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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-K





(Mark One)

|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the Fiscal Year Ended December 31, 2008

OR



| ̈ | 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 0-15087





TRAILER BRIDGE, INC.

(Exact name of registrant as specified in its charter)







|                                                               |  |                                                     
|-------------------------------------------------------------- |  | ----------------------------------------------------
|DELAWARE                                                       |  | 13-3617986                                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)                
|                                                               | 
|10405 New Berlin Road East Jacksonville, FL 32226              |  | (904) 751-7100                                      
|(Address of Principal Executive Offices, including Zip Code)   |  | (Registrants Telephone Number, Including Area Code)





Securities Registered
Pursuant to Section 12(b) of the Act:



|                                        |  |                                          
|--------------------------------------- |  | -----------------------------------------
|Title of Each Class                     |  | Name of Each Exchange on Which Registered
|Common Stock, par value $0.01 per share |  | Nasdaq Stock Market, LLC                 

Securities Registered Pursuant to Section 12(g) of the Act: None





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in rule 405 of the Securities Act.    Yes   ̈    No  x

Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes   ̈    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No   ̈

Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of registrants knowledge, in the registrants definitive proxy statement incorporated by
reference in Part III of this Form 10-K.  x

Indicate by check mark if the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule12b-2 of the Exchange Act.
(Check one):



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated filer         |  |  ̈
|                        |  |                                                  | 
|Non-accelerated filer   |  |  ̈  (Do not check if a smaller reporting company) |  | Smaller reporting company |  | x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act.)    Yes   ̈    No  x

The aggregate market value of the shares of the registrants $0.01 par value common stock held by non-affiliates of the registrant as of June 30, 2008, the last business day of the registrants most recently completed second
fiscal quarter was $40,108,764 (based upon $5.76 per share being the price at which the common equity was last sold). In making this calculation the issuer has assumed, without admitting for any purpose, that all executive officers and directors of
the registrant are affiliates.

As of March 20, 2009, 11,975,511 shares of the registrants common stock, par value $0.01 per share, were
outstanding.

DOCUMENTS INCORPORATED BY REFERENCE: The information set forth under Part III, Items 10, 11, 12, 13, and 14 of this Report is incorporated by
reference from the registrants definitive proxy statement for the 2009 annual meeting of stockholders that will be filed no later than 120 days after the end of the year to which this report relates.









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TRAILER BRIDGE, INC.

FORM 10-K

FOR THE YEAR ENDED DECEMBER 31, 2008

TABLE OF CONTENTS



|              |  |                                                                                                              |  |    |  |   
|------------- |  | ------------------------------------------------------------------------------------------------------------ |  | -- |  | --
|PART I        |  |                                                                                                              |  |   
|              |  |                                                                                                              | 
|Item 1.       |  |                                                                                                              |  |    |  |   
|              |  | Business                                                                                                     |  | 3 
|Item 1A.      |  |                                                                                                              |  |    |  |   
|              |  | Risk Factors                                                                                                 |  | 10
|Item 1B.      |  |                                                                                                              |  |   
|              |  | Unresolved Staff Comments                                                                                    |  | 14
|Item 2.       |  |                                                                                                              |  |    |  |   
|              |  | Properties                                                                                                   |  | 14
|Item 3.       |  |                                                                                                              |  |    |  |   
|              |  | Legal Proceedings                                                                                            |  | 15
|Item 4.       |  |                                                                                                              |  |    |  |   
|              |  | Submission of Matters to a Vote of Security Holders                                                          |  | 16
|              |  |                                                                                                             
|PART II       |  |                                                                                                              |  |   
|              |  |                                                                                                              | 
|Item 5.       |  |                                                                                                              |  |    |  |   
|              |  | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 17
|Item 6.       |  |                                                                                                              |  |    |  |   
|              |  | Selected Financial Data                                                                                      |  |    |  | 18
|Item 7.       |  |                                                                                                              |  |    |  |   
|              |  | Managements Discussion and Analysis of Financial Condition and Results of
Operations                        |  | 19
|Item 7A.      |  |                                                                                                              |  |    |  |   
|              |  | Quantitative and Qualitative Disclosures About Market Risk                                                   |  | 28
|Item 8.       |  |                                                                                                              |  |    |  |   
|              |  | Financial Statements and Supplementary Data                                                                  |  | 29
|Item 9.       |  |                                                                                                              |  |    |  |   
|              |  | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure                         |  | 51
|Item 9A(T).   |  |                                                                                                              |  |    |  |   
|              |  | Controls and Procedures                                                                                      |  | 51
|Item 9B.      |  |                                                                                                              |  |    |  |   
|              |  | Other Information                                                                                            |  | 52
|              |  |                                                                                                             
|PART III      |  |                                                                                                              |  |   
|              |  |                                                                                                              | 
|Items 10 14. |  |                                                                                                              |  |    |  |   
|              |  | Incorporated by Reference                                                                                    |  | 52
|              |  |                                                                                                             
|PART IV       |  |                                                                                                              |  |   
|              |  |                                                                                                              | 
|Item 15.      |  |                                                                                                              |  |    |  |   
|              |  | Exhibits, Financial Statement Schedules                                                                      |  | 53
|SIGNATURES    |  |                                                                                                              |  | 57
|EXHIBIT INDEX |  |                                                                                                              |  | 53



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PART I

Forward Looking Statements

This report on Form 10-K contains statements that constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. The matters discussed in this Report include statements regarding the intent, belief or current expectations of the Company, its directors or its officers with respect to
the future operating performance of the Company. Investors are cautioned that any such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those
in the forward looking statements as a result of various factors. Without limitation, these risks and uncertainties include the risks of changes in demand for transportation services offered by the Company, changes in rate levels for transportation
services offered by the Company, changes in the cost of fuel, DOJ investigation and related class actions, and economic recessions and severe weather. An additional description of the Companys risk factors is described in Part 1 
Item 1A. Risk Factors. The Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.



|Item 1. | Business
|------- | --------

BUSINESS OVERVIEW

Trailer Bridge Inc. (Trailer Bridge) was incorporated in 1991 and is headquartered in Jacksonville, Florida. Trailer Bridge is an integrated trucking and
marine freight carrier that provides freight transportation between the continental U.S., Puerto Rico and the Dominican Republic. Trailer Bridge was the first, and remains the only company serving markets governed by the Jones Act to exclusively
operate marine vessels fully configured to carry 48 and 53 long, 102 wide, high-cube equipment. This configuration enables the Company to achieve operating efficiencies not readily available to traditional ocean
carriers that primarily use smaller capacity equipment, such as 40 containers, as the 53 containers have 61% more inside cubic space compared to traditional 40 marine containers which typically results in lower per cubic foot
shipping costs on both land and sea for customers. The Company also utilizes tug/barge vessels which result in lower costs per unit mile at sea compared to traditional self-propelled vessels. Trailer Bridges vessels are loaded and unloaded
using both a cost-efficient roll-on, roll-off process and a unique patented process for its newer vessels, both of which result in lower operating costs per unit compared to traditional container gantry crane operations.



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In 1998 and 1999, Trailer Bridge took delivery of five 403 long container carrying barges designed specifically for
the Companys integrated truckload marine transportation system and bearing the Companys Triplestack Box Carrier® (TBC) trade name. In 2004, Trailer Bridge purchased two roll-on/roll-off (ro/ro) barges that it
previously chartered from a related party. The TBCs are versatile, low-draft vessels that have a capacity of 281 53 containers. The Company currently utilizes the two mid-bodied ro/ro vessels and two TBCs to provide two weekly
sailings between Jacksonville, Florida and San Juan, Puerto Rico and one bi-weekly sailing between and among Jacksonville, Florida, San Juan, Puerto Rico and Puerto Plata, Dominican Republic. As of December 31, 2008, three TBCs were
chartered to a third party.

In this Form 10K, unless the context requires a different interpretation, Trailer Bridge, the Company,
we, us, and our refer to Trailer Bridge, Inc.

OPERATIONS

At December 31, 2008, Trailer Bridge operated a fleet of 119 tractors, comprised of 81 company owned units and 38 leased and owner operator units, 3,912 53
high cube containers, 3,164 53 chassis, 210 high-cube trailers and 299 53 vehicle transport modules that transport truckload freight between the Companys Jacksonville port facility, its San Juan, Puerto Rico port facility, the
Dominican Republic and inland points in the U.S. and Puerto Rico. In addition the Company leased 313 40 chassis and 392 40 high-cube containers. The Company provides full truckload service between inland points within the continental
U.S., primarily to reposition equipment in order to service loads to and from Puerto Rico. The Company maintains a centralized dispatch and customer service center at its Jacksonville headquarters to coordinate the movement of customer freight
throughout the Companys transportation system. Sales and customer service representatives solicit and accept freight, quote freight rates and serve as the primary contact with customers. Dispatch, sales and customer service personnel work
together to coordinate freight to achieve the most optimum load balance and minimize empty miles within the Companys truckload operation.

At
December 31, 2008, Trailer Bridge operated two 736 triple-deck, ro/ro ocean-going barges and two 403 TBCs. Loading of the ro/ro barges is performed with small maneuverable yard tractors operated by stevedores hired from an
outside contractor. Each ro/ro vessel is towed at approximately 9 knots by one 7,200 horsepower diesel-powered tug. Each TBC is towed at approximately 9 knots by one 4,600 horsepower diesel-powered tug. The tugs are time-chartered and are manned by
employees of one major tug owner. Compared to a self-propelled vessel, a tug/barge unit has reduced Coast Guard manning requirements and higher fuel efficiency compared to the steam turbine vessels operated by competitors. The construction cost and
maintenance costs of tug/barges are also lower compared to self-propelled vessels. With relative cost efficiencies at the operating, fuel and capital cost lines, the Companys tug/barge vessel model results in lower costs per unit mile at sea
compared to the self-propelled vessels it competes with. The tug/barge model also results in less toxic emissions than steam turbine vessels, which use residual fuel. The greater fuel efficiency and much cleaner distillate fuel associated with our
tug/barge model results in 4 to 6 times fewer total emissions per cargo unit, and up to 10 and 16 times less particulate matter and sulfur oxide, respectively, compared to the self-propelled vessels now serving Puerto Rico. The large number of U.S.
tugs available for charter provides the Company with a reliable source for towing services.

MARKETING AND CUSTOMERS

Sales professionals based in Jacksonville, Florida, San Juan, Puerto Rico, Santiago, Dominican Republic, and other key U.S. cities aggressively market Trailer Bridge to
shippers as a customer-oriented provider of value-priced and dependable service. The Company services major shippers with high volume, repetitive shipments whose freight lends itself to integrated trucking and marine service.



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The Company believes that price is the primary determinant in the freight lanes in which it serves. Rates are quoted and
contracted for on a per container load basis but the Company seeks to highlight that its containers carry up to 61% more of a shippers cargo compared to traditional containers. The Company highlights the effective cost per cubic foot of both the
freight rate and any surcharges and calculates what those charges would need to be with a competitors smaller container to result in better overall cost economics. The Company seeks to obtain additional business by highlighting the
advantageous cost per cubic foot pricing embodied in its proposals. However, the Company also believes that it provides enhanced service that results from its use of an intermodal model built around 53 equipment that is the standard for
movements on the mainland. The intermodal model provides for moving products from one location to another by various means, including water, truck and rail. This intermodal service frees the customer from the operational complexities of coordinating
the interface between over-the-road, rail and marine service. This customer service philosophy has generated increased demand from existing customers.

Because the Company has a diversified customer base, typical shipments to Puerto Rico include furniture, consumer goods, raw materials for manufacturing, electronics, new and used automobiles, and apparel, whereas, the typical shipments
from Puerto Rico normally include healthcare products, pharmaceuticals, electronics, shoes and recyclables. Management intends to continue the Companys efforts both to increase business with existing customers and add new core relationships.

The Company maintains written contracts with the majority of its customers. These contracts generally specify service standards and rates, eliminating the
need for negotiating the rate for individual shipments. A contract typically requires a minimum tender of cargo during a specified term in return for a set rate.

The continental United States/Puerto Rico trade lane in which the Company operates is imbalanced with approximately 80% of the freight moving southbound. The Companys core business is southbound containers and trailers but it also
moves new automobiles, used automobiles, non-containerized, or freight not in trailers (NITs) and freight moving in shipper owned or leased equipment (SOLs).

VESSELS

Ro/Ro Barges

At December 31, 2008, the Company owned and operated two 736 by 104 triple-deck ro/ro barges. Each deck has ten lanes that are accessed from the stern of the vessel via ramp structures in Jacksonville, Florida and San Juan,
Puerto Rico that have been built specifically for the Company. On each vessel, 86 equivalent 53 slots have been converted to carry new and used automobiles on car decks that allow up to 11 cars to fit in the space previously used for one
53 unit. The container/chassis combinations and trailers are secured on the vessel by attachment to pullman stands that are engaged and disengaged with specially configured yard tractors used to pull the container/chassis combinations and
trailers into position on the vessel.

Triplestack Box Carriers

At December 31, 2008, the Company owned five TBCs that are single deck barges designed to carry 53 containers. Two TBCs are currently operating in scheduled liner service between Jacksonville, Florida, San Juan, Puerto Rico
and Puerto Plata, Dominican Republic. These vessels utilize the same port facilities as the ro/ro barge vessels in Jacksonville and San Juan. A call every 14 days in Puerto Plata, Dominican Republic was added to the rotation in August 2007. The
Company developed and patented an innovative system for loading and unloading the TBCs that requires minimum capital expenditures and



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labor resources. Wheeled vehicles, known as reach-stackers, carry and load the containers onto the vessels. These highly maneuverable vehicles are also used
by railroads to load containers on rail cars for intermodal transportation. The reach-stackers are significantly less expensive than the cranes typically required for loading and unloading containers from the holds of large cargo ships and instead
directly access the deck of the vessel via simple and movable linear planks.

At December 31, 2008, three TBCs were chartered to a third party.

VESSELS OWNED BY THE COMPANY



|                    |  |       |  |               |  |                          
|------------------- |  | ----- |  | ------------- |  | -------------------------
|VESSEL NAME         |  | TYPE  |  | CAPACITY      |  | SERVICE as of 12/31/08   
|SAN JUAN JAX BRIDGE |  | Ro/Ro |  | 405 53 units |  | Jax/San Juan             
|JAX SAN JUAN BRIDGE |  | Ro/Ro |  | 405 53 units |  | Jax/San Juan             
|ATLANTA BRIDGE      |  | TBC   |  | 281 53 units |  | Chartered                
|CHICAGO BRIDGE      |  | TBC   |  | 281 53 units |  | Chartered                
|CHARLOTTE BRIDGE    |  | TBC   |  | 281 53 units |  | Jax/San Juan             
|BROOKLYN BRIDGE     |  | TBC   |  | 281 53 units |  | Chartered                
|MEMPHIS BRIDGE      |  | TBC   |  | 281 53 units |  | Jax/San Juan/Puerto Plata

RAMP STRUCTURES

The loading and unloading of the Companys two 736 by 104 triple-deck ro/ro barges is accomplished through the use of ramp structures at both the San Juan and Jacksonville locations. The Company owns a floating ramp
structure in San Juan for the two 736 by 104 triple-deck ro/ro barges. In Jacksonville, the Company has the preferential right to use a land-base ramp structure built and owned by the Jacksonville Port Authority.

OWNED REVENUE EQUIPMENT

At December 31, 2008, the Company owned
76 line haul tractors and 5 day cabs. The line haul units are conventional tractors with sleeping accommodation. The day cabs are used for local delivery work in the Jacksonville area. The Company also owned 210 dry van trailers as well as, 3,814
53 containers and 3,164 53 chassis.

At December 31, 2008, the Company owned 299 53 Vehicle Transport Modules® or
VTMs (VTMs) designed and built by the Company. These units are used to transport automobiles and can hold up to three vehicles to provide an efficient unit for loading and unloading. The Company holds four separate
patents for the VTMs. Two patents cover the VTM unit and two patents cover the method of loading and unloading vehicles into the VTM.

The Company performs
preventative maintenance on equipment at its Jacksonville operations center, with the majority of major maintenance and repairs handled by outside contractors.

DRIVER RECRUITING AND RETENTION

The Company offers competitive compensation and health care benefits comparable to those offered by
truckload operators. Management also promotes driver retention by assigning drivers a tractor for the life of the unit. Drivers are assigned a single dispatcher, regardless of geographic area, providing more predictable home time. The Companys
driver turnover in 2008 was 27.6% compared to 32.3% in 2007. The Company believes this is significantly below the typical average in the industry.



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FUEL AVAILABILITY AND COST

The Company actively manages its fuel costs by requiring drivers to fuel at offsite fuel facilities where the Company has established favorable pricing arrangements. Whenever possible in route, drivers are required to fuel
at these truck stops and service centers with which the Company has established these volume purchasing discounts. The Company also offers fuel-conservation bonuses to its drivers based on achieving miles per gallon goals. During 2008, the
Company continued to purchase APUs (auxiliary power units) for use in some of its tractors. The APUs reduce the amount of fuel used when the engine is idle while the drivers rest.

Although the Company pays indirectly for the marine fuel used by the large tugs it charters, tug crew personnel employed by the tug owner control the actual fuel
loading. The tug owner is responsible for providing the tug fuel, the cost of which is re-billed at cost and paid by the Company. The price of the tug fuel is based on a published weekly index plus a per gallon handling charge. The tug fuel is
purchased and loaded at the nearby suppliers dock facility in Jacksonville during cargo loading operations.

Trailer Bridge does not engage in any
fuel hedging activities as the present fuel surcharge mechanism has the effect of adjusting revenue levels over time for changes in fuel prices.

In 2001,
due to the increased cost of fuel, the Company instituted fuel surcharges to its customers pursuant to its tariff and these fuel surcharges per container load or per unit shipped have remained in place throughout 2008. The fuel surcharges for
domestic truck movements are charged on a per mile basis and are stipulated in the Companys tariff at predetermined levels based upon the price of fuel. During 2008, the fuel surcharge for domestic truck movements was between $0.15 per mile to
$0.60 per mile. Total fuel surcharge revenue for 2008 was $26.1 million compared to $17.3 million in 2007. The fuel surcharges on movements to and from Puerto Rico are assessed on a per move basis and have partially mitigated the increases in fuel
prices. The additional fuel surcharge is distinguished from freight revenues and both are reported in the Companys operating revenues.

SAFETY,
ENVIRONMENT AND INSURANCE

Trailer Bridge emphasizes safety in all aspects of its operations. The Company maintains its own strict standards for
recruiting drivers, including a minimum of two years of verifiable commercial driving experience, a safe driving history and a successful physical examination, including drug and alcohol testing. The Companys ongoing driver safety program
includes an initial orientation for all new drivers, 100% log monitoring and strong adherence to all speed and weight regulations.

The Company adheres to
all applicable environmental regulations. Trailer Bridge believes that its vessel emissions are well below certain competitors due to the cleaner distillate fuel that the Company routinely uses in the tugs it charters. The Company believes these
pronounced differences will become a positive differentiating factor in the future.

The Company bids annually for both marine and land insurance policies.
Major coverages include hull and protection indemnity, pollution, excess liability, marine cargo, truckers liability, workers compensation, directors and officers and commercial property.



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TECHNOLOGY

The core
information systems of Trailer Bridge run within the IBM AS-400 iSeries architecture, which integrates all servers under a common platform and enhances the security of all corporate data by combining all data stores into a unified environment. This
approach to data storage and retrieval into a SANS (Secure Area Network Storage) environment tightens controls on access and provides better management tools in the integrated environment. It also moves control of traditionally vulnerable operating
software into the control of the IBM OS/400 operating system.

The information systems link the Companys headquarters, truck operations center, San
Juan office and marine terminals in Jacksonville and San Juan. The system enhances the Companys operating efficiency by providing cost effective access to detailed information concerning available equipment, loads, shipment status and specific
customer requirements, and permits the Company to respond promptly and accurately to customer requests.

The Companys electronic data interchange
(EDI) capability allows customers to tender loads, receive load confirmation, check load status and receive billing information via computer. The Companys EDI system also helps in accelerating the collection of its receivables. The
Companys largest customers require EDI service from their core carriers.

The Company has a web-based load tracking system, which provides its
customers with real time load information. This system, along with the EDI, has allowed the Company to better respond to customer demands. Since the deployment of this web based tracking system, usage has increased as customers have found these
systems to be useful for tracking their inventory and monitoring of their current payables. These systems have also enabled Trailer Bridge to handle increasing demand with greater efficiency, by knowing the exact location and load of every operator
as well as open or excess capacity, and identify the Companys performing customers.

COMPETITION

The Company currently competes with three carriers for freight moving between the U.S. and Puerto Rico where its container volume market share, excluding vehicles, during
2008 was approximately 15.6%, according to data obtained from PIERS (Port Import Export Reporting Service), a subsidiary of the Journal of Commerce. The Companys market share grew 1.5 percentage points in 2008 compared to its 14.1% market
share in 2007. That continues a recent pattern of consistent share market growth as the Company had a 13.2% market share in 2006 and a 12.7% market share in 2005. The three other current carriers in the Puerto Rico trade are Horizon Lines, Crowley
Liner Services, and Sea Star Line. Based on available PIERS data for 2008, Horizon Lines has approximately 33.5% of the market and operates four steam turbine powered container vessels that carry mainly 40 containers. Crowley Liner Services, a
subsidiary of Crowley Maritime Corporation, has approximately 30.2% of the market and operates ro/ro barges in various services between the U.S. and Puerto Rico. Sea Star Line, owned primarily by SaltChuk Resources, Inc., parent of Totem Ocean
Trailer Express, Inc., has approximately 20.6% of the market with two steam turbine powered combination ro/ro container vessels. If vehicle cargos were included in the market share analysis, Trailer Bridge, Crowley, and Sea Star market shares would
be in excess of the preceding figures, with Trailer Bridge having the largest relative increase followed by Crowley.

Puerto Rico shippers select carriers
based primarily upon price and to a lesser extent, criteria such as frequency of shipments, transit time, consistency, billing accuracy and claims experience. The Company believes that the elements comprising its business model result in it being a
lower-cost operator. This underlying cost advantage, combined with consistently focusing a shippers attention on the effective cost per cubic foot of freight rates and surcharges, assists the Company in providing and highlighting



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proposals that contain better pricing. Based upon how much of the additional 61% inside cube a shipper can utilize, it is not unusual for them to switch to
Trailer Bridge even when that results in actually paying more per container load than they were before.

In the Dominican Republic trade, Trailer Bridge
competes with over a dozen carriers. Trailer Bridge serves the northern port of Puerto Plata and therefore does not compete directly with most of the carriers that serve the much larger southern ports near Santo Domingo. Trailer Bridges
service every 14 days to Puerto Plata represented a very small capacity increase in the trade between the U.S. and the Dominican Republic.

The trucking
industry is highly competitive and fragmented with no one carrier or group of carriers dominating the market. The Companys non-Puerto Rico domestic truckload operations, which are used primarily to balance its core Puerto Rico service, compete
with a number of trucking companies as well as private truck fleets used by shippers to transport their own products. Truckload carriers compete primarily on the basis of price. The Companys truck freight service also competes to a limited
extent with rail and rail-truck intermodal service, but the Company attempts to limit this competition by seeking more time and service-sensitive freight.

The Company has several distinct advantages over its competitors in the Puerto Rico trade. The Company has a unique and superior operating system, which utilizes 53 high cube containers, TBCs, and reach stackers to
load/unload freight. In November 2008, Trailer Bridge was granted a patent for the process of loading and unloading containers on its TBC vessels by the United States Patent and Trademark Office (USPTO). Trailer Bridge also holds several
patents related to its Vehicle Transport Modules® (VTM®), special purpose modules for receiving motorized vehicles for transportation that interchange easily between transport modes without the necessity of re-handling the
vehicles.

The Companys ocean going tugs all use a cleaner distillate fuel as opposed to the residual fuel used by the self-propelled vessels in the
Puerto Rico trade. The Company believes its vessel emissions characteristics result in it having the cleanest environmental footprint in the Puerto Rico trade and believes that this will become an increasingly important factor in customers
decision making process. The Company was the first marine company to join the Environment Protection Agency SmartWay Transport Partnership, a voluntary business/government collaboration focused on increasing efficiency and reducing emissions.
Because all of the tugs that tow the Companys vessels use a cleaner distillate fuel all the time, its entire fleet already meets all the fuel quality standards recently recommended by the United Nations International Maritime Organization
(IMO). The U.S. Senate passed a bill approving the IMO framework and on July 21, 2008, President Bush signed that bill into law. In October 2008, the Company was recognized by the Environmental Protection Agency with a Smartway Excellence
Award.

REGULATION

As a common and contract motor
carrier, the Company is regulated by the Surface Transportation Board and various state agencies. The Companys drivers, including owner-operators, also must comply with the safety and fitness regulations promulgated by the Department of
Transportation, including those relating to drug testing and hours of service.

The Companys operations are subject to various federal, state and
local environmental laws and regulations, implemented principally by the Environmental Protection Agency and similar state regulatory agencies. These regulations govern the management of hazardous wastes, discharge of pollutants into the air,
surface and underground waters, and the disposal of certain substances. Management is not aware of any water or land fuel spills or hazardous substance contamination on its properties and believes that its operations are in material compliance with
current environmental laws and regulations.



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The Companys marine operations are conducted in the U.S. domestic trade and the U.S. foreign trade. A set of
federal laws known as the Jones Act requires that only U.S. built, operated and crewed vessels move freight between ports in the U.S., including the noncontiguous areas of Puerto Rico, Alaska and Hawaii. These marine operations are subject to
regulation by various federal agencies, including the Surface Transportation Board, the Federal Maritime Commission, the U.S. Maritime Administration and the U.S. Coast Guard. These regulatory authorities have broad powers governing activities such
as operational safety, tariff filings of freight rates, certain mergers, contraband, environmental contamination and financial reporting. Management believes that its operations are in material compliance with current marine laws and regulations.
The Company has approved the Facility Security Plans in place for our waterfront facilities and Vessel Security plans in compliance with Homeland Security and the Maritime Transportations Security Act. The Company is an approved participant in the
Customs Trade Partnership against Terrorism (CTPAT). CTPAT participation is a requirement for carriers operating in foreign trade. The Company demonstrated that it has adequate security procedures in place to protect its assets and the products of
its customers while under the Companys control.

EMPLOYEES

At December 31, 2008, Trailer Bridge had 223 employees consisting of 77 truck drivers and 146 executive and administrative personnel.

AVAILABLE INFORMATION

The Company makes its public filings with the Securities and Exchange Commission, including
the Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all exhibits and amendments to these reports, available at the Companys web site http://www.trailerbridge.com as soon as reasonably
practicable after the Company electronically files such material with, or furnishes it to, the Securities and Exchange Commission. Any material that the Company files with the Securities and Exchange Commission may be read and copied at the
Securities and Exchange Commissions Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 or at www.sec.gov. Information on the operating of the Public Reference Room may be obtained by calling the Securities and Exchange
Commission at 1-800-SEC-0330.



|Item 1A. | Risk Factors
|-------- | ------------

Risks Relating to the Companys Business

There is a criminal investigation into pricing practices in the trade in which the Company operates and related class action suits.

On April 17, 2008, the Company received a subpoena from the Antitrust Division of the U.S. Department of Justice (the DOJ)
seeking documents and information relating to a grand jury investigation of alleged anti-competitive conduct by Puerto Rico ocean carriers. Company representatives have met with United States Justice Department attorneys and pledged the
Companys full and complete cooperation with the DOJ investigation. The Company has made document submissions to the DOJ in response to the subpoena, and its attorneys are in the process of reviewing documents for additional submissions.

Following publicity about the DOJ investigation, beginning on April 22, 2008, shippers in the Puerto Rico trade lane have filed at least 34 purported
class actions against domestic ocean carriers, including Horizon Lines, Sea Star Lines, and Crowley. The Company has been named as a co-defendant in these lawsuits. The actions allege that the defendants inflated prices in violation of federal
antitrust laws and seek treble damages, attorneys fees and injunctive relief. The actions, which were filed in the United States District Court for the Southern District of Florida, the United States District Court for the Middle District of
Florida, and the United States District Court for the District of Puerto Rico, have been



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consolidated for pre-trial purposes into a single multi-district litigation proceeding (MDL 1962) in the District Court of Puerto Rico. On March 10,
2009, the Company filed an amended motion to dismiss the claim with the court.

On October 20, 2008, four senior officers of two competitors of the
Company pled guilty to one-count felony criminal information. They were charged with having engaged in a criminal conspiracy to suppress or eliminate competition in the Puerto Rico freight market, including engaging in discussions and meetings
during which agreements were reached to allocate customers, rig bids, and fix rates, surcharges, and other fees charged to customers.

The DOJ
investigation is a criminal investigation, and the parallel class actions by civil litigants seek remedies that include treble damages. The Company is cooperating fully with the DOJ and intends to defend itself vigorously against the class actions.
Significant legal fees and costs are expected to be incurred in connection with the DOJ investigation and the class actions. During 2008, these costs were approximately $1.5 million.

The Company is not able to predict the ultimate outcome or cost of the DOJ investigation and class actions. However, should this result in an unfavorable outcome for the Company, it could have a material adverse
effect on the Companys financial position and future operations.

Volatility in fuel prices could adversely affect our profitability.

While the Company has a series of fuel surcharges in place that seek to adjust revenues with changes in fuel prices, such mechanisms do not act with
precision in terms of timing and amount. When fuel prices increase dramatically, rapidly or consistently the surcharge mechanism may not immediately adjust revenues enough to offset the increase in cost to the Company. Additionally, in periods of
consistent fuel price increases, the fuel surcharge mechanism may not fully capture the increase in costs. The fuel surcharge is also an area of competition among carriers in the trade and market forces may prohibit the Company from generating
enough revenue from the fuel surcharges to offset any increase in costs, which may have a negative affect on our profitability.

If we are unable to
implement our business strategy, our business and financial condition could be adversely affected.

Our future results of operations will depend in
significant part on the extent to which we can implement our business strategy successfully. Our business strategy includes using our superior hard assets and operating systems to continue providing cost advantages, pursuing other operating
strategies to further enhance efficiencies and reduce costs, expanding our share of the Puerto Rico market and replicating our business model in other markets. Our strategy is subject to business, economic and competitive uncertainties and
contingencies, many of which are beyond our control. As a consequence, we may not be able to fully implement our strategy or realize the anticipated results of our strategy.

We have no control over economic factors that could adversely affect our business.

We have no control over
economic factors such as fuel prices, fuel tax, interest rate fluctuations, recessions or customers business cycles. Significant increases in fuel or other operating costs and interest rates, to the extent not offset by increases in freight
rates or fuel surcharges, would adversely affect our operating results. Economic recessions, temporary inventory imbalances or downturns in customers business cycles also could have a material adverse effect upon our operating results. If the
resale value of our revenue equipment were to decline, we could receive less upon the disposition of our equipment or find it necessary to retain our equipment longer, with a resulting increase in our operating expenses. The marine and trucking
industries are cyclical with corresponding changes in revenue and profits. Changes



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in economic and trade growth as well as changes in the supply and demand of vessel and trucking capacity can impact both rates and resale values. The amount
and timing of new vessel deliveries to competing carriers in the Puerto Rico market and rate reductions from increased capacity, excess capacity or slow market growth could result in rate instability that could have a material adverse effect upon
us.

The Company has experienced losses in the past.

Due primarily to the overcapacity and intense competition in the Puerto Rico market during the late 1990s and early 2000s, the Company experienced significant financial losses and associated negative cash flow during that time.
Despite operating income for the Company in 2005, 2006, 2007, and 2008, the Company cannot assure that it will continue to generate operating income and positive cash flow. For example, the Company cannot assure that a new marine freight carrier
will not commence operations in the Puerto Rico market. Most of its competitors have substantially greater financial resources, operate more equipment, or carry a larger volume of freight than the Company does.

The Companys operations are dependent on a limited fleet and special loading structures.

The Companys current operations depend on four vessels and triple deck loading ramps at its port facilities in Jacksonville and San Juan, the loss of which could
have a material adverse effect on the Company. The operation of any marine vessel involves the risk of catastrophic events due to various perils of sea. In addition, port facilities in Jacksonville, San Juan and Puerto Plata are vulnerable to the
risk of hurricanes. In the event of either a total loss of or major damage to its vessels or ramps, the Company cannot assure that the Company could locate suitable replacements, or if available, that such replacements could be obtained on suitable
terms. The Company also could be adversely affected if unexpected maintenance or repairs are required for either of the custom configured ramp systems the Company uses. Although its vessels are insured for loss, the Company does not maintain
business interruption insurance and the Companys vessel insurance might not be high enough to build replacement vessels. Accordingly, the Company cannot assure that the loss of, damage to or significant required repair to any of its vessels or
port facilities in the future would not have a material adverse effect on its cash flow.

A substantial part of the Companys revenue is
produced in a single market, which makes it susceptible to changes that could adversely affect its results.

The vast majority of its revenue is
attributable to freight moving either to or from Puerto Rico. Its reliance on the Puerto Rico market makes it susceptible to a downturn in the local economy, local economic and competitive factors changes in government regulations and political
changes that the Company cannot predict. The Companys operation is highly leveraged and a downturn in freight volume in the Puerto Rico trade lane would have a material adverse effect on its cash flow.

Repeal or substantial amendment of the Jones Act could adversely affect its business.

The Jones Act provides that all vessels operating between ports in the United States, including the noncontiguous areas of Puerto Rico, Alaska and Hawaii, must be built, owned, operated and crewed substantially by
U.S. citizens. The Jones Act continues to be in effect, however, the Company cannot assure that the Jones Act will not be repealed or amended in the future. If the Jones Act were to be repealed or substantially amended and, as a consequence,
competition were to increase in the Puerto Rico market, the Companys business and cash flow could be adversely affected.



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Changes in tax laws or the interpretation thereof, adverse tax audits and other tax matters related to the
Companys tonnage tax election or such tax may adversely affect future results.

The Company elected to be taxed according to the tonnage tax
instead of the federal corporate income tax on income from its qualifying shipping activities on its 2007 federal tax return. Changes in tax laws or the interpretation thereof, adverse tax audits, and other tax matters related to such tax election
or such tax may adversely affect the Companys future results.

During the fourth quarter of 2007, a draft of a Technical Corrections Act proposed
redefining the Puerto Rico trade to not qualify for application of the tonnage tax. The tax writing committee in Congress removed the tonnage tax repeal language from the Technical Corrections Act before its passage, but the Company cannot assure
that there will not be future efforts to repeal all, or any portion of, the tonnage tax as it applies to the Companys shipping activities.

Profitability of service to Dominican Republic is uncertain.

In August 2007, the Company instituted a new sailing on a bi-weekly
basis between and among Jacksonville, Florida, San Juan, Puerto Rico and Puerto Plata, Dominican Republic. The implementation of the new sailing required additional investment in new container equipment. The Company modified its schedule in 2008 to
service this market as part of its service to Puerto Rico without requiring an extra sailing. Even with this modification there is no assurance that this service to the Dominican Republic will remain profitable.

Intense competition in our industry could adversely affect our business and financial condition.

The trucking industry is highly competitive and fragmented and the Puerto Rico freight market is also highly competitive. We currently compete with other truckload
carriers that provide domestic dry van service, private fleets operated by existing and potential customers, and marine carriers that provide ocean service between the continental U.S. and Puerto Rico. Competition for the freight we transport is
based primarily on freight rates, and, to a lesser degree, on service and efficiency. Most of our current and future competitors have substantially greater financial resources, operate more equipment, or carry a larger volume of freight than we do.

We are susceptible to severe weather and natural disasters.

Our operations are vulnerable to disruption as a result of weather and natural disasters such as bad weather at sea and hurricanes. Such events will interfere with our ability to provide the on-time scheduled service
our customers demand resulting in increased expenses and potential loss of business associated with such events. In addition, severe weather and natural disasters can result in interference with our terminal operations, and may cause significant
damage to our vessels and ramps, loss or damage to containers, cargo and other equipment and loss of life or physical injury to our employees. Terminals on the east coast of the continental U.S. and in the Caribbean are particularly susceptible to
hurricanes. Any damage caused by natural disasters may not be fully covered by insurance.

Restrictions on foreign ownership of our vessels could
prevent us from conducting operations in the United States domestic trade.

In order to maintain the eligibility of the Company to own and operate
vessels in compliance with the Jones Act, 75% of the outstanding capital stock and voting power of the Company is required to be held by U.S. citizens. The Companys Certificate of Incorporation contains provisions limiting non-citizenship
ownership of its capital stock and requiring non-citizens to divest the shares of capital stock that they own in excess of these limits. However, the Company could lose its ability to conduct operations in the U.S. domestic trade if such provisions
prove unsuccessful in maintaining the required level of citizen ownership, which would require us to shut down all but a very small portion of our current business.



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Loss of our key management personnel could adversely affect our business.

In December 2008, the Companys CEO and Vice Chairman left the management of the Company. Our future success will depend, in significant part, upon the services of
our President and interim CEO, our Executive Vice President and General Counsel, our Chief Financial Officer and our other officers. The loss of the services of any of these executive officers could adversely affect our future operating results
because of such officers experience and knowledge of our business and customer relationships. We do not maintain key person insurance on any of our executive officers.



|Item 1B. | Unresolved Staff Comments
|-------- | -------------------------

None.



|Item 2. | Properties
|------- | ----------

OFFICE FACILITIES

Trailer Bridge is headquartered in Jacksonville, Florida, where it owns a 20,500 square foot office building adjacent to its truck operations center. This facility allows
97 Jacksonville personnel to be centralized in one location. The office building has also been designed so that additions can be constructed to serve the Companys future needs. The truck operations center property consists of 27 acres near
Interstate 95, approximately 2 miles from the Companys marine terminal on Blount Island. In addition to the office building, the property includes an 11,400 square foot tractor maintenance shop where preventative maintenance and repairs are
performed, as well as, a trailer washing facility, drivers lounge and parking space for tractors and trailers.

The Company maintains small sales
office facilities in Miami, Florida, North Carolina, Illinois, Ohio, New Jersey, Georgia and Santiago, Dominican Republic that are utilized by sales personnel. The Company also rents a 2,600 square foot office in San Juan where 22 Puerto Rico
administrative and sales personnel are based and executive offices in New York.

PORT FACILITIES

The Company utilizes port facilities in Jacksonville and San Juan where its vessels are loaded and freight is stored awaiting further movement by either vessel or truck.

Trailer Bridges terminal in Jacksonville is located on Blount Island and consists of a berthing area and approximately 30 acres leased from the
Jacksonville Port Authority. The lease, which expires in 2013, allows the Company to use the berthing area on a preferential, although non-exclusive, basis and the land area on an exclusive basis. Included in the lease is a triple deck loading ramp
funded by the Jacksonville Port Authority that the Company uses to load and unload its triple-deck ro/ro barges. The Company pays the Jacksonville Port Authority a monthly rental payment plus a wharfage payment based upon total cargo volume with a
minimum guarantee of approximately $1.9 million per year.

The Companys marine terminal in San Juan consists of two berthing areas and 46 acres that
the Company utilizes on a preferential basis under a stevedoring services agreement with the contractor who provides cargo-handling services. In addition to the area designated for parking containers and vehicles the Company has on site
offices for its management personnel, two designated gate areas for receiving and delivery of loaded containers and vehicles, a roadability area for checking equipment, a three story



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loading ramp for working the triple deck ro/ro barges and a maintenance area for servicing our equipment. This agreement calls for the Company to make fixed
payments as well as payments based upon total cargo volume and the prevailing wharfage rates of the Puerto Rico Ports Authority. This agreement was renewed October 16, 2006 with an expiration date of November 30, 2010 with renewals at the
Companys option until October 23, 2026. The Company believes its present port facilities combined with the additional San Juan land lease that it expects to conclude in 2009 are sufficient for its current and future operations. See - Part
1  Item 1. Business RAMP STRUCTURES.

Trailer Bridge operates in the port of Puerto Plata in the Dominican
Republic within the public container terminal operated by the Puerto Plata Port Authority. The Port Authority has set aside an exclusive secured area for parking Trailer Bridge loads and equipment and provides full time security personnel in
this area. The vessel and terminal operations are managed by Ageport, an operating agent, under the direction of a Trailer Bridge manager.

The Company
believes that all of its facilities and equipment are in good condition, well maintained and able to support its current operations. For additional information concerning the Companys properties, see the information concerning its fleet of
vessels and certain other properties as set forth in Part 1  Item 1. Business.

A substantial portion of the Companys property
and vessels are pledged as collateral for the Companys long-term debt.



|Item 3. | Legal Proceedings
|------- | -----------------

On April 17, 2008, the Company received a
subpoena from the Antitrust Division of the U.S. Department of Justice (the DOJ) seeking documents and information relating to a grand jury investigation of alleged anti-competitive conduct by Puerto Rico ocean carriers. Company
representatives have met with United States Justice Department attorneys and pledged the Companys full and complete cooperation with the DOJ investigation. The Company has made document submissions to the DOJ in response to the subpoena, and
its attorneys are in the process of reviewing documents for additional submissions.

Following publicity about the DOJ investigation, beginning on
April 22, 2008, shippers in the Puerto Rico trade lane have filed at least 34 purported class actions against domestic ocean carriers, including Horizon Lines, Sea Star Lines, and Crowley. The Company has been named as a co-defendant in these
lawsuits. The actions allege that the defendants inflated prices in violation of federal antitrust laws and seek treble damages, attorneys fees and injunctive relief. The actions, which were filed in the United States District Court for the
Southern District of Florida, the United States District Court for the Middle District of Florida, and the United States District Court for the District of Puerto Rico, have been consolidated for pre-trial purposes into a single multi-district
litigation proceeding (MDL 1962) in the District Court of Puerto Rico. On March 10, 2009, the Company filed an amended motion to dismiss the claim with the court.

On October 20, 2008, four senior officers of two competitors of the Company pled guilty to a one-count felony criminal information. They were charged with having engaged in a criminal conspiracy to suppress or
eliminate competition in the Puerto Rico freight market, including engaging in discussions and meetings during which agreements were reached to allocate customers, rig bids, and fix rates, surcharges, and other fees charged to customers.

The DOJ investigation is a criminal investigation, and the parallel class actions by civil litigants seek remedies that include treble damages. The Company is
cooperating fully with the DOJ and intends to defend itself vigorously against the class actions. Significant legal fees and costs are expected to be incurred in connection with the DOJ investigation and the class actions. During 2008, these costs
were approximately $1.5 million.



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The Company is not able to predict the ultimate outcome or cost of the DOJ investigation and class actions. However,
should this result in an unfavorable outcome for the Company, it could have a material adverse effect on the Companys financial position and future operations.

The Company from time to time is a party to litigation arising in the ordinary course of its business, substantially all of which involves claims related to personnel matters or for personal injury and property damage
incurred in the transportation of freight or disputed contract claims with its customers. The Company presently is a party to litigation arising from vehicle accidents, cargo damage and failure of a customer to meet its contractual volume
commitment. Management is not aware of any claims or threatened claims that reasonably would be expected to exceed insurance limits or have a material adverse effect upon the Companys operations or financial position.



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

No matters
were submitted to a vote of the Companys security holders during the Fourth Quarter of 2008.



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##### Table of Contents

PART II



|Item 5. | Market For Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|------- | ------------------------------------------------------------------------------------------------------------

The Companys common stock trades on the NASDAQ Global Market.

The
following table represents the high and low bid quotations for the past two years as reported on the NASDAQ Global Market:



|               |  |      |       |     |   |     
|-------------- |  | ---- | ----- | --- | - | ----
|2008           |  | High |       | Low
|First Quarter  |  | $    | 12.48 |     | $ | 8.00
|Second Quarter |  | $    | 9.44  |     | $ | 5.05
|Third Quarter  |  | $    | 7.00  |     | $ | 4.98
|Fourth Quarter |  | $    | 6.09  |     | $ | 3.61



|               |  |      |       |     |   |      
|-------------- |  | ---- | ----- | --- | - | -----
|2007           |  | High |       | Low
|First Quarter  |  | $    | 9.05  |     | $ | 8.00 
|Second Quarter |  | $    | 13.35 |     | $ | 8.50 
|Third Quarter  |  | $    | 13.20 |     | $ | 10.43
|Fourth Quarter |  | $    | 14.75 |     | $ | 10.25

The Company has paid no dividends since its inception and does not anticipate doing so in the foreseeable future.
Certain of the Companys loan documents prevent the payment of cash dividends under certain circumstances. The Company makes no predictions as to the future performance of its stock.

As of March 20, 2009 there were 94 stockholders of record in addition to approximately 1,000 stockholders whose shares were held in nominee name.

The following table sets forth information about the Companys equity compensation plans.

Equity Compensation Plan Information



|                                                             |  |                                                                                          |  |                                                                          |      |                                                                                                                                        |        
|------------------------------------------------------------ |  | ---------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------ | ---- | -------------------------------------------------------------------------------------------------------------------------------------- | -------
|                                                             |  | (a)                                                                                      |  | (b)                                                                      |      | (c)                                                                                                                                   
|Plan Category                                                |  | Number of securities tobe issued upon exercise ofoutstanding options,warrants and
rights |  | Weighted-averageexercise price ofoutstanding options,warrants and rights |      | Number of securities remainingavailable for future issuance underequity compensation
plans(excluding securities reflected incolumn (a)
|Equity compensation plans approved by securities holders     |  | 1,093,250                                                                                |  | $                                                                        | 4.99 |                                                                                                                                        | 176,776
|                                                             |  |                                                                                          |  |                                                                          |      |                                                                                                                                        |        
|Equity compensation plans not approved by securities holders |  |                                                                                         |  |                                                                          |     |                                                                                                                                        |       
|                                                             |  |                                                                                          |  |                                                                          |      |                                                                                                                                        |        
|Total                                                        |  | 1,093,250                                                                                |  | $                                                                        | 4.99 |                                                                                                                                        | 176,776
|                                                             |  |                                                                                          |  |                                                                          |      |                                                                                                                                        |        



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##### Table of Contents

The following table reflects stock repurchases made by the Company during the fourth quarter of 2008:



|                                     |  |                                  |  |                            |      |                                                                             |   |                                                                                                  |  
|------------------------------------ |  | -------------------------------- |  | -------------------------- | ---- | --------------------------------------------------------------------------- | - | ------------------------------------------------------------------------------------------------ | -
|                                     |  | Issuer Repurchases of Securities
|Period                               |  | TotalNumberof SharesPurchased    |  | Average PricePaid PerShare |      | Total Number ofSharesPurchased asPart of PubliclyAnnounced Plansor Programs |   | MaximumNumber (orApproximate $Value) of Sharesthat May Yet BePurchased Underthe Plans
orPrograms
|October 1, 2008  October 31, 2008   |  |                                 |  |                            |     |                                                                             |  |                                                                                                  | 
|November 1, 2008  November 30, 2008 |  |                                 |  |                            |     |                                                                             |  |                                                                                                  | 
|December 1, 2008  December 31, 2008 |  | 100,000                          |  | $                          | 4.00 |                                                                             |  |                                                                                                  | 



|* | The Company purchased 100,000 shares from John D. McCown in connection with his resignation as Chief Executive Officer of the Company.
|- | --------------------------------------------------------------------------------------------------------------------------------------



|Item 6. | Selected Financial Data
|------- | -----------------------

Not required for smaller reporting
companies.



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##### Table of Contents

|Item 7. | Managements Discussion And Analysis Of Financial Condition And Results Of Operations
|------- | -------------------------------------------------------------------------------------

EXECUTIVE SUMMARY

The Company earns revenue by the movement of freight by water to and from Puerto Rico, the
Dominican Republic and the continental United States through its terminal facility in Jacksonville, Florida. Service to the Dominican Republic commenced in August 2007. The Company also earns revenue from the movement of freight within the
continental United States when such movement complements its core business of moving freight to and from Puerto Rico and the Dominican Republic. The Companys operating expenses consist of the cost of the equipment, labor, facilities, fuel,
inland transportation and administrative support necessary to move freight to and from Puerto Rico, the Dominican Republic and within the continental United States. During 2008, the Company experienced a decline in operating income and the resulting
operating ratio compared to 2007, primarily due to increased fuel expense. Fuel expense increased due to higher fuel prices as well as increased consumption in connection with the Dominican Republic service.

RESULTS OF OPERATIONS

The following table sets forth the indicated items as
a percentage of net revenues for the years ended December 31, 2008, 2007 and 2006.

Operating Statement - Margin Analysis

(% of Operating Revenues)



|                                                                             |  |       |    |  |       |    |  |       |  
|---------------------------------------------------------------------------- |  | ----- | -- |  | ----- | -- |  | ----- | -
|                                                                             |  | 2008  |    |  | 2007  |    |  | 2006  |  
|Operating Revenues                                                           |  | 100.0 | %  |  | 100.0 | %  |  | 100.0 | %
|                                                                             |  |       |   
|Salaries, wages, and benefits                                                |  | 13.8  |    |  | 14.4  |    |  | 13.7  |  
|Purchased transportation and other rents                                     |  | 25.2  |    |  | 24.4  |    |  | 23.6  |  
|Fuel                                                                         |  | 21.4  |    |  | 16.2  |    |  | 13.3  |  
|Operating and maintenance (exclusive of depreciation shown separately below) |  | 19.7  |    |  | 19.8  |    |  | 20.5  |  
|Dry-Docking                                                                  |  | 0.7   |    |  | 0.0   |    |  | 11.6  |  
|Taxes and licenses                                                           |  | 0.4   |    |  | 0.4   |    |  | 0.4   |  
|Insurance and claims                                                         |  | 2.4   |    |  | 2.8   |    |  | 3.3   |  
|Communications and utilities                                                 |  | 0.6   |    |  | 0.6   |    |  | 0.5   |  
|Depreciation and amortization                                                |  | 4.6   |    |  | 4.9   |    |  | 4.8   |  
|Loss (gain) on sale of assets                                                |  | 0.2   |    |  | 0.0   |    |  | (0.1  | )
|Other operating expenses                                                     |  | 5.8   |    |  | 4.3   |    |  | 4.0   |  
|                                                                             |  |       |    |  |       |    |  |       |  
|Total Operating Expenses                                                     |  | 94.8  |    |  | 87.8  |    |  | 95.6  |  
|                                                                             |  |       |    |  |       |    |  |       |  
|Operating income                                                             |  | 5.2   |    |  | 12.2  |    |  | 4.4   |  
|Net interest expense                                                         |  | (7.6  | )  |  | (8.3  | )  |  | (8.9  | )
|(Provision) benefit for Income taxes                                         |  | (0.0  | )  |  | (4.1  | )  |  | 4.5   |  
|                                                                             |  |       |    |  |       |    |  |       |  
|Net (loss) income                                                            |  | (2.4  | )% |  | (0.2  | )% |  | 0.0   | %
|                                                                             |  |       |    |  |       |    |  |       |  



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##### Table of Contents

Year ended December 31, 2008 Compared to Year ended December 31, 2007

The Companys operating ratio, or operating expenses expressed as a percentage of revenue, deteriorated from 87.8% in 2007 to 94.8% in 2008. This change is more
fully explained under the operating expenses caption set forth below.

Revenues

The following table sets forth by percentage and dollar, the changes in the Companys revenue and volume, measured by equivalent units, by sailing route and freight carried:

Volume & Revenue Changes 2008 Compared to 2007



|                              |  |         |      |  
|----------------------------- |  | ------- | ---- | -
|                              |  | Overall |     
|Volume Percent Change:        |  |         |      |  
|Total Equivalent Units        |  |         | 8.1  | %
|                              | 
|Revenue Change (in millions): |  |         |      |  
|Core Service Revenue          |  | $       | 7.0  |  
|Other Revenues                |  |         | 9.9  |  
|                              |  |         |      |  
|Total Revenue Change          |  | $       | 16.9 |  
|                              |  |         |      |  

The increase in revenues is primarily due to increases in volume partially offset by lower average yields. The
increase in other revenue is primarily due to increases in fuel surcharges as well as increased charterhire resulting from an improved vessel charter market.

Vessel capacity utilization southbound was 86.3% during 2008, compared to 80.0% during 2007.

The increase in other revenues is primarily
attributable to an increase in fuel surcharge revenue during 2008, which increased to $26.1 million from $17.3 million in 2007. Net demurrage, a charge assessed for failure to return empty freight equipment on time less a demurrage related allowance
for bad debt, is also included in the Companys revenues and amounted to $1.1 million in 2008 compared to $1.7 million in 2007. Total charterhire revenue amounted to $4.0 million in 2008 and $1.7 million in 2007. Charterhire is rental revenue
for vessels not in use in a liner service. Security charges are charges to cover the Companys additional expenses required to ensure the safety of the shippers cargo. These charges amounted to $2.1 million in 2008 and 2007.

Operating expenses

Operating expenses increased by $24.1 million,
or 23.7% from $101.9 million for 2007 to $126.1 million for 2008. This increase was due primarily to fuel expenses in 2008, which increased $9.7 million, or 51.2%, due to increased consumption related to the Dominican Republic service that started
in August of 2007 and increases in fuel prices. Most other operating expenses of the Company increased as well during 2008 as a result of additional volume and an additional bi-weekly sailing to the Dominican Republic during the first half of 2008.
That extra TBC was removed from liner service in the second half



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##### Table of Contents

of 2008 due to increased fuel prices. Salaries and benefits increased by $1.6 million or 9.8% primarily due to salary increases and a one-time compensation
charge of $0.8 million related to the departure of the Companys Chief Executive Officer John D. McCown. This increase in salaries and benefits was partially offset by a decrease in incentive based compensation. Rent and purchased
transportation increased by $5.3 million or 18.7% due partially to tug charter related to the additional TBC in service during the first half of 2008 to service the Dominican Republic and increased inland purchased transportation related to
increases in volume. Operating and maintenance expense increased $4.1 million or 18.0% primarily due to increased terminal costs related to the overall increase in volume and an increase in expenses related to the Companys stevedores.
Depreciation and amortization expense increased by $0.5 million or 9.2% due to the Companys purchase of containers and chassis in 2007 that were depreciated for a full year in 2008. Other operating expenses increased $2.5 million due to an
increase in legal fees and an increase in security expenses during 2008. The increase in legal fees was primarily the result of the DOJ investigation that began on April 22, 2008. During 2008, legal expenses related to this investigation were
$1.5 million. As a result, the Companys operating ratio of expenses compared to revenue was higher during 2008, at 94.8% as compared to 87.8% during 2007.

Interest Expense

Interest expense increased slightly to $10.4 million in 2008 from $10.3 million in 2007 primarily due to additional draws
on the Wachovia term loan that was established in the fourth quarter of 2007 to fund the purchase of containers and chassis to support the Dominican Republic service. In May 2008 and November 2008, the Company drew approximately $1.3 million and
$4.1 million on this note, respectively. The Company began making principle payments on the November draw of $4.1 million in January of 2009.

As a result
of the factors described above, the Company reported a net loss of $3.2 million or $0.27 per share, basic and diluted, for the year ended December 31, 2008 compared to a net loss of $0.3 million or $0.02 per share, basic and diluted, for the
year ended December 31, 2007.

Income Taxes

The
American Jobs Creation Act of 2004 instituted an elective tonnage tax regime whereby a corporation may elect to pay a tonnage tax based upon the net tonnage of its qualifying U.S. flag vessels rather than the traditional federal corporate income tax
on the taxable income from such vessels and related inland service. The Company has determined that its marine operations and inland transportation related to marine operations qualify for the tonnage tax. In the second quarter of 2007, the Company
completed its analysis of the impact of making the election to be taxed under the tonnage tax regime. The analysis illustrated that using the tonnage tax method would reduce the Companys cash outlay related to federal income taxes. For federal
tax purposes, the Company can satisfy only 90% of its AMT (Alternative Minimum Taxable) income with its net operating loss carryforwards (NOL) and, therefore, results in a much larger cash outlay in comparison to the required payments associated
with the tonnage tax regime. As a result of this analysis, the Company determined that it would be making the election to be taxed under the tonnage tax regime on its 2007 federal tax return. As a result, it was more likely than not that the Company
would not be able to utilize its deferred tax asset. Therefore during the second quarter of 2007, the deferred tax asset was adjusted by approximately $4.6 million to reflect this limitation. The remaining deferred tax asset at December 31,
2008 and 2007 of approximately $279,000 and $202,000, respectively, represents primarily the state portion of the Companys deferred tax asset. The Companys research of the tonnage tax suggests that states do not recognize the tonnage tax
and, therefore, NOLs related to state qualifying shipping income would not be suspended. The 2008 election of the tonnage tax was made in connection with the filing of the Companys 2007 federal corporate income tax return and will also
apply to all subsequent federal income tax returns unless the Company revokes this tax treatment. The Company is accounting for this election as a change in status of its qualifying shipping activities. As a result of the change in status, federal
deferred tax assets and liabilities, including approximately $85 million of federal NOLs, which were previously offset by a valuation allowance, have been suspended. It cannot be assured that there will not be future efforts to repeal all, or
any portion of, the tonnage tax as it applies to our shipping activities. The federal tax expense related to the tonnage tax method is estimated to be $28,000 which could not be offset by the Companys existing NOLs under the tonnage tax
regime.



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Year ended December 31, 2007 Compared to Year ended December 31, 2006

The Companys operating ratio, or operating expenses expressed as a percentage of revenue, improved from 95.6% in 2006 to 87.8% in 2007. This improvement is more
fully explained under the operating expenses caption set forth below.

Revenues

The following table sets forth by percentage and dollar, the changes in the Companys revenue and volume, measured by equivalent units, by sailing route and freight carried:

Volume & Revenue Changes 2007 Compared to 2006



|                              |  |         |      |  
|----------------------------- |  | ------- | ---- | -
|                              |  | Overall |     
|Volume Percent Change:        |  |         |      |  
|Total Equivalent Units        |  |         | 6.1  | %
|                              | 
|Revenue Change (in millions): |  |         |      |  
|Core Service Revenue          |  | $       | 6.7  |  
|Other Revenues                |  |         | (0.8 | )
|                              |  |         |      |  
|Total Revenue Change          |  | $       | 5.9  |  
|                              |  |         |      |  

The increase in revenues is primarily due to increases in volume and average yields. The decrease in other revenue
is primarily due to decreased charterhire.

Vessel capacity utilization southbound was 80.0% during 2007, compared to 87.1% during 2006. Southbound trailer
and container volume increased slightly but vessel capacity utilization decreased due to the addition of one TBC vessel for use in the Dominican Republic service, which commenced in August 2007.

The decrease in other revenues is primarily attributable to a decrease in slot charter during 2007 to $0.4 million from $1.4 million in 2006. Slot charter is revenue
related to the sale, to customers, of space on competitors vessels in the trade lanes served by the Company. The slot charter arrangement the Company had with a competitor ended in 2007. The Companys fuel surcharge is included in the
Companys revenues and amounted to $17.3 million in 2007 and $16.9 million in 2006. Net demurrage, a charge assessed for failure to return empty freight equipment on time less a demurrage related allowance for bad debt, is also included in the
Companys revenues and amounted to $1.7 million in 2007 compared to $1.6 million in 2006. Total charterhire revenue amounted to $1.7 million in 2007 and $1.8 million in 2006. Charterhire is rental revenue for vessels not in use in a liner
service. Security charges are charges to cover the Companys additional expenses required to ensure the safety of the shippers cargo. These charges amounted to $2.1 million in 2007 compared to $1.9 million in 2006. Revenue related to the
Dominican Republic service, which commenced in August 2007, was approximately $0.5 million.



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Operating expenses

Operating expenses decreased by $3.5 million, or 3.3% from $105.4 million in 2006 to $101.9 million for 2007. This decrease was due primarily to the expense associated with the required regulatory dry-docking of the Companys two ro/ro
barges during 2006 totaling $12.8 million. The ro/ro vessels are not scheduled for another dry-docking until 2011. Most other operating expenses of the Company increased during 2007 as a result of additional volume and the implementation of an
additional bi-weekly sailing. Salaries and benefits increased by $1.6 million or 10.4% primarily due to salary increases partially offset by a decrease in incentive based compensation. Rent and purchased transportation increased by $2.3 million or
8.8% due to tug charter related to the new Dominican Republic service and increased inland purchased transportation related to increases in volume. Fuel expense increased $4.1 million or 28.2% due to increased consumption related to the Dominican
Republic service and increases in fuel prices. Operating and maintenance expense decreased $12.3 million or 34.9% primarily due to required regulatory dry-docking of the Companys two ro/ro barges during 2006. Depreciation and amortization
expense increased by $0.4 million or 6.9% due to the Companys purchase of containers and chassis. Other operating expenses increased $0.6 million due to an increase in the period expenses related to the Companys allowance for doubtful
accounts, an increase in advertising costs, legal fees and an increase in security expenses during 2007. As a result, the Companys operating ratio improved from 95.6% during 2006 to 87.8% during 2007.

Interest Expense

Interest expense increased to $10.3 million in 2007
from $10.2 million in 2006 primarily due to the draw on the Wachovia note payable in the fourth quarter of 2007. This note payable was established to fund the purchase of containers and chassis to support the Dominican Republic service. In November
2007, the Company drew approximately $4.6 million on this note.

As a result of the factors described above, the Company reported a net loss of $0.3
million or $0.02 per share, basic and diluted, for the year ended December 31, 2007 compared to a net loss of $18,093 or $0.00 per share, basic and diluted, for the year ended December 31, 2006.

Income Taxes

The American Jobs Creation Act of 2004 instituted an
elective tonnage tax regime whereby a corporation may elect to pay a tonnage tax based upon the net tonnage of its qualifying U.S. flag vessels rather than the traditional U.S. corporate income tax on the taxable income from such vessels and related
inland service. The Company has determined that its marine operations and inland transportation related to marine operations qualify for the tonnage tax. In the second quarter of 2007, the Company completed its analysis of the impact of making the
election to be taxed under the tonnage tax regime. The analysis illustrated that using the tonnage tax method would reduce the Companys cash outlay related to federal income taxes; for federal tax purposes, the Company can satisfy only 90% of
its AMT (Alternative Minimum Taxable) income with its net operating loss carryforwards (NOL) and, therefore, results in a much larger cash outlay in comparison to the required payments associated with the tonnage tax regime. As a result of this
analysis, the Company made the election to be taxed under the tonnage tax regime on its 2007 federal tax return. The federal tax expense related to 2007 under the tonnage tax method was approximately $28,000 which could not be offset by the
Companys existing NOLs because when the Company elected to be taxed under the tonnage tax regime its federal NOLs related to qualifying shipping activities were not available to offset any related tonnage tax. As a result it was
more likely than not that the Company would not be able to utilize its deferred tax asset. Therefore during the second quarter of 2007, the deferred tax asset was adjusted by approximately $4.6 million to reflect this limitation. The remaining
deferred tax asset of approximately $202,000, at December 31, 2007, represented the state portion of the companys deferred tax asset. The Companys research of the tonnage tax suggests that states do not recognize the tonnage tax and,
therefore, NOLs related to state qualifying shipping income would not be suspended.

DIVIDENDS

The Company has not declared or paid dividends on its common stock during the past six years.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was $4.4 million in 2008 compared to net
cash provided by operating activities of $12.0 million in 2007. This represented a decrease of $7.6 million, which resulted partially from additional net losses in 2008 compared to 2007. Net cash used in investing activities was $2.0 million in 2008
compared to net cash used in investing activities in 2007 of $19.7 million. This $17.7 million decrease from 2007 was due to large cash outlays on purchases and upgrades of containers and chassis during 2007. Net cash provided by financing
activities was $2.9 million in 2008 compared to net cash provided by financing activities of $2.8 million in 2007 representing an increase of $0.1 million. This change was primarily the result of drawing an additional $5.4 million on the Wachovia
term loan to finance the purchase of new roll-door containers. This increase in borrowings was slightly offset by an increase in principle payments on debt made in 2008. At December 31, 2008, the Company had cash of $7.2 million, working
capital of $10.0 million, and capital deficit of $1.8 million.

Net cash provided by operating activities was $12.0 million in 2007 compared to net cash
provided by operating activities of $1.2 million in 2006. This represented an increase of $10.8 million from 2006 due primarily to the large cash outlays related to the dry-dockings during 2006. The increase in the accounts payable was related to
higher operating expenses as a result of increased volume. Net cash used in



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investing activities was $19.7 million in 2007 compared to net cash used in investing activities in 2006 of $3.6 million. The Company spent $19.8 million on
purchases and upgrades of containers and chassis during 2007. Net cash provided by financing activities was $2.8 million in 2007 compared to net cash used in financing activities of $2.0 million in 2006 representing a change of $4.8 million
primarily the result of borrowing approximately $4.6 million from Wachovia to finance the purchase of a portion of the new containers and chassis. At December 31, 2007, cash amounted to $1.9 million, working capital was at $5.3 million, and
stockholders equity was $1.4 million.

The Companys revolving credit facility with Wachovia, formerly Congress Financial Corporation, as
amended, provides for a maximum availability of $10 million and expires April 2012. The facility provides for interest equal to the prime rate, as set by Wachovia. The revolving line of credit is subject to a borrowing base formula (approximately
$10.0 million was available under this formula at December 31, 2008) based on a percentage of eligible accounts receivable. The revolving credit facility is secured by the Companys accounts receivable. At December 31, 2008, there
were no advances drawn on this credit facility.

The Companys has access to a term loan that provides for a maximum availability of $10 million and
expires April 2012. The term loan provides for interest equal to the prime rate. At December 31, 2008, approximately $9.1 million was drawn on this loan to fund equipment purchases. This term loan is collateralized by eligible equipment with a
carrying value of $16.3 million at December 31, 2008.

During the fourth quarter of 2008, the Company and Wachovia amended the Revolving Credit
Agreement to eliminate all financial covenants at any time the Company has at least $3.0 million in unused borrowing capacity under the revolving credit facility. As of December 31, 2008, the Company had $10.9 million available under this
facility and therefore was not subject to any financial covenants. Additionally, the Company was in compliance with the financial covenant that would apply if the Company had less than $3.0 million in unused capacity under the facility.

The Companys $85 million 91/4% Senior Secured Notes mature on November 15, 2011. Interest on the notes is payable semi-annually on each May 15 and November 15. Prior to November 15, 2008, the Company had the
option to redeem some or all of the notes at a make-whole premium. After November 15, 2008, the Company may redeem the notes, in whole or in part, at its option at any time or from time to time at the redemption prices specified in the
indenture governing the notes, plus accrued and unpaid interest thereon, if any, to the redemption date. Upon the occurrence of certain changes in control specified in the indenture governing the notes, the holders of the notes will have the right,
subject to certain conditions, to require the Company to repurchase all or any part of their notes at a repurchase price equal to 101% of the principal amount of the notes, plus accrued and unpaid interest thereon, if any, to the redemption date.
The agreement among other things, places restrictions (as defined) on the Companys ability to (a) incur or guarantee additional debt (b) to pay dividends, repurchase common stock or subordinated debt (c) create liens
(d) transact with affiliates and (e) transfer or sell assets.

The Company has outstanding two series of Ship Financing Bonds designated
as its 7.07% Sinking Fund Bonds Due September 30, 2022 and 6.52% Sinking Fund Bonds Due March 30, 2023. These bonds are guaranteed by the U.S. government under Title XI of the Merchant Marine Act of 1936, as amended. The aggregate
principal amount of the Title XI Bonds outstanding at December 31, 2008 was $17.3 million. The Company is required to make deposits based on adjusted earnings of the Company. During 2008, the Company made no deposits into a reserve fund that
secures the Title XI Bonds. As of December 31, 2008, the balance of this reserve fund was approximately $4.1 million.

As of December 31, 2008,
the Company was restricted from performing certain financial activities due to it not being in compliance with Title XI debt covenants relating to certain leverage ratios. The provisions



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of the Title XI covenants provide that, in the event of noncompliance with the covenants, the Company is restricted from conducting certain financial
activities without obtaining the written permission of the Secretary of Transportation of the United States (the Secretary). If such permission is not obtained and the Company enters into any of the following actions it will be
considered to be in default of the Title XI covenants and the lender will have the right to call the debt. These actions are as follows: (1) acquire any fixed assets other than those required for the normal maintenance and operation of its
existing assets; (2) enter into or become liable under certain charters and leases (having a term of six months or more); (3) pay any debt subordinated to the Title XI Bonds; (4) incur any debt, except current liabilities or short
term loans incurred in the ordinary course of business; (5) make investments in any person, other than obligations of U.S. government, bank deposits or investments in securities of the character permitted for money in the reserve fund; or
(6) create any lien on any of its assets, other than pursuant to loans guaranteed by the Secretary of Transportation of the United States under Title XI and liens incurred in ordinary course of business. However, none of the foregoing covenants
will apply at any time if the Company meets certain financial tests provided for in the agreement and the Company has satisfied its obligation to make deposits into the reserve fund. As of December 31, 2008, the Company was in compliance with
such restrictions.

The Companys projected cash flows from operating activities and the availability under the credit facility is expected to provide
sufficient cash flows for future operations.

INFLATION

Inflation has had a minimal effect upon the Companys operating results in recent years. Most of the Companys operating expenses are inflation-sensitive, with inflation generally producing increased costs of operation. All
transactions are denominated in United States Dollars. The Company expects that inflation will affect its costs no more than it affects those of other truckload and marine carriers.

SEASONALITY

The Companys liner service is subject to the seasonality of the Puerto Rico freight market where
shipments are generally reduced during the first calendar quarter and increased during the third and fourth calendar quarters of each year. The fourth quarter typically has the highest revenue. In 2008, however, fourth quarter revenue was 5.9% below
third quarter revenue, in contrast to the 11.7% increase in 2007 and the average increase of 10.5% from 2004 thru 2007.

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements as of December 31, 2008.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES.

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires the application of certain accounting policies, many of which require the Company to make estimates and assumptions about future events and their impact on amounts reported in
the financial statements and related notes. Since future events and their impact cannot be determined with certainty, the actual results will inevitably differ from our estimates. Such differences could be material to the financial statements.

Management believes the application of accounting policies, and the estimates inherently required therein, are reasonable. These accounting policies and
estimates are constantly reevaluated, and adjustments are made when facts and circumstances dictate a change. Historically, management has found the application of accounting policies to be appropriate, and actual results have not differed
materially from those determined using necessary estimates.



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The Companys most critical accounting policies are described below.

Revenue Recognition. In accordance with Emerging Issues Task Force (EITF) Issue No. 91-09, Revenue and Expense Recognition for Freight
Services in Progress, voyage revenue is recognized ratably over the duration of a voyage based on the relative transit time in each reporting period commonly referred to as the percentage of completion method. Voyage expenses
are recognized as incurred. Fuel and other surcharges, demurrage and charterhire revenue are included in our revenues. Net demurrage is a charge assessed for failure to return empty freight equipment on time less a demurrage related allowance for
bad debt. Charter hire is rental revenue for vessels not in use in a liner service. The Company recognizes demurrage and charterhire revenue based on negotiated fees included in the contracts of our customers. These amounts are computed daily and
included in Operating Revenue.

Useful Life and Salvage Values.The Company reviews the selections of estimated useful lives and salvage
values for purposes of depreciating our property and equipment. Depreciable lives of property and equipment range from 2 to 40 years. Estimates of salvage value at the expected date of trade-in or sales are based on the expected values of equipment
at the time of disposal. The accuracy of these estimates affects the amount of depreciation expense recognized in a period and ultimately, the gain or losses on the disposal of the asset.

Repairs and Maintenance. The Company expenses repairs and maintenance as incurred. Every five years the Companys vessels are required to go through
regulatory dry-docking. The Company elected, in a prior year, to account for its dry-docking costs using the expense-as-incurred method as opposed to the defer-and-amortize method predominantly used by the Companys industry peer group. The
Company elected the expense-as-incurred method for accounting for these required regulatory dry-docking costs as it is the method preferred by the Securities and Exchange Commission. Using the expense-as-incurred method, the Company recorded
$972,113, $4,544, and $12,765,606, in the years ended December 31, 2008, 2007 and 2006, respectively. Had the Company used the defer-and-amortize method such expenses would have been amortized over the five year period between regulatory
dry-dockings.

Impairment Of Long-Lived Assets. The Company evaluates the carrying amounts and periods over which long-lived assets are depreciated
to determine if events have occurred which would require modification to our carrying values or useful lives. In evaluating useful lives and carrying values of long-lived assets, the Company reviews certain indicators of potential impairment, such
as undiscounted projected operating cash flows, replacement costs of such assets, business plans and overall market conditions. The Company determines undiscounted projected net operating cash flows and compares it to the carrying value. In the
event that impairment occurred, the Company would determine the fair value of the related asset and record a charge to operations calculated by comparing the assets carrying value to the estimated fair value. The Company estimates fair value
primarily through the use of appraisals or other valuation techniques. The Company recognized no impairments in 2006, 2007 or 2008.

Uncollectible
Accounts. The Company records a monthly provision based on specific known collectability problems, historical losses, and current economic information. In addition, the Company performs an analysis of the total receivables on a quarterly basis,
including review of historical collection trends, and adjusts the provision account each quarter. It is the Companys policy to write off receivables once it is determined that additional efforts of collection will not result in the collection
of the receivable.

Income taxes.The American Jobs Creation Act of 2004 instituted an elective tonnage tax regime whereby a corporation may elect
to pay a tonnage tax based upon the net tonnage of its qualifying U.S. flag vessels rather than the traditional U.S. corporate income tax on the taxable income from such vessels and related inland service. The Company has determined that its marine
operations and inland transportation related



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to marine operations qualify for the tonnage tax. In the second quarter of 2007, the Company completed its analysis of the impact of making the election to
be taxed under the tonnage tax regime. The analysis illustrated that using the tonnage tax method would reduce the Companys cash outlay related to federal income taxes; for federal tax purposes, the Company can satisfy only 90% of its
Alternative Minimum Taxable (AMT) income with its net operating loss carryforwards (NOLs) and, therefore, results in a much larger cash outlay in comparison to the required payments associated with the tonnage tax regime. As a result of this
analysis, the Company made the election to be taxed under the tonnage tax regime on its 2007 federal tax return. The federal tax expense related to 2008 under the tonnage tax method is estimated to be approximately $28,000. The remaining deferred
tax asset of approximately $279,000 represents the state portion of the Companys deferred tax asset. The Companys research of the tonnage tax suggests that states do not recognize the tonnage tax and, therefore, NOLs related to
state qualifying shipping income would not be suspended.

The Company adopted Financial Accounting Standards Board (FASB) Interpretation
No. 48, Accounting for Uncertainty in Income Taxes  an interpretation of FASB Statement 109, (FIN 48) in the first quarter of 2007. FIN 48 is an interpretation of FASB Statement No. 109,
Accounting for Income Taxes, and seeks to reduce the diversity in practice associated with certain aspects of measurement and recognition in accounting for income taxes. FIN 48 prescribes a recognition threshold and measurement
attribute for financial statement recognition and measurement of a tax position that an entity takes or expects to take in a tax return. Under FIN 48, an entity may only recognize or continue to recognize tax positions that meet a more likely
than not threshold. In the ordinary course of business there is inherent uncertainty in quantifying our income tax positions. The Company assesses its income tax positions and records tax benefits for all years subject to examination based on
managements evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, the Company has recognized the largest amount of
tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax
benefit will be sustained, no tax benefit has been recognized in the Companys financial statements.

As a result of the implementation of FIN 48, the
Company performed a review of its uncertain tax positions in accordance with FIN 48 and concluded that there were no significant adjustments required related to uncertain tax positions. As of the adoption date, the Company had no accrued interest
expense or penalties related to unrecognized tax benefits. Interest and penalties, if incurred, would be recognized as a component of income tax expense. As of December 31, 2008, there has been no change to the assessment as of the adoption
date. The Company does not believe there will be any material changes in its unrecognized position over the next 12 months.

The Company files income tax
returns in the U.S. federal jurisdiction and each state jurisdiction in which it operates which imposes an income tax. The Company has not been subject to Internal Revenue Service (IRS) examination of its federal income tax returns. The Company is
not currently involved in any state income tax examination.

The above listing is not intended to be a comprehensive list of all of our accounting
policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by generally accepted accounting principles, with less management judgment in their application. There are also areas in which managements
judgment in selecting any available alternative would not produce a materially different result. See the Companys audited financial statements and notes there to which begin on page 31 of this Annual Report on Form 10-K which contain
accounting policies and other disclosures required by generally accepted accounting principles.



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RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles. SFAS 162 identifies the sources of accounting principles to be used in the preparation of
financial statements that are presented in conformity with generally accepted accounting principles in the United States for non-governmental entities. SFAS 162 was effective November 2008. The adoption of SFAS 162 did not have a material impact on
the Companys financial statements.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business
Combinations. This standard establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non-controlling interest in the
acquiree and the goodwill acquired. This standard also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. This standard is effective for financial statements issued for
fiscal years beginning after December 15, 2008. The Company does not expect that the implementation of this statement will have a material impact on its results of operations, financial position, or liquidity.

In February 2007, the FASB issued SFAS No. 159 (SFAS 159), The Fair Value Option for Financial Assets and Financial Liabilities,
providing companies with an option to report selected financial assets and liabilities at fair value. SFAS 159s objective is to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring
related assets and liabilities differently. United States generally accepted accounting principles has required different measurement attributes for different assets and liabilities that can create artificial volatility in earnings. SFAS 159 helps
to mitigate this type of accounting-induced volatility by enabling companies to report related assets and liabilities at fair value, which would likely reduce the need for companies to comply with detailed rules for hedge accounting. SFAS 159 also
establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. SFAS 159 requires companies to provide additional
information that will help investors and other users of financial statements to more easily understand the effect of the companys choice to use fair value on its earnings. It also requires entities to display the fair value of those assets and
liabilities for which it has chosen to use fair value on the face of the balance sheet. SFAS 159 is effective for fiscal years beginning after November 15, 2007. The adoption of SFAS 159 had no material impact on the Companys financial
statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. This statement establishes a single
authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements. SFAS 157 defines fair value as the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at the measurement date. For the Company, SFAS 157 is effective for the fiscal year beginning after November 15, 2007; however, the FASB has deferred the
implementation of the provision of SFAS 157 relating to nonfinancial assets and liabilities until January 1, 2009. The adoption of SFAS 157 had no material impact on the Companys financial statements.



|Item 7A. | Quantitative and Qualitative Disclosures About Market Risk
|-------- | ----------------------------------------------------------

Not
required for smaller reporting companies.



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Table of Contents



|Item 8. | Financial Statements and Supplementary Data
|------- | -------------------------------------------

Index
to financial statements and schedule of Trailer Bridge, Inc.

See Note 15 to the financial statement for summarized quarterly financial
data.



|                                                                                                                      |  |     
|--------------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                      |  | Page
|Report of Independent Registered Certified Public Accounting Firm                                                     |  | 30  
|Balance Sheets as of December 31, 2008 and 2007                                                                       |  | 31  
|Statements of Operations for the years ended December 31, 2008, 2007 and 2006                                         |  | 32  
|Statements of Changes in Stockholders Equity (Capital Deficit) for the years ended December 
31, 2008, 2007 and 2006 |  | 33  
|Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006                                         |  | 34  
|Notes to Financial Statements                                                                                         |  | 35  
|Schedule II  Valuation and Qualifying Accounts                                                                       |  | 51  



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Report of Independent Registered Certified Public Accounting Firm

Board of Directors and Stockholders

Trailer Bridge, Inc.

Jacksonville, Florida

We have audited the accompanying balance sheets of
Trailer Bridge, Inc. as of December 31, 2008 and 2007 and the related statements of operations, changes in stockholders equity (capital deficit), and cash flows for each of the three years in the period ended December 31, 2008. In
connection with our audits of the financial statements, we have also audited the financial statement schedule listed in the accompanying index. These financial statements and schedule are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the
standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements and schedule. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of Trailer Bridge, Inc. at December 31, 2008 and 2007, and the results of its operations and its cash flows for each of the three years in the period ended December 31,
2008, in conformity with accounting principles generally accepted in the United States of America.

Also, in our opinion, the financial statement
schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.



|                    
|--------------------
|/s/ BDO Seidman, LLP
|Miami, Florida      
|March 30, 2009      



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TRAILER BRIDGE, INC.

BALANCE SHEETS

DECEMBER 31,



|                                                                                                                                                  |  |      |             |   |      |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                                                                                                                  |  | 2008 |             |   | 2007 |  
|ASSETS                                                                                                                                            |  |      |             |   |      |   |             |  
|Current Assets:                                                                                                                                   |  |      |             |   |      |   |             |  
|Cash and cash equivalents                                                                                                                         |  | $    | 7,216,283   |   |      | $ | 1,932,535   |  
|Trade receivables, less allowance for doubtful accounts of $599,017 and $1,010,341                                                                |  |      | 16,818,259  |   |      |   | 15,794,534  |  
|Prepaid and other current assets                                                                                                                  |  |      | 1,883,942   |   |      |   | 2,719,522   |  
|Deferred income taxes, net                                                                                                                        |  |      | 278,856     |   |      |   | 202,001     |  
|                                                                                                                                                  |  |      |             |   |      |   |             |  
|Total current assets                                                                                                                              |  |      | 26,197,340  |   |      |   | 20,648,592  |  
|                                                                                                                                                  |  |     
|Property and equipment, net                                                                                                                       |  |      | 89,304,822  |   |      |   | 93,762,574  |  
|Reserve fund for long-term debt                                                                                                                   |  |      | 4,125,995   |   |      |   | 4,077,726   |  
|Other assets                                                                                                                                      |  |      | 3,704,490   |   |      |   | 4,357,554   |  
|                                                                                                                                                  |  |      |             |   |      |   |             |  
|TOTAL ASSETS                                                                                                                                      |  | $    | 123,332,647 |   |      | $ | 122,846,446 |  
|                                                                                                                                                  |  |      |             |   |      |   |             |  
|                                                                                                                                                  |  |     
|LIABILITIES AND STOCKHOLDERS (CAPITAL DEFICIT) EQUITY                                                                                            |  |      |             |   |      |   |             |  
|Current Liabilities:                                                                                                                              |  |      |             |   |      |   |             |  
|Accounts payable                                                                                                                                  |  |      | 5,259,355   |   |      | $ | 6,918,764   |  
|Accrued liabilities                                                                                                                               |  |      | 7,694,690   |   |      |   | 5,961,347   |  
|Unearned revenue                                                                                                                                  |  |      | 385,458     |   |      |   | 446,774     |  
|Current portion of long-term debt                                                                                                                 |  |      | 2,874,700   |   |      |   | 2,008,220   |  
|                                                                                                                                                  |  |      |             |   |      |   |             |  
|Total current liabilities                                                                                                                         |  |      | 16,214,203  |   |      |   | 15,335,105  |  
|                                                                                                                                                  |  |     
|Other accrued liabilities                                                                                                                         |  |      | 414,910     |   |      |   |            |  
|Long-term debt, less current portion                                                                                                              |  |      | 108,545,228 |   |      |   | 106,098,506 |  
|                                                                                                                                                  |  |      |             |   |      |   |             |  
|TOTAL LIABILITIES                                                                                                                                 |  |      | 125,174,341 |   |      |   | 121,433,611 |  
|                                                                                                                                                  |  |      |             |   |      |   |             |  
|                                                                                                                                                  |  |     
|Commitments and Contingencies                                                                                                                     |  |      |             |   |      |   |             |  
|                                                                                                                                                  |  |     
|Stockholders (Capital Deficit) Equity:                                                                                                           |  |      |             |   |      |   |             |  
|Preferred stock, $.01 par value, 1,000,000, shares authorized; no shares issued or outstanding                                                    |  |      |            |   |      |   |            |  
|Common stock, $.01 par value, 20,000,000 shares authorized; 11,938,921 and 11,931,564 shares issued; 11,838,921 and 11,931,564 shares
outstanding |  |      | 119,389     |   |      |   | 119,316     |  
|Treasury stock, at cost, 100,000 shares                                                                                                           |  |      | (400,000    | ) |      |   |            |  
|Additional paid-in capital                                                                                                                        |  |      | 53,460,783  |   |      |   | 53,076,644  |  
|Capital deficit                                                                                                                                   |  |      | (55,021,866 | ) |      |   | (51,783,125 | )
|                                                                                                                                                  |  |      |             |   |      |   |             |  
|TOTAL STOCKHOLDERS (CAPITAL DEFICIT) EQUITY                                                                                                      |  |      | (1,841,694  | ) |      |   | 1,412,835   |  
|                                                                                                                                                  |  |      |             |   |      |   |             |  
|TOTAL LIABILITIES AND STOCKHOLDERS (CAPITAL DEFICIT) EQUITY                                                                                      |  | $    | 123,332,647 |   |      | $ | 122,846,446 |  
|                                                                                                                                                  |  |      |             |   |      |   |             |  

See accompanying summary of significant accounting policies and notes to financial statements



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TRAILER BRIDGE, INC.

STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31,



|                                                                                           |  |      |             |   |      |   |             |      |  |   |             |  
|------------------------------------------------------------------------------------------ |  | ---- | ----------- | - | ---- | - | ----------- | ---- |  | - | ----------- | -
|                                                                                           |  | 2008 |             |   | 2007 |   |             | 2006 | 
|OPERATING REVENUES                                                                         |  | $    | 133,029,672 |   |      | $ | 116,152,794 |      |  | $ | 110,249,949 |  
|OPERATING EXPENSES:                                                                        |  |      |             |   |      |   |             |      |  |   |             |  
|Salaries, wages, and benefits                                                              |  |      | 18,345,791  |   |      |   | 16,702,856  |      |  |   | 15,135,860  |  
|Purchased transportation and other rent                                                    |  |      | 33,582,188  |   |      |   | 28,284,876  |      |  |   | 26,003,083  |  
|Fuel                                                                                       |  |      | 28,510,000  |   |      |   | 18,851,635  |      |  |   | 14,704,320  |  
|Operating and maintenance (exclusive of depreciation & dry-docking shown separately below) |  |      | 26,174,043  |   |      |   | 23,009,628  |      |  |   | 22,570,884  |  
|Dry-docking                                                                                |  |      | 972,113     |   |      |   | 4,544       |      |  |   | 12,765,606  |  
|Taxes and licenses                                                                         |  |      | 565,470     |   |      |   | 432,285     |      |  |   | 426,419     |  
|Insurance and claims                                                                       |  |      | 3,221,112   |   |      |   | 3,226,439   |      |  |   | 3,685,332   |  
|Communications and utilities                                                               |  |      | 759,589     |   |      |   | 672,739     |      |  |   | 507,629     |  
|Depreciation and amortization                                                              |  |      | 6,160,384   |   |      |   | 5,640,543   |      |  |   | 5,278,337   |  
|Loss (gain) on sale of assets                                                              |  |      | 232,397     |   |      |   | 55,421      |      |  |   | (105,905    | )
|Other operating expenses                                                                   |  |      | 7,546,744   |   |      |   | 5,064,093   |      |  |   | 4,427,050   |  
|                                                                                           |  |      |             |   |      |   |             |      |  |   |             |  
|                                                                                           |  |      | 126,069,831 |   |      |   | 101,945,059 |      |  |   | 105,398,615 |  
|                                                                                           |  |      |             |   |      |   |             |      |  |   |             |  
|OPERATING INCOME                                                                           |  |      | 6,959,841   |   |      |   | 14,207,735  |      |  |   | 4,851,334   |  
|                                                                                           |  |      |            
|NONOPERATING (EXPENSE) INCOME:                                                             |  |      |             |   |      |   |             |      |  |   |             |  
|Interest expense                                                                           |  |      | (10,354,015 | ) |      |   | (10,274,249 | )    |  |   | (10,249,671 | )
|Interest income                                                                            |  |      | 164,479     |   |      |   | 589,263     |      |  |   | 412,876     |  
|                                                                                           |  |      |             |   |      |   |             |      |  |   |             |  
|                                                                                           |  |      |            
|(LOSS) INCOME BEFORE (PROVISION) BENEFIT FOR INCOME TAXES                                  |  |      | (3,229,695  | ) |      |   | 4,522,749   |      |  |   | (4,985,461  | )
|                                                                                           |  |      |            
|(PROVISION) BENEFIT FOR INCOME TAXES                                                       |  |      | (9,046      | ) |      |   | (4,773,359  | )    |  |   | 4,967,368   |  
|                                                                                           |  |      |             |   |      |   |             |      |  |   |             |  
|NET LOSS                                                                                   |  | $    | (3,238,741  | ) |      | $ | (250,610    | )    |  | $ | (18,093     | )
|                                                                                           |  |      |             |   |      |   |             |      |  |   |             |  
|                                                                                           |  |      |            
|PER SHARE AMOUNTS:                                                                         |  |      |             |   |      |   |             |      |  |   |             |  
|                                                                                           |  |      |            
|NET LOSS PER SHARE BASIC                                                                   |  | $    | (0.27       | ) |      | $ | (0.02       | )    |  | $ | (0.00       | )
|                                                                                           |  |      |             |   |      |   |             |      |  |   |             |  
|NET LOSS PER SHARE DILUTED                                                                 |  | $    | (0.27       | ) |      | $ | (0.02       | )    |  | $ | (0.00       | )
|                                                                                           |  |      |             |   |      |   |             |      |  |   |             |  

See accompanying summary of significant accounting policies and notes to financial statements



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##### Table of Contents

TRAILER BRIDGE, INC.

STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY (CAPITAL DEFICIT)



|                             |  |              |  |                |         |        |                            |   |        |                 |          |   |       |   |            |   |  |   |             |   |  |   |            |  
|---------------------------- |  | ------------ |  | -------------- | ------- | ------ | -------------------------- | - | ------ | --------------- | -------- | - | ----- | - | ---------- | - |  | - | ----------- | - |  | - | ---------- | -
|                             |  | Common Stock |  | Treasury Stock |         |        | Additional Paid-In Capital |   |        | Capital Deficit |          |   | Total |  
|                             |  | Shares       |  | Amount         |         | Shares |                            |   | Amount |                 |          |   |       |   |            |   |  |   |            
|Balance January 1, 2006      |  | 11,775,652   |  | $              | 117,757 |        |                            |   |        |                 |          |   |       | $ | 52,178,786 |   |  | $ | (51,514,422 | ) |  | $ | 782,121    |  
|                             |  |              |  |                |         |        |                           
|Net Loss                     |  |             |  |                |        |        |                           |   |        |                 |         |   |       |   |           |   |  |   | (18,093     | ) |  |   | (18,093    | )
|Compensation - Stock Options |  |             |  |                |        |        |                           |   |        |                 |         |   |       |   | 144,089    |   |  |   |            |   |  |   | 144,089    |  
|Options Exercised            |  | 12,135       |  |                | 121     |        |                           |   |        |                 |         |   |       |   | 34,477     |   |  |   |            |   |  |   | 34,598     |  
|                             |  |              |  |                |         |        |                            |   |        |                 |          |   |       |   |            |   |  |   |             |   |  |   |            |  
|                             |  |              |  |                |         |        |                           
|Balance December 31, 2006    |  | 11,787,787   |  |                | 117,878 |        |                           |   |        |                 |         |   |       |   | 52,357,352 |   |  |   | (51,532,515 | ) |  |   | 942,715    |  
|                             |  |              |  |                |         |        |                            |   |        |                 |          |   |       |   |            |   |  |   |             |   |  |   |            |  
|Net Loss                     |  |             |  |                |        |        |                           |   |        |                 |         |   |       |   |           |   |  |   | (250,610    | ) |  |   | (250,610   | )
|Compensation - Stock Options |  |             |  |                |        |        |                           |   |        |                 |         |   |       |   | 397,239    |   |  |   |            |   |  |   | 397,239    |  
|Options Exercised            |  | 143,777      |  |                | 1,438   |        |                           |   |        |                 |         |   |       |   | 322,053    |   |  |   |            |   |  |   | 323,491    |  
|                             |  |              |  |                |         |        |                            |   |        |                 |          |   |       |   |            |   |  |   |             |   |  |   |            |  
|                             |  |              |  |                |         |        |                           
|Balance December 31, 2007    |  | 11,931,564   |  |                | 119,316 |        |                           |   |        |                 |         |   |       |   | 53,076,644 |   |  |   | (51,783,125 | ) |  |   | 1,412,835  |  
|                             |  |              |  |                |         |        |                            |   |        |                 |          |   |       |   |            |   |  |   |             |   |  |   |            |  
|                             |  |              |  |                |         |        |                           
|Net Loss                     |  |             |  |                |        |        |                           |   |        |                 |         |   |       |   |           |   |  |   | (3,238,741  | ) |  |   | (3,238,741 | )
|Compensation - Stock Options |  |             |  |                |        |        |                           |   |        |                 |         |   |       |   | 399,600    |   |  |   |            |   |  |   | 399,600    |  
|Options Exercised            |  | 7,357        |  |                | 73      |        |                           |   |        |                 |         |   |       |   | (15,461    | ) |  |   |            |   |  |   | (15,388    | )
|Purchase of Treasury Stock   |  |             |  |                |        |        | (100,000                   | ) |        |                 | (400,000 | ) |       |   |           |   |  |   |            |   |  |   | (400,000   | )
|                             |  |              |  |                |         |        |                            |   |        |                 |          |   |       |   |            |   |  |   |             |   |  |   |            |  
|                             |  |              |  |                |         |        |                           
|Balance December 31, 2008    |  | 11,938,921   |  | $              | 119,389 |        | (100,000                   | ) |        | $               | (400,000 | ) |       | $ | 53,460,783 |   |  | $ | (55,021,866 | ) |  | $ | (1,841,694 | )
|                             |  |              |  |                |         |        |                            |   |        |                 |          |   |       |   |            |   |  |   |             |   |  |   |            |  

See accompanying summary of significant accounting policies and notes to financial statements



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##### Table of Contents

TRAILER BRIDGE, INC.

STATEMENTS OF CASH FLOWS

YEARS ENDED December 31,



|                                                                                    |  |      |            |   |      |   |             |      |  |   |            |  
|----------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ----------- | ---- |  | - | ---------- | -
|                                                                                    |  | 2008 |            |   | 2007 |   |             | 2006 | 
|Operating activities:                                                               |  |      |            |   |      |   |             |      |  |   |            |  
|Net loss                                                                            |  | $    | (3,238,741 | ) |      | $ | (250,610    | )    |  | $ | (18,093    | )
|Adjustments to reconcile net loss to net cash provided by operating activities:     |  |      |            |   |      |   |             |      |  |   |            |  
|Depreciation and amortization                                                       |  |      | 6,160,384  |   |      |   | 5,636,298   |      |  |   | 5,274,201  |  
|Amortization of loan costs                                                          |  |      | 745,439    |   |      |   | 747,479     |      |  |   | 844,207    |  
|Non-cash stock compensation expense                                                 |  |      | 399,600    |   |      |   | 397,239     |      |  |   | 144,089    |  
|Provision for doubtful accounts                                                     |  |      | 913,009    |   |      |   | 1,662,918   |      |  |   | 1,096,763  |  
|Deferred tax (benefit) expense                                                      |  |      | (93,776    | ) |      |   | 4,666,761   |      |  |   | (4,975,360 | )
|Loss (gain) on sale of fixed assets                                                 |  |      | 232,397    |   |      |   | 55,421      |      |  |   | (105,905   | )
|Decrease (increase) in:                                                             |  |      |            |   |      |   |             |      |  |   |            |  
|Trade receivables                                                                   |  |      | (1,936,734 | ) |      |   | (1,381,282  | )    |  |   | (1,988,751 | )
|Prepaid and other current assets                                                    |  |      | 835,580    |   |      |   | (343,050    | )    |  |   | 118,346    |  
|Other assets                                                                        |  |      | (38,579    | ) |      |   | (298,176    | )    |  |   |           |  
|Increase (decrease) in:                                                             |  |      |            |   |      |   |             |      |  |   |            |  
|Accounts payable                                                                    |  |      | (1,698,434 | ) |      |   | 1,512,984   |      |  |   | (746,555   | )
|Accrued liabilities                                                                 |  |      | 2,165,174  |   |      |   | (319,114    | )    |  |   | 1,718,741  |  
|Unearned revenue                                                                    |  |      | (61,316    | ) |      |   | (118,420    | )    |  |   | (193,829   | )
|                                                                                    |  |      |            |   |      |   |             |      |  |   |            |  
|Net cash provided by operating activities                                           |  |      | 4,384,003  |   |      |   | 11,968,448  |      |  |   | 1,167,854  |  
|                                                                                    |  |      |            |   |      |   |             |      |  |   |            |  
|Investing activities:                                                               |  |      |            |   |      |   |             |      |  |   |            |  
|Purchases of property and equipment                                                 |  |      | (2,094,797 | ) |      |   | (19,820,356 | )    |  |   | (3,194,354 | )
|Proceeds from sale of property and equipment                                        |  |      | 181,761    |   |      |   | 347,666     |      |  |   | 747,658    |  
|Additions to other assets                                                           |  |      | (124,058   | ) |      |   | (261,325    | )    |  |   | (1,201,775 | )
|                                                                                    |  |      |            |   |      |   |             |      |  |   |            |  
|Net cash used in investing activities                                               |  |      | (2,037,094 | ) |      |   | (19,734,015 | )    |  |   | (3,648,471 | )
|                                                                                    |  |      |            |   |      |   |             |      |  |   |            |  
|                                                                                    |  |      |           
|Financing activities:                                                               |  |      |            |   |      |   |             |      |  |   |            |  
|Payments on borrowing from affiliate                                                |  |      |           |   |      |   | (888,132    | )    |  |   | (818,913   | )
|Exercise of stock options                                                           |  |      | (15,388    | ) |      |   | 323,491     |      |  |   | 34,598     |  
|Purchase of treasury stock                                                          |  |      | (400,000   | ) |      |   |            |      |  |   |           |  
|Cash received from notes payable                                                    |  |      | 5,433,030  |   |      |   | 4,561,760   |      |  |   |           |  
|Principal payments on notes payable                                                 |  |      | (2,080,803 | ) |      |   | (1,208,902  | )    |  |   | (1,208,902 | )
|Loan costs                                                                          |  |      |           |   |      |   |            |      |  |   | (5,540     | )
|                                                                                    |  |      |            |   |      |   |             |      |  |   |            |  
|Net cash provided by (used in) financing activities                                 |  |      | 2,936,839  |   |      |   | 2,788,217   |      |  |   | (1,998,757 | )
|                                                                                    |  |      |            |   |      |   |             |      |  |   |            |  
|                                                                                    |  |      |           
|Net increase (decrease) in cash and cash equivalents                                |  |      | 5,283,748  |   |      |   | (4,977,350  | )    |  |   | (4,479,374 | )
|Cash and cash equivalents, beginning of the period                                  |  |      | 1,932,535  |   |      |   | 6,909,885   |      |  |   | 11,389,259 |  
|                                                                                    |  |      |            |   |      |   |             |      |  |   |            |  
|                                                                                    |  |      |           
|Cash and cash equivalents, end of the period                                        |  | $    | 7,216,283  |   |      | $ | 1,932,535   |      |  | $ | 6,909,885  |  
|                                                                                    |  |      |            |   |      |   |             |      |  |   |            |  
|                                                                                    |  |      |           
|Supplemental cash flow information and non-cash investing and financing activities: |  |      |            |   |      |   |             |      |  |   |            |  
|                                                                                    |  | 2008 |            |   | 2007 |   |             | 2006 | 
|Cash paid for interest                                                              |  | $    | 10,363,998 |   |      | $ | 10,265,131  |      |  | $ | 10,424,813 |  
|                                                                                    |  |      |            |   |      |   |             |      |  |   |            |  
|Cash paid for income taxes                                                          |  | $    | 85,901     |   |      | $ |            |      |  | $ | 7,992      |  
|                                                                                    |  |      |            |   |      |   |             |      |  |   |            |  

See accompanying summary of significant accounting policies and notes to financial statements



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##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business  Trailer Bridge, Inc. (the Company) is a domestic trucking and marine transportation company with contract and common carrier
authority. Highway transportation services are offered in the continental United States, while marine transportation is offered between Jacksonville, Florida, San Juan, Puerto Rico and Puerto Plata, Dominican Republic.

Cash and Cash Equivalents  The Company considers cash on hand and amounts on deposit with financial institutions with original maturities of three months or less
to be cash equivalents. Some of the amounts on deposit with financial institutions may exceed FDIC limits.

Allowance for Doubtful Accounts  The
Company records a monthly provision based on specific known collectability problems, historical losses, and current economic information. In addition, the Company performs an analysis of the total receivables on a quarterly basis, and adjusts the
provision account each quarter. It is the Companys policy to write off receivables once it is determined that additional efforts of collection will not result in the collection of the receivable.

Property and Equipment  Property and equipment are carried at cost. Property and equipment are depreciated to their estimated salvage values on a straight-line
method based on the following estimated useful lives:



|                               |  |      
|------------------------------ |  | -----
|                               |  | Years
|Buildings and structures       |  | 40   
|Office furniture and equipment |  | 6-10 
|Leasehold improvements         |  | 2-12 
|Freight equipment:             |  | 4-40 
|Vessels                        |  | 20-40
|Tractors                       |  | 4    
|Containers, Chassis and VTMs  |  | 18   
|Trailers                       |  | 12   

The Company expenses maintenance and repair costs, including regulatory dry-docking of its vessels, as incurred.

Tires on revenue equipment purchased are capitalized as part of the equipment cost and depreciated over the life of the vehicle. Replacement tires are
expensed when placed in service.

Leasehold improvements and equipment under capital leases are amortized over the lesser of the estimated lives of the
asset or the lease terms.

Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. Recoverability of assets to be held and used is measured by net undiscounted cash flows expected to be generated by the asset. An impairment loss is recognized if the carrying value exceeds the fair value of the
assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less the cost to sell.



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##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



Revenue Recognition and Classification  In accordance with Emerging Issues Task Force (EITF) Issue
No. 91-09, Revenue and Expense Recognition for Freight Services in Process, voyage revenue is recognized ratably over the duration of a voyage based on the relative transit time in each reporting period; commonly referred to
as the percentage of completion method. Voyage expenses are recognized as incurred. Net demurrage and charterhire revenue are included in the Companys revenues. Net demurrage is a charge assessed for failure to return empty freight
equipment on time less a demurrage related allowance for bad debt. Charterhire is rental revenue for vessels not in use in a liner service. The Company recognizes demurrage and charterhire revenue based on negotiated fees included in the contracts
of its customers. These amounts are computed daily and included in Operating Revenue. The Company has in place fuel surcharges that are stipulated in the Companys tariff at predetermined levels based upon the price of fuel. The
fuel surcharge is distinguished from freight revenues and is reported in the Companys operating revenues. The fuel surcharge was approximately $26.1 million, $17.3 million, and $16.9 million for the years ended December 31, 2008, 2007 and
2006, respectively.

Income Taxes  The Company adopted Financial Accounting Standards Board (FASB) Interpretation No. 48,
Accounting for Uncertainty in Income Taxes  an interpretation of FASB Statement 109, (FIN 48) in the first quarter of 2007. FIN 48 prescribes a recognition threshold and measurement attribute for financial
statement recognition and measurement of a tax position that an entity takes or expects to take in a tax return. Under FIN 48, an entity may only recognize or continue to recognize tax positions that meet a more likely than not
threshold. In the ordinary course of business there is inherent uncertainty in quantifying our income tax positions. The Company assesses its income tax positions and records tax benefits for all years subject to examination based on
managements evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, the Company has recognized the largest amount of
tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax
benefit will be sustained, no tax benefit has been recognized in the Companys financial statements.

As a result of the implementation of FIN 48, the
Company performed a review of its uncertain tax positions in accordance with FIN 48 and concluded that there were no significant adjustments required related to uncertain tax positions. As of the adoption date, the Company had no accrued interest
expense or penalties related to unrecognized tax benefits. Interest and penalties, if incurred, would be recognized as a component of income tax expense. As of December 31, 2008, there has been no change to the assessment as of the adoption
date. The Company does not believe there will be any material changes in its unrecognized position over the next 12 months.

The Company files income tax
returns in the U.S. federal jurisdiction and each state jurisdiction in which it operates which imposes an income tax. The Company has not been subject to Internal Revenue Service (IRS) examination of its federal income tax returns. Filed federal
tax returns for the years of 2005, 2006 and 2007 remain subject to examination by the IRS. The Company is not currently involved in any state income tax examination.

Earnings Per Share  Basic earnings per share (EPS) is computed by dividing earnings applicable to common shareholders by the weighted-average number of common shares outstanding for the period.
Diluted EPS reflects the potential dilution of securities that could participate in the earnings.

Options to purchase 383,564, 1,096,986, and 483,472
shares of the Companys common stock were excluded from the calculation of diluted earnings per share as their effect would be anti-dilutive during the years ended December 31, 2008, 2007 and 2006, respectively.



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TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



Stock-Based Compensation  In the first quarter of 2006, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 123 (revised 2004), Share-Based Payment(SFAS 123R). This Statement requires companies to expense the estimated fair value of stock options and similar equity instruments issued to
employees over the vesting period in their statement of operations. The Company adopted SFAS 123R using the modified prospective method effective January 1, 2006, which requires the Company to record compensation expense over the vesting period
for all awards granted after the date of adoption, and for the unvested portion of previously granted awards that remain outstanding at the date of adoption. For the years ended December 31, 2008, 2007, and 2006 compensation expense in the
amounts of $399,600, $397,239, and $144,089, respectively, were recorded as part of salaries, wages, and benefits in the statement of operations.

Advertising Costs  The Companys advertising costs are expensed as incurred. Advertising costs for the years ended December 31, 2008, 2007, and 2006 were $27,530, $120,369, and $25,096, respectively.

Use of Estimates  The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Reclassification  Certain prior periods amounts in the
financial statements have been reclassified to conform to current year presentation.

Recently Issued Accounting Pronouncements  In May 2008, the
FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles. SFAS 162 identifies the sources of accounting principles to be used in the preparation of financial statements that are presented in
conformity with generally accepted accounting principles in the United States for non-governmental entities. SFAS 162 was effective November 2008. The adoption of SFAS 162 did not have a material impact on the Companys financial statements.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations. This standard establishes principles
and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non-controlling interest in the acquiree and the goodwill acquired. This standard also
establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. This standard is effective for financial statements issued for fiscal years beginning after December 15, 2008. The
Company does not expect that the implementation of this statement will have a material impact on its results of operations, financial position, or liquidity.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, providing companies with an option to report selected financial assets and liabilities at
fair value. SFAS 159s objective is to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. United States generally accepted accounting
principles has required different measurement attributes for different assets and liabilities that can create artificial volatility in earnings. SFAS 159 helps to mitigate this type of accounting-induced volatility by enabling companies to report
related assets and liabilities at fair value, which would likely reduce the need for companies to comply with detailed rules for hedge accounting. SFAS 159 also establishes presentation and disclosure requirements designed to facilitate



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TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. SFAS 159 requires companies to
provide additional information that will help investors and other users of financial statements to more easily understand the effect of the Companys choice to use fair value on its earnings. It also requires entities to display the fair value
of those assets and liabilities for which it has chosen to use fair value on the face of the balance sheet. SFAS 159 is effective for fiscal years beginning after November 15, 2007. The adoption of SFAS 159 had no material impact on the
Companys financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. This statement
establishes a single authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements. SFAS 157 defines fair value as the price that would be received to
sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. For the Company, SFAS 157 is effective for the fiscal year beginning after November 15, 2007; however, the FASB
has deferred the implementation of the provision of SFAS 157 relating to nonfinancial assets and liabilities until January 1, 2009. The adoption of SFAS 157 had no material impact on the Companys financial statements.

2. PROPERTY AND EQUIPMENT , NET

Property and equipment at December 31,
2008 and 2007 consist of the following:



|                                                |  |      |             |   |      |   |             |  
|----------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                |  | 2008 |             |   | 2007 |  
|Vessels                                         |  | $    | 55,894,395  |   |      | $ | 55,708,780  |  
|Containers and trailers                         |  |      | 35,362,448  |   |      |   | 35,096,560  |  
|Chassis                                         |  |      | 20,591,025  |   |      |   | 20,340,652  |  
|Tractors                                        |  |      | 5,202,270   |   |      |   | 5,135,200   |  
|Office furniture and equipment                  |  |      | 4,001,763   |   |      |   | 3,949,339   |  
|Buildings and structures                        |  |      | 2,789,835   |   |      |   | 2,714,116   |  
|VTMs                                           |  |      | 2,461,437   |   |      |   | 2,510,732   |  
|Leasehold improvements                          |  |      | 1,703,268   |   |      |   | 1,327,550   |  
|Land                                            |  |      | 1,254,703   |   |      |   | 1,254,703   |  
|                                                |  |      |             |   |      |   |             |  
|                                                |  |      | 129,261,144 |   |      |   | 128,037,632 |  
|less: accumulated depreciation and amortization |  |      | (39,956,322 | ) |      |   | (34,275,058 | )
|                                                |  |      |             |   |      |   |             |  
|                                                |  | $    | 89,304,822  |   |      | $ | 93,762,574  |  
|                                                |  |      |             |   |      |   |             |  

Depreciation and amortization expense on property and equipment was $6,160,384, $5,640,543, and $5,278,337, in
2008, 2007, and 2006, respectively.

3. TRANSACTIONS WITH RELATED PARTIES

On December 17, 2008, the Company purchased 100,000 shares of the Companys common stock from John D. McCown at $4.00 per share at which time the closing market price was $4.20 per share. This was in
connection with Mr. McCowns resignation as Chief Executive Officer of the Company on December 15, 2008. Mr. McCowns employment agreement was amended so that the Company will pay his



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TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



severance in equal installments over a 24-month period (instead of 50% in a lump sum within 30 days after separation from service). Mr. McCown will
continue to serve as a director of the Company. Approximately $830,000 is recorded in salaries, wages, and benefits as of December 31, 2008 related to Mr. McCowns severance agreement.

During 2007, the related party debt had been completely repaid. This debt arose in a prior year from deferred charterhire payments to K Corp., an entity acquired in 2004
by the Company and the former lessor of the Companys ro/ro vessels, had an interest rate of 8.03% and was payable in 36 equal monthly installments which began in January 2005. As the debt was repaid in 2007, there was nothing outstanding as of
December 31, 2008.

4. LONG-TERM DEBT

Following is a
summary of long-term debt at December 31, 2008 and 2007:



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |      |             |   |      |   |             |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | 2008 |             |   | 2007 |  
|Senior secured notes maturing on November 15, 2011; Interest on the notes is payable semi-annually on each May 15 and
November 15, beginning on May 15, 2006. The notes accrue interest at 9 1/4% per year on the principal amount. The
notes are collateralized by a first priority lien with a carrying value of $41.0 million on two roll-on/roll-off barges, certain equipment and the Jacksonville, Florida office and terminal, including associated real estate. |  | $    | 85,000,000  |   |      | $ | 85,000,000  |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |     
|Ship-financing bonds and notes (Title XI) maturing on March 30, 2023; payable in semi-annual installments of principal and interest;
interest is fixed at 6.52%; collateralized by vessels with a carrying value of $13,175,114 at December 31,2008; amount is guaranteed by The United States of America under the Title XI Federal Ship Financing Program                                                                                                             |  |      | 10,800,432  |   |      |   | 11,545,290  |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |     
|Ship-financing bonds and notes (Title XI) maturing on September 30, 2022; payable in semi-annual installments of principal and interest;
interest is fixed at 7.07%; collateralized by vessels with a carrying value of $8,479,446 at December 31, 2008; amount is guaranteed by The United States of America under the Title XI Federal Ship Financing Program                                                                                                         |  |      | 6,496,607   |   |      |   | 6,960,651   |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |     
|Wachovia term note maturing on April 23, 2012; payable in monthly installments of principal and interest; interest is calculated using
the Prime rate on the first day of the month; collateralized by eligible new equipment with a carrying value of $16,301,686 at December 31, 2008. The interest rate on this note for the years ended December 31, 2008 and 2007 was equal to
the Prime rate of 4.0% and 7.5%, respectively.                                      |  |      | 9,122,889   |   |      |   | 4,561,760   |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |     
|First National Bank note which matured on June 21, 2008; payable in monthly installments of principal and interest; interest was fixed at
8.00%.                                                                                                                                                                                                                                                                                                                        |  |      |            |   |      |   | 39,025      |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |      |             |   |      |   |             |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | $    | 111,419,928 |   |      | $ | 108,106,726 |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |     
|Less current portion                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |      | (2,874,700  | ) |      |   | (2,008,220  | )
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |      |             |   |      |   |             |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | $    | 108,545,228 |   |      | $ | 106,098,506 |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |      |             |   |      |   |             |  



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TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



(A) SENIOR SECURED NOTES

The $85 million in 91/4% Senior Secured Notes mature on November 15, 2011. Interest on the notes is payable semi-annually each May 15 and November 15. The notes are secured by a first priority lien for the benefit of
the holders of the notes on our two ro/ro barges, certain equipment and our Jacksonville, Florida office and terminal, including associated real estate. The notes are subordinated to the Title XI debt collateralized by the TBC barges. Prior to
November 15, 2008, the Company had the option to redeem some or all of the notes at a make-whole premium. After November 15, 2008, the Company may redeem the notes, in whole or in part, at its option at any time or from time to time at the
redemption prices specified in the indenture governing the notes, plus accrued and unpaid interest thereon, if any, to the redemption date. Upon the occurrence of certain changes in control specified in the indenture governing the notes, the holders
of the notes will have the right, subject to certain conditions, to require the Company to repurchase all or any part of their notes at a repurchase price equal to 101% of the principal amount of the notes, plus accrued and unpaid interest thereon,
if any, to the redemption date. The agreement among other things, places restrictions (as defined) on the Companys ability to (a) incur or guarantee additional debt (b) to pay dividends, repurchase common stock or subordinated debt
(c) create liens (d) transact with affiliates and (e) transfer or sell assets.

(B) SHIP FINANCING BONDS AND NOTES

In the first quarter of 2004, the Company received approval to reschedule principal payments over the remaining life of each Title XI issue. As rescheduled, the
Companys semi-annual principal payments on each of the bonds increased to $232,022 and $372,429 respectively. In addition, in connection with obtaining the consent of the Secretary of Transportation of the United States of America (the
Secretary) to offer and sell senior secured notes, in December 2004 the Company deposited approximately $2.0 million into a reserve fund that secures the Title XI Bonds. As of December 31, 2008 and 2007, the Company did not comply
with the financial covenants relating to certain leverage ratios contained in the Title XI debt agreements. The default provisions of the Title XI covenants provide that, in the event of default, the Company is restricted from conducting certain
financial activities without obtaining the written permission of the Secretary. The Company may not take, without prior written approval, any of the following actions: (1) acquire any fixed assets other than those required for the normal
operation and maintenance of our existing assets; (2) enter into or become liable under certain charters and leases (having a term of six months or more); (3) pay any debt subordinated to the Title XI Bonds; (4) incur any debt, except
current liabilities or short term loans incurred in the ordinary course of business; (5) make investments in any person, other than obligations of U.S. government, bank deposits or investments in securities of the character permitted for money
in the reserve fund; or (6) create any lien on any of our assets, other than pursuant to loans guaranteed by the Secretary under Title XI and liens incurred in ordinary course of business. However, none of the foregoing restrictions will apply
at any time if the Company meets certain financial tests provided for in the agreement and the Company has satisfied our obligation to make deposits into the reserve fund. In November 2004, the Company received permission from the Secretary to issue
$85 million in Senior Secured Notes and to use the proceeds of this transaction to fund the acquisition of K Corp., repay K Corp.s indebtedness, repay our existing debts, and exercise certain equipment purchase options on equipment previously
leased. As of December 31, 2008 and 2007, the Company has not performed any such restricted financial activities and therefore its in compliance with such restrictions. The United States of America under the Title XI Federal Ship
Financing Program guarantees the bonds.

According to the Title XI debt agreement, the Company is required to make a deposit based on adjusted earnings as
defined by the agreement into a reserve fund that secures the Title XI Bonds. The total amount held in deposit was $4.1 million as of December 31, 2008 and 2007, which is included in the long-term asset section of the balance sheet. Under
certain circumstances, the Title XI debt agreement



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TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



requires an annual deposit until an amount equal to fifty percent of the outstanding balance is reached which is approximately $8.6 million as of
December 31, 2008. Based on the adjusted earnings, as defined in the agreement, the Company did not have a deposit requirement in 2008 and 2007. In 2006, the Company deposited $1.1 million into the reserve fund.

(C) WACHOVIA TERM LOAN

The Company has access to a term loan with
Wachovia that provides for a maximum availability of $10 million and expires April 2012. The term loan provides for interest equal to the prime rate. At December 31, 2008, approximately $9.1 million was outstanding, of which $5.4 million was
advanced in 2008 to fund equipment purchases. This term loan is collateralized by eligible equipment with a carrying value of $16.3 million at December 31, 2008.

(D) EQUIPMENT DEBT

The Companys note payable with First National Bank arose from a purchase option within a
lease of office equipment. The note had an interest rate of 8.00% and matured in June 2008.

(E) REVOLVING LINE OF CREDIT

The Companys revolving credit facility with Wachovia, as amended, provides for a maximum availability of $10 million and expires April 2012. The facility provides
for interest equal to the prime rate. The revolving line of credit is subject to a borrowing base formula (approximately $10.0 million was available under this formula at December 31, 2008) based on a percentage of eligible accounts receivable.
The revolving credit facility is secured by the Companys accounts receivable. At December 31, 2008, there were no advances drawn on this credit facility. During the fourth quarter of 2008, the Company and Wachovia amended the Revolving
Credit Agreement to eliminate all financial covenants at any time the Company has at least $3.0 million in unused borrowing capacity under the facility. As of December 31, 2008 the Company had $10.9 million available under this facility and
therefore was not subject to any financial covenants.

Following are maturities of long-term debt at December 31, 2008:



|           |  |   |            
|---------- |  | - | -----------
|2009       |  | $ | 2,874,700  
|2010       |  |   | 2,874,700  
|2011       |  |   | 87,874,700 
|2012       |  |   | 2,874,700  
|2013       |  |   | 2,874,700  
|Thereafter |  |   | 12,046,428 
|           |  |   |            
|           |  | $ | 111,419,928
|           |  |   |            

5. OPERATING LEASES

The Company has various operating lease agreements principally for land leases, office facilities, charterhire, tug charter and equipment. The Company also has a lease agreement with the Port Authority of Jacksonville, whereas, monthly rent
is calculated based on the total tonnage shipped, with an annual minimum guarantee of approximately $1.9 million. During the years ended December 31, 2008, 2007, and 2006, the Company did not exceed the minimum tonnage under this lease
agreement to require additional rent. In addition, the Company is responsible for all fuel costs associated with its tug charterhire agreements.



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TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



Future minimum rental payments required under operating leases that have initial or remaining noncancellable lease
terms in excess of one year as of December 31, 2008 are as follows:



|     |  |   |           
|---- |  | - | ----------
|2009 |  | $ | 6,724,836 
|2010 |  |   | 2,916,405 
|2011 |  |   | 1,904,955 
|2012 |  |   | 1,880,794 
|2013 |  |   | 1,367,963 
|     |  |   |           
|     |  | $ | 14,794,953
|     |  |   |           

Included in the amounts in the table above is tug charter hire of $3.6 million in 2009 and $0.2 million in 2010,
respectively.

Rent expense for all operating leases, including leases with terms of less than one year, was $14,531,028, $13,839,875, and $13,073,117 for
2008, 2007, and 2006, respectively. Included in the $14.5 million of rent expense is $11.3 million related to tug charter hire, of which $5.6 million is directly related to chartering the tugs and approximately $5.7 million was related to the
labor associated with the tug charters. This relationship where the capital cost component is typically just under half the total tug charter hire amount is believed to be fairly consistent among all the tug charter agreements.

6. OTHER ASSETS

Other assets consist of the following at December 31,
2008 and 2007:



|                                                     |  |      |           |      |   |          
|---------------------------------------------------- |  | ---- | --------- | ---- | - | ---------
|                                                     |  | 2008 |           | 2007
|Debt issuance costs, net of accumulated amortization |  |      | 3,117,034 |      |   | 3,840,000
|Other                                                |  |      | 587,456   |      |   | 517,554  
|                                                     |  |      |           |      |   |          
|                                                     |  | $    | 3,704,490 |      | $ | 4,357,554
|                                                     |  |      |           |      |   |          

Amortization expense for the years ended December 31, 2008, 2007, and 2006 was $838,978, $840,060, and
$912,060, respectively.



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TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



7. ACCRUED LIABILITIES

Accrued liabilities consist of the following at December 31, 2008 and 2007:



|                         |  |      |           |      |   |          
|------------------------ |  | ---- | --------- | ---- | - | ---------
|                         |  | 2008 |           | 2007
|Marine expense           |  | $    | 3,454,775 |      | $ | 2,549,486
|Interest                 |  |      | 1,313,508 |      |   | 1,323,492
|Salaries and wages       |  |      | 815,650   |      |   | 352,624  
|Rent                     |  |      | 932,574   |      |   | 532,022  
|Purchased transportation |  |      | 391,310   |      |   | 595,527  
|Fringe benefits          |  |      | 270,678   |      |   | 335,660  
|Taxes                    |  |      | 79,596    |      |   | 19,606   
|Other                    |  |      | 436,599   |      |   | 252,930  
|                         |  |      |           |      |   |          
|                         |  | $    | 7,694,690 |      | $ | 5,961,347
|                         |  |      |           |      |   |          

8. INCOME TAXES

The
(provision) benefit for income taxes is comprised of the following for the years ended December 31, 2008, 2007 and 2006:



|                                        |  |      |          |   |      |   |            |      |  |   |           |  
|--------------------------------------- |  | ---- | -------- | - | ---- | - | ---------- | ---- |  | - | --------- | -
|                                        |  | 2008 |          |   | 2007 |   |            | 2006 | 
|Current:                                |  |      |          |   |      |   |            |      |  |   |           |  
|Federal                                 |  | $    | (29,000  | ) |      | $ |           |      |  | $ | 136       |  
|State                                   |  |      | 113,729  |   |      |   | (106,598   | )    |  |   | (8,128    | )
|                                        |  |      |          |   |      |   |            |      |  |   |           |  
|                                        |  |      | 84,729   |   |      |   | (106,598   | )    |  |   | (7,992    | )
|                                        |  |      |          |   |      |   |            |      |  |   |           |  
|Deferred                                |  |      |          |   |      |   |            |      |  |   |           |  
|Federal                                 |  |      | (1,316   | ) |      |   | (1,624,711 | )    |  |   | 1,533,851 |  
|State                                   |  |      | 24,143   |   |      |   | 113,635    |      |  |   | 291,019   |  
|                                        |  |      |          |   |      |   |            |      |  |   |           |  
|                                        |  |      | 22,827   |   |      |   | (1,511,076 | )    |  |   | 1,824,870 |  
|Valuation allowance decrease (increase) |  |      | (116,602 | ) |      |   | (3,155,685 | )    |  |   | 3,150,490 |  
|                                        |  |      |          |   |      |   |            |      |  |   |           |  
|Total income tax (provision) benefit    |  | $    | (9,046   | ) |      | $ | (4,773,359 | )    |  | $ | 4,967,368 |  
|                                        |  |      |          |   |      |   |            |      |  |   |           |  

Income tax (provision) benefit for the years ended December 31, 2008, 2007 and 2006 differs from the amounts
computed by applying the statutory Federal corporate rate to income (loss) before (provision) benefit for income taxes. The differences are reconciled as follows:



|                                                              |  |      |            |   |      |   |            |      |  |   |           |  
|------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | --------- | -
|                                                              |  | 2008 |            |   | 2007 |   |            | 2006 | 
|Tax (provision) benefit at statutory Federal rate             |  | $    | 1,098,097  |   |      | $ | (1,537,710 | )    |  | $ | 1,695,056 |  
|Qualifying shipping income                                    |  |      | (1,128,856 | ) |      |   |           |      |  |   |          |  
|(Increase) decrease in deferred tax asset valuation allowance |  |      | (116,602   | ) |      |   | (3,155,685 | )    |  |   | 3,150,490 |  
|Nondeductible expenses                                        |  |      | (4,298     | ) |      |   | (75,460    | )    |  |   | (69,605   | )
|State income taxes                                            |  |      | 142,613    |   |      |   | (4,504     | )    |  |   | 191,427   |  
|                                                              |  |      |            |   |      |   |            |      |  |   |           |  
|Total income tax (provision) benefit                          |  | $    | (9,046     | ) |      | $ | (4,773,359 | )    |  | $ | 4,967,368 |  
|                                                              |  |      |            |   |      |   |            |      |  |   |           |  

Deferred income taxes reflect the net tax effect of temporary differences between carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income taxes.



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TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



The components of the Companys net deferred tax asset at December 31, 2008 and 2007 are as follows:



|                                       |  |      |           |      |   |           
|-------------------------------------- |  | ---- | --------- | ---- | - | ----------
|                                       |  | 2008 |           | 2007
|Deferred tax assets:                   |  |      |           |      |   |           
|Net operating loss carry forwards      |  | $    | 2,033,140 |      | $ | 28,867,823
|Employee stock option                  |  |      | 19,124    |      |   | 141,353   
|Intangible Asset                       |  |      | 5,581     |      |   | 104,977   
|Allowance for bad debts                |  |      | 14,376    |      |   | 359,520   
|Accrued vacation                       |  |      | 6,496     |      |   | 119,442   
|Other                                  |  |      | 5,682     |      |   | 109,091   
|                                       |  |      |           |      |   |           
|Gross deferred assets                  |  |      | 2,084,399 |      |   | 29,702,206
|                                       |  |     
|Deferred tax liabilities:              |  |      |           |      |   |           
|Fixed asset basis                      |  |      | 1,467,408 |      |   | 21,198,271
|                                       |  |      |           |      |   |           
|                                       |  |     
|Gross deferred tax liabilities         |  |      | 1,467,408 |      |   | 21,198,271
|Deferred tax asset valuation allowance |  |      | 338,135   |      |   | 8,301,934 
|                                       |  |      |           |      |   |           
|                                       |  |     
|Net deferred tax asset                 |  | $    | 278,856   |      | $ | 202,001   
|                                       |  |      |           |      |   |           

The Company has recorded deferred tax assets as reflected above. In assessing the ability to realize the deferred
tax assets, management considers, whether it is more likely than not, that some portion, or the entire deferred tax asset will be realized. The ultimate realization is dependent on generating sufficient taxable income in future years.

The American Jobs Creation Act of 2004 instituted an elective tonnage tax regime whereby a corporation may elect to pay a tonnage tax based upon the net tonnage of its
qualifying U.S. flag vessels rather than the traditional federal corporate income tax on the taxable income from such vessels and related inland service. The Company has determined that its marine operations and inland transportation related to
marine operations qualify for the tonnage tax. In the second quarter of 2007, the Company completed its analysis of the impact of making the election to be taxed under the tonnage tax regime. The analysis illustrated that using the tonnage tax
method would reduce the Companys cash outlay related to federal income taxes. For federal tax purposes, the Company can satisfy only 90% of its AMT (Alternative Minimum Taxable) income with its net operating loss carryforwards (NOL) and,
therefore, results in a much larger cash outlay in comparison to the required payments associated with the tonnage tax regime. As a result of this analysis, the Company determined that it would be making the election to be taxed under the tonnage
tax regime on its 2007 federal tax return. As a result, it was more likely than not that the Company would not be able to utilize its deferred tax asset. Therefore during the second quarter of 2007, the deferred tax asset was adjusted by
approximately $4.6 million to reflect this limitation. The remaining deferred tax asset at December 31, 2008 and 2007 of approximately $279,000 and $202,000, respectively, represents primarily the state portion of the Companys deferred
tax asset. The Companys research of the tonnage tax suggests that states do not recognize the tonnage tax and, therefore, NOLs related to state qualifying shipping income would not be suspended. The 2008 election of the tonnage tax was
made in connection with the filing of the Companys 2007 federal corporate income tax return and will also apply to all subsequent federal income tax returns unless the Company revokes this tax treatment. The Company is accounting for this
election as a change in status of its qualifying shipping activities. As a result of the change in status, federal deferred tax assets and liabilities, including approximately $85 million of federal NOLs, which were previously offset by a
valuation allowance, have been suspended. It cannot be assured that there will not be future efforts to repeal all, or any portion of, the tonnage tax as it applies to our shipping activities. The federal tax expense related to the tonnage tax
method is estimated to be $28,000 which could not be offset by the Companys existing NOLs under the tonnage tax regime.

The Company adopted
Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes  an interpretation of FASB Statement 109, (FIN 48) in the first quarter of 2007. FIN
48 prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position that an entity takes or expects to take in a tax return. Under FIN 48, an entity may only recognize or continue to
recognize tax positions that meet a more likely than not threshold. In the ordinary course of business there is inherent uncertainty in quantifying our income tax positions. The Company assesses its income tax positions and records tax
benefits for all years subject to examination based on managements evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where it is more likely than not that a tax benefit will be
sustained, the Company has recognized the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax
positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the Companys financial statements.



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TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



As a result of the implementation of FIN 48, the Company performed a review of its uncertain tax positions in
accordance with FIN 48 and concluded that there were no significant adjustments required related to uncertain tax positions. As of the adoption date, the Company had no accrued interest expense or penalties related to unrecognized tax benefits.
Interest and penalties, if incurred, would be recognized as a component of income tax expense. As of December 31, 2008, there has been no change to the assessment as of the adoption date. The Company does not believe there will be any material
changes in its unrecognized position over the next 12 months.

The Company files income tax returns in the U.S. federal jurisdiction and each state
jurisdiction in which it operates which imposes an income tax. The Company has not been subject to Internal Revenue Service (IRS) examination of its federal income tax returns. Filed federal tax returns for the years of 2005, 2006 and 2007 remain
subject to examination by the IRS. The Company is not currently involved in any state income tax examination.

9. STOCKHOLDERS EQUITY

In 1997, the Companys Board of Directors and stockholders authorized the establishment of an Incentive Stock Plan (the Plan). The purpose of the Plan is
to promote the interests of the Company and its shareholders by retaining the services of outstanding key management members and employees and encouraging them to have a greater financial investment in the Company and increase their personal
interest in its continued success. The Company initially reserved 785,000 shares of common stock for issuance pursuant to the Plan to eligible employees under the Plan. In July 2000, the Board of Directors authorized an increase of 515,000 shares of
common stock reserved under the Plan. In May 2006, the Board of Directors authorized an increase of 500,000 shares of common stock reserved under the Plan. In April 2007 the Board of Directors extended the expiration date of the plan for five years
until July 2012. All such reservations and amendments were made pursuant to shareholder approval. Awarded options that expire unexercised or are forfeited become available again for issuance under the Plan. The options vest equally over a period of
five years and the maximum term for a grant is ten years. As of December 31, 2008, there were 166,887 options available for grant under the Plan.

In
July 2000, the Companys Board of Directors and its stockholders authorized the establishment of the Non-Employee Director Stock Incentive Plan (the Director Plan). The purpose of the Director Plan is to assist the Company in
attracting and retaining highly competent individuals to serve as non-employee directors. The Company has reserved 50,000 shares of common stock for issuance pursuant to the Director Plan. Awarded options that expire unexercised or are forfeited
become available again for issuance under the Director Plan. The exercise price per share of options granted under the Director Plan shall not be less than 100% of the fair market value of the common stock on the date of grant. Such options become
exercisable at the rate of 20% per year beginning on the first anniversary date of the grant and the maximum term for a grant is ten years. As of December 31, 2008, there were 9,889 options available for grant under the Director Plan.



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TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



On December 20, 2006 and January 9, 2008, the Company granted options to purchase 300,000 and 96,500 shares
of the Companys common stock, respectively, under the Companys Incentive Stock Plan. In accordance with SFAS 123R, the assumptions used to calculate the fair value of those options, using the Black-Scholes method, granted during the
years ended December 31, 2008 and 2006 are as follows:



|                        |  |                          |   |  |           |  
|----------------------- |  | ------------------------ | - |  | --------- | -
|                        |  | Years ended December 31, |  
|                        |  | 2008                     |   |  | 2006      |  
|Expected Term           |  | 6.5 years                |   |  | 6.5 years |  
|Volatility              |  | 45.98                    | % |  | 86.00     | %
|Risk-free interest rate |  | 3.40                     | % |  | 4.57      | %
|Dividends               |  | None                     |   |  | None      |  

There were no stock options granted during 2007.

The weighted average fair value of options granted for the years ended December 31, 2008 and 2006 was $5.49 and $6.60, respectively.

A summary of option activity under the Companys stock-based compensation plan at December 31, 2008 and during the year then ended is presented below:



|                                                                    |  |         |           |   |                              |   |                         |  |   |        
|------------------------------------------------------------------- |  | ------- | --------- | - | ---------------------------- | - | ----------------------- |  | - | -------
|                                                                    |  | 2008   
|                                                                    |  | Options |           |   | WeightedAverageExercisePrice |   | AggregateIntrinsicValue
|Outstanding at beginning of year                                    |  |         | 1,096,986 |   |                              | $ | 4.90                    |  |   |        
|Granted                                                             |  |         | 96,500    |   |                              |   | 10.90                   |  |   |        
|Exercised                                                           |  |         | (91,928   | ) |                              |   | 8.77                    |  |   |        
|Forfeited                                                           |  |         | (8,308    | ) |                              |   | 5.73                    |  |   |        
|                                                                    |  |         |           |   |                              |   |                         |  |   |        
|                                                                    |  |         |           |   |                              |   |                         |  |   |        
|                                                                    |  |         |           |   |                              |   |                         |  |   |        
|Outstanding at end of year                                          |  |         | 1,093,250 |   |                              | $ | 4.99                    |  | $ | 675,604
|                                                                    |  |         |           |   |                              |   |                         |  |   |        
|Grants exercisable at year-end                                      |  |         | 824,340   |   |                              | $ | 3.55                    |  | $ | 675,604
|                                                                    |  |         |           |   |                              |   |                         |  |   |        
|                                                                    |  |         |          
|Fair value of options granted during the year at the price of $5.49 |  | $       | 529,785   |   |                              |   |                         |  |   |        

The intrinsic value of the options exercised during 2008, 2007, and 2006 was $97,538, $1,502,157, and $57,912,
respectively.



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TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



The following table summarizes information about the outstanding options at December 31, 2008:



|              |       |                    |           |                                           |                    |                    |        
|------------- | ----- | ------------------ | --------- | ----------------------------------------- | ------------------ | ------------------ | -------
|ExercisePrice |       | OptionsOutstanding |           | Weighted-AverageRemainingContractual Life |                    | OptionsExercisable
|$             | 2.25  |                    | 150,600   |                                           | Less than one year |                    | 150,600
|              | 2.84  |                    | 324,430   |                                           | 1.6 years          |                    | 324,430
|              | 2.88  |                    | 234,656   |                                           | 3.4 years          |                    | 234,656
|              | 8.61  |                    | 287,064   |                                           | 7.9 years          |                    | 114,654
|              | 10.90 |                    | 96,500    |                                           | 9.1 years          |                    |       
|              |       |                    |           |                                           |                    |                    |        
|              |       |                    | 1,093,250 |                                           |                    |                    | 824,340
|              |       |                    |           |                                           |                    |                    |        

Remaining non-exercisable options and the related expense as of December 31, 2008 become exercisable as
follows:



|     |  |         |  |         |          
|---- |  | ------- |  | ------- | ---------
|     |  | Options |  | Expense
|2009 |  | 76,770  |  | $       | 443,790  
|2010 |  | 76,770  |  |         | 443,790  
|2011 |  | 76,770  |  |         | 432,398  
|2012 |  | 19,300  |  |         | 97,556   
|2013 |  | 19,300  |  |         | 1,866    
|     |  |         |  |         |          
|     |  | 268,910 |  | $       | 1,419,400
|     |  |         |  |         |          

During the first quarter of 2008, the Compensation Committee approved the use of the cashless exercise method for
the Companys Officer Group for the July 1998 options. This cashless transaction allows the aggregate spread of each holders options exercise minus relevant taxes to determine the number of shares issued to the holder. Each holders
resulting tax liabilities were paid by the Company and reduced the Companys Additional Paid in Capital Balance. This cashless transaction resulted in an aggregate of 5,429 shares issued to the Officer Group out of 90,000 options to purchase
common stock.

During the second quarter of 2007, the Compensation Committee approved the use of the cashless exercise method for the Companys
Officer Group for the July 1997 options. This cashless transaction allows the aggregate spread of each holders options exercise minus relevant taxes to determine the number of shares issued to the holder. Each holders resulting tax
liabilities were paid by the Company and reduced the Companys Additional Paid in Capital Balance. This cashless transaction resulted in an aggregate of 56,373 shares issued to the Officer Group out of 345,344 options to purchase common stock.

The total unamortized fair value of outstanding options at December 31, 2008 is $1,601,131.

10. EMPLOYEE BENEFIT PLANS

The Company has a 401(k) Plan, which covers
substantially all employees in the United States. Participants are permitted to make contributions of up to 25% of their compensation not to exceed certain limitations. The Company makes matching contributions to the Plan at a rate not to exceed 3%
of compensation as defined. The Company contributed approximately $0.2 million to the Plan during each of the years 2008, 2007 and 2006.

In addition, the
Company has a 165(e) Plan that covers substantially all employees in Puerto Rico. The Company made contributions of approximately $28,000, $29,000, and $26,000 to the Plan during 2008, 2007, and 2006, respectively.



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TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



The Company has an Incentive Bonus Program and expensed $235,588 and $513,834 during 2007 and 2006, respectively.
There were no Incentive Bonus expenses in 2008. Bonuses are based on the Companys pre-tax income (as defined).

11. CONTINGENCIES

On April 17, 2008, the Company received a subpoena from the Antitrust Division of the U.S. Department of Justice (the DOJ) seeking documents and
information relating to a grand jury investigation of alleged anti-competitive conduct by Puerto Rico ocean carriers. Company representatives have met with United States Justice Department attorneys and pledged the Companys full and complete
cooperation with the DOJ investigation. The Company has made document submissions to the DOJ in response to the subpoena, and its attorneys are in the process of reviewing documents for additional submissions.

On October 20, 2008, four senior officers of two competitors of the Company pled guilty to a one-count felony criminal information. They were charged with having
engaged in a criminal conspiracy to suppress or eliminate competition in the Puerto Rico freight market, including engaging in discussions and meetings during which agreements were reached to allocate customers, rig bids, and fix rates, surcharges,
and other fees charged to customers. Each of the two competitors had an officer plead guilty to a felony affecting at least one billion dollars in revenue.

Following publicity about the DOJ investigation, beginning on April 22, 2008, shippers in the Puerto Rico trade lane have filed at least 34 purported class actions against domestic ocean carriers, including Horizon Lines, Sea Star
Lines, and Crowley. The Company has been named as a co-defendant in these lawsuits. The actions allege that the defendants inflated prices in violation of federal antitrust laws and seek treble damages, attorneys fees and injunctive relief.
The actions, which were filed in the United States District Court for the Southern District of Florida, the United States District Court for the Middle District of Florida, and the United States District Court for the District of Puerto Rico, have
been consolidated for pretrial purposes into a single multi-district litigation proceeding (MDL 1962) in the District Court of Puerto Rico. On March 10, 2009, the Company filed an amended motion to dismiss the claim with the court.

The DOJ investigation is a criminal investigation, and the parallel class actions by civil litigants seek remedies that include treble damages. The Company is
cooperating fully with the DOJ and intends to defend itself vigorously against the class actions. Significant legal fees and costs are expected to be incurred in connection with the DOJ investigation and the class actions. During 2008, these costs
were approximately $1.5 million.

The Company is not able to predict the ultimate outcome or cost of the DOJ investigation and class actions. However,
should this result in an unfavorable outcome for the Company, it could have a material adverse effect on the Companys financial position and future operations.

The Company is involved in litigation on a number of matters and is subject to certain claims which arise in the normal course of business, none of which, in the opinion of management, are expected to have a material
adverse effect on the Companys financial position or cash flows.

12. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

Cash and Cash Equivalents  For those short-term instruments, the carrying amount is a reasonable estimate of fair value.



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TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



Accounts Receivable and Accounts Payable  The carrying amounts of accounts receivable and accounts payable
approximate fair value due to the relatively short maturities.

Long Term Debt  Interest rates that are currently available to the Company for
issuance of debt with similar terms and remaining maturities are used to estimate fair value for debt instruments. For the year ended December 31, 2008 the estimated fair value of the Companys long-term debt was less than the carrying
values by approximately $298,502. This difference in the fair value and the carrying value is based on the anticipated change in the Companys borrowing rate over the life of the Companys fixed rate debt.

13. SEGMENTS

The Companys primary business is to transport freight
from its origination point in the continental United States to San Juan, Puerto Rico and Puerto Plata, Dominican Republic and from San Juan, Puerto Rico and Puerto Plata, Dominican Republic to its destination point in the continental United States.
The Company provides a domestic trucking system and a barge vessel system, which work in conjunction with each other to service its customers.

While each
of the services that the Company performs related to the transportation of goods may be considered to be separate business activities, the Company does not capture or report these activities separately because all activities are considered part of
the Companys Intermodal Model for providing customer service. Intermodal is a term used to represent the variety of transportation services the Company provides to move products from one location to another, including but not
limited to water, land and rail. The Company provides intermodal services to its customers from the continental United States to San Juan, Puerto Rico and Puerto Plata, Dominican Republic. Customers are billed for the transportation of goods from
the point of origin to the final destination, and are not billed separately for inland or marine transportation. Revenue related to the Dominican Republic service for 2008 and 2007 was $7.2 million and $0.5 million, respectively.

While the Company is able to track the expenses for these services separately, the Company does not capture the revenues based on inland or marine transportation because
the results of revenues are not considered relevant to the model currently employed by the Company. Instead management and directors of the Company make operating and reporting decisions based on the total results of operations.

14. CONCENTRATION OF GEOGRAPHIC AND MARKET RISK

The Company transports
freight between the Continental United States, Puerto Rico and the Dominican Republic for companies in diversified industries who have operations located in these places. There is no one customer that comprises over 10% of the Companys total
revenues.

The Company performs periodic credit evaluations of the customers financial condition and as a condition of the extension of credit the
customer agrees that the Company shall have the right to exercise a lien against any shipment tendered. Receivables are generally due within 45 days. Credit losses have been within managements expectations.

The Company leases its tug charter from one vendor; the Company believes this risk is mitigated by the availability of tugboat providers currently in the market.



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TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



15. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)



|                                                |  |               |            |   |              |   |            |                   |  |                  |            |  |   |            |  
|----------------------------------------------- |  | ------------- | ---------- | - | ------------ | - | ---------- | ----------------- |  | ---------------- | ---------- |  | - | ---------- | -
|Quarter Ended                                   |  | March 31,2008 |            |   | June 30,2008 |   |            | September 30,2008 |  | December 31,2008 |           
|Operating revenues                              |  | $             | 30,409,242 |   |              | $ | 33,898,265 |                   |  | $                | 35,413,471 |  | $ | 33,308,694 |  
|Operating income                                |  |               | 692,080    |   |              |   | 2,208,752  |                   |  |                  | 2,610,285  |  |   | 1,448,724  |  
|Net income (loss)                               |  |               | (1,822,556 | ) |              |   | (329,261   | )                 |  |                  | 34,444     |  |   | (1,121,368 | )
|Net income (loss) attributable to common shares |  |               | (1,822,556 | ) |              |   | (329,261   | )                 |  |                  | 34,444     |  |   | (1,121,368 | )
|Net income (loss) per share -                   |  |               |            |   |              |   |            |                   |  |                  |            |  |   |            |  
|basic                                           |  | $             | (0.15      | ) |              | $ | (0.03      | )                 |  | $                |           |  | $ | (0.09      | )
|diluted                                         |  | $             | (0.15      | ) |              | $ | (0.03      | )                 |  | $                |           |  | $ | (0.09      | )
|                                                |  |               |            |  
|Quarter Ended                                   |  | March 31,2007 |            |   | June 30,2007 |   |            | September 30,2007 |  | December 31,2007 |           
|Operating revenues                              |  | $             | 26,840,504 |   |              | $ | 29,555,590 |                   |  | $                | 28,229,658 |  | $ | 31,527,042 |  
|Operating income (loss)                         |  |               | 3,759,895  |   |              |   | 5,257,034  |                   |  |                  | 2,771,818  |  |   | 2,418,988  |  
|Net (loss) income                               |  |               | 1,325,589  |   |              |   | (1,873,679 | )(a)              |  |                  | 364,813    |  |   | (67,333    | )
|Net (loss) income attributable to common shares |  |               | 1,325,589  |   |              |   | (1,873,679 | )                 |  |                  | 364,813    |  |   | (67,333    | )
|Net (loss) income per share -                   |  |               |            |   |              |   |            |                   |  |                  |            |  |   |            |  
|basic                                           |  | $             | 0.11       |   |              | $ | (0.16      | )(a)              |  | $                | 0.03       |  | $ | (0.01      | )
|diluted                                         |  | $             | 0.11       |   |              | $ | (0.16      | )(a)              |  | $                | 0.03       |  | $ | (0.01      | )



|(a) | During the second quarter of 2007, the Company adjusted its valuation allowance for its deferred tax asset by approximately $4.6 million or $0.40 per share as a result of its
planned adoption of the tonnage tax.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED December 31, 2008

Allowance for Doubtful Accounts



|     |  |                                |           |                              |   |                        |  |   |                       |   |  |   |          
|---- |  | ------------------------------ | --------- | ---------------------------- | - | ---------------------- |  | - | --------------------- | - |  | - | ---------
|Year |  | Balance atBeginning of theyear |           | Charged to Costsand Expenses |   | Deductions(Chargeoffs) |  |   | Balance atend of year
|2008 |  | $                              | 1,010,341 |                              | $ | 913,009                |  | $ | (1,324,333            | ) |  | $ | 599,017  
|2007 |  | $                              | 864,875   |                              | $ | 1,662,918              |  | $ | (1,517,452            | ) |  | $ | 1,010,341
|2006 |  | $                              | 606,717   |                              | $ | 1,096,763              |  | $ | (838,605              | ) |  | $ | 864,875  

It is the policy of the Company to write off receivables once it is determined that additional efforts of
collection will not result in the receipt of the receivable.



|Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
|------- | -------------------------------------------------------------------------------------

None



|Item 9A(T). | Controls and Procedures
|----------- | -----------------------

Conclusion Regarding
the Effectiveness of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including
our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as
amended (the Exchange Act), as of the end of the period covered by this report. Based on their evaluation, our principal executive officer and principal accounting officer concluded that Trailer Bridge, Inc.s disclosure controls
and procedures are effective.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting identified in connection with the evaluation referred to in paragraph
(a) above that occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Managements Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the
Securities Exchange Act of 1934, as amended). Under the supervision and with the participation of management, including our principal executive officer and principal financial officer, management assessed the effectiveness of the Companys
internal control over financial reporting as of December 31, 2008. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)



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##### Table of Contents

in Internal Control  Integrated Framework as of and for the year ended December 31, 2008. Based on our evaluation under the framework
in Internal Control  Integrated Framework, our management concluded that our internal control over financial reporting was effective as of the end of the period covered by this annual report.



| | (d) | This annual report on Form 10-K does not include an attestation report of the Companys registered certified public accounting firm regarding internal control over financial
reporting. Managements report is not subject to attestation by the Companys registered certified public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only
managements report in this Form 10-K for the year ended December 31, 2008.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Item 9B. | Other Information
|-------- | -----------------

None

PART III

Incorporated by Reference

The information called for by Item 10 Directors, Executive Officers and Corporate Governance of
the Registrant, Item 11 Executive Compensation, Item 12 Security Ownership of Certain Beneficial Owners and Management, Item 13 Certain Relationships, Related Transactions and Director Independence
 and Item 14 Principal Accounting Fees and Services is incorporated herein by this reference to the Companys definitive proxy statement for its annual meeting of stockholders which definitive proxy statement is expected
to be filed with the Commission not later than 120 days after the end of the fiscal year to which this report relates.



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PART IV



|Item 15. | Exhibits, Financial Statement Schedules, and Reports on Form 8-K
|-------- | ----------------------------------------------------------------



|(a) | Documents Filed as Part of this Report
|--- | --------------------------------------



| | 1. | Financial Statement Schedules:
| | -- | ------------------------------

Schedule II - Valuation
and Qualifying Accounts and Reserves, for each of the three years ended December 31, 2008, 2007 and 2006.

All other schedules are
omitted as the required information is not applicable or the information is presented in the Financial Statements and notes thereto in Item 8.



| | 2. | Exhibits.
| | -- | ---------

EXHIBIT INDEX

(Exhibits being filed with this Form 10-K)



|              |  |                                                                                                                                                                           
|------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBITNUMBER |  | DESCRIPTION OF EXHIBITS                                                                                                                                                   
|3.1.1(5)      |  | Amended and Restated Certificate of Incorporation of Trailer Bridge, Inc.                                                                                                 
|              | 
|3.2(1)        |  | Form of Amended and Restated Bylaws of the Registrant                                                                                                                     
|              | 
|4.1           |  | See Exhibits 3.1.1 and 3.2 for provisions of the Certificate of Incorporation and Bylaws of the Registrant defining the rights of holders of the Registrants Common
Stock
|              | 
|10.1(1)#      |  | Form of Indemnification Agreement with Directors and Executive Officers                                                                                                   
|              | 
|10.8.13(5)    |  | United States Government Guaranteed Ship Financing Bond, 1997 Series, Amended and Restated September 30, 2003, in the amount of $10,515,000                               
|              | 
|10.8.14(5)    |  | Trust Indenture, Second Supplement to Special Provisions                                                                                                                  
|              | 
|10.8.15(5)    |  | United States Government Guaranteed Ship Financing Bond, 1997 Series II, Amended and Restated September 30, 2003, in the amount of $16,918,000                            
|              | 
|10.8.16(6)    |  | Trust Indenture, Third Supplement to Special Provisions                                                                                                                   
|              | 
|10.8.17(6)    |  | United States Government Guaranteed Ship Financing Bond, 1997 Series, Amended and Restated April 29, 2004, in the amount of $10,515,000                                   
|              | 
|10.8.18(6)    |  | Trust Indenture, Third Supplement to Special Provisions                                                                                                                   
|              | 
|10.8.19(6)    |  | United States Government Guaranteed Ship Financing Bond, 1997 Series II, Amended and Restated April 29, 2004, in the amount of $16,918,000                                
|              | 
|10.8.20(7)    |  | Trust Indenture, Fourth Supplement to Special Provisions                                                                                                                  



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|              |  |                                                                                                                                                                                                                                                                                                                                          
|------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBITNUMBER |  | DESCRIPTION OF EXHIBITS                                                                                                                                                                                                                                                                                                                  
|10.8.21(7)    |  | Trust Indenture, Fourth Supplement to Special Provisions                                                                                                                                                                                                                                                                                 
|              | 
|10.8.22(10)   |  | Third Amendment to Amended and Restated Title XI Reserve Fund and Financial Agreement dated as of December 1, 2004 by and between Trailer Bridge, Inc. and the United States of America,
represented by the Secretary of Transportation, acting by and through the Maritime Administrator.                                               
|              | 
|10.9(1)       |  | Agreement and Lease dated as of August 1, 1991 between the Registrant and the Jacksonville Port Authority                                                                                                                                                                                                                                
|              | 
|10.9.1(1)     |  | Amendment #5 to Exhibit B, Schedule of Fees and Charges                                                                                                                                                                                                                                                                                  
|              | 
|10.11(1)#     |  | Incentive Stock Plan                                                                                                                                                                                                                                                                                                                     
|              | 
|10.11.1(1)#   |  | Form of Stock Option Award Agreement                                                                                                                                                                                                                                                                                                     
|              | 
|10.11.2(4)#   |  | Amendment No. 1 to Trailer Bridge, Inc. Stock Incentive Plan                                                                                                                                                                                                                                                                             
|              | 
|10.11.3(4)#   |  | Trailer Bridge, Inc. Non-Employee Director Stock Incentive Plan                                                                                                                                                                                                                                                                          
|              | 
|10.11.4(4)#   |  | Form of Non-Employee Director Stock Option Award Agreement                                                                                                                                                                                                                                                                               
|              | 
|10.11.5(12)#  |  | Section 409A Amendments to Option Award Agreements                                                                                                                                                                                                                                                                                       
|              | 
|10.11.6(12)#  |  | Amendment to Non-Employee Director Stock Incentive Plan                                                                                                                                                                                                                                                                                  
|              | 
|10.11.7(12)#  |  | Amendment to Stock Incentive Plan                                                                                                                                                                                                                                                                                                        
|              | 
|10.24(6)#     |  | Employment Agreement dated as of April 5, 2003 between Trailer Bridge, Inc. and William G. Gotimer, Jr.                                                                                                                                                                                                                                  
|              | 
|10.24.1(12)#  |  | Amended and Restated Employment Agreement between Trailer Bridge, Inc. and William G. Gotimer, Jr.                                                                                                                                                                                                                                       
|              | 
|10.25(8)#     |  | Amended and Restated Employment Agreement dated as of October 21, 2008 between Trailer Bridge, Inc. and John D. McCown                                                                                                                                                                                                                   
|              | 
|10.25.4(10)   |  | Amendment No. 2 to Loan and Security Agreement dated as of December 1, 2004, by and between Trailer Bridge, Inc., as Borrower, and Congress Financial Corporation (Florida), as Agent and the
Lenders from time to time party thereto, as Lenders.                                                                                       
|              | 
|10.25.5       |  | Loan and Security Agreement dated as of April 23, 2004 by and among Trailer Bridge, Inc., as Borrower, and Congress Financial Corporation (Florida), as Agent and the Lenders from time to time
party thereto, as Lenders (incorporated by reference to Exhibit 10.25.1 to the Companys Form 10-K for the year ended December 31, 2003).
|              | 
|10.25.6       |  | Amendment No. 8 to Loan and Security Agreement dated as of October 9, 2008, by and among Trailer Bridge, Inc., as Borrower, and Wachovia Bank, National Association, successor by merger to
Congress Financial Corporation (Florida), as Agent and the Lenders from time to time party thereto, as Lenders.                              



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|              |  |                                                                                                                                                                                             
|------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBITNUMBER |  | DESCRIPTION OF EXHIBITS                                                                                                                                                                     
|10.28.1(10)   |  | Indenture dated as of December 1, 2004 between Trailer Bridge, Inc. and Wells Fargo Bank, National Association, as Trustee.                                                                 
|              | 
|10.28.2(10)   |  | Form of 9 1/4% Senior Secured Note due 2011 (incorporated by reference
to Exhibit A to Exhibit 10.28.1 hereof).                                                                             
|              | 
|10.28.3(10)   |  | Security Agreement dated as of December 1, 2004 between Trailer Bridge, Inc. and Wells Fargo Bank, National Association, as Trustee.                                                        
|              | 
|10.28.4(10)   |  | Assignment of Earnings dated as of December 1, 2004 between Trailer Bridge, Inc. and Wells Fargo Bank, National Association, as Trustee.                                                    
|              | 
|10.28.5(10)   |  | Assignment of Insurances dated as of December 1, 2004 between Trailer Bridge, Inc. and Wells Fargo Bank, National Association, as Trustee.                                                  
|              | 
|10.28.6(10)   |  | First Preferred Vessel Mortgage dated as of December 1, 2004 between Trailer Bridge, Inc. and Wells Fargo Bank, National Association, as Trustee.                                           
|              | 
|10.28.7(10)   |  | Mortgage and Security Agreement dated as of December 1, 2004 between Trailer Bridge, Inc. and Wells Fargo Bank, National Association, as Trustee.                                           
|              | 
|10.29.1(10)   |  | Purchase Agreement dated as of November 16, 2004 among Trailer Bridge, Inc. and the Initial Purchasers named therein.                                                                       
|              | 
|10.29.2(10)   |  | Registration Rights Agreement dated as of December 1, 2004 between Trailer Bridge, Inc. and Wells Fargo Bank, National Association, Trustee.                                                
|              | 
|10.30(11)     |  | Agreement dated December 15, 2008 between the Company and John D. McCown.                                                                                                                   
|              | 
|23.2(12)      |  | Consent of BDO Seidman, LLP, Independent Registered Certified Public Accounting Firm.                                                                                                       
|              | 
|31.1(12)      |  | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934                        
|              | 
|31.2(12)      |  | Certification of Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934                              
|              | 
|32.1(12)      |  | Certification of Trailer Bridge, Inc.s Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 (as adopted by Section 906 of the Sarbanes-Oxley Act of
2003)
|              | 
|99.1(9)       |  | Shares Acquisition Agreement dated as of July 23, 2004 by and between the Estate of Malcom P. McLean, Kadampanttu Corp., and Trailer Bridge, Inc.                                           



|# | Management contract or compensatory plan or arrangement.
|- | --------------------------------------------------------



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|(1) | Incorporated by reference to the indicated exhibit to the Companys Registration Statement on Form S-1 (File No. 333-28221) that became effective on July 23, 1997.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Incorporated by reference to the indicated exhibit to the Companys Form 10-Q for the quarter ended September 30, 1997.
|--- | -----------------------------------------------------------------------------------------------------------------------

|(3) | Incorporated by reference to the indicated exhibit to the Companys Form 10-K for the year ended December 31, 1997.
|--- | -------------------------------------------------------------------------------------------------------------------

|(4) | Incorporated by reference to the indicated exhibit to the Companys Form 10-K for the year ended December 31, 2000.
|--- | -------------------------------------------------------------------------------------------------------------------

|(5) | Incorporated by reference to the indicated exhibit to the Companys Form 10-Q for the quarter ended September 30, 2003.
|--- | -----------------------------------------------------------------------------------------------------------------------

|(6) | Incorporated by reference to the indicated exhibit to the Companys Form 10-K for the year ended December 31, 2004.
|--- | -------------------------------------------------------------------------------------------------------------------

|(7) | Incorporated by reference to the indicated exhibit to the Companys Form 10-Q for the quarter ended June 30, 2004.
|--- | ------------------------------------------------------------------------------------------------------------------

|(8) | Incorporated by reference to the exhibit to the Companys Form 8-K filed on October 23, 2008.
|--- | ---------------------------------------------------------------------------------------------

|(9) | Incorporated by reference to the indicated exhibit to the Companys Form 8-K dated July 28, 2004.
|--- | -------------------------------------------------------------------------------------------------

|(10) | Incorporated by reference to the indicated exhibit to the Companys Registration Statement on Form S-4 (File No. 333-122783) which was filed on February 15, 2005.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(11) | Incorporated by reference to the exhibit to the Companys form 8-K filed on December 18, 2008.
|---- | ----------------------------------------------------------------------------------------------

|(12) | Filed herewith.
|---- | ---------------



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, and State of New York, on this thirty first day of March 2009.



TRAILER BRIDGE, INC.By:

/s/ Ralph W. HeimRalph W. HeimInterim Chief Executive Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by
the following persons in the capacities and on the dates indicated



|                           |  |  |  |                                                                                                          |  |  |                |               
|-------------------------- |  |  |  | -------------------------------------------------------------------------------------------------------- |  |  | -------------- | --------------
|SIGNATURE                  |  |  |  | TITLE                                                                                                    |  |  |                | DATE          
|                           |  |  |  |                                                                                                         
|/s/ Ralph W. Heim          |  |  |  | Interim Chief Executive Officer (Principal Executive Officer)                                            |  |  |                | March 31, 2009
|Ralph W. Heim              |  |  |  |                                                                                                          |  |  |               
|                           |  |  |  |                                                                                                         
|/s/ Mark A. Tanner         |  |  |  | Vice President  Administration and Chief Financial Officer (Principal Financial and Accounting Officer) |  |  |                |               
|Mark A. Tanner             |  |  |  |                                                                                                          |  |  | March 31, 2009
|                           |  |  |  |                                                                                                         
|/s/ John D. McCown         |  |  |  | Director                                                                                                 |  |  |                | March 31, 2009
|John D. McCown             |  |  |  |                                                                                                          |  |  |                |               
|                           |  |  |  |                                                                                                         
|                           |  |  |  | Director                                                                                                 |  |  |                | March 31, 2009
|Nickel van Reesema         |  |  |  |                                                                                                          |  |  |                |               
|                           |  |  |  |                                                                                                         
|/s/ Allen L. Stevens       |  |  |  | Director                                                                                                 |  |  |                | March 31, 2009
|Allen L. Stevens           |  |  |  |                                                                                                          |  |  |                |               
|                           |  |  |  |                                                                                                         
|/s/ Douglas E. Schimmel    |  |  |  | Director                                                                                                 |  |  |                | March 31, 2009
|Douglas E. Schimmel        |  |  |  |                                                                                                          |  |  |                |               
|                           |  |  |  |                                                                                                         
|                           |  |  |  | Director                                                                                                 |  |  |                | March 31, 2009
|Malcom P. McLean, Jr.      |  |  |  |                                                                                                          |  |  |                |               
|                           |  |  |  |                                                                                                         
|/s/ Greggory B. Mendenhall |  |  |  | Director                                                                                                 |  |  |                | March 31, 2009
|Greggory B. Mendenhall     |  |  |  |                                                                                                          |  |  |                |               
|                           |  |  |  |                                                                                                         
|/s/ Robert P. Burke        |  |  |  | Director                                                                                                 |  |  |                | March 31, 2009
|Robert P. Burke            |  |  |  |                                                                                                          |  |  |                |               



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