##### Table of Contents





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, 2009

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 000-22837





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.   ̈

Indicate by
check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or
for such shorter period that the registrant was required to submit and post such files).    Yes   ̈    No   ̈

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 Rule 12b-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, 2009, the last business day of the registrants most recently completed second fiscal quarter was $31,004,256 (based upon $4.84 per
share being the price at which the common equity was last sold on June 30, 2009). 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 26, 2010, 12,002,653 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 2010 annual meeting of stockholders that will be filed no later than 120 days after the end of the year to which this report relates.



---

##### Table of Contents

TRAILER BRIDGE, INC.

FORM 10-K

FOR THE YEAR ENDED DECEMBER 31, 2009

TABLE OF CONTENTS



|                                        |  |                                                                                                              |  |   
|--------------------------------------- |  | ------------------------------------------------------------------------------------------------------------ |  | --
|                                        |  | PART I                                                                                                       |  |   
|Item 1.                                 |  |                                                                                                             
|                                        |  | Business                                                                                                     |  | 3 
|Item 1A.                                |  |                                                                                                             
|                                        |  | Risk Factors                                                                                                 |  | 11
|Item 1B.                                |  |                                                                                                             
|                                        |  | Unresolved Staff Comments                                                                                    |  | 14
|Item 2.                                 |  |                                                                                                             
|                                        |  | Properties                                                                                                   |  | 15
|Item 3.                                 |  |                                                                                                             
|                                        |  | Legal Proceedings                                                                                            |  | 16
|Item 4.                                 |  |                                                                                                             
|                                        |  | Removed and Reserved                                                                                         |  | 17
|                                        |  |                                                                                                             
|                                        |  | PART II                                                                                                      |  |   
|Item 5.                                 |  |                                                                                                             
|                                        |  | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 18
|Item 6.                                 |  |                                                                                                             
|                                        |  | Selected Financial Data                                                                                      |  | 19
|Item 7.                                 |  |                                                                                                             
|                                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                        |  | 20
|Item 7A.                                |  |                                                                                                             
|                                        |  | Quantitative and Qualitative Disclosures About Market Risk                                                   |  | 30
|Item 8.                                 |  |                                                                                                             
|                                        |  | Financial Statements and Supplementary Data                                                                  |  | 31
|Item 9.                                 |  |                                                                                                             
|                                        |  | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure                         |  | 52
|Item 9A(T).                             |  |                                                                                                             
|                                        |  | Controls and Procedures                                                                                      |  | 52
|Item 9B.                                |  |                                                                                                             
|Other Information                       |  | 53                                                                                                          
|                                        | 
|PART III                                |  |                                                                                                             
|Items 10  14                           |  | 53                                                                                                          
|                                        | 
|PART IV                                 |  |                                                                                                             
|Item 15.                                |  |                                                                                                             
|Exhibits, Financial Statement Schedules |  | 54                                                                                                          
|EXHIBIT INDEX                           |  | 55                                                                                                          
|SIGNATURES                              |  | 59                                                                                                          



2



---

##### Table of Contents

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, unfavorable outcomes from the United States Department of Justice (DOJ) investigation and related class actions, economic recessions and severe
weather as well the ability to retain and/or attract the necessary personnel and maintain necessary vendor relationships. An additional description of the Companys risk factors is described in Part I  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 Delaware 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. Our 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.



3



---

##### Table of Contents

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 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 weekly sailing between and among Jacksonville, Florida, San Juan, Puerto Rico and Puerto Plata, Dominican Republic. The sailing to Puerto Plata, Dominican Republic increased to weekly sailings effective January 2010. As of December 31,
2009, three TBCs were chartered to third parties on short-term charters.

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

OPERATIONS

At December 31, 2009, Trailer Bridge operated a fleet of 134 tractors, comprised of 80 company owned units and
54 leased and owner operator units, 3,924 53 high cube containers, 3,158 53 chassis, 210 48 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 314 40 chassis and 482 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, 2009, 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 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 5,000 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 greater 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 that use residual fuel. The greater fuel efficiency and clean-burning distillate fuel associated with our tug/barge model exceeds the new standards by
two-times having less than 500 PPM of sulfur, equating to a sulfur content of 0.05%. The large number of U.S. tugs available for charter provides the Company with a reliable source for towing services.



4



---

##### Table of Contents

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.

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 shippers 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. Typical shipments to Dominican Republic mostly consist of raw materials for manufacturing, whereas, typical shipments from Dominican Republic include apparel, raw materials
for manufacturing, 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 75% 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, 2009, 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.



5



---

##### Table of Contents

Triplestack Box Carriers

At December 31, 2009, 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, and increased to weekly sailings effective January 2010. The Company developed and patented an innovative system for loading and unloading the TBCs that requires minimum capital expenditures and 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, 2009, three TBCs were chartered to third parties on short-term charters.

VESSELS OWNED BY THE COMPANY



|                    |  |       |  |               |  |                          
|------------------- |  | ----- |  | ------------- |  | -------------------------
|VESSEL NAME         |  | TYPE  |  | CAPACITY      |  | SERVICE as of 12/31/09   
|                    |  |       | 
|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 |  | Jax/San Juan/Puerto Plata
|MEMPHIS BRIDGE      |  | TBC   |  | 281 53 units |  | Chartered                

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. In Jacksonville, Florida the Company has the preferential right to use a land-based ramp structure built and owned by the
Jacksonville Port Authority.

OWNED REVENUE EQUIPMENT

At December 31, 2009, the Company owned 75 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 204 dry van trailers as well as, 3,924 53 containers and 3,158 53 chassis.

At
December 31, 2009, 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.



6



---

##### Table of Contents

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 2009 was 24.1% compared to 27.6% in 2008. The Company believes this is
significantly below the industry average.

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. The Company uses APUs (auxiliary power units) 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 2009. 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. Total fuel surcharge revenue for 2009 was $14.0 million compared to $26.1 million in 2008. 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, 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 coverages include hull and protection indemnity,
pollution, excess liability, marine cargo, truckers liability, workers compensation, directors and officers and commercial property.



7



---

##### Table of Contents

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 Secure Area Network Storage (SANS) 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.

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 2009 was approximately 15.6%, according to data obtained from the Port Import Export Reporting Service
(PIERS), a subsidiary of the Journal of Commerce. The Companys market share grew 0.5 percentage points in 2009 compared to its 15.1% market share in 2008. That continues a recent pattern of consistent market share growth as the
Company had a 13.8% market share in 2007, 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 2009, 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
(Crowley), has approximately 29.8% 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 21.1% 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.

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 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 in 2009 of every 14 days to Puerto Plata represented a very small capacity increase in the trade between the U.S. and the Dominican Republic. A
service every 7 days to Puerto Plata, Dominican Republic, was implemented in January 2010.



8



---

##### Table of Contents

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 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 one of the cleanest environmental
footprints in the Puerto Rico trade and believes that this will become an increasingly important factor in customers decision making processes. 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). 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.

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 Transportation Security Act. The Company
is an approved participant in the Customs Trade Partnership



9



---

##### Table of Contents

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.

PATENTS AND TRADEMARKS

We seek to establish and maintain our proprietary rights in our technology through the use of patents, trademarks, and trade secrets. This technology is used
by the Company in its services and processes. The Companys technology includes, among other things:



| |  |  | A patented innovative system for loading and unloading the TBCs that requires minimum capital expenditures and 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.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Numerous patents for the VTM unit and the method of loading and unloading vehicles into the VTM.
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | A patent for the process of loading and unloading containers on its TBC vessels.
| | - |  | --------------------------------------------------------------------------------

EMPLOYEES

At December 31, 2009,
Trailer Bridge had 205 employees consisting of 69 truck drivers and 136 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. The information on the Companys website is not incorporated by reference in this annual report on Form 10-K.



10



---

##### Table of Contents

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.

As more fully described in Item 3.  Legal Proceedings, on April 17, 2008, the Company received a subpoena from the Department of Justice (DOJ) seeking documents and information
relating to a criminal grand jury investigation of alleged anti-competitive conduct by Puerto Rico ocean carriers. To date, neither the Company nor any of its employees has been charged with any wrongdoing in this investigation and we will continue
to cooperate with government officials. Following publicity about the DOJ investigation, beginning on April 22, 2008, shippers in the Puerto Rico trade lane, and in one case indirect consumer purchasers within Puerto Rico, have filed at least
41 purported class actions against domestic ocean carriers, including Horizon Lines, Sea Star Lines, Crowley and the Company. Additionally, on October 9, 2009, the Company received a Request for Information and Production of Documents from the
Puerto Rico Office of Monopolistic Affairs. The request relates to an investigation into possible price fixing and unfair competition in the Puerto Rico domestic ocean shipping business. The Company is not able to predict the ultimate outcome or
cost of the DOJ investigation, the civil class actions, or the Puerto Rico Office of Monopolistic Affairs investigation. 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.

We may be unable to refinance our 9.25% Senior Secured Notes.

The Companys 9.25% Senior Secured Notes mature on November 15, 2011. As of March 26, 2010, the aggregate principal
outstanding on the 9.25% Senior Secured Notes is $82.5 million. We do not expect to generate sufficient funds from our operations to pay off the aggregate principal outstanding on the 9.25% Senior Secured Notes when due in November 2011. If we are
unable to refinance these notes on acceptable terms, we might be forced (i) to dispose of property or equipment, which might result in losses, and/or (ii) to obtain financing at unfavorable terms. Either could reduce the cash flow
available for operations and, therefore, have a negative effect on our results of operations.

Compliance With Safety and Environmental
Protection and Other Governmental Requirements May Adversely Affect Our Operations.

The shipping industry in general, and our
business and the operation of our vessels and terminals in particular, are affected by extensive and changing safety, environmental protection and other international, national, state and local governmental laws and regulations. For example, our
vessels generally must be maintained in class and are subject to periodic inspections by the American Bureau of Shipping or similar classification societies, and must be periodically inspected by, or on behalf of, the U.S. Coast
Guard. Changes in enforcement policies for existing requirements and additional laws and regulations adopted in the future could limit our ability to do business or further increase the cost of our doing business.

We believe our vessels are maintained in good condition in compliance with present regulatory requirements, are operated in compliance in all material
respects with applicable safety/environmental laws and regulations and are insured against the usual risks for such amounts as our management deems appropriate. Our vessels operating certificates and licenses are renewed periodically during
the required annual surveys of the vessels. However, there can be no assurance that such certificates and licenses will be renewed. In the future, we may have to alter existing equipment, add new equipment to, or change operating procedures for, our
vessels to comply with changes in governmental regulations, safety or other equipment standards to meet our customers changing needs. If any such costs are material, they could adversely affect our financial condition.



11



---

##### Table of Contents

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.

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. The current economic uncertainty caused by the economic recession in the United States and other countries, could have a material adverse effect upon our operating results; especially if conditions do not
improve. 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 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.

Intense maritime competition has led to past financial losses.

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 negative cash flow. Although we have had positive operating income since 2005, the Company cannot assure that it will continue to generate operating income and positive cash flow. The Company cannot
assure that a new marine freight carrier will not commence operations in the Puerto Rico market or that an existing competitor will not increase capacity or lower prices in the Puerto Rico market. Most of our competitors have substantially greater
financial resources, operate more equipment, or carry a larger volume of freight than we do.

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 competitors have substantially greater financial resources, operate
more equipment, or carry a larger volume of freight than we do.



12



---

##### Table of Contents

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

The Companys current liner 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 at sea. 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 Company
cannot assure that the Jones Act will not be repealed or amended in the future. If the Jones Act was to be repealed or substantially amended and, as a consequence, competition was to increase in the Puerto Rico market, the Companys business
and cash flow could be adversely affected.

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 has elected to be
taxed according to the tonnage tax instead of the federal corporate income tax on income from its qualifying shipping activities since the 2007 federal tax year. 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.

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 as well as hurricanes and earthquakes. 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.



13



---

##### Table of Contents

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.

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

Our future success will depend, in significant part, upon the
services of our Chief Executive Officer, 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 officers experience and knowledge of our business and customer relationships. We do not maintain key person insurance on any of our executive officers.

We are subject to, and may in the future be subject to legal disputes that could have a material adverse effect on us.

The nature of our business exposes us to the potential for legal disputes from time to time relating to labor and employment matters, personal injury and property damage, environmental matters and other
matters, as discussed in the other risk factors disclosed in this Form 10-K. In addition, as a common carrier, our tariffs, rates, rules and practices in dealing with our customers are governed by extensive and complex foreign, federal, state
and local regulations which are the subject of administrative and/or judicial proceedings from time to time. These proceedings, individually or collectively, could harm our business by distracting our management from the operation of our business.
Additionally, these proceedings, individually or collectively, could involve significant expenditures by us or result in significant changes to our tariffs, rates, rules and practices in dealing with our customers that could have a material adverse
effect on our future revenue and profitability.

Covenants in our debt agreements may restrict our operating activities and adversely
affect our financial condition.

Our debt agreements contain customary covenants and financial tests, including compliance with
certain financial ratios under certain circumstances. These covenants could limit our operational flexibility and our acquisition activities. Moreover, if we breach any of the covenants and did not cure the breach within the applicable cure period,
we could be forced to repay the debt immediately, even in the absence of a payment default. As a result, any default under our debt covenants could have an adverse effect on our financial condition, our results of operations, our ability to meet our
obligations, and the market value of our stock.

Item 1B. Unresolved Staff Comments

None.



14



---

##### Table of Contents

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 its 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, Charlotte, North Carolina, Chicago, Illinois,
Cleveland, Ohio, Shrewsbury, New Jersey, Atlanta, 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 its Puerto Rico administrative and sales personnel
are based.

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 marine 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 36 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 loading ramp for working the triple deck ro/ro barges and a maintenance area for
servicing our equipment. The stevedoring services 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 expires
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 are sufficient for its current and future operations.
See - Part I  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 I  Item 1. Business.



15



---

##### Table of Contents

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 DOJ seeking documents and information relating to a criminal 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. To date, neither the Company nor any of its employees has been charged with any wrongdoing in this investigation and we will continue to cooperate with
government officials.

Following publicity about the DOJ investigation, beginning on April 22, 2008, shippers in the Puerto Rico trade
lane, and in one case indirect consumer purchasers within Puerto Rico, have filed at least 41 purported class actions against domestic ocean carriers, including Horizon Lines, Sea Star Lines, Crowley Liner Services and the Company. The Company
intends to continue its vigorous defense of these actions. 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, were consolidated into a
single multi-district litigation proceeding (MDL 1960) in the District of Puerto Rico for pretrial purposes. Plaintiffs lead counsel has filed a number of amended class action complaints under seal. The Company filed a motion to dismiss that
complaint with the court. That motion has been fully briefed and argued and the parties are awaiting a ruling by the Court.

In June 2009,
Horizon Lines and its related companies entered into a settlement agreement with certain named direct purchaser plaintiffs on behalf of a purported class of claimants in the MDL 1960 proceeding, while denying any liability for the underlying claims.
The settlement agreement is subject to Court approval and is subject to various objections. In December 2009, the Court heard arguments related to the approval of the settlement and has set this matter for further argument on April 6,
2010. Additionally, Crowley Liner Services and its related entities have entered into a settlement agreement with certain named direct purchaser plaintiffs on behalf of a purported class of claimants in the MDL 1960 proceeding, while denying
liability for the underlying claims. The Court is expected to hear argument related to the approval of the Crowley Settlement on April 6, 2010 as well. It is not clear what, if any, impact the settlements, if approved, will have on
further prosecution of the MDL 1960. The Company is not a party to either of the settlements.

On October 9, 2009, the Company received a
Request for Information and Production of Documents from the Puerto Rico Office of Monopolistic Affairs. The request relates to an investigation into possible price fixing and unfair competition in the Puerto Rico domestic ocean shipping business.
The Company has indicated to the Puerto Rican authorities that it will cooperate fully with this investigation and has provided requested documents to such authorities.

Significant legal fees and costs are expected to be incurred in connection with the DOJ investigation, the class actions, and the Puerto Rico Office of Monopolistic Affairs investigation. During the
three-month periods ended December 31, 2009, and 2008, costs were approximately $676,000 and $341,000, respectively. During the twelve month periods ended December 31, 2009, and 2008, costs were approximately $1,728,000 and $1,464,000,
respectively.



16



---

##### Table of Contents

On October 15, 2009, the Company commenced legal action against its insurer for a judicial declaration
that the insurer owes and has breached its duty to defend the Company in an antitrust lawsuit captioned: In re Puerto Rican Cabotage Antitrust Litigation, U.S.D.C., Puerto Rico, Case No. 3:08-md-01960-DRD (MDL
1960), and for judgment requiring the insurer to defend and to reimburse the Companys defense expenses. The case is in the Middle District of Florida, Jacksonville Division, and is captioned: Trailer Bridge, Inc. v. Illinois National
Insurance Company. Discovery has not commenced. The Company and defendant insurer have cross-moved for partial summary judgment on the duty to defend issue. No hearing date has been set and the motions outcomes
cannot be predicted with certainty.

The Company is not able to predict the ultimate outcome or cost of the DOJ investigation, the civil class
actions, or the Puerto Rico Office of Monopolistic Affairs investigation. 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 routine litigation 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.

Item 4. Removed and Reserved



17



---

##### 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, under the NASDAQ symbol TRBR.

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



|               |  |      |       |     |   |     
|-------------- |  | ---- | ----- | --- | - | ----
|2009           |  | High |       | Low
|               |  |     
|First Quarter  |  | $    | 4.68  |     | $ | 1.73
|Second Quarter |  | $    | 5.68  |     | $ | 2.29
|Third Quarter  |  | $    | 5.86  |     | $ | 3.90
|Fourth Quarter |  | $    | 6.17  |     | $ | 3.85
|               |  |     
|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

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.

As of March 26, 2010 there were 88 stockholders of record.

The closing price for the common stock on March 26, 2010 was $5.05.

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

Equity Compensation Plan Information



|                                                             |  |                                                                                         |  |                                                                         |      |                                                                                                                                      |          |   
|------------------------------------------------------------ |  | --------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------- | ---- | ------------------------------------------------------------------------------------------------------------------------------------ | -------- | --
|                                                             |  | (a)                                                                                     |  | (b)                                                                     |      | (c)                                                                                                                                  |         
|Plan Category                                                |  | Number of securitiesto be issued uponexercise of outstandingoptions,
warrantsand rights |  | Weighted-averageexercise price ofoutstandingoptions, warrantsand
rights |      | Number of securitiesremaining availablefor future issuanceunder equitycompensation
plans(excluding securitiesreflected in column (a) |         
|                                                             |  |                                                                                         | 
|Equity compensation plans approved by securities holders     |  | 1,533,822                                                                               |  | $                                                                       | 4.91 |                                                                                                                                      | (110,146 | )*
|                                                             |  |                                                                                         |  |                                                                         |      |                                                                                                                                      |          |   
|Equity compensation plans not approved by securities holders |  |                                                                                        |  |                                                                         |     |                                                                                                                                      |         |   
|                                                             |  |                                                                                         |  |                                                                         |      |                                                                                                                                      |          |   
|Total                                                        |  | 1,533,822                                                                               |  | $                                                                       | 4.91 |                                                                                                                                      | (110,146 | )*
|                                                             |  |                                                                                         |  |                                                                         |      |                                                                                                                                      |          |   



|* | Amendments to both the Companys Stock Incentive Plan and Non-Employee Director Plan to increase the number of shares authorized for issuance by 325,000 and
175,000, respectively, are subject to shareholder approval at our 2010 annual meeting of shareholders.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



18



---

##### Table of Contents

On December 29, 2009, the Board of Directors authorized the repurchase of up to $1.0 million of the
Companys common stock. Under this program, stock repurchases may be made in the open market or through privately negotiated transactions beginning on December 30, 2009. The timing and actual number of shares repurchased will depend on
market conditions and other factors. The stock repurchase program, which will expire on December 30, 2010, unless extended by the Board of Directors, may be commenced or suspended at any time without prior notice.

Item 6. Selected Financial Data

Not required for smaller reporting companies.



19



---

##### 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. 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 also earns revenue from
chartering its vessels that are not in liner service to third party operators. 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 2009, the Company experienced an improvement in operating income and the resulting operating ratio compared to 2008, primarily due to decreased
fuel expense. Fuel expense decreased due to lower fuel prices as well as decreased consumption as a result of one less TBC in liner service during the first half of 2009.

RESULTS OF OPERATIONS

The following table sets forth the indicated items as a percentage of net
revenues for the years ended December 31, 2009, 2008 and 2007.

Operating Statement - Margin Analysis

(% of Operating Revenues)



|                                                                                           |  |       |   |  |       |    |  |       |   
|------------------------------------------------------------------------------------------ |  | ----- | - |  | ----- | -- |  | ----- | --
|                                                                                           |  | 2009  |   |  | 2008  |    |  | 2007  |   
|                                                                                           |  |       |  
|Operating Revenues                                                                         |  | 100.0 | % |  | 100.0 | %  |  | 100.0 | % 
|                                                                                           |  |       |  
|Salaries, wages, and benefits                                                              |  | 15.8  |   |  | 13.8  |    |  | 14.4  |   
|Purchased transportation and other rent                                                    |  | 22.3  |   |  | 25.2  |    |  | 24.4  |   
|Fuel                                                                                       |  | 12.9  |   |  | 21.4  |    |  | 16.2  |   
|Operating and maintenance (exclusive of depreciation & dry-docking shown separately below) |  | 21.6  |   |  | 19.7  |    |  | 19.8  |   
|Dry-docking                                                                                |  | 0.8   |   |  | 0.7   |    |  |      |   
|Taxes and licenses                                                                         |  | 0.5   |   |  | 0.4   |    |  | 0.4   |   
|Insurance and claims                                                                       |  | 2.7   |   |  | 2.4   |    |  | 2.8   |   
|Communications and utilities                                                               |  | 0.6   |   |  | 0.6   |    |  | 0.6   |   
|Depreciation and amortization                                                              |  | 5.4   |   |  | 4.6   |    |  | 4.9   |   
|Loss on sale of property & equipment                                                       |  |      |   |  | 0.2   |    |  |      |   
|Other operating expenses                                                                   |  | 6.3   |   |  | 5.8   |    |  | 4.3   |   
|                                                                                           |  |       |   |  |       |    |  |       |   
|Total Operating Expenses                                                                   |  | 88.9  |   |  | 94.8  |    |  | 87.8  |   
|                                                                                           |  |       |   |  |       |    |  |       |   
|Operating income                                                                           |  | 11.1  |   |  | 5.2   |    |  | 12.2  |   
|Net interest expense                                                                       |  | (8.9  | ) |  | (7.6  | )  |  | (8.3  | ) 
|Gain on debt extinguishment                                                                |  | 0.1   |   |  |      |    |  |      |   
|Benefit (provision) for income taxes                                                       |  |      |   |  |      |    |  | (4.1  | ) 
|                                                                                           |  |       |   |  |       |    |  |       |   
|                                                                                           |  |       |  
|Net income (loss)                                                                          |  | 2.3   | % |  | (2.4  | )% |  | (0.2  | )%
|                                                                                           |  |       |   |  |       |    |  |       |   



20



---

##### Table of Contents

Year ended December 31, 2009, Compared to Year ended December 31, 2008

The Companys operating ratio, or operating expenses expressed as a percentage of revenues, improved from 94.8% in 2008 to 88.9% in 2009. This change is
explained under the operating expenses caption below.

Revenues

The following table sets forth by percentage and dollar, the changes in the Companys revenue and volume, measured by equivalent units from 2008 to 2009:

Volume & Revenue Changes 2009 Compared to 2008



|                              |  |         |       |   
|----------------------------- |  | ------- | ----- | --
|                              |  | Overall |      
|Volume Percent Change:        |  |         |       |   
|Total Equivalent Units        |  |         | (4.2  | )%
|                              | 
|Revenue Change (in millions): |  |         |       |   
|Core Service Revenue          |  | $       | (7.3  | ) 
|Other Revenues                |  |         | (11.4 | ) 
|                              |  |         |       |   
|Total Revenue Change          |  | $       | (18.7 | ) 
|                              |  |         |       |   

The decrease in revenues is primarily due to a decrease in overall container and trailer as well as auto volumes. The
decrease in other revenue is primarily due to decreases in fuel surcharges partially offset by an increase in charterhire revenue resulting from more vessels chartered in 2009 when compared to 2008.

Vessel capacity utilization southbound was 87.5% during 2009, compared to 86.3% during 2008. Southbound container and trailer volume decreased but vessel
capacity utilization increased due to one less TBC vessel in liner service during the first and second quarter of 2009. Vessel capacity utilization northbound was 29.4% during 2009, compared to 24.4% during 2008. This change was primarily due to
increased northbound volumes combined with decreased vessel capacity.

The decrease in other revenues is primarily attributable to a decrease
in fuel surcharge revenue during 2009, which decreased to $14.0 million from $26.1 million in 2008. 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 $0.7 million in 2009 compared to $1.1 million in 2008. Total charterhire revenue amounted to $5.6 million in 2009 and $4.0 million in 2008. 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 $1.8 million in 2009 compared to $2.1 million in 2008.

Operating expenses

Operating expenses
decreased by $24.5 million, or 19.4% from $126.1 million for 2008 to $101.6 million for 2009. This decrease was due primarily to lower inland and marine variable costs due to lower volumes and decreases in the market price of fuel. Fuel expenses in
2009 decreased $13.7 million, or 48.2%, due to significant decreases in the market price of fuel combined with decreased consumption due to one less TBC in liner service during half of the year in 2009 when compared to 2008. Rent and purchased
transportation decreased by $8.1 million or 24.2% due partially to tug charter rent for an additional TBC in service during the first half of 2008 and decreases in cargo volumes and fuel related components of inland purchased transportation.
Operating and maintenance expense decreased $1.5 million or 5.7% primarily due to decreased stevedoring moves related to the overall decrease in volume. Other operating expenses decreased $0.6 million due to a decrease in uncollectible revenue
expense and finance fees and charges. As a result, the Companys operating ratio of revenue compared to expenses improved during 2009, at 88.9% as compared to 94.8% during 2008.



21



---

##### Table of Contents

Interest Expense

Interest expense remained fairly consistent at $10.4 million in 2008 and 2009. During the third quarter of 2009, the Company repurchased, with cash, $1.5 million (face amount) of its 9.25% Senior Secured
Notes in open market transactions. The aggregate principal outstanding on the 9.25% Senior Secured Notes following the Companys purchases was $83.5 million. This decrease in principal caused a slight decrease in interest expense in the fourth
quarter of 2009. The Companys 9.25% Senior Secured Notes mature on November 15, 2011, with interest payable semi-annually on each May 15 and November 15.

As a result of the factors described above, the Company reported net income of $2.6 million or $0.22 per share, basic and diluted, for the year ended December 31, 2009, compared to a net loss of $3.2
million or $0.27 per share, basic and diluted, for the year ended December 31, 2008.

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, 2009 and 2008 of approximately $279,000 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 2009 tax expense under 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.

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.



22



---

##### Table of Contents

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 from 2007 to 2008:

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 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 previous 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.



23



---

##### Table of Contents

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 of approximately
$279,000 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 2008 federal tax expense under the tonnage tax method was approximately $28,000 which can not be offset by the Companys existing NOLs under the tonnage tax regime.



24



---

##### Table of Contents

DIVIDENDS

The Company has not declared or paid dividends on its common stock since its inception.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was $9.8 million in 2009 compared to net cash
provided by operating activities of $4.4 million in 2008. This represented an increase of $5.4 million, which resulted partially from net income in 2009 compared to a net loss in 2008. The increase in cash provided by operating activities was also
partially the result of a decrease in accounts receivable of $5.0 million as a result of improved collections and a decrease in accrued liabilities of $3.7 million as a result of lower operating expenses. Net cash used in investing activities was
$1.8 million in 2009 compared to net cash used in investing activities in 2008 of $2.0 million. This $0.2 million decrease from 2008 was due to a reduction in cash outlays on purchases of equipment in 2009. Net cash used in financing activities was
$4.2 million in 2009 compared to net cash provided by financing activities of $2.9 million in 2008 representing a decrease of $7.1 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 in the fourth quarter of 2008. The repayments of the additional Wachovia term loan along with the retirement of $1.5 million of the Companys 9.25% Senior Secured Notes in the third quarter of
2009 contributed to increased debt payments in 2009. The Company made $1.0 million in additional purchases of its Senior Secured Notes in the first quarter of 2010. At December 31, 2009, the Company had cash of $11.0 million and working capital
of $12.5 million.

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 and working capital of $10.0 million.

The Companys revolving credit facility with Wachovia, as amended, provides for a maximum availability of $10 million and expires in April 2012. The
facility provides for interest equal to the prime rate. The revolving line of credit is subject to a borrowing base formula based on a percentage of eligible accounts receivable. The revolving credit facility is secured by the Companys
accounts receivable. At December 31, 2009, there were no advances drawn on this credit facility. During the fourth quarter of 2008, the Company 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, 2009, the Company had $7.8 million available under this facility as calculated by the borrowing base formula and therefore was not subject to the
financial covenants.

The Company 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, 2009, approximately $7.5 million was drawn on this loan to fund previous equipment purchases. This term loan is collateralized by eligible new equipment with a
carrying value of $15.3 million at December 31, 2009.

The Companys $83.5 million 9.25 % 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,



25



---

##### Table of Contents

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 is currently is working on refinancing these notes.

During the third quarter of 2009, the
Company repurchased, with cash, $1.5 million (face amount) of its 9.25% Senior Secured Notes in open market transactions. The Companys 9.25% Senior Secured Notes mature on November 15, 2011, with interest payable semi-annually on each
May 15 and November 15. The aggregate principal outstanding on the 9.25% Senior Secured Notes following the Companys purchases is $83.5 million. For the period ended December 31, 2009, the repurchase of these notes resulted in a
gain on extinguishment of debt of $132,500. The Company purchased an additional $1 million of Senior Secured Notes, at par value, in the first quarter of 2010.

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 Title XI Bonds). The aggregate principal amount of the Title XI Bonds outstanding at December 31, 2009, was $16.1 million. The
Company is required to make deposits based on adjusted earnings of the Company. During 2008 and 2009, the Company made no deposits into a reserve fund that secures the Title XI Bonds. As of December 31, 2009, the balance of this reserve fund
was approximately $4.2 million. The Company expects to make another deposit into this fund during 2010 based upon its 2009 net income.

As of
December 31, 2009, the Company was restricted from performing certain financial activities due to it not being in compliance with Title XI Bond covenants relating to certain leverage ratios. The provisions of the Title XI Bond 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. 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 Bond 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 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 the 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 of the Merchant
Marine Act of 1936, as amended, and liens incurred in the ordinary course of business. As of December 31, 2009, 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.



26



---

##### Table of Contents

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.

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements as of December 31, 2009.

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.

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

Revenue Recognition. In accordance with Accounting Standards Codification (ASC) 605-20-25-13, Services for
Freight-in-Transit at the End of a Reporting Periodthe Company recognizes voyage revenue 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



27



---

##### Table of Contents

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
dry-docking expenses of $958,491, $972,113, and $4,544, in the years ended December 31, 2009, 2008 and 2007, 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 2007, 2008 or 2009.

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 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 2009 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.

Financial Accounting Standards Board
(FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes an Interpretation of FASB Statement 109 (FIN 48) (included in ASC 740-10, Income Taxes) 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 ASC 740-10, 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



28



---

##### Table of Contents

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.

The Company performed a review of its uncertain tax positions and concluded that there were no significant adjustments required related to uncertain tax
positions as of December 31, 2009 and 2008. The Company has 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. 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 33 of this Annual Report on Form 10-K which
contain accounting policies and other disclosures required by generally accepted accounting principles in the United States of America.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 2009, the FASB issued Statement of Financial Accounting Standard
(SFAS) No. 168 (Accounting Standards Codification (ASC) 105), The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, a Replacement of FASB
Statement No. 162. This statement become the source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. Following this statement, the FASB will issue
new standards in the form of Accounting Standard Updates (ASU). This Statement was effective for financial statements issued for interim and annual periods ending after September 15, 2009. The issuance of FASB ASC 105 did not change
accounting principles generally accepted in the United States of America (GAAP) and therefore the adoption of FASB ASC 105 affects only the specific references to GAAP literature.

In September 2006, the FASB issued SFAS No. 157 (ASC 820), 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. ASC 820 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, ASC 820 was effective for the fiscal year beginning after November 15, 2007; however, the FASB had deferred the
implementation of the provision relating to non-financial assets and liabilities until January 1, 2009. The adoption of this statement had no material impact on the Companys financial statements.

In April 2009, the FASB issued Financial Standards Position (FSP) No. 157-4 (ASC 820-10-65-4), Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly which provides guidance on (1) estimating the fair value of an asset or liability when the volume
and level of activity for the asset or liability have significantly decreased and (2) identifying transactions that are not orderly. This standard is effective for interim and annual periods ending after June 15, 2009. The adoption of this
standard had no material impact on the Companys financial statements.



29



---

##### Table of Contents

In April 2009, the FASB issued FSP No. 107-1 and Accounting Principles Board (APB)
No. 28-1 (ASC 825-10-65-1), Interim Disclosures about Fair Value of Financial Instruments, which require disclosures about the fair value of financial instruments for annual and interim reporting periods of publicly traded
companies. These standards are effective for financial statements used for periods ending after June 15, 2009. The adoption of these standards had no material impact on the Companys financial statements.

In April 2009, the FASB issued FSP No. 115-2 and FAS 124-2 (ASC 320-10-65-1), Recognition and Presentation of Other-Than-Temporary
Impairments, which amends the other-than-temporary impairment guidance for debt securities to make it more operational and to improve the presentation and disclosure of other-than-temporary-impairments of debt and equity securities in the
financial statements. These standards are effective for interim and annual reporting periods ending after June 15, 2009. The adoption of these standards had no material impact on the Companys financial statements.

In May 2009, the FASB issued SFAS No. 165 (ASC 855-10), Subsequent Events, which establishes general standards of accounting
for and disclosure of events that occur after the balance sheet date but before financial statements are issued. ASC 855-10 is effective for interim or annual financial periods ending after June 15, 2009. The Company adopted ASC 855-10.

In August 2009, the FASB issued ASU No. 2009-05, Measuring Liabilities at Fair Value. This update provides amendments
to ASC Topic 820, Fair Value Measurements and Disclosurefor the fair value measurement of liabilities. This Update is effective for the first reporting period (including interim periods) beginning after issuance. The adoption of
this standard had no material impact on the Companys financial statements.

In October 2009, the FASB issued ASU No. 2009-13,
Multiple-Deliverable Revenue Arrangements, a consensus of the FASB Emerging Issues Task Force, which addresses the accounting for multiple-deliverable arrangements to enable vendors to account for products or services
(deliverables) separately rather than as a combined unit. ASU 2009-13 is effective prospectively for revenue arrangements entered into or materially modified beginning in fiscal years on or after June 15, 2010, however, early adoption is
permitted. The Company is currently evaluating the impact that the adoption of ASU 2009-13 will have on the Companys financial statements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Not required for smaller
reporting companies.



30



---

##### Table of Contents

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                                                     |  | 32  
|Balance Sheets as of December 31, 2009 and 2008                                                                       |  | 33  
|Statements of Operations for the years ended December 31, 2009, 2008 and 2007                                         |  | 34  
|Statements of Changes in Stockholders Equity (Capital Deficit) for the years ended December 
31, 2009, 2008 and 2007 |  | 35  
|Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007                                         |  | 36  
|Notes to Financial Statements                                                                                         |  | 37  
|Schedule II  Valuation and Qualifying Accounts                                                                       |  | 52  



31



---

##### Table of Contents

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, 2009 and 2008 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, 2009. 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, 2009 and 2008, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2009, 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, 2010



32



---

##### Table of Contents

TRAILER BRIDGE, INC.

BALANCE SHEETS

DECEMBER 31,



|                                                                                                                                                                                              |  |      |             |   |      |   |             |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                                                                                                                                                              |  | 2009 |             |   | 2008 |  
|ASSETS                                                                                                                                                                                        |  |      |             |   |      |   |             |  
|Current Assets:                                                                                                                                                                               |  |      |             |   |      |   |             |  
|Cash and cash equivalents                                                                                                                                                                     |  | $    | 10,987,379  |   |      | $ | 7,216,283   |  
|Trade receivables, less allowance for doubtful accounts of $441,985 and $599,017                                                                                                              |  |      | 12,814,741  |   |      |   | 16,818,259  |  
|Prepaid and other current assets                                                                                                                                                              |  |      | 2,444,337   |   |      |   | 1,883,942   |  
|Deferred income taxes, net                                                                                                                                                                    |  |      | 278,856     |   |      |   | 278,856     |  
|                                                                                                                                                                                              |  |      |             |   |      |   |             |  
|Total current assets                                                                                                                                                                          |  |      | 26,525,313  |   |      |   | 26,197,340  |  
|                                                                                                                                                                                              |  |     
|Property and equipment, net                                                                                                                                                                   |  |      | 84,891,922  |   |      |   | 89,304,822  |  
|Reserve fund for long-term debt                                                                                                                                                               |  |      | 4,237,385   |   |      |   | 4,125,995   |  
|Other assets                                                                                                                                                                                  |  |      | 2,862,911   |   |      |   | 3,704,490   |  
|                                                                                                                                                                                              |  |      |             |   |      |   |             |  
|                                                                                                                                                                                              |  |     
|TOTAL ASSETS                                                                                                                                                                                  |  | $    | 118,517,531 |   |      | $ | 123,332,647 |  
|                                                                                                                                                                                              |  |      |             |   |      |   |             |  
|                                                                                                                                                                                              |  |     
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)                                                                                                                                                |  |      |             |   |      |   |             |  
|Current Liabilities:                                                                                                                                                                          |  |      |             |   |      |   |             |  
|Accounts payable                                                                                                                                                                              |  | $    | 3,088,124   |   |      | $ | 5,259,355   |  
|Accrued liabilities                                                                                                                                                                           |  |      | 6,458,760   |   |      |   | 7,694,690   |  
|Unearned revenue                                                                                                                                                                              |  |      | 611,147     |   |      |   | 385,458     |  
|Current portion of long-term debt                                                                                                                                                             |  |      | 3,874,700   |   |      |   | 2,874,700   |  
|                                                                                                                                                                                              |  |      |             |   |      |   |             |  
|Total current liabilities                                                                                                                                                                     |  |      | 14,032,731  |   |      |   | 16,214,203  |  
|                                                                                                                                                                                              |  |     
|Other accrued liabilities                                                                                                                                                                     |  |      | 55,556      |   |      |   | 414,910     |  
|Long-term debt, less current portion                                                                                                                                                          |  |      | 103,170,528 |   |      |   | 108,545,228 |  
|                                                                                                                                                                                              |  |      |             |   |      |   |             |  
|TOTAL LIABILITIES                                                                                                                                                                             |  |      | 117,258,815 |   |      |   | 125,174,341 |  
|                                                                                                                                                                                              |  |      |             |   |      |   |             |  
|                                                                                                                                                                                              |  |     
|Commitments and Contingencies                                                                                                                                                                 |  |      |             |   |      |   |             |  
|                                                                                                                                                                                              |  |     
|Stockholders Equity (Deficit):                                                                                                                                                               |  |      |             |   |      |   |             |  
|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; 12,031,707 and 11,938,921 shares issued; 11,992,534 and 11,838,921
shares outstanding at December 31, 2009 and 2008, respectively |  |      | 120,317     |   |      |   | 119,389     |  
|Treasury stock, at cost, 39,173 and 100,000 shares at December 31, 2009 and 2008, respectively                                                                                                |  |      | (156,692    | ) |      |   | (400,000    | )
|Additional paid-in capital                                                                                                                                                                    |  |      | 53,711,081  |   |      |   | 53,460,783  |  
|Capital deficit                                                                                                                                                                               |  |      | (52,415,990 | ) |      |   | (55,021,866 | )
|                                                                                                                                                                                              |  |      |             |   |      |   |             |  
|TOTAL STOCKHOLDERS EQUITY (DEFICIT)                                                                                                                                                          |  |      | 1,258,716   |   |      |   | (1,841,694  | )
|                                                                                                                                                                                              |  |      |             |   |      |   |             |  
|                                                                                                                                                                                              |  |     
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)                                                                                                                                          |  | $    | 118,517,531 |   |      | $ | 123,332,647 |  
|                                                                                                                                                                                              |  |      |             |   |      |   |             |  

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



33



---

##### Table of Contents

TRAILER BRIDGE, INC.

STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31,



|                                                                                           |  |      |             |   |      |   |             |      |  |   |             |  
|------------------------------------------------------------------------------------------ |  | ---- | ----------- | - | ---- | - | ----------- | ---- |  | - | ----------- | -
|                                                                                           |  | 2009 |             |   | 2008 |   |             | 2007 | 
|OPERATING REVENUES                                                                         |  | $    | 114,302,750 |   |      | $ | 133,029,672 |      |  | $ | 116,152,794 |  
|OPERATING EXPENSES:                                                                        |  |      |             |   |      |   |             |      |  |   |             |  
|Salaries, wages, and benefits                                                              |  |      | 18,078,564  |   |      |   | 18,345,791  |      |  |   | 16,702,856  |  
|Purchased transportation and other rent                                                    |  |      | 25,464,549  |   |      |   | 33,582,188  |      |  |   | 28,284,876  |  
|Fuel                                                                                       |  |      | 14,762,470  |   |      |   | 28,510,000  |      |  |   | 18,851,635  |  
|Operating and maintenance (exclusive of depreciation & dry-docking shown separately below) |  |      | 24,675,616  |   |      |   | 26,174,043  |      |  |   | 23,009,628  |  
|Dry-docking                                                                                |  |      | 958,491     |   |      |   | 972,113     |      |  |   | 4,544       |  
|Taxes and licenses                                                                         |  |      | 616,143     |   |      |   | 565,470     |      |  |   | 432,285     |  
|Insurance and claims                                                                       |  |      | 3,122,047   |   |      |   | 3,221,112   |      |  |   | 3,226,439   |  
|Communications and utilities                                                               |  |      | 689,965     |   |      |   | 759,589     |      |  |   | 672,739     |  
|Depreciation and amortization                                                              |  |      | 6,222,958   |   |      |   | 6,160,384   |      |  |   | 5,640,543   |  
|Loss on sale of property & equipment                                                       |  |      | 33,144      |   |      |   | 232,397     |      |  |   | 55,421      |  
|Other operating expenses                                                                   |  |      | 6,948,168   |   |      |   | 7,546,744   |      |  |   | 5,064,093   |  
|                                                                                           |  |      |             |   |      |   |             |      |  |   |             |  
|                                                                                           |  |      | 101,572,115 |   |      |   | 126,069,831 |      |  |   | 101,945,059 |  
|                                                                                           |  |      |             |   |      |   |             |      |  |   |             |  
|OPERATING INCOME                                                                           |  |      | 12,730,635  |   |      |   | 6,959,841   |      |  |   | 14,207,735  |  
|                                                                                           |  |      |            
|NONOPERATING (EXPENSE) INCOME:                                                             |  |      |             |   |      |   |             |      |  |   |             |  
|Interest expense                                                                           |  |      | (10,388,060 | ) |      |   | (10,354,015 | )    |  |   | (10,274,249 | )
|Gain on debt extinguishment                                                                |  |      | 132,500     |   |      |   |            |      |  |   |            |  
|Interest income                                                                            |  |      | 129,405     |   |      |   | 164,479     |      |  |   | 589,263     |  
|                                                                                           |  |      |             |   |      |   |             |      |  |   |             |  
|                                                                                           |  |      |            
|INCOME (LOSS) BEFORE BENEFIT (PROVISION) FOR INCOME TAXES                                  |  |      | 2,604,480   |   |      |   | (3,229,695  | )    |  |   | 4,522,749   |  
|                                                                                           |  |      |            
|BENEFIT (PROVISION) BENEFIT FOR INCOME TAXES                                               |  |      | 1,396       |   |      |   | (9,046      | )    |  |   | (4,773,359  | )
|                                                                                           |  |      |             |   |      |   |             |      |  |   |             |  
|NET INCOME (LOSS)                                                                          |  | $    | 2,605,876   |   |      | $ | (3,238,741  | )    |  | $ | (250,610    | )
|                                                                                           |  |      |             |   |      |   |             |      |  |   |             |  
|                                                                                           |  |      |            
|PER SHARE AMOUNTS:                                                                         |  |      |             |   |      |   |             |      |  |   |             |  
|                                                                                           |  |      |            
|NET INCOME (LOSS) PER SHARE BASIC                                                          |  | $    | 0.22        |   |      | $ | (0.27       | )    |  | $ | (0.02       | )
|                                                                                           |  |      |             |   |      |   |             |      |  |   |             |  
|NET INCOME (LOSS) PER SHARE DILUTED                                                        |  | $    | 0.22        |   |      | $ | (0.27       | )    |  | $ | (0.02       | )
|                                                                                           |  |      |             |   |      |   |             |      |  |   |             |  
|                                                                                           |  |      |            
|WEIGHTED AVERAGE                                                                           |  |      |             |   |      |   |             |      |  |   |             |  
|SHARES OUTSTANDING                                                                         |  |      | 11,899,149  |   |      |   | 11,929,672  |      |  |   | 11,871,326  |  
|                                                                                           |  |      |             |   |      |   |             |      |  |   |             |  
|DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING                                                |  |      | 12,034,922  |   |      |   | 11,929,672  |      |  |   | 11,871,326  |  
|                                                                                           |  |      |             |   |      |   |             |      |  |   |             |  

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



34



---

##### Table of Contents

TRAILER BRIDGE, INC.

STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY (CAPITAL DEFICIT)



|                                  |  |              |  |                |         |        |                           |   |        |                 |          |   |       |   |            |   |  |   |             |   |  |   |            |  
|--------------------------------- |  | ------------ |  | -------------- | ------- | ------ | ------------------------- | - | ------ | --------------- | -------- | - | ----- | - | ---------- | - |  | - | ----------- | - |  | - | ---------- | -
|                                  |  | Common Stock |  | Treasury Stock |         |        | Additional Paid-InCapital |   |        | Capital Deficit |          |   | Total |  
|                                  |  | Shares       |  | Amount         |         | Shares |                           |   | Amount |                 |          |   |       |   |            |   |  |   |            
|                                  |  |              |  |                |         |        |                          
|Balance January 1, 2007           |  | 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 | )
|                                  |  |              |  |                |         |        |                           |   |        |                 |          |   |       |   |            |   |  |   |             |   |  |   |            |  
|                                  |  |              |  |                |         |        |                          
|Net Income                        |  |             |  |                |        |        |                          |   |        |                 |         |   |       |   |           |   |  |   | 2,605,876   |   |  |   | 2,605,876  |  
|Compensation - Stock Options      |  |             |  |                |        |        |                          |   |        |                 |         |   |       |   | 398,867    |   |  |   |            |   |  |   | 398,867    |  
|Options Exercised                 |  | 92,786       |  |                | 928     |        |                          |   |        |                 |         |   |       |   | (155,261   | ) |  |   |            |   |  |   | (154,333   | )
|Issuance of Treasury Stock to CEO |  |             |  |                |        |        | 60,827                    |   |        |                 | 243,308  |   |       |   | 6,692      |   |  |   |            |   |  |   | 250,000    |  
|                                  |  |              |  |                |         |        |                           |   |        |                 |          |   |       |   |            |   |  |   |             |   |  |   |            |  
|                                  |  |              |  |                |         |        |                          
|Balance December 31, 2009         |  | 12,031,707   |  | $              | 120,317 |        | (39,173                   | ) |        | $               | (156,692 | ) |       | $ | 53,711,081 |   |  | $ | (52,415,990 | ) |  | $ | 1,258,716  |  
|                                  |  |              |  |                |         |        |                           |   |        |                 |          |   |       |   |            |   |  |   |             |   |  |   |            |  

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



35



---

##### Table of Contents

TRAILER BRIDGE, INC.

STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31,



|                                                                                         |  |      |            |   |      |   |            |      |  |   |             |  
|---------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ----------- | -
|                                                                                         |  | 2009 |            |   | 2008 |   |            | 2007 | 
|Operating activities:                                                                    |  |      |            |   |      |   |            |      |  |   |             |  
|Net income (loss)                                                                        |  | $    | 2,605,876  |   |      | $ | (3,238,741 | )    |  | $ | (250,610    | )
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |      |            |   |      |   |            |      |  |   |             |  
|Depreciation and amortization                                                            |  |      | 6,222,958  |   |      |   | 6,160,384  |      |  |   | 5,636,298   |  
|Amortization of loan costs                                                               |  |      | 866,930    |   |      |   | 745,439    |      |  |   | 747,479     |  
|Non-cash stock compensation expense                                                      |  |      | 398,867    |   |      |   | 399,600    |      |  |   | 397,239     |  
|Provision for doubtful accounts                                                          |  |      | 1,038,210  |   |      |   | 913,009    |      |  |   | 1,662,918   |  
|Deferred tax (benefit) expense                                                           |  |      | (29,396    | ) |      |   | (93,776    | )    |  |   | 4,666,761   |  
|Loss on sale of property and equipment                                                   |  |      | 33,144     |   |      |   | 232,397    |      |  |   | 55,421      |  
|Gain on extinguishment of debt                                                           |  |      | (132,500   | ) |      |   |           |      |  |   |            |  
|Decrease (increase) in:                                                                  |  |      |            |   |      |   |            |      |  |   |             |  
|Trade receivables                                                                        |  |      | 2,965,307  |   |      |   | (1,936,734 | )    |  |   | (1,381,282  | )
|Prepaid and other current assets                                                         |  |      | (560,396   | ) |      |   | 835,580    |      |  |   | (343,050    | )
|Other assets                                                                             |  |      | (131,488   | ) |      |   | (38,579    | )    |  |   | (298,176    | )
|(Decrease) increase in:                                                                  |  |      |            |   |      |   |            |      |  |   |             |  
|Accounts payable                                                                         |  |      | (2,171,231 | ) |      |   | (1,698,434 | )    |  |   | 1,512,984   |  
|Accrued liabilities                                                                      |  |      | (1,552,880 | ) |      |   | 2,165,174  |      |  |   | (319,114    | )
|Unearned revenue                                                                         |  |      | 225,688    |   |      |   | (61,316    | )    |  |   | (118,420    | )
|                                                                                         |  |      |            |   |      |   |            |      |  |   |             |  
|Net cash provided by operating activities                                                |  |      | 9,779,089  |   |      |   | 4,384,003  |      |  |   | 11,968,448  |  
|                                                                                         |  |      |            |   |      |   |            |      |  |   |             |  
|                                                                                         |  |      |           
|Investing activities:                                                                    |  |      |            |   |      |   |            |      |  |   |             |  
|Purchases of property and equipment                                                      |  |      | (1,883,951 | ) |      |   | (2,094,797 | )    |  |   | (19,820,356 | )
|Proceeds from sale of property and equipment                                             |  |      | 64,890     |   |      |   | 181,761    |      |  |   | 347,666     |  
|Additions to other assets                                                                |  |      |           |   |      |   | (124,058   | )    |  |   | (261,325    | )
|                                                                                         |  |      |            |   |      |   |            |      |  |   |             |  
|Net cash used in investing activities                                                    |  |      | (1,819,061 | ) |      |   | (2,037,094 | )    |  |   | (19,734,015 | )
|                                                                                         |  |      |            |   |      |   |            |      |  |   |             |  
|                                                                                         |  |      |           
|Financing activities:                                                                    |  |      |            |   |      |   |            |      |  |   |             |  
|Payments on borrowing from affiliate                                                     |  |      |           |   |      |   |           |      |  |   | (888,132    | )
|Cash proceeds from note payable                                                          |  |      |           |   |      |   | 5,433,030  |      |  |   | 4,561,760   |  
|Principal payments on notes payable                                                      |  |      | (4,284,599 | ) |      |   | (2,080,803 | )    |  |   | (1,208,902  | )
|Exercise of stock options                                                                |  |      | (154,333   | ) |      |   | (15,388    | )    |  |   | 323,491     |  
|Purchase of treasury stock                                                               |  |      |           |   |      |   | (400,000   | )    |  |   |            |  
|Reissuance of treasury stock to CEO                                                      |  |      | 250,000    |   |      |   |           |      |  |   |            |  
|                                                                                         |  |      |            |   |      |   |            |      |  |   |             |  
|Net cash (used in) provided by financing activities                                      |  |      | (4,188,932 | ) |      |   | 2,936,839  |      |  |   | 2,788,217   |  
|                                                                                         |  |      |            |   |      |   |            |      |  |   |             |  
|                                                                                         |  |      |           
|Net increase (decrease) in cash and cash equivalents                                     |  |      | 3,771,096  |   |      |   | 5,283,748  |      |  |   | (4,977,350  | )
|Cash and cash equivalents, beginning of the period                                       |  |      | 7,216,283  |   |      |   | 1,932,535  |      |  |   | 6,909,885   |  
|                                                                                         |  |      |            |   |      |   |            |      |  |   |             |  
|                                                                                         |  |      |           
|Cash and cash equivalents, end of the period                                             |  | $    | 10,987,379 |   |      | $ | 7,216,283  |      |  | $ | 1,932,535   |  
|                                                                                         |  |      |            |   |      |   |            |      |  |   |             |  
|                                                                                         |  |      |           
|Supplemental cash flow information:                                                      |  |      |            |   |      |   |            |      |  |   |             |  
|                                                                                         |  |      |           
|                                                                                         |  | 2009 |            |   | 2008 |   |            | 2007 | 
|Cash paid for interest                                                                   |  | $    | 10,438,563 |   |      | $ | 10,363,998 |      |  | $ | 10,265,131  |  
|                                                                                         |  |      |            |   |      |   |            |      |  |   |             |  
|Cash paid for income taxes                                                               |  | $    | 21,670     |   |      | $ | 85,901     |      |  | $ |            |  
|                                                                                         |  |      |            |   |      |   |            |      |  |   |             |  

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



36



---

##### 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. The Company also earns revenue from chartering its vessels that are not in liner service to third party operators.

Cash and Cash Equivalents - The Company considers cash on hand and all highly liquid 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 Vehicle Transport Modules® (VTMs) |  | 18-22
|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.



37



---

##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS(Continued)



Revenue Recognition and Classification - In accordance with Accounting Standard Codification
(ASC) 605-20-25-13, Services for Freight-in-Transit at the End of a Reporting Period, the Company recognizes voyage revenue 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 $14.0 million, $26.1 million, and $17.3 million for the years ended
December 31, 2009, 2008 and 2007, respectively.

Income Taxes  Financial Accounting Standards Board (FASB)
Interpretation No. 48, Accounting for Uncertainty in Income Taxes an Interpretation of FASB Statement 109 (FIN 48) (included in ASC 740-10, Income Taxes) 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 ASC 740-10, 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.

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.

The following table reconciles weighted average common shares outstanding used in basic
and dilutive earnings per share calculations for the years ended December 31, 2009, 2008 and 2007:



|                                                         |  |                              |  |            |  |           
|-------------------------------------------------------- |  | ---------------------------- |  | ---------- |  | ----------
|                                                         |  | For years ended December 31,
|                                                         |  | 2009                         |  | 2008       |  | 2007      
|Basic weighted average common shares outstanding         |  | 11,899,149                   |  | 11,929,672 |  | 11,871,326
|                                                         |  |                              | 
|Effect of dilutive securities:                           |  |                              |  |            |  |           
|Common stock issuable upon the exercise of stock options |  | 135,773                      |  |           |  |          
|                                                         |  |                              |  |            |  |           
|                                                         |  |                              | 
|Dilutive weighted average common shares outstanding      |  | 12,034,922                   |  | 11,929,672 |  | 11,871,326
|                                                         |  |                              |  |            |  |           

Options to purchase 1,171,664, 383,564, and 1,096,986 shares of the
Companys common stock were excluded from the calculation of diluted EPS as their effect would be anti-dilutive during the years ended December 31, 2009, 2008 and 2007, respectively.

Stock-Based Compensation  ASC 718-10 Compensation  Stock Compensation 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 ASC 718-10 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



38



---

##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS(Continued)



years ended December 31, 2009, 2008, and 2007 compensation expense in the amounts of $398,867, $399,600, and $397,239, 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 and recorded as part of other
operating expenses in the statement of operations. Advertising costs for the years ended December 31, 2009, 2008, and 2007 were $38,955, $27,530, and $120,369, 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 June 2009, the FASB issued Statement of Financial
Accounting Standard (SFAS) No. 168 (Accounting Standards Codification (ASC) 105), The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, a
Replacement of FASB Statement No. 162. This statement become the source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. Following this statement,
the FASB will issue new standards in the form of Accounting Standard Updates (ASU). This Statement was effective for financial statements issued for interim and annual periods ending after September 15, 2009. The issuance of ASC 105
did not change accounting principles generally accepted in the United States of America (GAAP) and therefore the adoption of ASC 105 affects only the specific references to GAAP literature.

In September 2006, the FASB issued SFAS No. 157 (ASC 820), 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. ASC 820 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, ASC 820 was effective for the fiscal year beginning after November 15, 2007; however, the FASB had deferred the
implementation of the provision relating to non-financial assets and liabilities until January 1, 2009. The adoption of this statement had no material impact on the Companys financial statements.

In April 2009, the FASB issued Financial Standards Position (FSP) No. 157-4 (ASC 820-10-65-4), Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly which provides guidance on (1) estimating the fair value of an asset or liability when the volume
and level of activity for the asset or liability have significantly decreased and (2) identifying transactions that are not orderly. This standard is effective for interim and annual periods ending after June 15, 2009. The adoption of this
standard had no material impact on the Companys financial statements.

In April 2009, the FASB issued FSP No. 107-1 and Accounting
Principles Board (APB) No. 28-1 (ASC 825-10-65-1), Interim Disclosures about Fair Value of Financial Instruments, which require disclosures about the fair value of financial instruments for annual and interim
reporting periods of publicly traded companies. These standards are effective for financial statements used for periods ending after June 15, 2009. The adoption of these standards had no material impact on the Companys financial
statements.

In April 2009, the FASB issued FSP No. 115-2 and FAS 124-2 (ASC 320-10-65-1), Recognition and Presentation of
Other-Than-Temporary Impairments, which amends the other-than-temporary



39



---

##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS(Continued)



impairment guidance for debt securities to make it more operational and to improve the presentation and disclosure of other-than-temporary-impairments of debt and equity securities in the
financial statements. These standards are effective for interim and annual reporting periods ending after June 15, 2009. The adoption of these standards had no material impact on the Companys financial statements.

In May 2009, the FASB issued SFAS No. 165 (ASC 855-10), Subsequent Events, which establishes general standards of accounting
for and disclosure of events that occur after the balance sheet date but before financial statements are issued. ASC 855-10 is effective for interim or annual financial periods ending after June 15, 2009. The Company adopted ASC 855-10 in the
second quarter of 2009 and the adoption had no material impact on the Companys financial statements.

In August 2009, the FASB issued
ASU No. 2009-05, Measuring Liabilities at Fair Value. This update provides amendments to FASB ASC Topic 820, Fair Value Measurements and Disclosurefor the fair value measurement of liabilities. This Update
is effective for the first reporting period (including interim periods) beginning after issuance. The adoption of this standard had no material impact on the Companys financial statements.

In October 2009, the FASB issued ASU No. 2009-13, Multiple-Deliverable Revenue Arrangements, a consensus of the FASB Emerging Issues Task
Force, which addresses the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. ASU 2009-13 is effective prospectively for revenue
arrangements entered into or materially modified beginning in fiscal years on or after June 15, 2010, however, early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2009-13 will have on the
Companys financial statements.

2. PROPERTY AND EQUIPMENT, NET

Property and equipment at December 31, 2009 and 2008 consist of the following:



|                                                |  |      |             |   |      |   |             |  
|----------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                |  | 2009 |             |   | 2008 |  
|Vessels                                         |  | $    | 56,059,595  |   |      | $ | 55,894,395  |  
|Containers and trailers                         |  |      | 36,823,014  |   |      |   | 35,362,448  |  
|Chassis                                         |  |      | 20,565,758  |   |      |   | 20,591,025  |  
|Tractors                                        |  |      | 5,140,289   |   |      |   | 5,202,270   |  
|Office furniture and equipment                  |  |      | 4,019,555   |   |      |   | 4,001,763   |  
|Buildings and structures                        |  |      | 2,797,668   |   |      |   | 2,789,835   |  
|VTMs                                           |  |      | 2,461,437   |   |      |   | 2,461,437   |  
|Leasehold improvements                          |  |      | 1,798,705   |   |      |   | 1,703,268   |  
|Land                                            |  |      | 1,254,703   |   |      |   | 1,254,703   |  
|                                                |  |      |             |   |      |   |             |  
|                                                |  |      | 130,920,724 |   |      |   | 129,261,144 |  
|less: accumulated depreciation and amortization |  |      | (46,028,802 | ) |      |   | (39,956,322 | )
|                                                |  |      |             |   |      |   |             |  
|                                                |  |     
|                                                |  | $    | 84,891,922  |   |      | $ | 89,304,822  |  
|                                                |  |      |             |   |      |   |             |  

Depreciation and amortization expense on property and equipment was $6,222,958, $6,160,384, and $5,640,543, in 2009, 2008,
and 2007, respectively.

3. TRANSACTIONS WITH RELATED PARTIES

On August 26, 2009, the Companys Board of Directors appointed Ivy Barton Suter to serve as Chief Executive Officer. At that time Ms. Suter entered into an employment agreement with the
Company for a



40



---

##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS(Continued)



period of two years, which will be automatically extended for consecutive one-year periods provided neither party provides notice of termination sixty (60) days prior to expiration of the
term. In addition, Ms. Suter purchased from the Company 60,827 shares of the Companys treasury stock for $250,000 (based on the closing price of the Companys common stock on the NASDAQ on August 26, 2009, of $4.11 per share)).
The Company also granted Ms. Suter 500,000 shares of common stock options under the Incentive Stock Plan on August 26, 2009.

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 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 continues to serve as a director of the Company. Approximately $830,000 was recorded in salaries, wages, and benefits in 2008 related to Mr. McCowns severance
agreement.

4. LONG-TERM DEBT

Following is a summary of long-term debt at December 31, 2009 and 2008:



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |      |             |   |      |   |             |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | 2009 |             |   | 2008 |  
|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 9.25 % per year on the principal amount. The notes are collateralized by a first priority lien with a carrying value of $37.6 million on two roll-on/roll-off barges, certain equipment and the Jacksonville, Florida office and
terminal, including associated real estate. |  | $    | 83,500,000  |   |      | $ | 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 $12,803,656 at December 31,2009; amount is guaranteed by The United States of America under the Title XI Federal Ship Financing Program                                                                                                             |  |      | 10,055,574  |   |      |   | 10,800,432  |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |     
|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 $8,234,650 at December 31, 2009; amount is guaranteed by The United States of America under the Title XI Federal Ship Financing Program                                                                                                         |  |      | 6,032,563   |   |      |   | 6,496,607   |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |     
|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 $15,346,485 at December 31, 2009. The interest rate on this note for the years ended December 31, 2009 and 2008 was equal to the Prime rate of 3.25% and 4.0%,
respectively.                                     |  |      | 7,457,091   |   |      |   | 9,122,889   |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |      |             |   |      |   |             |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | $    | 107,045,228 |   |      | $ | 111,419,928 |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |     
|Less current portion                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |      | (3,874,700  | ) |      |   | (2,874,700  | )
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |      |             |   |      |   |             |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | $    | 103,170,528 |   |      | $ | 108,545,228 |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |      |             |   |      |   |             |  



41



---

##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS(Continued)



(A) SENIOR SECURED NOTES

The $83.5 million in 9.25% 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. 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 Bond issue. As rescheduled, the Companys semi-annual principal
payments on each of the Title XI 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, 2009 and 2008, 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 Bond 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 Bond 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., former lessor of the Companys ro/ro vessels, repay K Corp.s indebtedness, repay our existing debts, and exercise certain equipment
purchase options on equipment previously leased. As of December 31, 2009 and 2008, the Company has not performed any such restricted financial activities and therefore it is 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 Bond 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 $4.2 million and $4.1 million as of December 31, 2009 and 2008,
respectively, which is included as a non-current asset in the balance sheet. Under certain circumstances, the Title XI Bond debt agreement requires an annual deposit until an amount equal to fifty percent of the outstanding balance is reached which
is approximately $8.0 million as of December 31, 2009. Based on the adjusted earnings, as defined in the agreement, the Company did not have a deposit requirement in 2008 and 2007. The Companys current deposit requirement based on
adjusted earnings through December 2009 is approximately $0.4 million. This deposit will be made in 2010.

(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, 2009, approximately $7.5 million was outstanding which was drawn to fund previous equipment purchases. This term loan is collateralized by eligible equipment with a
carrying value of $15.3 million at December 31, 2009.



42



---

##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS(Continued)



(D) 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 based on a percentage of eligible accounts receivable. The revolving credit facility is secured by the Companys accounts receivable. At December 31, 2009, 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, 2009, the Company had $7.8 million available under this facility as calculated by the borrowing base formula and therefore was not subject to any financial covenants.

Following are maturities of long-term debt at December 31, 2009:



|           |  |   |            
|---------- |  | - | -----------
|2010       |  | $ | 3,874,700  
|2011       |  |   | 85,374,700 
|2012       |  |   | 2,874,700  
|2013       |  |   | 2,874,700  
|2014       |  |   | 2,002,800  
|Thereafter |  |   | 10,043,628 
|           |  |   |            
|           | 
|           |  | $ | 107,045,228
|           |  |   |            

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, 2009,
2008, and 2007, 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.

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, 2009, are as follows:



|     |  |   |           
|---- |  | - | ----------
|2010 |  | $ | 6,567,187 
|2011 |  |   | 2,117,255 
|2012 |  |   | 1,880,794 
|2013 |  |   | 1,367,963 
|     |  |   |           
|     | 
|     |  | $ | 11,933,199
|     |  |   |           

Included in the amounts in the table above is tug charter hire of $3.7
million in 2010 and $0.2 million in 2011, respectively.

Rent expense for all operating leases, including leases with terms of less than one
year, was $13,385,984, $14,531,028, and $13,839,875 for 2009, 2008, and 2007, respectively, and is recorded as a part of purchased transportation and other rent on the statement of operations. Included in the $13.4 million of rent expense for
2009 is $10.1 million related to tug charter hire, of which $5.1 million is directly related to chartering the tugs and approximately $5.0 million was related to the labor associated with the tug charters.



43



---

##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS(Continued)



6. OTHER ASSETS

Other assets consist of the following at December 31, 2009 and 2008:



|                                                     |  |      |           |      |   |          
|---------------------------------------------------- |  | ---- | --------- | ---- | - | ---------
|                                                     |  | 2009 |           | 2008
|                                                     |  |     
|Debt issuance costs, net of accumulated amortization |  | $    | 2,349,042 |      | $ | 3,117,034
|Other                                                |  |      | 513,869   |      |   | 587,456  
|                                                     |  |      |           |      |   |          
|                                                     |  |     
|                                                     |  | $    | 2,862,911 |      | $ | 3,704,490
|                                                     |  |      |           |      |   |          

Amortization expense for the years ended December 31, 2009, 2008,
and 2007 was $971,561, $838,978, and $840,060, respectively, and is recorded as part of depreciation and amortization in the statement of operations.

7. ACCRUED LIABILITIES

Accrued liabilities consist of the following at December 31, 2009 and 2008:



|                         |  |      |           |      |   |          
|------------------------ |  | ---- | --------- | ---- | - | ---------
|                         |  | 2009 |           | 2008
|Marine expense           |  | $    | 2,308,986 |      | $ | 3,454,775
|Interest                 |  |      | 1,263,006 |      |   | 1,313,508
|Salaries and wages       |  |      | 1,509,601 |      |   | 815,650  
|Rent                     |  |      | 259,864   |      |   | 932,574  
|Purchased transportation |  |      | 191,764   |      |   | 391,310  
|Fringe benefits          |  |      | 256,683   |      |   | 270,678  
|Taxes                    |  |      | 27,760    |      |   | 79,596   
|Other                    |  |      | 641,096   |      |   | 436,599  
|                         |  |      |           |      |   |          
|                         |  |     
|                         |  | $    | 6,458,760 |      | $ | 7,694,690
|                         |  |      |           |      |   |          

8. INCOME TAXES

The (provision) benefit for income taxes is comprised of the following for the years ended December 31, 2009, 2008 and 2007:



|                                     |  |      |         |   |      |   |          |      |  |   |            |  
|------------------------------------ |  | ---- | ------- | - | ---- | - | -------- | ---- |  | - | ---------- | -
|                                     |  | 2009 |         |   | 2008 |   |          | 2007 | 
|                                     |  |      |        
|Current:                             |  |      |         |   |      |   |          |      |  |   |            |  
|Federal                              |  | $    | (28,000 | ) |      | $ | (29,000  | )    |  | $ |           |  
|State                                |  |      |        |   |      |   | 113,729  |      |  |   | (106,598   | )
|                                     |  |      |         |   |      |   |          |      |  |   |            |  
|                                     |  |      |        
|                                     |  |      | (28,000 | ) |      |   | 84,729   |      |  |   | (106,598   | )
|                                     |  |      |         |   |      |   |          |      |  |   |            |  
|Deferred                             |  |      |         |   |      |   |          |      |  |   |            |  
|Federal                              |  |      | (799    | ) |      |   | (1,316   | )    |  |   | (1,624,711 | )
|State                                |  |      | 37,763  |   |      |   | 24,143   |      |  |   | 113,635    |  
|                                     |  |      |         |   |      |   |          |      |  |   |            |  
|                                     |  |      |        
|                                     |  |      | 36,964  |   |      |   | 22,827   |      |  |   | (1,511,076 | )
|Valuation allowance increase         |  |      | (7,568  | ) |      |   | (116,602 | )    |  |   | (3,155,685 | )
|                                     |  |      |         |   |      |   |          |      |  |   |            |  
|                                     |  |      |        
|Total income tax benefit (provision) |  | $    | 1,396   |   |      | $ | (9,046   | )    |  | $ | (4,773,359 | )
|                                     |  |      |         |   |      |   |          |      |  |   |            |  



44



---

##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS(Continued)



Income tax (provision) benefit for the years ended December 31, 2009, 2008 and 2007 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:



|                                                   |  |      |          |   |      |   |            |      |  |   |            |  
|-------------------------------------------------- |  | ---- | -------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                   |  | 2009 |          |   | 2008 |   |            | 2007 | 
|Tax (provision) benefit at statutory Federal rate  |  | $    | (885,523 | ) |      | $ | 1,098,097  |      |  | $ | (1,537,710 | )
|Qualifying shipping income                         |  |      | 857,199  |   |      |   | (1,128,856 | )    |  |   |            |  
|Increase in deferred tax asset valuation allowance |  |      | (7,568   | ) |      |   | (116,602   | )    |  |   | (3,155,685 | )
|Nondeductible expenses                             |  |      | (3,869   | ) |      |   | (4,298     | )    |  |   | (75,460    | )
|State income taxes                                 |  |      | 41,157   |   |      |   | 142,613    |      |  |   | (4,504     | )
|                                                   |  |      |          |   |      |   |            |      |  |   |            |  
|                                                   |  |      |         
|Total income tax benefit (provision)               |  | $    | 1,396    |   |      | $ | (9,046     | )    |  | $ | (4,773,359 | )
|                                                   |  |      |          |   |      |   |            |      |  |   |            |  

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.

The components of the Companys net deferred tax asset at
December 31, 2009 and 2008 are as follows:



|                                       |  |      |           |      |   |          
|-------------------------------------- |  | ---- | --------- | ---- | - | ---------
|                                       |  | 2009 |           | 2008
|Deferred tax assets:                   |  |      |           |      |   |          
|Net operating loss carry forwards      |  | $    | 2,245,891 |      | $ | 2,033,140
|Employee stock option                  |  |      | 32,643    |      |   | 19,124   
|Intangible Asset                       |  |      | 4,644     |      |   | 5,581    
|Allowance for bad debts                |  |      | 12,066    |      |   | 14,376   
|Accrued vacation                       |  |      | 7,008     |      |   | 6,496    
|Other                                  |  |      | 5,964     |      |   | 5,682    
|                                       |  |      |           |      |   |          
|Gross deferred assets                  |  |      | 2,308,216 |      |   | 2,084,399
|                                       |  |     
|Deferred tax liabilities:              |  |      |           |      |   |          
|Fixed asset basis                      |  |      | 1,683,657 |      |   | 1,467,408
|                                       |  |      |           |      |   |          
|                                       |  |     
|Gross deferred tax liabilities         |  |      | 1,683,657 |      |   | 1,467,408
|Deferred tax asset valuation allowance |  |      | 345,703   |      |   | 338,135  
|                                       |  |      |           |      |   |          
|                                       |  |     
|Net deferred tax asset                 |  | $    | 278,856   |      | $ | 278,856  
|                                       |  |      |           |      |   |          

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



45



---

##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS(Continued)



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, 2009 and 2008, of approximately $279,000 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 2009 and 2008 tax expense under the tonnage tax method was approximately $28,000, which could not be offset by the
Companys existing NOLs under the tonnage tax regime.

In accordance with FIN 48, the Company performed a review of its uncertain
tax positions and concluded that there were no significant adjustments required related to uncertain tax positions. The Company had no accrued interest expense or penalties related to unrecognized tax benefits as of December 31, 2009 and 2008.
Interest and penalties, if incurred, would be recognized as a component of income tax expense. 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 2006, 2007 and 2008 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.
Since inception, the Company reserved 2,300,000 shares of common stock for issuance pursuant to the Plan to eligible employees under the Plan. 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, 2009, there was a deficit of 120,035
options available for grant under the Plan, as options for the 120,035 shares were issued in 2009 subject to stockholder approval increasing the authorized number of the shares available for issuance at our 2010 annual meeting.

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 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, 2009, there were 9,889 options available for grant under the Director Plan.



46



---

##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS(Continued)



On January 9, 2008, April 23, 2009, August 26, 2009, and November 2, 2009
the Company granted options to purchase 96,500, 135,000, 500,000, and 325,000 shares of the Companys common stock, respectively, under the Companys Incentive Stock Plan. Using the Black-Scholes method, the assumptions used to calculate
the fair value of those options granted during the twelve month periods ended December 31, 2009 and 2008 are as follows:



|                        |  |                 |  |                |  |                 |  |                 
|----------------------- |  | --------------- |  | -------------- |  | --------------- |  | ----------------
|                        |  | 2008            |  | 2009          
|                        |  | January 9, 2008 |  | April 23, 2009 |  | August 26, 2009 |  | November 2, 2009
|Expected Term           |  | 6.5 years       |  | 6.5 years      |  | 6.5 years       |  | 6.5 years       
|Volatility              |  | 45.98%          |  | 64.84%         |  | 65.13%          |  | 65.02%          
|Risk-free interest rate |  | 3.40%           |  | 2.49%          |  | 3.09%           |  | 3.00%           
|Dividends               |  | None            |  | None           |  | None            |  | None            

The weighted average fair value of
options granted for the years ended December 31, 2009 and 2008 was $2.83 and $5.49, respectively.

A summary of option activity under the
Companys stock-based compensation plan at December 31, 2009 and during the year then ended is presented below:



|                                                                    |  |         |           |   |                              |   |                         |  |   |          
|------------------------------------------------------------------- |  | ------- | --------- | - | ---------------------------- | - | ----------------------- |  | - | ---------
|                                                                    |  | 2009   
|                                                                    |  | Options |           |   | WeightedAverageExercisePrice |   | AggregateIntrinsicValue
|Outstanding at beginning of year                                    |  |         | 1,093,250 |   |                              | $ | 4.99                    |  |   |          
|Granted                                                             |  |         | 960,000   |   |                              |   | 4.47                    |  |   |          
|Exercised                                                           |  |         | (346,350  | ) |                              |   | 6.46                    |  |   |          
|Forfeited                                                           |  |         | (173,078  | ) |                              |   | 6.51                    |  |   |          
|                                                                    |  |         |           |   |                              |   |                         |  |   |          
|Outstanding at end of year                                          |  |         | 1,533,822 |   |                              | $ | 4.91                    |  | $ | 1,091,657
|                                                                    |  |         |           |   |                              |   |                         |  |   |          
|Grants exercisable at year-end                                      |  |         | 507,182   |   |                              | $ | 4.57                    |  | $ | 702,657  
|                                                                    |  |         |           |   |                              |   |                         |  |   |          
|                                                                    |  |         |          
|Fair value of options granted during the year at the price of $2.83 |  | $       | 2,716,800 |   |                              |   |                         |  |   |          

The intrinsic value of the options exercised during 2009, 2008, and 2007 was $545,546, $97,538, and $1,502,157,
respectively.

The following table summarizes information about the outstanding options at December 31, 2009:



|               |  |                    |  |                                           |  |                   
|-------------- |  | ------------------ |  | ----------------------------------------- |  | ------------------
|Exercise Price |  | OptionsOutstanding |  | Weighted-AverageRemainingContractual Life |  | OptionsExercisable
|2.84           |  | 182,830            |  | Less than one year                        |  | 182,830           
|2.88           |  | 179,328            |  | 2.4 years                                 |  | 179,328           
|8.61           |  | 200,664            |  | 6.9 years                                 |  | 129,724           
|10.90          |  | 58,500             |  | 8.1 years                                 |  | 15,300            
|3.44           |  | 87,500             |  | 9.3 years                                 |  |                  
|4.26           |  | 500,000            |  | 9.7 years                                 |  |                  
|5.22           |  | 325,000            |  | 9.9 years                                 |  |                  
|               |  |                    |  |                                           |  |                   
|               |  | 1,533,822          |  |                                           |  | 507,182           
|               |  |                    |  |                                           |  |                   



47



---

##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS(Continued)



As of December 31, 2009, the remaining non-exercisable options become exercisable and the related
compensation expense is expected to be recognized in future years as follows:



|     |  |           |  |         |          
|---- |  | --------- |  | ------- | ---------
|     |  | Options   |  | Expense
|2010 |  | 228,770   |  | $       | 782,097  
|2011 |  | 228,770   |  |         | 772,604  
|2012 |  | 193,300   |  |         | 554,986  
|2013 |  | 193,300   |  |         | 499,949  
|2014 |  | 182,500   |  |         | 349,183  
|     |  |           |  |         |          
|     |  | 1,026,640 |  | $       | 2,958,819
|     |  |           |  |         |          

During the first quarter of 2009, the Compensation Committee approved
the use of the cashless exercise method for the Companys Officer Group for the March 1999 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 method of exercise resulted in an aggregate of 34,841 shares being
issued to the Officer Group upon exercise of 148,500 options to purchase common stock.

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, 2009 is $2,958,819.

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 2009, 2008 and 2007.

In addition, the Company has a 165(e) Plan that covers substantially all employees in Puerto Rico. The Company made contributions of approximately $22,000,
$28,000, and $29,000 to the Plan during 2009, 2008, and 2007, respectively.

The Company has an Incentive Bonus Program and expensed $431,533
and $235,588 during 2009 and 2007, respectively, which is recorded as a part of salaries, wages, and benefits in the statement of operation. There were no Incentive Bonus expenses in 2008. Bonuses are based on the Companys adjusted pre-tax
income as defined in the Incentive Bonus Plan, which is approved by the Board of Directors.



48



---

##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS(Continued)



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 criminal 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. To date, neither the company nor any of its employees has been charged with any wrongdoing in this investigation and we will continue to cooperate with
government officials.

Following publicity about the DOJ investigation, beginning on April 22, 2008, shippers in the Puerto Rico trade
lane, and in one case indirect consumer purchasers within Puerto Rico, have filed at least 41 purported class actions against domestic ocean carriers, including Horizon Lines, Sea Star Lines, Crowley Liner Services and the Company. The Company
intends to continue its vigorous defense of these actions. 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, were consolidated into a
single multi-district litigation proceeding (MDL 1960) in the District of Puerto Rico for pretrial purposes. Plaintiffs lead counsel has filed a number of amended class action complaints under seal. The Company filed a motion to dismiss that
complaint with the court. That motion has been fully briefed and argued and the parties are awaiting a ruling by the Court.

In June 2009,
Horizon Lines and its related companies entered into a settlement agreement with certain named direct purchaser plaintiffs on behalf of a purported class of claimants in the MDL 1960 proceeding, while denying any liability for the underlying claims.
The settlement agreement is subject to Court approval and is subject to various objections. In December 2009, the Court heard arguments related to the approval of the settlement and has set this matter for further argument on April 6,
2010. Additionally, Crowley Liner Services and its related entities have entered into a settlement agreement with certain named direct purchaser plaintiffs on behalf of a purported class of claimants in the MDL 1960 proceeding, while denying
liability for the underlying claims. The Court is expected to hear argument related to the approval of the Crowley Settlement on April 6, 2010 as well. It is not clear what, if any, impact the settlements, if approved, will have
on further prosecution of the MDL 1960. The Company is not a party to either of the settlements.

On October 9, 2009, the Company
received a Request for Information and Production of Documents from the Puerto Rico Office of Monopolistic Affairs. The request relates to an investigation into possible price fixing and unfair competition in the Puerto Rico domestic ocean shipping
business. The Company has indicated to the Puerto Rican authorities that it will cooperate fully with this investigation and has provided requested documents to such authorities.

Significant legal fees and costs are expected to be incurred in connection with the DOJ investigation, the class actions, and the Puerto Rico Office of Monopolistic Affairs investigation. During the
three-month periods ended December 31, 2009, and 2008, costs were approximately $676,000 and $341,000, respectively. During the twelve month periods ended December 31, 2009, and 2008, costs were approximately $1,728,000 and $1,464,000,
respectively.

On October 15, 2009, the Company commenced legal action against its insurer for a judicial declaration that the
insurer owes and has breached its duty to defend the Company in an antitrust lawsuit captioned: In re Puerto Rican Cabotage Antitrust Litigation, U.S.D.C., Puerto Rico, Case No. 3:08-md-01960-DRD (MDL 1960), and for
judgment requiring the insurer to defend and to reimburse the Companys defense expenses. The case is in the Middle District of Florida, Jacksonville Division, and is captioned: Trailer Bridge, Inc. v. Illinois National Insurance
Company. Discovery has not commenced. The Company and defendant insurer have cross-moved for partial summary judgment on the duty to defend issue. No hearing date has been set and the motions outcomes cannot be
predicted with certainty.



49



---

##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS(Continued)



The Company is not able to predict the ultimate outcome or cost of the DOJ investigation, the civil
class actions, or the Puerto Rico Office of Monopolistic Affairs investigation. 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 routine litigation 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.

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 - The fair value of the Senior Secured Notes are based on quoted market prices. 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 other long-term debt. As of December 31, 2009, the estimated fair value of the Companys
long-term debt is less than the carrying values by approximately $429,922.

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 2009, 2008, and 2007 was $10.5 million, $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.



50



---

##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS(Continued)



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.

15. QUARTERLY RESULTS
OF OPERATIONS (UNAUDITED)



|                                                |  |               |            |   |              |   |            |                   |  |                  |            |  |   |            |  
|----------------------------------------------- |  | ------------- | ---------- | - | ------------ | - | ---------- | ----------------- |  | ---------------- | ---------- |  | - | ---------- | -
|Quarter Ended                                   |  | March 31,2009 |            |   | June 30,2009 |   |            | September 30,2009 |  | December 31,2009 |           
|                                                |  |               |            |  
|Operating revenues                              |  | $             | 25,340,915 |   |              | $ | 27,900,812 |                   |  | $                | 30,325,952 |  | $ | 30,735,071 |  
|Operating income                                |  |               | 1,801,606  |   |              |   | 3,207,883  |                   |  |                  | 4,122,135  |  |   | 3,599,011  |  
|Net (loss) income                               |  |               | (768,034   | ) |              |   | 656,693    |                   |  |                  | 1,708,442  |  |   | 1,008,775  |  
|Net (loss) income attributable to common shares |  |               | (768,034   | ) |              |   | 656,693    |                   |  |                  | 1,708,442  |  |   | 1,008,775  |  
|Net (loss) income per share -                   |  |               |            |   |              |   |            |                   |  |                  |            |  |   |            |  
|basic                                           |  | $             | (0.06      | ) |              | $ | 0.06       |                   |  | $                | 0.14       |  | $ | 0.08       |  
|diluted                                         |  | $             | (0.06      | ) |              | $ | 0.05       |                   |  | $                | 0.14       |  | $ | 0.08       |  
|                                                |  |               |            |  
|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 (loss) income                               |  |               | (1,822,556 | ) |              |   | (329,261   | )                 |  |                  | 34,444     |  |   | (1,121,368 | )
|Net (loss) income attributable to common shares |  |               | (1,822,556 | ) |              |   | (329,261   | )                 |  |                  | 34,444     |  |   | (1,121,368 | )
|Net (loss) income per share -                   |  |               |            |   |              |   |            |                   |  |                  |            |  |   |            |  
|basic                                           |  | $             | (0.15      | ) |              | $ | (0.03      | )                 |  | $                |           |  | $ | (0.09      | )
|diluted                                         |  | $             | (0.15      | ) |              | $ | (0.03      | )                 |  | $                |           |  | $ | (0.09      | )

16. SUBSEQUENT EVENTS

On January 13, 2010, the Company completed its previously announced purchase of another $1.0 million (face amount) of its 9.25% Senior Secured Notes, at
par value, in privately negotiated transactions. The Companys 9.25% Senior Secured Notes mature on November 15, 2011, with interest payable semi-annually on each May 15 and November 15. The aggregate principal outstanding on the
9.25% Senior Secured Notes following the Companys purchases is $82.5 million.

On January 19, 2010, the Company announced that it
would expand its Dominican Republic sailings from every two weeks to weekly. The Company will provide this service utilizing its existing vessels that currently link the ports of Jacksonville, FL, San Juan, Puerto Rico, and Puerto Plata, Dominican
Republic.

On January 15, 2010, the Company granted options to purchase 175,000 shares of the Companys common stock under the
Non-Employee Director Stock Incentive Plan subject to shareholders approval increasing the authorized number of shares available for issuance at our 2010 meeting.



51



---

##### Table of Contents

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED December 31, 2009

Allowance for Doubtful Accounts



|     |  |                                |           |                             |   |                        |  |   |                       |   |  |   |          
|---- |  | ------------------------------ | --------- | --------------------------- | - | ---------------------- |  | - | --------------------- | - |  | - | ---------
|Year |  | Balance atBeginning ofthe year |           | Charged toCosts andExpenses |   | Deductions(Chargeoffs) |  |   | Balance atend of year
|     |  |                                |           |                            
|2009 |  | $                              | 599,017   |                             | $ | 1,038,210              |  | $ | (1,195,242            | ) |  | $ | 441,985  
|2008 |  | $                              | 1,010,341 |                             | $ | 913,009                |  | $ | (1,324,333            | ) |  | $ | 599,017  
|2007 |  | $                              | 864,875   |                             | $ | 1,662,918              |  | $ | (1,517,452            | ) |  | $ | 1,010,341

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, 2009. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in Internal Control  Integrated Framework as of and for the year ended December 31, 2009. 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.



52



---

##### Table of Contents

| | (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, 2009.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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 scheduled to be held
on May 27, 2010 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.



53



---

##### Table of Contents

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, 2009, 2008 and 2007.

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.
| | -- | ---------

In reviewing the
agreements included as exhibits to this report, please remember they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company, its subsidiaries
or other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the
applicable agreement and:



| |  |  | should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those
statements prove to be inaccurate;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures
are not necessarily reflected in the agreement;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



| |  |  | were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more
recent developments.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

Accordingly, these representations and warranties may not describe the actual state of
affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this report and the Companys other public files, which are available without charge through the SECs website
at http://www.sec.gov.



54



---

##### Table of Contents

EXHIBIT INDEX

(Exhibits being filed with this Form 10-K)



|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBITNUMBER |  | DESCRIPTION OF EXHIBITS                                                                                                                                                                                                                                                                                                                                                                                                               
|              | 
|3.1           |  | Amended and Restated Certificate of Incorporation of Trailer Bridge, Inc. (Incorporated by reference to the Companys Form 10-Q for the quarter ended September 30,
2002.)                                                                                                                                                                                                                                                            
|              | 
|3.2           |  | Form of Amended and Restated Bylaws of the Registrant (Incorporated by reference to the Companys Registration Statement on Form S-1 (File No. 333-28221) that became effective
on July 23, 1997.)                                                                                                                                                                                                                                    
|              | 
|4.1           |  | See Exhibits 3.1 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#         |  | Form of Indemnification Agreement with Directors and Executive Officers (Incorporated by reference to the Companys Registration Statement on Form S-1 (File No. 333-28221).)                                                                                                                                                                                                                                                         
|              | 
|10.2          |  | United States Government Guaranteed Ship Financing Bond, 1997 Series, Amended and Restated March 30, 2004, in the amount of $10,515,000 (Incorporated by reference to the
Companys Form 10-Q for the quarter ended March 31, 2004.)                                                                                                                                                                                                  
|              | 
|10.2.1        |  | Fourth Supplement to Trust Indenture  Special Provisions dated as of March 30, 2004. (Incorporated by reference to the Companys Form 10-Q for the quarter ended March 31,
2004.)                                                                                                                                                                                                                                                    
|              | 
|10.2.2        |  | United States Government Guaranteed Ship Financing Bond, 1997 Series II, Amended and Restated March 30, 2004, in the amount of $16,918,000 (Incorporated by reference to the
Companys Form 10-Q for the quarter ended March 31, 2004.)                                                                                                                                                                                               
|              | 
|10.2.3        |  | Fourth Supplement to Trust Indenture  Special Provisions dated as of March 30, 2004. (Incorporated by reference to the Companys Form 10-Q for the quarter ended March 31,
2004.)                                                                                                                                                                                                                                                    
|              | 
|10.2.4        |  | 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. (Incorporated by reference to the Companys Registration Statement on Form S-4 (File No. 333-122783) which was filed on February 14,
2005.)
|              | 
|10.3          |  | Agreement and Lease dated as of August 1, 1991 between the Registrant and the Jacksonville Port Authority (Incorporated by reference to the Companys Registration Statement on
Form S-1 (File No. 333-28221))                                                                                                                                                                                                                        
|              | 
|10.3.1        |  | Amendment #5 to Exhibit B, Schedule of Fees and Charges (Incorporated by reference to the Companys Registration Statement on Form S-1 (File No.
333-28221).)                                                                                                                                                                                                                                                                         



55



---

##### Table of Contents

|              |  |                                                                                                                                                                                                                                                                                                                                                                                               
|------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBITNUMBER |  | DESCRIPTION OF EXHIBITS                                                                                                                                                                                                                                                                                                                                                                       
|              | 
|10.4#         |  | Incentive Stock Plan (Incorporated by reference to the Companys Registration Statement on Form S-1 (File No. 333-28221).)                                                                                                                                                                                                                                                                    
|              | 
|10.4.1#       |  | Form of Stock Option Award Agreement (Incorporated by reference to the Companys Registration Statement on Form S-1 (File No. 333-28221).)                                                                                                                                                                                                                                                    
|              | 
|10.4.2#       |  | Amendment No. 1 to Trailer Bridge, Inc. Stock Incentive Plan (Incorporated by reference to the Companys Form 10-K for the year ended December 31, 2000.)                                                                                                                                                                                                                                     
|              | 
|10.4.3#       |  | Trailer Bridge, Inc. Non-Employee Director Stock Incentive Plan (Incorporated by reference to the Companys Form 10-K for the year ended December 31, 2000.)                                                                                                                                                                                                                                  
|              | 
|10.4.4#       |  | Form of Non-Employee Director Stock Option Award Agreement (Incorporated by reference to the Companys Form 10-K for the year ended December 31, 2000.)                                                                                                                                                                                                                                       
|              | 
|10.4.5#       |  | Section 409A Amendments to Option Award Agreements (Incorporated by reference to the Companys Form 10-K for the year ended December 31, 2008.)                                                                                                                                                                                                                                               
|              | 
|10.4.6#       |  | Section 409A Amendment to Non-Employee Director Stock Incentive Plan (Incorporated by reference to the Companys Form 10-K for the year ended December 31,
2008.)                                                                                                                                                                                                                             
|              | 
|10.4.7#       |  | Section 409A Amendment to Stock Incentive Plan (Incorporated by reference to the Companys Form 10-K for the year ended December 31, 2008.)                                                                                                                                                                                                                                                   
|              | 
|10.4.8#       |  | Amendment No. 2 to Stock Incentive Plan (Incorporated by reference to the Companys Definitive Proxy Statement filed on April 21, 2006.)                                                                                                                                                                                                                                                      
|              | 
|10.4.9#       |  | Amendment No. 3 to Stock Incentive Plan (Incorporated by reference to the Companys Definitive Proxy Statement filed on April 30, 2007.)                                                                                                                                                                                                                                                      
|              | 
|10.4.10#      |  | Amendment No. 4 to Stock Incentive Plan (Incorporated by reference to the Companys Definitive Proxy Statement filed on April 27, 2009.)                                                                                                                                                                                                                                                      
|              | 
|10.5#         |  | Amended and Restated Employment Agreement between Trailer Bridge, Inc. and William G. Gotimer, Jr. (Incorporated by reference to the Companys Form 10-K for the year ended
December 31, 2008.)                                                                                                                                                                                               
|              | 
|10.6          |  | 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 the Companys Form 10-K for the year ended December 31, 2003).                                                                           
|              | 
|10.6.1        |  | 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. (Incorporated by reference to the Companys Registration Statement on Form S-4 (File No. 333-122783) which was filed on February 14, 2005.)



56



---

##### Table of Contents

|              |  |                                                                                                                                                                                                                                                                                                                                                                                                             
|------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBITNUMBER |  | DESCRIPTION OF EXHIBITS                                                                                                                                                                                                                                                                                                                                                                                     
|              | 
|10.6.2        |  | 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. (Incorporated by reference to the Companys Form 10-Q for the quarter ended September 30, 2008.)
|              | 
|10.7          |  | Indenture dated as of December 1, 2004 between Trailer Bridge, Inc. and Wells Fargo Bank, National Association, as Trustee. (Incorporated by reference to the Companys
Registration Statement on Form S-4 (File No. 333-122783) which was filed on February 14, 2005.)                                                                                                                                     
|              | 
|10.7.1        |  | Form of 91/4% Senior Secured Note due 2011 (Incorporated by reference to the Companys Registration Statement on Form S-4 (File No. 333-122783) which was filed on February 14, 2005.)                                                                                                                                                                                                                      
|              | 
|10.7.2        |  | Security Agreement dated as of December 1, 2004 between Trailer Bridge, Inc. and Wells Fargo Bank, National Association, as Trustee. (Incorporated by reference to the Companys
Registration Statement on Form S-4 (File No. 333-122783) which was filed on February 14, 2005.)                                                                                                                            
|              | 
|10.7.3        |  | Assignment of Earnings dated as of December 1, 2004 between Trailer Bridge, Inc. and Wells Fargo Bank, National Association, as Trustee. (Incorporated by reference to the
Companys Registration Statement on Form S-4 (File No. 333-122783) which was filed on February 14, 2005.)                                                                                                                        
|              | 
|10.7.4        |  | Assignment of Insurances dated as of December 1, 2004 between Trailer Bridge, Inc. and Wells Fargo Bank, National Association, as Trustee. (Incorporated by reference to the
Companys Registration Statement on Form S-4 (File No. 333-122783) which was filed on February 14, 2005.)                                                                                                                      
|              | 
|10.7.5        |  | First Preferred Vessel Mortgage dated as of December 1, 2004 between Trailer Bridge, Inc. and Wells Fargo Bank, National Association, as Trustee. (Incorporated by reference to the
Companys Registration Statement on Form S-4 (File No. 333-122783) which was filed on February 14, 2005.)                                                                                                               
|              | 
|10.7.6        |  | Mortgage and Security Agreement dated as of December 1, 2004 between Trailer Bridge, Inc. and Wells Fargo Bank, National Association, as Trustee. (Incorporated by reference to the
Companys Registration Statement on Form S-4 (File No. 333-122783) which was filed on February 14, 2005.)                                                                                                               
|              | 
|10.8          |  | Purchase Agreement dated as of November 16, 2004 among Trailer Bridge, Inc. and the Initial Purchasers named therein. (Incorporated by reference to the Companys Registration
Statement on Form S-4 (File No. 333-122783) which was filed on February 14, 2005.)                                                                                                                                           
|              | 
|10.8.1        |  | Registration Rights Agreement dated as of December 1, 2004 between Trailer Bridge, Inc. and Wells Fargo Bank, National Association, Trustee. (Incorporated by reference to the
Companys Registration Statement on Form S-4 (File No. 333-122783) which was filed on February 14, 2005.)                                                                                                                    



57



---

##### Table of Contents

|              |  |                                                                                                                                                                                         
|------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBITNUMBER |  | DESCRIPTION OF EXHIBITS                                                                                                                                                                 
|              | 
|10.9#         |  | Employment Agreement dated as of August 26, 2009, by and between Trailer Bridge, Inc. and Ivy Barton Suter. (Incorporated by reference to the Companys Form 8-K dated August
27, 2009.)
|              | 
|10.10#        |  | Form of Director/Officer Indemnification Agreement (Incorporated by reference to the Companys Form 10-Q for the quarter ended September 30, 2009.)                                     
|              | 
|23.2          |  | Consent of BDO Seidman, LLP, Independent Registered Certified Public Accounting Firm.                                                                                                   
|              | 
|31.1          |  | 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          |  | 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          |  | Certification of Trailer Bridge, Inc.s Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 (as adopted by Section 906 of the Sarbanes-Oxley Act of
2002)                        
|              | 
|32.2          |  | Certification of Trailer Bridge, Inc.s Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 (as adopted by Section 906 of the Sarbanes-Oxley Act of
2002)                        



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



58



---

##### Table of Contents

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 thirtieth day of March 2010.



TRAILER BRIDGE, INC.By:

/s/ Ivy Barton SuterIvy Barton SuterChief 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/ Ivy Barton Suter       |  | Chief Executive Officer                                                                                 |  | March 30, 2010
|Ivy Barton Suter           |  |                                                                                                         |  |               
|                           |  |                                                                                                        
|/s/ Mark A. Tanner         |  |                                                                                                         |  |               
|Mark A. Tanner             |  | Vice President  Administration and Chief Financial Officer(Principal Financial and Accounting
Officer) |  | March 30, 2010
|                           |  |                                                                                                        
|/s/ John D. McCown         |  |                                                                                                         |  |               
|John D. McCown             |  | Director                                                                                                |  | March 30, 2010
|                           |  |                                                                                                        
|/s/ Nickel van Reesema     |  |                                                                                                         |  |               
|Nickel van Reesema         |  | Director                                                                                                |  | March 30, 2010
|                           |  |                                                                                                        
|/s/ Allen L. Stevens       |  |                                                                                                         |  |               
|Allen L. Stevens           |  | Director                                                                                                |  | March 30, 2010
|                           |  |                                                                                                        
|/s/ Douglas E. Schimmel    |  |                                                                                                         |  |               
|Douglas E. Schimmel        |  | Director                                                                                                |  | March 30, 2010
|                           |  |                                                                                                        
|/s/ Malcolm P. McLean, Jr. |  |                                                                                                         |  |               
|Malcolm P. McLean, Jr.     |  | Director                                                                                                |  | March 30, 2010
|                           |  |                                                                                                        
|/s/ Robert P. Burke        |  |                                                                                                         |  |               
|Robert P. Burke            |  | Director                                                                                                |  | March 30, 2010



59