table of Contents



EAGLE BULK SHIPPING INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (UNAUDITED)
 Three Months Ended
    
    
    Nine Months EndedSeptember
    
    
    September
    
    
    September
    
    
    September30, 2008
    
    
    30, 2007
    
    
    30, 2008
    
    
    30, 2007Revenues, net of commissions
    
    $
    51,553,232
    
    
    $
    33,955,704
    
    
    $
    125,462,448
    
    
    $
    89,202,283Vessel expenses
    
    
    9,344,348
    
    
    
    6,647,223
    
    
    
    24,932,088
    
    
    
    19,749,702Depreciation and amortization
    
    
    8,991,877
    
    
    
    7,241,927
    
    
    
    23,718,898
    
    
    
    19,079,511General and administrative expenses
    
    
    6,666,748
    
    
    
    1,691,594
    
    
    
    16,478,840
    
    
    
    8,292,167Gain on sale of vessel
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (872,568
    )Total operating expenses
    
    
    25,002,973
    
    
    
    15,580,744
    
    
    
    65,129,826
    
    
    
    46,248,812Operating income
    
    
    26,550,259
    
    
    
    18,374,960
    
    
    
    60,332,622
    
    
    
    42,953,471Interest expense
    
    
    3,714,458
    
    
    
    3,476,977
    
    
    
    10,513,928
    
    
    
    9,789,541Interest income
    
    
    (385,816
    )
    
    
    (603,912
    )
    
    
    (2,654,863
    )
    
    
    (2,750,448
    )Net interest expense
    
    
    3,328,642
    
    
    
    2,873,065
    
    
    
    7,859,065
    
    
    
    7,039,093Net income
    
    $
    23,221,617
    
    
    $
    15,501,895
    
    
    $
    52,473,557
    
    
    $
    35,914,378Weighted average shares outstanding :Basic
    
    
    46,770,486
    
    
    
    42,209,617
    
    
    
    46,762,092
    
    
    
    40,493,753Diluted
    
    
    47,066,254
    
    
    
    42,365,252
    
    
    
    47,062,811
    
    
    
    40,590,796Per share amounts:Basic net income
    
    $
    0.50
    
    
    $
    0.37
    
    
    $
    1.12
    
    
    $
    0.89Diluted net income
    
    $
    0.49
    
    
    $
    0.37
    
    
    $
    1.11
    
    
    $
    0.88Cash dividends declared and paid
    
    $
    0.50
    
    
    $
    0.47
    
    
    $
    1.50
    
    
    $
    1.48
  4




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##### Table of Contents



EAGLE BULK SHIPPING INC.
 
 CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (UNAUDITED)
 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008
 Retained EarningsCommon
    
    
    Additional
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    TotalCommon
    
    
    Shares
    
    
    Paid-In
    
    
    
    
    
    
    Cash
    
    
    Accumulated
    
    
    Comprehensive
    
    
    StockholdersShares
    
    
    Amount
    
    
    Capital
    
    
    Net Income
    
    
    Dividends
    
    
    Deficit
    
    
    Income (Loss)
    
    
    EquityBalance at December 31,
2007
    
    
    46,727,153
    
    
    $
    467,271
    
    
    $
    602,929,530
    
    
    
    
    
    
    
    
    
    
    $
    (75,826,561
    )
    
    $
    (12,599,245
    )
    
    $
    514,970,995Comprehensive income :Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    52,473,557
    
    
    
    
    
    
    
    52,473,557
    
    
    
    
    
    
    
    52,473,557Net change in unrealized
income in derivatives
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,082,220
    
    
    
    3,082,220Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55,555,777Cash dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (70,149,063
    )
    
    
    (70,149,063
    )
    
    
    
    
    
    
    (70,149,063
    )Exercise of stock options
    
    
    13,333
    
    
    
    133
    
    
    
    237,194
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    237,327Non-cash compensation :Issuance of common shares
    
    
    30,000
    
    
    
    300
    
    
    
    608,100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    608,400Restricted share grants
and options
    
    
    
    
    
    
    
    
    
    
    7,158,052
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,158,052Balance at September 30,
2008
    
    
    46,770,486
    
    
    $
    467,704
    
    
    $
    610,932,876
    
    
    
    
    
    
    
    
    
    
    $
    (93,502,067
    )
    
    $
    (9,517,025
    )
    
    $
    508,381,488
  5




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##### Table of Contents



EAGLE BULK SHIPPING INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 Nine Months EndedSeptember 30, 
2008
    
    
    September 30, 
2007Cash flows from operating activities:Net income
    
    $
    52,473,557
    
    
    $
    35,914,378Adjustments to reconcile net income to net cash provided by operating activities:Items included in net income not affecting cash flows:Depreciation
    
    
    21,816,618
    
    
    
    18,008,485Amortization of deferred drydocking costs
    
    
    1,902,280
    
    
    
    1,071,026Amortization of deferred financing costs
    
    
    185,508
    
    
    
    180,070Amortization of fair value (below) above contract value of time charter acquired
    
    
    (264,053
    )
    
    
    3,240,000Non-cash compensation expense
    
    
    7,766,452
    
    
    
    3,504,193Gain on sale of vessel
    
    
    
    
    
    
    (872,568
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    (489,213
    )
    
    
    (1,417,655
    )Prepaid expenses
    
    
    (2,409,563
    )
    
    
    (597,878
    )Accounts payable
    
    
    (3,288,849
    )
    
    
    2,300,317Accrued interest
    
    
    573,342
    
    
    
    2,192,455Accrued expenses
    
    
    1,056,589
    
    
    
    79,210Drydocking expenditures
    
    
    (1,701,042
    )
    
    
    (2,972,553
    )Unearned charter hire revenue
    
    
    3,971,645
    
    
    
    1,958,114Net cash provided by operating activities
    
    
    81,593,271
    
    
    
    62,587,594Cash Flows from investing activities:Purchase of vessels and vessel improvements
    
    
    (146,688,116
    )
    
    
    (138,876,098
    )Advances for vessel construction
    
    
    (127,078,734
    )
    
    
    (265,089,166
    )Proceeds from sale of vessel
    
    
    
    
    
    
    12,011,482Purchase of leasehold improvements
    
    
    (120,723
    )
    
    
    Net cash used in investing activities
    
    
    (273,887,573
    )
    
    
    (391,953,782
    )Cash flows from financing activities:Issuance of common shares
    
    
    
    
    
    
    239,848,266Proceeds from exercise of stock options
    
    
    237,327
    
    
    
    Equity issuance costs
    
    
    
    
    
    
    (5,701,127
    )Bank borrowings
    
    
    144,724,967
    
    
    
    300,304,279Repayment of bank debt
    
    
    
    
    
    
    (12,440,000
    )Changes in restricted cash
    
    
    (1,651,440
    )
    
    
    (800,000
    )Deferred financing costs
    
    
    (786,811
    )
    
    
    (402,180
    )Cash dividends
    
    
    (70,149,063
    )
    
    
    (58,771,405
    )Net cash provided by financing activities
    
    
    72,374,980
    
    
    
    462,037,833Net (decrease)/increase in cash
    
    
    (119,919,322
    )
    
    
    132,671,645Cash at beginning of period
    
    
    152,903,692
    
    
    
    22,275,491Cash at end of period
    
    $
    32,984,370
    
    
    $
    154,947,136
  6




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##### Table of Contents



EAGLE BULK SHIPPING INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Note 1. Basis of Presentation and General Information
    VesselNo. of Vessels
    
    Dwt
    
    Type
    
    Delivery
    
    EmploymentVessels in Operation
21 Vessels
    
    1,074,433
    
    18 Supramax
    
    
    
    Time Charter3 Handymax
    
    
    
    Time CharterVessels to be delivered
4 Vessels
    
    212,400
    
    53,100 dwt series
    
    2008-2009
    
    3 Vessels on Time Charter andSupramax
    
    
    
    1 Vessel Charter Free5 Vessels
    
    280,000
    
    56,000 dwt series
    
    2008-2010
    
    Charter FreeSupramax25 Vessels
    
    1,450,000
    
    58,000 dwt series
    
    2009-2012
    
    17 Vessels on TimeCharter andSupramax
    
    
    
    8 Vessels Charter ree
  % of Consolidated Time Charter RevenueThree Months Ended
    
    Nine Months EndedSeptember 30, 2008
    
    September 30, 2007
    
    September 30, 2008
    
    September 30, 2007ChartererCharterer A
    
    
    
    
    
    
    12
    %
    
    
    
    
    
    
    13
    %Charterer B
    
    
    22
    %
    
    
    21
    %
    
    
    25
    %
    
    
    23
    %Charterer D
    
    
    
    
    
    
    10
    %
    
    
    
    
    
    
    13
    %Charterer H
    
    
    14
    %
    
    
    12
    %
    
    
    16
    %
    
    
    11
    %Charterer J
    
    
    
    
    
    
    11
    %
    
    
    
    
    
    
    Charterer L
    
    
    18
    %
    
    
    13
    %
    
    
    19
    %
    
    
    
 7




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##### Table of Contents



% of Consolidated Time Charter RevenueThree Months Ended
    
    Nine Months EndedSeptember 30, 2008
    
    September 30, 2007
    
    September 30, 2008
    
    September 30, 2007Charterer M
    
    
    12
    %
    
    
    
    
    
    
    12
    %
    
    
    Charterer P
    
    
    10
    %
    
    
    
    
    
    
    
    
    
    
    
   Note 2. New Accounting Pronouncements
    8




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##### Table of Contents



Note 3. Vessels
 a. Vessel and Vessel Improvements
   Vessels and Vessel Improvements, at December 31, 2007
    
    $
    605,244,861Purchase of Vessel and Vessel Improvements
    
    
    146,688,116Delivery of Newbuild Vessel
    
    
    55,867,424Depreciation Expense
    
    
    (21,816,618
    )Vessels and Vessel Improvements, at September 30, 2008
    
    $
    785,983,783
 b. Advances for Vessel Construction
    9




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Advances for Vessel Construction, at December 31, 2007
    
    $
    344,854,962Progress Payments
    
    
    137,947,463Capitalized Interest
    
    
    19,271,348Legal and Technical Supervision Costs
    
    
    2,733,546Delivery of Newbuild Vessel
    
    
    (55,867,424
    )Advances for Vessel Construction, at September 30, 2008
    
    $
    448,939,895
 Note 4. Long-Term Debt
  en bloc
   10




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##### Table of Contents



:
 Three Months Ended
    
    
    Nine Months EndedSeptember
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,30, 2008
    
    
    2007
    
    
    2008
    
    
    2007Loan Interest
    
    $
    3,636,510
    
    
    $
    3,340,888
    
    
    $
    10,287,483
    
    
    $
    9,247,055Commitment Fees
    
    
    15,661
    
    
    
    73,803
    
    
    
    40,937
    
    
    
    362,416Amortization of Deferred Financing Costs
    
    
    62,287
    
    
    
    62,286
    
    
    
    185,508
    
    
    
    180,070Total Interest Expense
    
    $
    3,714,458
    
    
    $
    3,476,977
    
    
    $
    10,513,928
    
    
    $
    9,789,541
  Interest-Rate Swaps
  Notional Amount
    
    Notional AmountOutstanding-
    
    Outstanding-September 30, 2008
    
    December 31, 2007
    
    
    Fixed Rate
    
    Maturity$
    84,800,000
    
    $
    84,800,000
    
    
    
    5.240
    %
    
    
    09/200925,776,443
    
    
    25,776,443
    
    
    
    4.900
    %
    
    
    03/201010,995,000
    
    
    10,995,000
    
    
    
    4.980
    %
    
    
    08/2010202,340,000
    
    
    202,340,000
    
    
    
    5.040
    %
    
    
    08/2010100,000,000
    
    
    100,000,000
    
    
    
    4.220
    %
    
    
    09/201030,000,000
    
    
    30,000,000
    
    
    
    4.5375
    %
    
    
    09/201025,048,118
    
    
    25,048,118
    
    
    
    4.740
    %
    
    
    12/201136,752,038
    
    
    36,752,038
    
    
    
    5.225
    %
    
    
    08/201281,500,000
    
    
    
    
    
    
    3.895
    %
    
    
    01/2013144,700,000
    
    
    
    
    
    
    3.580
    %
    
    
    10/2011$
    741,911,599
    
    $
    515,711,599
   Foreign Currency swaps
  11




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##### Table of Contents



Note 5. Fair Value Measurements
      Level 1
    
    Level 2
    
    Level 3AssetsInterest rate contracts
    
    
    
    
    
    $
    1,522,442
    
    
    
    Foreign currency
contracts
    
    
    
    
    
    $
    4,340,255
    
    
    
    LiabilitiesInterest rate contracts
    
    
    
    
    
    $
    15,379,722
    
    
    
    
  Note 6. Commitments and Contingencies
 Vessel Technical Management Contracts
  Operating Lease
   12




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##### Table of Contents



2008
    
    $
    162,1382009
    
    
    648,5522010
    
    
    648,5522011
    
    
    788,5192012
    
    
    835,175Thereafter
    
    
    4,523,865Total
    
    $
    7,606,801
 Note 7. Earnings Per Common Share
  Three Months Ended
    
    Nine Months EndedSeptember
    
    September
    
    September
    
    September30, 2008
    
    30, 2007
    
    30, 2008
    
    30, 2007Net Income
    
    $
    23,221,617
    
    
    $
    15,501,895
    
    
    $
    52,473,557
    
    
    $
    35,914,378Weighted Average Shares  Basic
    
    
    46,770,486
    
    
    
    42,209,617
    
    
    
    46,762,092
    
    
    
    40,493,753Dilutive effect of stock options
and restricted stock units
    
    
    295,768
    
    
    
    185,635
    
    
    
    300,719
    
    
    
    97,043Weighted Average Shares  Diluted
    
    
    47,066,254
    
    
    
    42,365,252
    
    
    
    47,062,811
    
    
    
    40,590,796Basic Earnings Per Share
    
    $
    0.50
    
    
    $
    0.37
    
    
    $
    1.12
    
    
    $
    0.89Diluted Earnings Per Share
    
    $
    0.49
    
    
    $
    0.37
    
    
    $
    1.11
    
    
    $
    0.88
 Note 8. Capital Stock
 Dividends
    13




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##### Table of Contents



Note 9. 2005 Stock Incentive Plan
       14




---



##### Table of Contents



Three Months Ended
    
    Nine Months EndedSeptember
    
    September
    
    September
    
    September30, 2008
    
    30, 2007
    
    30, 2008
    
    30, 2007Stock Option Plans
    
    $
    62,851
    
    
    $
    120,614
    
    
    $
    226,108
    
    
    $
    366,381Restricted Stock Grants
    
    
    3,131,658
    
    
    
    
    
    
    
    6,931,944
    
    
    
    Stock Grants
    
    
    
    
    
    
    
    
    
    
    608,400
    
    
    
    Non-dilutive Profits Interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,137,812Total Non-cash compensation expense
    
    $
    3,194,509
    
    
    $
    120,614
    
    
    $
    7,766,452
    
    
    $
    3,504,193
  Note 10. Subsequent Events
 Dividend
  15




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
   Overview
   16




---



##### Table of Contents



(1)
    
    concentration in one vessel category: Supramax class of Handymax dry bulk vessels,
which we believe offer size, operational and geographical advantages (over Panamax and
Capesize vessels),(2)
    
    our strategy is to charter our vessels primarily pursuant to one- to three-year time
charters to allow us to take advantage of the stable cash flow and high utilization rates
that are associated with medium to long-term time charters. Reliance on the spot market
contributes to fluctuations in revenue, cash flow, and net income. On the other hand, time
charters provide a shipping company with a predictable level of revenues. We have entered
into time charters for all of our vessels which range in length from approximately one to
three years, and in the case of many of our newbuilding vessels for periods up to December
2018. Our time charters provide for fixed semi-monthly payments in advance. This strategy
is effective in strong and weak dry bulk markets, giving us security and predictability of
cashflows when we look at the volatility of the shipping markets,(3)
    
    maintain high quality vessels and improve standards of operation through improved
environmental procedures, crew training and maintenance and repair procedures, and(4)
    
    maintain a balance between purchasing vessels as market conditions and opportunities
arise and maintaining prudent financial ratios (e.g. leverage ratio).
  Year
    
    
    
    
    
    Daily TimeVessel
    
    Built
    
    Dwt
    

Time Charter Expiration (1)
    
    Charter Hire RateCardinal
    
    2004
    
    55,408
    
    May 2008 to August 2008
    
    $28,000August 2008 to Jun/Sep 2009
    
    $62,000Condor (2)
    
    2001
    
    50,296
    
    May 2009 to August 2009
    
    $20,500Falcon (3)
    
    2001
    
    50,296
    
    April 2008 to July 2008
    
    $20,950August 2008 to Apr/Jun 2010
    
    $39,500Griffon
    
    1995
    
    46,635
    
    March 2009 to June 2009
    
    $20,075Harrier (4)
    
    2001
    
    50,296
    
    June 2009 to September 2009
    
    $24,000Hawk I
    
    2001
    
    50,296
    
    April 2009 to June 2009
    
    $22,000Heron (5)
    
    2001
    
    52,827
    
    January 2011 to March 2011
    
    $26,375
 17




---



##### Table of Contents



Year
    
    
    
    
    
    Daily TimeVessel
    
    Built
    
    Dwt
    

Time Charter Expiration (1)
    
    Charter Hire RateJaeger (6)
    
    2004
    
    52,248
    
    July 2008 to August 2008
    
    $27,500August 2008 to November 2008
    
    $50,000Kestrel I (7)
    
    2004
    
    50,326
    
    April 2008 to June 2008
    
    $18,750June 2008 to April 2009
    
    $20,000Kite
    
    1997
    
    47,195
    
    September 2009 to January 2010
    
    $21,000Merlin(8)
    
    2001
    
    50,296
    
    December 2010 to March 2011
    
    $25,000Osprey I (9)
    
    2002
    
    50,206
    
    July 2008 to November 2008
    
    $21,000November 2008 to December 2009
    
    $25,000Peregrine
    
    2001
    
    50,913
    
    December 2008 to February 2009
    
    $20,500Sparrow (10)
    
    2000
    
    48,225
    
    February 2010 to April 2010
    
    $34,500Tern (11)
    
    2003
    
    50,200
    
    February 2009 to April 2009
    
    $20,500Shrike (12)
    
    2003
    
    53,343
    
    April 2009 to June 2009
    
    $24,600June 2009 to Aug 2010
    
    $25,600Skua (13)
    
    2003
    
    53,350
    
    May 2009 to August 2009
    
    $24,200August 2009 to September 2010
    
    $25,200Kittiwake (14)
    
    2002
    
    53,146
    
    May 2008 to August 2008
    
    $30,400August 2008 to July/Sep 2009
    
    $56,250Goldeneye
    
    2002
    
    52,421
    
    May 2009 to August 2009
    
    $61,000$24,750Wren (15)
    
    2008
    
    53,100
    
    Feb 2012 Feb 2012 to Dec 2018/Apr 2019
    
    $18,000 
(withprofit share)Redwing
    
    2007
    
    52,421
    
    September 2008 to August/October 2009
    
    $50,000
 
 (1)
    
    The date range provided represents the earliest and latest date on which
the charterer may redeliver the vessel to the Company upon the termination of the
charter. The time charter hire rates presented are gross daily charter rates before
brokerage commissions, ranging from 2.25% to 6.25%, to third party ship brokers.(2)
    
    The charterer of the CONDOR has exercised its option to extend the
charter period by 11 to 13 months at a time charter rate of $22,000 per day.(3)
    
    Upon the conclusion of the current charter in July 2008, the FALCON
commenced a new time charter with a rate of $39,500 per day for 21 to 23 months.
The charterer has an option to extend the charter period by 11 to 13 months at a
daily time charter rate of $41,000.(4)
    
    The daily rate for the HARRIER is $27,000 for the first year and $21,000
for the second year. Revenue recognition is based on an average daily rate of
$24,000.(5)
    
    The previous time charter on the HERON at a daily rate of $24,000 ended
in January 2008. The vessel commenced a new time charter with a rate of $26,375
per day for 36 to 39 months. The charterer has an option for a further 11 to 13
months at a time charter rate of $27,375 per day. The charterer has a second option
for a further 11 to 13 months at a time charter rate of $28,375 per day.(6)
    
    The JAEGER commenced a new time charter in August 2008 with a daily rate
of $50,000 for a period of 3 to 5 months. The vessel was previously employed on a
one year time charter at a daily rate which was based on the average time charter
rate for the Baltic Supramax Index, but in no case be greater than $27,500 per day
or less than $22,500 per day. The vessel earned the maximum $27,500 per day during
the currency of that charter.(7)
    
    The charterer of the KESTREL I has exercised its option to extend the
charter period by 11 to 13 months at a daily time charter rate of $20,000 per day.(8)
    
    The daily rate for the MERLIN is $27,000 for the first year, $25,000 for
the second year and $23,000 for the third year. Revenue recognition is based on an
average daily rate of $25,000. 18




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##### Table of Contents



(9)
    
    The charterer of the OSPREY I has exercised its option to extend the
charter period by up to 11 to 13 months at a time charter rate of $25,000 per day.
The charterer has an additional option to extend for a further 11 to 13 months at a
time charter rate of $25,000 per day.(10)
    
    The SPARROW was previously on a time charter at a base rate of $24,000
per day for 11 to 13 months with a profit share of 30% of up to the first $3,000
per day over the base rate. This charter ended in February 2008.(11)
    
    The TERN previously was on a time charter at a daily rate of $19,000.
This charter ended in March 2008 and the charterer has exercised its option to
extend the charter period by 11 to 13 months at a time charter rate of $20,500 per
day.(12)
    
    The charterer of the SHRIKE has exercised their option to extend the
charter period by 12 to 14 months at a daily time charter rate of $25,600.(13)
    
    The charterer of the SKUA has exercised an option to extend the charter
period by 11 to 13 months at a daily time charter rate of $25,200.(14)
    
    The KITTIWAKE commenced a new time charter in August 2008 with a daily
rate of $56,250 for 11 to 13 months. The KITTIWAKE was previously employed on a
time charter for 11 to 13 months at a charter rate which was based on the average
time charter rate for the Baltic Supramax Index, but in no case be greater than
$30,400 per day or less than $24,400 per day. The vessel earned the maximum $30,400
per day during the currency of that charter.(15)
    
    The WREN has entered into a long-term charter. The charter rate until
February 2012 is $24,750 per day. Subsequently, the charter until redelivery in
December 2018 to April 2019 will be profit share based. The base charter rate will
be $18,000 with a 50% profit share for earned rates over $22,000 per day. Revenue
recognition for the base rate from commencement of the charter is based on an
average daily base rate of $20,306.  Year Built
    
    
    
    Daily Time- Expected
    
    
    
    Charter HireVessel
    
    Dwt
    
    Delivery(1)
    
    Time Charter Expiration(2)
    
    Rate(3)
    
    Profit ShareWoodstar (4)
    
    53,100
    
    Oct 2008
    
    Jan 2014
    
    $18,300
    
    Jan 2014 to Dec 2018/Apr 2019
    
    $18,000
    
    50% over $22,000Crowned Eagle
    
    56,000
    
    Nov 2008
    
    Nov 2008 to Oct 2009
    
    $16,000
    
    Crested Eagle
    
    56,000
    
    Feb 2009
    
    Charter Free
    
    
    
    Stellar Eagle
    
    56,000
    
    Apr 2009
    
    Charter Free
    
    
    
    Thrush
    
    53,100
    
    Sep 2009
    
    Charter Free
    
    
    
    Bittern
    
    58,000
    
    Sep 2009
    
    Dec 2014
    
    $18,850
    
    Dec 2014 to Dec 2018/Apr 2019
    
    $18,000
    
    50% over $22,000Canary
    
    58,000
    
    Oct 2009
    
    Jan 2015
    
    $18,850
    
    Jan 2015 to Dec 2018/Apr 2019
    
    $18,000
    
    50% over $22,000Thrasher
    
    53,100
    
    Nov 2009
   
    Feb 2016
    
    $18,400
    
    Feb 2016 to Dec 2018/Apr 2019
    
    $18,000
    
    50% over $22,000Crane
    
    58,000
    
    Nov 2009
    
    Feb 2015
    
    $18,850
    
    Feb 2015 to Dec 2018/Apr 2019
    
    $18,000
    
    50% over $22,000Avocet
    
    53,100
    
    Dec 2009
    
    Mar 2016
    
    $18,400
    
    Mar 2016 to Dec 2018/Apr 2019
    
    $18,000
    
    50% over $22,000Egret (5)
    
    58,000
    
    Dec 2009
    
    Sep 2012 to Jan 2013
    
    $17,650
    
    50% over $20,000Golden Eagle
    
    56,000
    
    Jan 2010
    
    Charter Free
    
    
    
    Gannet (5)
    
    58,000
    
    Jan 2010
    
    Oct 2012 to Feb 2013
    
    $17,650
    
    50% over $20,000Imperial Eagle
    
    56,000
    
    Feb 2010
    
    Charter Free
    
    
    
    Grebe(5)
    
    58,000
    
    Feb 2010
    
    Nov 2012 to Mar 2013
    
    $17,650
    
    50% over $20,000
 19




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##### Table of Contents



Year Built
    
    
    
    Daily Time- Expected
    
    
    
    Charter HireVessel
    
    Dwt
    
    Delivery(1)
    
    Time Charter Expiration(2)
    
    Rate(3)
    
    Profit ShareIbis(5)
    
    58,000
    
    Mar 2010
    
    Dec 2012 to Apr 2013
    
    $17,650
    
    50% over $20,000Jay
    
    58,000
    
    Apr 2010
    
    Sep 2015
    
    $18,500
    
    50% over $21,500Sep 2015 to Dec 2018/Apr 2019
    
    $18,000
    
    50% over $22,000Kingfisher
    
    58,000
    
    May 2010
   
    Oct 2015
    
    $18,500
    
    50% over $21,500Oct 2015 to Dec 2018/Apr 2019
    
    $18,000
    
    50% over $22,000Martin
    
    58,000
    
    Jun 2010
    
    Dec 2016 to Dec 2017
    
    $18,400
    
    Besra (6)
    
    58,000
    
    Oct 2010
    
    Charter Free
    
    
    
    Cernicalo (6)
    
    58,000
    
    Jan 2011
    
    Charter Free
    
    
    
    Nighthawk
    
    58,000
    
    Mar 2011
    
    Sep 2017 to Sep 2018
    
    $18,400
    
    Oriole
    
    58,000
    
    Jul 2011
    
    Jan 2018 to Jan 2019
    
    $18,400
    
    Fulmar (6)
    
    58,000
    
    Jul 2011
    
    Charter Free
    
    
    
    Owl
    
    58,000
    
    Aug 2011
    
    Feb 2018 to Feb 2019
    
    $18,400
    
    Petrel (5)
    
    58,000
    
    Sep 2011
    
    Jun 2014 to Oct 2014
    
    $17,650
    
    50% over $20,000Goshawk (6)
    
    58,000
    
    Sep 2011
    
    Charter Free
    
    
    
    Puffin (5)
    
    58,000
    
    Oct 2011
    
    Jul 2014 to Nov 2014
    
    $17,650
    
    50% over $20,000Roadrunner (5)
    
    58,000
    
    Nov 2011
    
    Aug 2014 to Dec 2014
    
    $17,650
    
    50% over $20,000Sandpiper (5)
    
    58,000
    
    Dec 2011
    
    Sep 2014 to Jan 2015
    
    $17,650
    
    50% over $20,000Snipe(6)
    
    58,000
    
    Jan 2012
    
    Charter Free
    
    
    
    Swift (6)
    
    58,000
    
    Feb 2012
    
    Charter Free
    
    
    
    Raptor (6)
    
    58,000
    
    Mar 2012
    
    Charter Free
    
    
    
    Saker (6)
    
    58,000
    
    Apr 2012
    
    Charter Free
    
    
    
    
 
 (1)
    
    Vessel build and delivery dates are estimates based on guidance
received from shipyard.(2)
    
    The date range represents the earliest and latest date on which the
charterer may redeliver the vessel to the Company upon the termination of the
charter.(3)
    
    The time charter hire rates presented are gross daily charter
rates before brokerage commissions, ranging from 2.25% to 6.25%, to third party
ship brokers. Revenue recognition for the long term charters with base rates will
be based on an average daily base rate over the life of the charter from
commencement of the charter.(4)
    
    The WOODSTAR was constructed and delivered into the Company
fleet in October 2008. The vessel immediately commenced its scheduled charter.(5)
    
    The charterer has an option to extend the charter by two periods of 11 to 13 months each.(6)
    
    Options for construction exercised on December 27, 2007. Fleet Management
  
    
    Strategic management. We locate, obtain financing and insurance for, purchase and sell vessels.
    
    Commercial management. We obtain employment for our vessels and manage our relationships
with charterers.
    
    Technical management. The technical manager performs day-to-day operations and
maintenance of our vessels.
 Commercial and Strategic Management
  20




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##### Table of Contents




    
    commercial operations and technical supervision;
    
    safety monitoring;
    
    vessel acquisition; and
    
    financial, accounting and information technology services.
 Technical Management
   Value of Assets and Cash Requirements
   Critical Accounting Policies
   21




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##### Table of Contents



Results of Operations for the three month periods ended September 30, 2008 and 2007:
 Fleet Data
  Three Months Ended
    
    Nine Months EndedSeptember 30, 2008
    
    September 30, 2007
    
    September 30, 2008
    
    September 30, 2007Ownership Days
    
    
    1,866
    
    
    
    1,656
    
    
    
    5,160
    
    
    
    4,510Available Days
    
    
    1,862
    
    
    
    1,607
    
    
    
    5,117
    
    
    
    4,440Operating Days
    
    
    1,845
    
    
    
    1,595
    
    
    
    5,094
    
    
    
    4,417Fleet Utilization
    
    
    99.1
    %
    
    
    99.3
    %
    
    
    99.6
    %
    
    
    99.5
    %
  Ownership days:
  Available days:
  Operating days:
  Fleet utilization:
 Revenues
   22




---



##### Table of Contents



Vessel Expenses
     Depreciation and Amortization
   23




---



##### Table of Contents



General and Administrative Expenses
    Capitalized Interest
  -
  EBITDA
  24




---



##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net Income
    
    $
    23,221,617
    
    
    $
    15,501,895
    
    
    $
    52,473,557
    
    
    $
    35,914,378Interest Expense
    
    
    3,714,458
    
    
    
    3,476,977
    
    
    
    10,513,928
    
    
    
    9,789,541Depreciation and Amortization
    
    
    8,991,877
    
    
    
    7,241,927
    
    
    
    23,718,898
    
    
    
    19,079,511Amortization of fair value (below) above
market of time charter acquired
    
    
    (264,053
    )
    
    
    1,080,000
    
    
    
    (264,053
    )
    
    
    3,240,000EBITDA
    
    
    35,663,899
    
    
    
    27,300,799
    
    
    
    86,442,330
    
    
    
    68,023,430Adjustments for Exceptional Items:Non-cash Compensation Expense (1)
    
    
    3,194,509
    
    
    
    120,614
    
    
    
    7,766,452
    
    
    
    3,504,193Credit Agreement EBITDA
    
    $
    38,858,408
    
    
    $
    27,421,413
    
    
    $
    94,208,782
    
    
    $
    71,527,623
 
 (1)
    
    Stock based compensation related to stock options, restricted
stock units, and managements participation in profits interests in Eagle
Ventures LLC (see Notes to our financial statements). Effects of Inflation
  Liquidity and Capital Resources
    25




---



##### Table of Contents



Revolving Credit Facility
 en bloc
 Dividends
  26




---



##### Table of Contents



Contractual Obligations
  Within
    
    One to
    
    Three to
    
    More than(in thousands of U.S. dollars)
    
    One Year
    
    Three Years
    
    Five Years
    
    Five years
    
    TotalVessels (1)
    
    $
    304,096
    
    
    $
    570,338
    
    
    $
    117,280
    
    
    
    
    
    
    $
    991,714Bank Loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    741,968
    
    
    
    741,968Interest and borrowing fees (2)
    
    
    43,720
    
    
    
    87,441
    
    
    
    87,441
    
    
    
    164,101
    
    
    
    382,703Office lease (3)
    
    
    649
    
    
    
    1,390
    
    
    
    1,670
    
    
    
    3,897
    
    
    
    7,606Total
    
    $
    348,465
    
    
    $
    659,169
    
    
    $
    206,391
    
    
    $
    909,966
    
    
    $
    2,123,991
 
 (1)
    
    The balance of the contract price in US dollars for the 34 newbuilding
vessels which are to be constructed and delivered between October 2008 and April
2012.(2)
    
    The Company is a party to floating-to-fixed interest rate swaps
covering an aggregate notional amount of $741,911,599 as of September 30, 2008,
that effectively convert the Companys interest rate exposure from floating rates
based on LIBOR to a fixed rates ranging from 3.58% to 5.24%, plus applicable
margins. Interest and borrowing fees includes capitalized interest for the
newbuilding vessels.(3)
    
    Remainder of the lease on the office space which we occupy. Capital Expenditures
    27




---



##### Table of Contents



Quarter Ending
    
    Off-hire Days(1)
    
    Projected Costs(2)December 31, 2008
    
    
    44
    
    
    $1.00 millionMarch 31, 2009
    
    
    88
    
    
    $2.00 millionJune 30, 2009
    
    
    22
    
    
    $0.50 millionSeptember 30, 2009
    
    
    88
    
    
    $2.00 million
 
 (1)
    
    While we estimate 22 days per vessel, actual duration of drydocking a
vessel will vary based on the condition of the vessel, yard schedules and other
factors.(2)
    
    Actual costs will vary based on various factors, including where the
drydockings are actually performed. Off-balance Sheet Arrangements
  28




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
 Interest Rate Risk
   -
    
    Notional amount of $81,500,000 with a fixed interest rate of 3.895% and maturity in January
2013-
    
    A forward interest rate swap contract for a notional amount of $84,800,000 of its
outstanding debt which
will commence upon the maturity in September 2009 of the existing swap for the notional
amount of $84,800,000 of its outstanding debt. Under the forward swap, the Company will pay
fixed rate interest of 3.90% and receive floating rate interest amounts based on
three-month Libor settings, exclusive of applicable margin. The forward swap matures in
September 2013.-
    
    Notional amount of $144,700,000 with a fixed interest rate of 3.58% and maturity in October
2011.
  Currency and Exchange Rates
    
 Item 4. Controls and Procedures
 Disclosure Controls and Procedures
  29




---



##### Table of Contents



Internal Control Over Financial Reporting
  30




---



##### Table of Contents



PART II: OTHER INFORMATION
 
 Item 1  Legal Proceedings
  
 Item 1A  Risk Factors
  Disruptions in world financial markets and the resulting governmental action of the
United States and other countries could have a material adverse impact on our ability to
obtain financing, our results of operations, financial condition and cash flows and could
cause the market price of our common shares to decline.
  Charter hire rates for dry bulk vessels may decrease in the future, which may adversely
affect our earnings An economic slowdown in the Asia Pacific region could have a material
adverse effect on our business, financial position and results of operations,
 Charter hire rates for drybulk vessels have decreased significantly and may remain at low
rates or further decrease in the future, which may adversely affect our earnings.
 31




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##### Table of Contents



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; embargoes and strikes;
    
    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:
 
    
    number of newbuilding deliveries;
    
    scrapping of older vessels;
    
    vessel casualties; and
    
    number of vessels that are out of service.
    An economic slowdown in the Asia Pacific region could have a material adverse effect on our
business, financial position and results of operations.
 32




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##### Table of Contents



Item 2  Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3  Defaults upon Senior Securities
  
 Item 4  Submission of Matters to a Vote of Security Holders
  
 Item 5  Other Information
  
 Item 6  Exhibits
 EXHIBIT INDEX
 3.1
    
    Amended and Restated Articles of Incorporation of the Company 13.2
    
    Amended and Restated Bylaws of the Company 13.3
    
    Certificate of Designation, Preferences and Rights of Series A Junior
Participating Preferred Stock 24.1
    
    Form of Share Certificate of the Company 14.2
    
    Form of Senior Indenture 34.3
    
    Form of Subordinated Indenture 34.4
    
    Rights Agreement 210.1
    
    Amended and Restated Employment Agreement of Mr. Sophocles N. Zoullas,
dated as of June 19, 2008 4,610.2
    
    Amendatory Agreement, dated as of July 3, 2008, among the Company and
certain of its subsidiaries and the banks and financial institutions
party thereto and the Royal Bank of Scotland plc, as mandated lead
arranger 531.1
    
    Rule 13a-14(d) / 15d-14(a)_Certification of CEO31.2
    
    Rule 13a-14(d) / 15d-14(a)_Certification of CFO32.1
    
    Section 1350 Certification of CEO
 33




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##### Table of Contents



32.2
    
    Section 1350 Certification of CFO
 
 1
    
    Incorporated by reference to Amendment No. 4 to the Companys Registration Statement on Form S-1, Registration No. 333-123817,
filed on June 22, 2005.2
    
    Incorporated by reference to the Companys Registration Statement on Form 8-A filed on November 13, 2007.3
    
    Incorporated by reference to the Companys Registration Statement on Form S-3, Registration No. 333-139745, filed on
December 29, 2007.4
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on June 20, 2008.5
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on July 7, 2008.6
    
    Management contract or compensating plan. 
 SIGNATURES
  EAGLE BULK SHIPPING INC.
 By: /s/ Sophocles N. ZoullasSophocles N. ZoullasChairman of the Board andChief Executive OfficerDate: November 7, 2008By: /s/ Alan S. GinsbergAlan S. GinsbergChief Financial Officerand TreasurerDate:November 7, 2008
 34