##### 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, 2010

OR



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

For the transition period from  to

Commission file number 0-22837





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 Rule12b-2 of the Exchange Act. (Check one):



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large Accelerated Filer |  |  ̈                                                |  | Accelerated Filer         |  |  ̈
|                        |  |                                                  | 
|Non-Accelerated Filer   |  |  ̈  (Do not check if a smaller reporting company) |  | Smaller Reporting Company |  | x

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

The
aggregate market value of the shares of the registrants $0.01 par value common stock held by non-affiliates of the registrant as of June 30, 2010, the last business day of the registrants most recently completed second fiscal
quarter, was $22,055,097 (based upon $3.11 per share being the price at which the common equity was last sold on June 30, 2010). 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 29, 2011, 12,016,681 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 2011 annual meeting of stockholders that will be filed no later than 120 days after December 31, 2010.









---

##### Table of Contents

TRAILER BRIDGE, INC.

FORM 10-K

FOR THE YEAR ENDED DECEMBER 31, 2010

TABLE OF CONTENTS



|                                                                                                             |  |  |    | 
|------------------------------------------------------------------------------------------------------------ |  |  | -- | 
|PART I                                                                                                       |  |  |    | 
|                                                                                                             | 
|Item 1.                                                                                                      |  |  |    | 
|Business                                                                                                     |  |  | 3  | 
|Item 1A.                                                                                                     |  |  |    | 
|Risk Factors                                                                                                 |  |  | 11 | 
|Item 1B.                                                                                                     |  |  |    | 
|Unresolved Staff Comments                                                                                    |  |  | 16 | 
|Item 2.                                                                                                      |  |  |    | 
|Properties                                                                                                   |  |  | 16 | 
|Item 3.                                                                                                      |  |  |    | 
|Legal Proceedings                                                                                            |  |  | 17 | 
|Item 4.                                                                                                      |  |  |    | 
|Removed and Reserved                                                                                         |  |  | 19 | 
|                                                                                                             | 
|PART II                                                                                                      |  |  |    | 
|                                                                                                             | 
|Item 5.                                                                                                      |  |  |    | 
|Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  |  | 20 | 
|Item 6.                                                                                                      |  |  |    | 
|Selected Financial Data                                                                                      |  |  | 21 | 
|Item 7.                                                                                                      |  |  |    | 
|Managements Discussion and Analysis of Financial Condition and Results of Operations                        |  |  | 22 | 
|Item 7A.                                                                                                     |  |  |    | 
|Quantitative and Qualitative Disclosures About Market Risk                                                   |  |  | 33 | 
|Item 8.                                                                                                      |  |  |    | 
|Financial Statements and Supplementary Data                                                                  |  |  | 34 | 
|Item 9.                                                                                                      |  |  |    | 
|Changes in and Disagreements With Accountants on Accounting and Financial Disclosure                         |  |  | 57 | 
|Item 9A.                                                                                                     |  |  |    | 
|Controls and Procedures                                                                                      |  |  | 57 | 
|Item 9B.                                                                                                     |  |  |    | 
|Other Information                                                                                            |  |  | 58 | 
|                                                                                                             | 
|PART III                                                                                                     |  |  |    | 
|                                                                                                             | 
|Items 10 - 14                                                                                                |  |  | 58 | 
|                                                                                                             | 
|PART IV                                                                                                      |  |  |    | 
|                                                                                                             | 
|Item 15.                                                                                                     |  |  |    | 
|Exhibits, Financial Statement Schedules                                                                      |  |  | 59 | 
|                                                                                                             | 
|EXHIBIT INDEX                                                                                                |  |  | 60 | 
|                                                                                                             | 
|SIGNATURES                                                                                                   |  |  | 64 | 



Page 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, the Companys ability to refinance its existing debt, unfavorable outcomes from the United States Department of Justice (DOJ) investigation
and related class or individual 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 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.



Page 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 TBC provides 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 in January 2010. As of
December 31, 2010, two TBCs were not in liner service.

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, 2010,
Trailer Bridge operated a fleet of 141 tractors, comprised of 79 company owned units and 62 leased and owner operator units, 3,957 53' high cube containers, 3,157 53' chassis, 164 48 high-cube trailers and 299 53 Vehicle Transport
Modules® or VTMs (VTM) 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 435 40 chassis and 531 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, 2010, Trailer Bridge operated one 736' triple-deck, ro/ro ocean-going barge and three 403' TBCs in its liner service. 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, ultra-low sulfur diesel (ULSD), associated with our tug/barge model exceeds the new standards by two-times having less than 6 PPM of sulfur. The large number of U.S. tugs available for charter provides the
Company with a reliable source for towing services.



Page 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 for customers. 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 services. This customer service philosophy has generated increased demand from existing customers and has enabled the Company to acquire new 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 the Dominican Republic mostly consist of raw materials for manufacturing,
whereas, typical shipments from the 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, 2010, the
Company owned two 736' by 104' triple-deck ro/ro barges. One ro/ro is currently operating in scheduled liner service between Jacksonville, Florida, and San Juan, Puerto Rico. The other ro/ro barge went into regulatory dry-docking at the end of the
fourth quarter 2010 and was placed back into liner service in the first quarter of 2011. The ro/ro that was operating at the end of 2010 was put into dry-docking in the first quarter of 2011 and is expected to rejoin liner service in early April
2011. 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. In 2010, the Company has increased the carrying capacity of these vessels by double
stacking containers on the top deck on certain voyages.



Page 5



---

##### Table of Contents

Triplestack Box Carriers

At December 31, 2010, the Company owned five TBCs that are single deck barges designed to carry 53' containers. Three TBCs are currently operating in scheduled liner service between
Jacksonville, Florida, San Juan, Puerto Rico, and Puerto Plata, Dominican Republic. The remaining two TBCs were available for charter and not in service as of December 31, 2010. Of these two remaining TBCs, one went into charter in
the first quarter of 2011 for a period of 300 consecutive days with the option for two additional 90-day extension periods. 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 was increased to weekly sailings in 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.

Normally, three of the TBCs are marketed and chartered for project moves including movement of military equipment
between ports in the Caribbean, movement of container cranes between US ports and overseas locations, offshore drilling rig components and various break-bulk type cargo movements.

VESSELS OWNED BY THE COMPANY



|                    |  |       |  |               |  |                          
|------------------- |  | ----- |  | ------------- |  | -------------------------
|VESSEL NAME         |  | TYPE  |  | CAPACITY      |  | SERVICE as of 12/31/10   
|                    |  |       | 
|SAN JUAN JAX BRIDGE |  | Ro/Ro |  | 385 53' units |  | Dry-docked               
|JAX SAN JUAN BRIDGE |  | Ro/Ro |  | 385 53' units |  | Jax/San Juan             
|ATLANTA BRIDGE      |  | TBC   |  | 295 53' units |  | Available for charter    
|CHICAGO BRIDGE      |  | TBC   |  | 295 53' units |  | Available for charter    
|CHARLOTTE BRIDGE    |  | TBC   |  | 295 53' units |  | Jax/San Juan             
|BROOKLYN BRIDGE     |  | TBC   |  | 295 53' units |  | Jax/San Juan/Puerto Plata
|MEMPHIS BRIDGE      |  | TBC   |  | 295 53' units |  | Jax/San Juan/Puerto Plata

RAMP
STRUCTURES

The loading and unloading of the Companys two 736' by 104' triple-deck ro/ro barges is accomplished through the use of
ramp structures at both the San Juan and Jacksonville locations. The Company replaced its floating ramp structure in San Juan with a fixed land-based structure in the first quarter of 2011. The new ramp structure permits the Company to handle cargo
it has not previously been able to handle and requires less maintenance expense than the replaced ramp. 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, 2010, the Company owned 74 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 164 dry van trailers as well as, 3,920 53' containers and 3,157 53 chassis.



Page 6



---

##### Table of Contents

At December 31, 2010, the Company owned 299 53 VTMs designed and built by the Company.
These units are used to transport automobiles and can hold up to three vehicles to provide an efficient unit for loading and unloading. The Company holds four separate patents for the VTMs. Two patents cover the VTM unit and two patents cover the
method of loading and unloading vehicles into the VTM.

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

DRIVER RECRUITING AND RETENTION

The Company offers competitive compensation and health care benefits comparable to those offered by truckload operators. Drivers are
assigned a single dispatcher, regardless of geographic area, providing more predictable home time. The Companys driver turnover in 2010 was 25.0% compared to 24.1% in 2009.

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.

The Company pays directly for the marine fuel used
by the tugs it charters however, tug crew personnel employed by the tug owner control the actual fuel loading. The price of the tug fuel is based on a published weekly index plus a per-gallon handling charge paid to the supplier. 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.

The Company charges fuel surcharges to its customers pursuant to its tariff. 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 2010 was $17.6 million compared to $14.0 million in 2009. 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.



Page 7



---

##### Table of Contents

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.

TECHNOLOGY

The core information systems of Trailer Bridge run within the IBM AS-400
iSeries architecture. Security of corporate data is enhanced by tight controls on access, management oversight, monitoring, and automated tools.

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, as of November 2010 was approximately 14.5%, according to available data obtained from the Port
Import Export Reporting Service (PIERS), a subsidiary of the Journal of Commerce. The Companys market share decreased 1.0 percentage point in 2010 compared to its 15.5% market share in 2009. The Company had a 15.1% market share in
2008, a 13.8% market share in 2007 and a 13.2% market share in 2006. 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 as of November 2010, Horizon
Lines has approximately 32.0% 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
29.7% of the market and operates eight 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 23.8% of the market
with three steam turbine powered combination ro/ro container vessels. If vehicle cargos were included in the market share analysis, Trailer Bridge, Crowley, and Sea Star Line 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 service, 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. A service every 7 days to Puerto Plata, Dominican Republic was implemented in January 2010.



Page 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 has a unique 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 distillate fuel that produces cleaner emissions
than 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 SmartWaySMTransport Partnership, a voluntary business/government collaboration focused on increasing efficiency and reducing
emissions.

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 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.



Page 9



---

##### Table of Contents

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, 2010,
Trailer Bridge had 133 employees consisting of 53 truck drivers and 80 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.



Page 10



---

##### Table of Contents

Item 1A. Risk Factors

Risks Relating to the Companys Business

Our cash flows and capital resources may be insufficient to make required payments on our substantial indebtedness and future indebtedness.

As of December 31, 2010, we had approximately $85.4 million of outstanding short-term debt. Our available liquidity plus the additional cash
expected to be generated by operations will not be sufficient, without additional financing, to pay the $82.5 million in 9.25% Senior Secured Notes (the Notes) which become due in November 2011. Although we expect to refinance these
Notes prior to November 2011, our failure to refinance these obligations that have not matured prior to March 31, 2011, has resulted in the inclusion of an explanatory going concern paragraph in the audit report of our Independent Registered
Certified Public Accounting Firm.

Because we have substantial debt, we require significant amounts of cash to fund our debt service
obligations. Our ability to generate cash to meet scheduled payments or to refinance our obligations with respect to our debt depends on our financial and operating performance which, in turn, is subject to prevailing economic and competitive
conditions and to the following financial and business factors, some of which may be beyond our control:



| |  |  | operating difficulties;
| | - |  | -----------------------



| |  |  | increased operating costs;
| | - |  | --------------------------



| |  |  | increased fuel costs;
| | - |  | ---------------------



| |  |  | general economic conditions;
| | - |  | ----------------------------



| |  |  | decreased demand for our services;
| | - |  | ----------------------------------



| |  |  | market cyclicality;
| | - |  | -------------------



| |  |  | tariff rates;
| | - |  | -------------



| |  |  | prices for our services;
| | - |  | ------------------------



| |  |  | the actions of competitors;
| | - |  | ---------------------------



| |  |  | regulatory developments; and
| | - |  | ----------------------------



| |  |  | delays in implementing strategic projects.
| | - |  | ------------------------------------------

If our cash flow and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and might be forced to reduce or delay capital expenditures,
dispose of material assets or operations, seek to obtain additional equity capital, restructure or refinance our indebtedness. In the event that we are required to dispose of material assets or operations to meet our debt service obligations, we
cannot be sure as to the timing of such dispositions or the proceeds that we would realize from those dispositions. The value realized from such dispositions will depend on market conditions and the availability of buyers, and, consequently, any
such disposition may not, among other things, result in sufficient cash proceeds to repay our indebtedness. Also, our existing debt agreements



Page 11



---

##### Table of Contents

(and any new financing documents may) contain covenants that may limit our ability to dispose of material assets or operations or to restructure or refinance our indebtedness. Further, we cannot
provide assurance that we will be able to restructure or refinance any of our indebtedness or obtain additional financing, given the uncertainty of prevailing market conditions from time to time. Such alternative measures may not be successful and
may not permit us to meet our scheduled debt service obligations. In such an event, we may be forced to file for protection under federal bankruptcy laws. If we are able to restructure or refinance our indebtedness or obtain additional financing, we
anticipate that the economic terms on which such indebtedness is restructured, refinanced or obtained will not be as favorable to us as our current indebtedness.

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

Our Notes mature on
November 15, 2011. As of March 31, 2011, the aggregate principal outstanding on our Notes is $82.5 million. We will not generate sufficient funds from our operations to pay off the aggregate principal outstanding on our Notes when due in
November 2011. Although we expect to refinance these Notes prior to November 2011, our failure to refinance these obligations that have not matured prior to March 31, 2011, has resulted in the inclusion of an explanatory going concern paragraph
in the audit report of our Independent Registered Certified Public Accounting Firm. 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
(ii) to obtain financing at unfavorable terms, and/or (iii) file for protection under bankruptcy laws. Each could reduce the cash flow available for operations and, therefore, have a negative effect on our results of operations.

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. We expect that any new financing would contain similar or more restrictive covenants and financial tests. 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. Additionally, there can be no assurance that we will be able to refinance our Notes
on terms that are as favorable. Consequently, the covenants in our future debt agreements may be even more restrictive than our current covenants. 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. It is likely that any refinancing of its existing indebtedness as described above will contain similar or more restrictive covenants.

There is a criminal investigation into pricing practices in the trade in which we operate and related class- action suits.

As more fully described in Item 3.  Legal Proceedings, on April 17, 2008, we 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 we nor any of our 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 40 purported class actions against domestic ocean carriers, including Horizon Lines, Sea Star Lines, Crowley and us. Additionally, on October 9, 2009, we 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



Page 12



---

##### Table of Contents

Puerto Rico domestic ocean shipping business. We are 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. It is possible that these proceedings may lead to a criminal conviction or settlement providing for the payment of substantial fines by us. It is also possible that the outcome of these proceedings could damage our reputation
and might impair our ability to conduct our business. Any conviction or potential settlement could have a substantial and material effect on our financial position, liquidity and cash flow. Settlements by our competitors that result in shipping
discounts could also have a substantial and material effect on pricing in the market that will adversely effect our business.

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.

Volatility in fuel prices could
adversely affect our profitability.

While we have 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 us. 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 us 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. Economic uncertainty caused by periodic economic
recessions in the United States and other countries, have a material adverse effect upon our operating results when such economic downturns occur. 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



Page 13



---

##### Table of Contents

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. We suffered volume decreases in the fourth quarter of 2010.

Due primarily to the overcapacity and intense competition in the Puerto Rico market during the late 1990s and early
2000s, we experienced significant financial losses and negative cash flow. Although we have had positive operating income since 2005, we cannot assure that we will continue to generate operating income and positive cash flow. We 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. Volume decreases in the fourth quarter 2010 may continue in the future and have a material adverse effect on the Company.

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.

Our operations are dependent on a limited fleet and special loading structures.

Our current liner operations depend on a limited number of 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 us. 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, we
cannot assure that we could locate suitable replacements, or if available, that such replacements could be obtained on suitable terms. We also could be adversely affected if unexpected maintenance or repairs are required for either of the custom
configured ramp systems that we use. Although our vessels are insured for loss, we do not maintain business interruption insurance and our vessel insurance might not be high enough to build replacement vessels. Accordingly, we cannot assure that the
loss of, damage to or required repair to any of our vessels or port facilities in the future would not have a material adverse effect on our cash flow.

A substantial part of our revenue is produced in a single market, which makes it susceptible to changes that could adversely affect our results and despite increased volume overall we lost market
share in that market throughout 2010.

The vast majority of our revenue is attributable to freight moving either to or from Puerto
Rico. In 2010, we experienced a consistent loss of market share in the Puerto Rico market, however, we made up for this loss by carrying more Dominican Republic freight. Our reliance on the Puerto Rico market makes us susceptible to a downturn in
the local economy, local economic and competitive factors, changes in government regulations and political changes that we cannot predict. Our operation is highly leveraged and a downturn in freight volume in the Puerto Rico trade lane would have a
material adverse effect on our cash flow. Additionally, at December 31, 2010, more than 10% of our trade accounts receivable was dependent upon funding from the Puerto Rico government.



Page 14



---

##### Table of Contents

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. We 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, our 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 our tonnage tax election or such tax may
adversely affect future results.

We have elected to be taxed according to the tonnage tax instead of the federal corporate income tax
on income from our 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 our future
results. We have been notified that the IRS will audit our 2009 tax year.

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.

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

In order to maintain our eligibility to own and operate vessels in compliance with the Jones Act, 75% of our outstanding capital
stock and voting power is required to be held by U.S. citizens. Our Certificate of Incorporation contains provisions limiting non-citizenship ownership of our capital stock and requiring non-citizens to divest the shares of capital stock that they
own in excess of these limits. However, we could lose our 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.



Page 15



---

##### Table of Contents

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.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

OFFICE FACILITIES

Trailer Bridge is
headquartered in Jacksonville, Florida, where it owns a 20,500 square foot office building adjacent to its truck operations center. This facility allows its Jacksonville personnel to be centralized in one location. 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 leases small sales and/or administrative office facilities in Charlotte, North Carolina, Chicago, Illinois, Cleveland, Ohio, Shrewsbury, New Jersey, Rockville Centre, New York, Atlanta,
Georgia and Santiago, Dominican Republic. 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 $1.95 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 new three-story



Page 16



---

##### Table of Contents

fixed 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, 2015, with renewals at the Companys option until October 23, 2035. 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.

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

Item 3. Legal Proceedings

On April 17, 2008, we 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. Our representatives have met with United States Justice Department attorneys and pledged our full and complete cooperation with the DOJ investigation. We have made document submissions to the DOJ in response to the
subpoena. To date, neither we nor any of our 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 40 purported class actions against domestic ocean carriers, including Horizon Lines, Sea Star Lines, Crowley Liner Services and us. The actions alleged that the defendants inflated prices and engaged in other allegedly anti-competitive conduct
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.

On April 30, 2010, in a non-final order, the Court granted our motion to be dismissed with prejudice as to the claims of the named plaintiffs
against us. This order will not become final and appealable until further order or judgment is entered by the Court. We intend to continue our vigorous defense of these actions, if necessary.

Horizon Lines, Crowley Liner Services, Sea Star Lines, LLC, Saltchuck Resources, an affiliate of Sea Star Lines, LLC, and their related companies entered into settlement agreements 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. All of these settlements received Preliminary Approval from the court in August, 2010, and
notices to the putative class members were mailed in September, 2010. The settling defendants have reported that enough potential claimants have opted-out of the



Page 17



---

##### Table of Contents

settlement class that the settling defendants have the option to terminate the settlement agreements. The Court has set a date of April 29, 2011 for the settling defendants to declare
whether they will terminate all or some of the settlement agreements. It is not clear what impact, if any, such a termination and subsequent class litigation may have on us, since we are not a party to any of the settlement agreements.

Even if the settlement agreements are not terminated, the opt-outs are likely to pursue claims against the settling defendants. It is not clear whether
an individual opt-out plaintiff would attempt to bring an action against us in such a proceeding or even whether they could do so in light of our dismissal with prejudice from the underlying MDL. Moreover, it is not clear what, if any, impact these
settlements, whether or not ultimately terminated or finally approved, will have on further prosecution of the MDL 1960 or other claims on us, or on the trade, in general.

On March 15, 2011, Horizon Lines, LLC plead guilty to a charge of violating federal antitrust laws with respect to the Puerto Rico trade lane in which we operate. Horizon Lines, LLC was sentenced to
pay a fine of $45 million over five years and was placed on criminal probation. It is unclear what, if any, impact the Horizon Lines, LLC plea will have on the civil actions discussed above, on us, or on the trade, in general.

On October 9, 2009, we 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. We have indicated to the Puerto Rican authorities that we will cooperate fully with this investigation and
have provided requested documents to such authorities.

We understand that on February 22, 2011, all currently named defendants in the
indirect purchaser action entered into a Memorandum of Understanding with the Commonwealth of Puerto Rico and attorneys representing a putative class of indirect purchasers to resolve all of the alleged claims of the Commonwealth of Puerto Rico and
the indirect purchasers related to ocean shipping services in the Puerto Rico trade lane. The exact terms of that agreement have not been reported. We are not a party to the indirect purchaser litigation, nor are we a party to the reported
Memorandum of Understanding. It is unclear what, if any, impact this Memorandum of Understanding will have on the future course of the investigation by the Puerto Rican 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, 2010, and 2009, costs were approximately $37,000 and $676,000, respectively. During the twelve month periods ended December 31, 2010, and 2009, costs were approximately $679,000 and $1,728,000,
respectively.

On October 15, 2009, we commenced legal action against our insurer for a judicial declaration that the
insurer owes and has breached its duty to defend us 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 was held in the Middle District of Florida, Jacksonville Division, and was captioned: Trailer Bridge, Inc. v. Illinois National Insurance
Company. On July 23, 2010 the Court denied the Companys motion and granted summary judgement in favor of the defendant. The Company appealed this decision to the Eleventh Circuit Court of Appeals on August 19, 2010. Oral argument has
been scheduled for the week of May 24, 2011, however, the appeals outcome cannot be predicted with certainty.

We are 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 us, it could have a material adverse effect on
our financial position and future operations.



Page 18



---

##### Table of Contents

We are involved in routine litigation and are subject to certain claims which arise in the normal course of
business, including employment discrimination claims, none of which, in the opinion of management, are expected to have a material adverse effect on our financial position or cash flows.

Item 4. Removed and Reserved



Page 19



---

##### Table of Contents

PART II

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

Our common stock trades on the NASDAQ Global Market, under the symbol TRBR.

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



|               |  |      |      |  |     |   |      | 
|-------------- |  | ---- | ---- |  | --- | - | ---- | 
|2010           |  | High |      |  | Low |  
|               |  |     
|First Quarter  |  | $    | 5.95 |  |     | $ | 4.58 | 
|Second Quarter |  | $    | 5.25 |  |     | $ | 2.93 | 
|Third Quarter  |  | $    | 3.60 |  |     | $ | 2.95 | 
|Fourth Quarter |  | $    | 3.39 |  |     | $ | 2.29 | 
|               |  |     
|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 | 

We have not paid dividends since our
inception and do not anticipate doing so in the foreseeable future. Certain of our loan documents prevent the payment of cash dividends under certain circumstances as described herein under Item 7  Liquidity and Capital Resources.

As of March 29, 2011, there were 83 stockholders of record.

The closing price for our common stock on March 29, 2011 was $3.75.

The following table
sets forth information about our equity compensation plans.

Equity Compensation Plan Information



|                                                            |  |                                                                                           |           |  |                                                                          |   |      |                                                                                                                                         |  |  |        | 
|----------------------------------------------------------- |  | ----------------------------------------------------------------------------------------- | --------- |  | ------------------------------------------------------------------------ | - | ---- | --------------------------------------------------------------------------------------------------------------------------------------- |  |  | ------ | 
|                                                            |  | (a)                                                                                       |           |  | (b)                                                                      |   |      | (c)                                                                                                                                     | 
|Plan Category                                               |  | Number of securities tobe 
issued upon exercise ofoutstanding options,warrants and rights |           |  | Weighted-averageexercise price
ofoutstanding options,warrants and rights |   |      | Number of securities 
remainingavailable for future issuance underequity compensation plans(excluding securities reflected incolumn (a) | 
|                                                            |  |                                                                                           |          
|Equity compensation plans appoved by securities holders     |  |                                                                                           | 1,485,223 |  |                                                                          | $ | 5.18 |                                                                                                                                         |  |  | 55,564 | 
|                                                            |  |                                                                                           |           |  |                                                                          |   |      |                                                                                                                                         |  |  |        | 
|                                                            |  |                                                                                           |          
|Equity compensation plans not appoved by securities holders |  |                                                                                           |          |  |                                                                          |   |     |                                                                                                                                         |  |  |       | 
|                                                            |  |                                                                                           |           |  |                                                                          |   |      |                                                                                                                                         |  |  |        | 
|Total                                                       |  |                                                                                           | 1,485,223 |  |                                                                          | $ | 5.18 |                                                                                                                                         |  |  | 55,564 | 
|                                                            |  |                                                                                           |           |  |                                                                          |   |      |                                                                                                                                         |  |  |        | 

Amendments to both the our Stock Incentive Plan and our Non-Employee Director Plan to increase the number of shares
authorized for issuance by 125,000 and 175,000, respectively, were approved at our 2010 Annual Meeting of stockholders.



Page 20



---

##### Table of Contents

|                                     |  |                                  |     |  |                            |   |      |                                                                                |  |  |                                                                                                         |  |  |   |         | 
|------------------------------------ |  | -------------------------------- | --- |  | -------------------------- | - | ---- | ------------------------------------------------------------------------------ |  |  | ------------------------------------------------------------------------------------------------------- |  |  | - | ------- | 
|                                     |  | Issuer Repurchases of Securities |    
|Period                               |  | Total Numberof
SharesPurchased   |     |  | AveragePrice PaidPer Share |   |      | Total Number ofShares 
Purchased asPart of PubliclyAnnounced Plans orPrograms* |  |  | Maximum Number 
(orApproximate $ Value) of Sharesthat May Yet Be Purchased 
Underthe Plans or Programs* | 
|October 1, 2010  October 31, 2010   |  |                                  | 100 |  |                            | $ | 3.35 |                                                                                |  |  | 100                                                                                                     |  |  | $ | 838,552 | 
|November 1, 2010  November 30, 2010 |  |                                  |    |  |                            |   |     |                                                                                |  |  |                                                                                                        |  |  |   | 838,552 | 
|December 1, 2010  December 31, 2010 |  |                                  |    |  |                            | $ |     |                                                                                |  |  |                                                                                                        |  |  | $ |        | 



|* | On December 29, 2009, the Board of Directors authorized the repurchase of up to $1.0 million of our common stock. Under this program, stock repurchases could be
made in the open market or through privately negotiated transactions beginning on December 30, 2009. The timing and actual number of shares repurchased depended on market conditions and other factors. The stock repurchase program expired on
December 30, 2010.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Item 6. Selected Financial Data

Not required for smaller reporting companies.



Page 21



---

##### 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 2010, the Company experienced a decline in operating income compared to 2009, primarily due to increased purchased transportation, fuel, and
operating and maintenance expenses as a result of higher variable costs associated with higher southbound cargo volumes and higher fuel prices.

RESULTS OF OPERATIONS

The following table sets
forth the indicated items as a percentage of net revenues for the years ended December 31, 2010, 2009 and 2008.

Operating
Statement  Margin Analysis

(% of Operating Revenues)



|                                                                                           |  |      |       |    |      |  |       |      |  |  |       |   
|------------------------------------------------------------------------------------------ |  | ---- | ----- | -- | ---- |  | ----- | ---- |  |  | ----- | --
|                                                                                           |  | 2010 |       |    | 2009 |  |       | 2008 | 
|                                                                                           |  |      |      
|Operating Revenues                                                                         |  |      | 100.0 | %  |      |  | 100.0 | %    |  |  | 100.0 | % 
|                                                                                           |  |      |      
|Salaries, wages, and benefits                                                              |  |      | 13.2  |    |      |  | 15.8  |      |  |  | 13.8  |   
|Purchased transportation and other rent                                                    |  |      | 25.9  |    |      |  | 22.3  |      |  |  | 25.2  |   
|Fuel                                                                                       |  |      | 15.1  |    |      |  | 12.9  |      |  |  | 21.4  |   
|Operating and maintenance (exclusive of depreciation & dry-docking shown separately below) |  |      | 24.0  |    |      |  | 21.6  |      |  |  | 19.7  |   
|Dry-docking                                                                                |  |      | 0.4   |    |      |  | 0.8   |      |  |  | 0.7   |   
|Taxes and licenses                                                                         |  |      | 0.5   |    |      |  | 0.5   |      |  |  | 0.4   |   
|Insurance and claims                                                                       |  |      | 2.7   |    |      |  | 2.7   |      |  |  | 2.4   |   
|Communications and utilities                                                               |  |      | 0.6   |    |      |  | 0.6   |      |  |  | 0.6   |   
|Depreciation and amortization                                                              |  |      | 5.2   |    |      |  | 5.4   |      |  |  | 4.6   |   
|Loss on sale of property & equipment                                                       |  |      |      |    |      |  |      |      |  |  | 0.2   |   
|Other operating expenses                                                                   |  |      | 5.9   |    |      |  | 6.3   |      |  |  | 5.8   |   
|                                                                                           |  |      |       |    |      |  |       |      |  |  |       |   
|Total Operating Expenses                                                                   |  |      | 93.5  |    |      |  | 88.9  |      |  |  | 94.8  |   
|                                                                                           |  |      |       |    |      |  |       |      |  |  |       |   
|Operating income                                                                           |  |      | 6.5   |    |      |  | 11.1  |      |  |  | 5.2   |   
|Net interest expense                                                                       |  |      | (8.4  | )  |      |  | (8.9  | )    |  |  | (7.6  | ) 
|Gain on debt extinguishment                                                                |  |      |      |    |      |  | 0.1   |      |  |  |      |   
|(Provision) benefit for income taxes                                                       |  |      | (0.1  | )  |      |  |      |      |  |  |      |   
|                                                                                           |  |      |       |    |      |  |       |      |  |  |       |   
|Net (loss) income                                                                          |  |      | (2.0  | )% |      |  | 2.3   | %    |  |  | (2.4  | )%
|                                                                                           |  |      |       |    |      |  |       |      |  |  |       |   



Page 22



---

##### Table of Contents

Year ended December 31, 2010, Compared to Year ended December 31, 2009

The Companys operating ratio, or operating expenses expressed as a percentage of revenues, increased from 88.9% in 2009 to 93.5% in 2010. 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 2009 to 2010:

Volume & Revenue Changes 2010 Compared to 2009



|                              |  |         |     |  
|----------------------------- |  | ------- | --- | -
|                              |  | Overall |    
|Volume Percent Change:        |  |         |     |  
|Total Equivalent Units        |  |         | 6.1 | %
|                              | 
|Revenue Change (in millions): |  |         |     |  
|Core Service Revenue          |  | $       | 2.2 |  
|Other Revenues                |  |         | 1.7 |  
|                              |  |         |     |  
|Total Revenue Change          |  | $       | 3.9 |  
|                              |  |         |     |  

The increase in core service revenue is primarily due to an increase in overall southbound cargo volumes. The increase in
other revenue is primarily due to increases in fuel surcharges partially offset by a decrease in charterhire revenue resulting from fewer vessels chartered in 2010 compared to 2009.

Vessel capacity utilization southbound was 96.5% during 2010, compared to 87.5% during 2009. This change was primarily due to increased southbound container and trailer and new auto volumes combined with
a decrease in the auto capacity of the ro/ro vessels. Vessel capacity utilization northbound was 26.9% during 2010, compared to 29.4% during 2009. This change was primarily due to decreased northbound container and trailer volumes.

The increase in other revenues is primarily attributable to an increase in fuel surcharge revenue during 2010, which increased to $17.6 million from
$14.0 million in 2009. 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 $0.8 million in 2010
compared to $0.7 million in 2009. Total charterhire revenue amounted to $3.1 million in 2010 and $5.6 million in 2009. 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 $1.9 million in 2010 compared to $1.8 million in 2009.

Operating Expenses

Operating expenses increased by $8.9 million, or 8.8%, from $101.6
million for 2009 to $110.5 million for 2010. This increase was due primarily to higher inland and marine variable costs due to higher southbound volumes and increases in the market price of fuel. This increase was partially offset by a decrease in
salaries and benefits of $2.5 million, or 13.9%, primarily due to reductions in force, less driver payroll as a result of a shift from company employed drivers to purchased transportation, reduction in healthcare costs, and reduction in incentive
bonuses. Rent and purchased transportation increased by $5.2 million or, 20.3%, primarily due to higher southbound cargo volumes combined with a reduction of company employed drivers resulting in increases in purchased truck miles and the fuel
related components of inland transportation. Fuel expenses increased $3.0 million, or 20.6%, due to increases in the market price of fuel. As noted above, the fuel surcharge revenue collected by the Company increased



Page 23



---

##### Table of Contents

$3.6 million from the prior year period. The category fuel expense does not include fuel related expenses associated with inland purchased transportation that also experienced an increase. The
Company estimates that its fuel expense associated with purchased transportation increased $1.9 million or 45.0%. Operating and maintenance expenses increased $3.7 million or 14.9% primarily due to increased stevedoring moves related to the overall
increase in southbound container and trailer and new auto volume. Dry-docking expenses decreased $0.5 million or 53.5% primarily due to fewer vessels that were dry-docked in 2010 as compared to prior year. As a result, the Companys operating
ratio of expenses as a percentage of revenue increased during 2010, to 93.5% as compared to 88.9% during 2009.

Interest Expense

Interest expense decreased slightly from $10.4 million in 2009 to $9.9 million in 2010. This decrease in interest expense was primarily
due to a decrease in the Companys Notes from repurchases made in the third and first quarters of 2009 and 2010, respectively. During the third quarter of 2009, the Company repurchased $1.5 million (face amount) of its Notes in open market
transactions. During the first quarter of 2010, the Company repurchased, in privately negotiated transactions, an additional $1.0 million (face amount) of its Notes, at par value. The aggregate principal outstanding on the Notes following both of
the Companys purchases was $82.5 million.

As a result of the factors described above, the Company reported a net loss of $2.3 million
or $0.19 per share, basic and diluted, for the year ended December 31, 2010, compared to net income of $2.6 million or $0.22 per share, basic and diluted, for the year ended December 31, 2009.

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 2007, the Company concluded 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 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. The Company made the election to be taxed under the tonnage tax regime on its 2007 federal tax return. This election applies to all
subsequent federal income tax returns unless the Company revokes this tax treatment. As a result, it was more likely than not that the Company would not be able to utilize its deferred tax asset. The remaining deferred tax asset at December 31,
2010 and 2009 of approximately $226,000 and $279,000, respectively, represents primarily the state portion of the Companys deferred tax asset. The Companys research of the tonnage tax suggests that states do not recognize the tonnage tax
and, therefore, NOLs related to state qualifying shipping income would not be suspended. The Company is accounting for this election as a change in status of its qualifying shipping activities. As a result of the change in status, federal
deferred tax assets and liabilities, including approximately $85 million of federal NOLs, which were previously offset by a valuation allowance, have been suspended. It cannot be assured that there will not be future efforts to repeal all, or
any portion of, the tonnage tax as it applies to our shipping activities. The federal tax expense under the tonnage tax method is estimated to be $29,000 and $28,000 for 2010 and 2009, respectively, which can not be offset by the Companys
existing NOLs under the tonnage tax regime. During the first quarter of 2011, the Company received notice that the IRS will be conducting an audit of its 2009 tax year. The Company intends to fully corporate with the IRS and all of its
requests during the audit.



Page 24



---

##### 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 revenue, improved from 94.8% in 2008 to 88.9% in 2009. This change
is more fully explained under the operating expenses caption set forth below.

Revenues

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



Page 25



---

##### 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 Notes in open market
transactions. The aggregate principal outstanding on the 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 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 2007, the Company concluded 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 (NOLs) and, therefore, results in a much larger cash outlay in comparison to the required payments associated with the tonnage tax regime. The Company made the election to be taxed under the
tonnage tax regime on its 2007 federal tax return. This election applies to all subsequent federal income tax returns unless the Company revokes this tax treatment. 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 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.

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 $8.9 million in 2010 compared to net cash provided by operating activities of $9.8 million in 2009. This
represented a decrease of $0.9 million, which resulted primarily from an increase in accounts receivable of $1.4 million as a result of an increase in revenue combined with lower write-offs and recoveries in 2010. This decrease in cash provided by
operating



Page 26



---

##### Table of Contents

activities was offset by an increase in accounts payable of $6.5 million as a result of higher operating expenses, increase in unearned revenue of $0.6 million, decrease in prepaid and other
current assets of $0.6 million, and an increase in non-cash stock compensation expense of $0.5 million. Net cash used in investing activities was $4.3 million in 2010 compared to net cash used in investing activities in 2009 of $1.8 million. This
$2.5 million increase from 2009 was mainly due to capital expenditures on the Companys San Juan, Puerto Rico terminal in 2010 combined with a deposit of $0.4 million made into the Title XI Bonds reserve fund in the first three months of 2010.
Net cash used in financing activities was $4.1 million in 2010 compared to $4.2 million in 2009 representing a decrease of $0.1 million. This change was primarily the result of a retirement of $1.0 million of the Companys Notes in the first
quarter of 2010 as compared to the retirement of $1.5 million of these Notes in the third quarter of 2009 offset by reissuance of approximately $0.3 million in treasury stock to the Companys CEO in the third quarter of 2009. At
December 31, 2010, the Company had cash of $11.5 million and working capital deficit of $71.8 million, primarily due to classification of the Companys $82.5 million Notes due in November 2011 as current in the Companys
December 31, 2010 balance sheet. The Company also had $4.6 million in a reserve fund for its 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 the Title XI of the Merchant Marine Act of 1936, as amended (collectively, the Title XI Bonds).

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 was
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 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 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.

In the second quarter of 2010, the Company committed to capital expenditures of approximately $5.5 million for modifications and improvements at its San
Juan, Puerto Rico terminal. As of December 31, 2010 approximately $3.8 million of this amount has been spent.

Every five years the
Companys vessels are required to go through regulatory dry-docking. The Company accounts 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 began dry-docking one of its ro/ro vessels at the end of the fourth quarter of 2010 and estimates its dry-docking costs to be expensed to be approximately $7.2 million for two ro/ro vessels and $0.5 million for one
TBC. The majority of the estimated $7.2 million expense related to the dry-docking of the two ro/ro vessels will occur in the first quarter of 2011 and is expected to result in a net loss for the Company in that period. As of December 31, 2010,
approximately $0.4 million of the estimated $7.2 million has been expensed.

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



Page 27



---

##### Table of Contents

December 31, 2010, 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, 2010, the Company had $7.1 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 on which the ability to draw expires April 2012. The term loan provides for interest equal to the prime rate and principal payments over a 72 month period through December 2014. At December 31, 2010, approximately $5.8 million was drawn
on this loan to fund previous equipment purchases. This term loan is collateralized by eligible equipment with a carrying value of $14.4 million at December 31, 2010.

The Companys $82.5 million Notes mature on November 15, 2011. Interest on the Notes is payable semi-annually on each May 15 and November 15. 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 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.

During the third quarter of 2009, the Company repurchased, with cash, $1.5 million (face amount) of its Notes in open market transactions. For the period ended December 31, 2009, the repurchase of
these Notes resulted in a gain on extinguishment of debt of $132,500. During the first quarter of 2010, the Company completed its previously announced purchase, in privately negotiated transactions, of an additional $1.0 million (face amount) of
these Notes, at par value. The Notes have an outstanding balance of $82.5 million at December 31, 2010.

The Companys available
liquidity plus the additional cash expected to be generated by operations will not be sufficient, without additional financing, to pay the $82.5 million Notes which become due in November 2011. While the Companys failure to refinance these
obligations that have not matured prior to March 31, 2011, will result in the inclusion of an explanatory going concern paragraph in the audit report of our Independent Registered Certified Public Accounting Firm for the fiscal year ended
December 31, 2010, the Company expects to refinance these Notes prior to November 2011. The Company is actively working with two lenders on a combined refinancing to redeem the Notes and concurrently refinance other indebtedness of the Company.
The Company will also incur significant expenses in completing the refinancing. Should such a refinancing occur in the second quarter of 2011, the Company will expense $1.2 million and $2.5 million in unamortized debt issuance costs related to
the Notes and other refinanced debt as well as prepayment penalties, respectively. The refinancing is expected to consist solely of debt, to bear interest at a variable rate, in part, and at a fixed rate, in part, to have a term of not less than
five years, and to be secured by substantially all of the Companys revenue generating assets. Although a portion of the new debt is expected to bear interest based on a variable interest rate, based on current interest rates, the
Companys blended interest rate with respect to the new debt is expected to be approximately 10.25%, as compared to a blended interest rate of approximately 8.55% under its current debt facilities. Should the expected refinancing not be
consummated, the Company would need to renew its refinancing efforts with its financial advisor. Such refinancing could involve new lenders and/or existing lenders and might involve the private or public lending market. The Company believes the
collateral securing the Notes, when combined with additional collateral it has to offer or unsecured borrowings will be sufficient to permit such a refinancing. The interest rate the



Page 28



---

##### Table of Contents

Company pays on its overall debt may be even higher under such refinancing and the Company could incur significant additional expenses in completing such a transaction. The existing Notes are
secured by a substantial portion of the Companys revenue generating assets and failure to refinance the debt could impair the Companys ability to use such assets. The Company can provide no assurance that it will be able to refinance the
Notes on favorable terms or at all. In the event the Company is not able to refinance the debt, the Companys finances and ability to operate would be severely impaired.

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, 2010, was $14.9 million. The
Company is required to make deposits based on adjusted earnings of the Company. During 2009, the Company made no deposits into a reserve fund that secures the Title XI Bonds. The Company made a deposit of $0.4 million into this fund during the first
quarter of 2010 based upon its 2009 net income. As of December 31, 2010, the balance of this reserve fund was approximately $4.6 million. If the Company retired this debt prior to the maturity date the Company would be subject to certain
prepayment penalties as defined in the agreement. Based on the Companys financial results for 2010, no deposit will be required in 2011.

As of December 31, 2010, the Company is restricted from performing certain financial activities described below due to certain leverage ratios under
its Title XI Bonds. The provisions of the Title XI Bond debt documents provide that, in the event the company does not maintain certain leverage ratios, 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, 2010, the Company was in compliance with such
restrictions.

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.

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements as of December 31, 2010.



Page 29



---

##### Table of Contents

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. 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 our customers. These amounts are computed daily and included in Operating Revenue.

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

Repairs and Maintenance. The Company expenses repairs and maintenance as incurred. Every five years the Companys vessels are required to go through regulatory dry-docking. The Company
elected, in a prior year, to account for its dry-docking costs using the expense-as-incurred method as opposed to the defer-and-amortize method predominantly used by the Companys industry peer group. The Company elected the expense-as-incurred
method for accounting for these required regulatory dry-docking costs. Using the expense-as-incurred method, the Company recorded dry-docking expenses of $445,737, $958,491, and $972,113, in the years ended December 31, 2010, 2009 and 2008,
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 2008, 2009 or 2010.



Page 30



---

##### Table of Contents

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 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 2010 under the tonnage tax method is estimated to be approximately $29,000. As of December 31, 2010 and 2009, the remaining deferred tax asset of approximately $226,000 and $279,000, respectively, 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.

ASC 740-10, Accounting for Uncertainty in 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.

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, 2010 and 2009. 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. Filed
federal tax returns for the years of 2007, 2008 and 2009 remain subject to examination by the IRS. During the first quarter of 2011, the Company received notice that the IRS will be conducting an audit of its 2009 tax year. The Company intends to
fully cooperate with the IRS and all of its requests during the audit. The Company is not currently involved in any state income tax examination.



Page 31



---

##### Table of Contents

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 40 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 January 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update
(ASU) 2010-06, Improving Disclosures about Fair Value Measurements (ASU 2010-06) which amends ASC 820 to add new requirements for disclosures about transfers into and out of Levels 1 and 2 and separate disclosures
about purchases, sales, issuances, and settlements relating to Level 3 measurements. ASU 2010-06 also clarifies existing fair value disclosures about level of disaggregation and about inputs and valuation techniques used to measure fair value.
Further, ASU 2010-06 amends guidance on employers disclosures about postretirement benefit plan assets under ASC 715, Compensation  Retirement Benefits to require that disclosures be provided by classes of assets instead of by
major categories of assets. ASU 2010-06 is effective for the first reporting period beginning after December 15, 2009, except for the requirement to provide the Level 3 activity of purchases, sales, issuance, and settlements on a gross basis,
which will be effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The adoption of this standard had no material impact on the Companys financial statements and the Company
expects no material impact for the requirement effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years.

In February 2010, the FASB issued ASU 2010-09, Amendments to Certain Recognition and Disclosure Requirements, (ASU 2010-09) which amends ASC 855, Subsequent Events, to address
certain implementation issues related to an entitys requirement to perform and disclose subsequent events procedures. ASU 2010-09 requires SEC filers to evaluate subsequent events through the date the financial statements are issued and
exempts SEC filers from disclosing the date through which subsequent events have been evaluated. The ASU was effective immediately upon issuance. The adoption of ASU 2010-09 did not have a material impact on the Companys financial statements.

In October 2009, the FASB issued ASU No. 2009-13, Multiple  Deliverable Revenue Arrangements, (ASU 2009-13).
ASU 2009-13 amends existing revenue recognition accounting pronouncements that are currently within the scope of ASC Subtopic 605-25, Multiple  Element Arrangements. ASU 2009-13 provides accounting principles and application guidance on
whether multiple deliverables exist, how the arrangement should be separated and the consideration allocated. This guidance eliminates the requirement to establish the fair value of undelivered products and services and also eliminates the residual
method of allocating arrangement consideration. The new guidance provides for separate revenue recognition based upon managements estimate of the selling price for an undelivered item when there is no other means to determine the fair value of
that undelivered item. Under the previous guidance, if the fair value of all of the elements in the arrangement was not determinable, then revenue was deferred until all of the items were delivered or fair value was determined. This new approach is
effective for fiscal years beginning on or after June 15, 2010. Entities can elect to apply ASU 2009-13 (i) prospectively to new or materially modified arrangements after its effective date or (ii) retrospectively for all periods
presented. The Company is currently evaluating the impact that the adoption of ASU 2009-13 will have on the Companys financial statements.

In July 2010, the FASB issued ASU 2010-20, Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses (ASU 2010-20). ASU 2010-20 improves
disclosures about the credit quality of an entitys financing receivables and related allowance for credit losses by



Page 32



---

##### Table of Contents

facilitating evaluation of the nature of credit risk inherent in an entitys portfolio of financing receivables, how that risk is analyzed and assessed in arriving at the allowance for
credit losses and the changes and reasons for those changes in the allowance for credit losses. A financing receivable is defined as a contractual right to receive money on demand or on fixed or determinable dates that is recognized as an asset in
the entitys statement of financial position including loans, trade accounts receivable, notes receivable, credit cards receivables and lease receivables, except for operating leases. Short term trade receivables and receivables measured at
fair value or lower of cost or fair value are excluded. Further, the standard defines two levels of disaggregation for disclosure purposes: portfolio segment and class of financing receivables. The disclosures relating to disaggregated investment
balances, allowance for credit losses, nonaccrual status, credit quality indicators, credit risk factors and impairment of financing receivables are effective for interim and annual periods ending on or after December 15, 2010. The disclosures
about activity that occurs during a reporting period are effective for interim and annual reporting periods beginning on or after December 15, 2011. The adoption of this standard had no material impact on the Companys financial
statements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Not required for smaller reporting companies.



Page 33



---

##### Table of Contents

Table of Contents

Item 8. Financial Statements and Supplementary Data

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



|                                                                                                              |  |      |    | 
|------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                              |  | Page |   
|Report of Independent Registered Certified Public Accounting Firm                                             |  |      | 35 | 
|Balance Sheets as of December 31, 2010 and 2009                                                               |  |      | 36 | 
|Statements of Operations for the years ended December 31, 2010, 2009 and 2008                                 |  |      | 37 | 
|Statements of Changes in Stockholders (Deficit) Equity for the years ended December 
31, 2010, 2009 and 2008 |  |      | 38 | 
|Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008                                 |  |      | 39 | 
|Notes to Financial Statements                                                                                 |  |      | 40 | 
|Schedule II  Valuation and Qualifying Accounts                                                               |  |      | 57 | 



Page 34



---

##### 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, 2010 and 2009 and the related statements of operations,
changes in stockholders (deficit) equity, and cash flows for each of the three years in the period ended December 31, 2010. 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, 2010 and 2009, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2010, 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.

The accompanying financial
statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has a significant working capital deficit resulting from the current maturities of long term
debt that raise substantial doubt about its ability to continue as a going concern. Managements plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

/s/ BDO USA, LLP

Miami, Florida

March 31, 2011



Page 35



---

##### Table of Contents

TRAILER BRIDGE, INC.

BALANCE SHEETS

DECEMBER 31,



|                                                                                                                                                                                              |  |      |             |   |      |   |             |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                                                                                                                                                              |  | 2010 |             |   | 2009 |  
|ASSETS                                                                                                                                                                                        |  |      |             |   |      |   |             |  
|Current Assets:                                                                                                                                                                               |  |      |             |   |      |   |             |  
|Cash and cash equivalents                                                                                                                                                                     |  | $    | 11,481,965  |   |      | $ | 10,987,379  |  
|Trade receivables, less allowance for doubtful accounts of $1,065,955 and $441,985                                                                                                            |  |      | 13,022,057  |   |      |   | 12,814,741  |  
|Prepaid and other current assets                                                                                                                                                              |  |      | 2,397,948   |   |      |   | 2,444,337   |  
|Deferred income taxes, net                                                                                                                                                                    |  |      | 225,645     |   |      |   | 278,856     |  
|                                                                                                                                                                                              |  |      |             |   |      |   |             |  
|Total current assets                                                                                                                                                                          |  |      | 27,127,615  |   |      |   | 26,525,313  |  
|                                                                                                                                                                                              |  |     
|Property and equipment, net                                                                                                                                                                   |  |      | 82,631,050  |   |      |   | 84,891,922  |  
|Reserve fund for long-term debt                                                                                                                                                               |  |      | 4,638,215   |   |      |   | 4,237,385   |  
|Other assets                                                                                                                                                                                  |  |      | 2,004,426   |   |      |   | 2,862,911   |  
|                                                                                                                                                                                              |  |      |             |   |      |   |             |  
|TOTAL ASSETS                                                                                                                                                                                  |  | $    | 116,401,306 |   |      | $ | 118,517,531 |  
|                                                                                                                                                                                              |  |      |             |   |      |   |             |  
|                                                                                                                                                                                              |  |     
|LIABILITIES AND STOCKHOLDERS (DEFICIT) EQUITY                                                                                                                                                |  |      |             |   |      |   |             |  
|Current Liabilities:                                                                                                                                                                          |  |      |             |   |      |   |             |  
|Accounts payable                                                                                                                                                                              |  | $    | 7,411,181   |   |      | $ | 3,088,124   |  
|Accrued liabilities                                                                                                                                                                           |  |      | 4,725,030   |   |      |   | 6,458,760   |  
|Unearned revenue                                                                                                                                                                              |  |      | 1,410,963   |   |      |   | 611,147     |  
|Current portion of long-term debt                                                                                                                                                             |  |      | 85,374,700  |   |      |   | 3,874,700   |  
|                                                                                                                                                                                              |  |      |             |   |      |   |             |  
|Total current liabilities                                                                                                                                                                     |  |      | 98,921,874  |   |      |   | 14,032,731  |  
|                                                                                                                                                                                              |  |     
|Other accrued liabilities                                                                                                                                                                     |  |      |            |   |      |   | 55,556      |  
|Long-term debt, less current portion                                                                                                                                                          |  |      | 17,795,827  |   |      |   | 103,170,528 |  
|                                                                                                                                                                                              |  |      |             |   |      |   |             |  
|TOTAL LIABILITIES                                                                                                                                                                             |  |      | 116,717,701 |   |      |   | 117,258,815 |  
|                                                                                                                                                                                              |  |      |             |   |      |   |             |  
|                                                                                                                                                                                              |  |     
|Commitments and Contingencies                                                                                                                                                                 |  |      |             |   |      |   |             |  
|                                                                                                                                                                                              |  |     
|Stockholders (Deficit) Equity:                                                                                                                                                               |  |      |             |   |      |   |             |  
|Preferred stock, $.01 par value, 1,000,000, shares authorized; no shares issued or outstanding                                                                                                |  |      |            |   |      |   |            |  
|Common stock, $.01 par value, 20,000,000 shares authorized; 12,102,587 and 12,031,707 shares issued; 12,016,681 and 11,992,534
shares outstanding at December 31, 2010 and 2009, respectively |  |      | 121,026     |   |      |   | 120,317     |  
|Treasury stock, at cost, 85,906 and 39,173 shares at December 31, 2010 and 2009, respectively                                                                                                 |  |      | (318,140    | ) |      |   | (156,692    | )
|Additional paid-in capital                                                                                                                                                                    |  |      | 54,613,643  |   |      |   | 53,711,081  |  
|Capital deficit                                                                                                                                                                               |  |      | (54,732,924 | ) |      |   | (52,415,990 | )
|                                                                                                                                                                                              |  |      |             |   |      |   |             |  
|TOTAL STOCKHOLDERS (DEFICIT) EQUITY                                                                                                                                                          |  |      | (316,395    | ) |      |   | 1,258,716   |  
|                                                                                                                                                                                              |  |      |             |   |      |   |             |  
|TOTAL LIABILITIES AND STOCKHOLDERS (DEFICIT) EQUITY                                                                                                                                          |  | $    | 116,401,306 |   |      | $ | 118,517,531 |  
|                                                                                                                                                                                              |  |      |             |   |      |   |             |  

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



Page 36



---

##### Table of Contents

TRAILER BRIDGE, INC.

STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER
31,



|                                                                                           |  |      |             |   |      |   |             |      |  |   |             |  
|------------------------------------------------------------------------------------------ |  | ---- | ----------- | - | ---- | - | ----------- | ---- |  | - | ----------- | -
|                                                                                           |  | 2010 |             |   | 2009 |   |             | 2008 | 
|OPERATING REVENUES                                                                         |  | $    | 118,185,628 |   |      | $ | 114,302,750 |      |  | $ | 133,029,672 |  
|OPERATING EXPENSES:                                                                        |  |      |             |   |      |   |             |      |  |   |             |  
|Salaries, wages, and benefits                                                              |  |      | 15,574,135  |   |      |   | 18,078,564  |      |  |   | 18,345,791  |  
|Purchased transportation and other rent                                                    |  |      | 30,642,330  |   |      |   | 25,464,549  |      |  |   | 33,582,188  |  
|Fuel                                                                                       |  |      | 17,796,649  |   |      |   | 14,762,470  |      |  |   | 28,510,000  |  
|Operating and maintenance (exclusive of depreciation & dry-docking shown separately below) |  |      | 28,352,075  |   |      |   | 24,675,616  |      |  |   | 26,174,043  |  
|Dry-docking                                                                                |  |      | 445,737     |   |      |   | 958,491     |      |  |   | 972,113     |  
|Taxes and licenses                                                                         |  |      | 645,534     |   |      |   | 616,143     |      |  |   | 565,470     |  
|Insurance and claims                                                                       |  |      | 3,150,812   |   |      |   | 3,122,047   |      |  |   | 3,221,112   |  
|Communications and utilities                                                               |  |      | 754,372     |   |      |   | 689,965     |      |  |   | 759,589     |  
|Depreciation and amortization                                                              |  |      | 6,203,333   |   |      |   | 6,222,958   |      |  |   | 6,160,384   |  
|Loss on sale of property & equipment                                                       |  |      | 25,598      |   |      |   | 33,144      |      |  |   | 232,397     |  
|Other operating expenses                                                                   |  |      | 6,929,439   |   |      |   | 6,948,168   |      |  |   | 7,546,744   |  
|                                                                                           |  |      |             |   |      |   |             |      |  |   |             |  
|                                                                                           |  |      | 110,520,014 |   |      |   | 101,572,115 |      |  |   | 126,069,831 |  
|                                                                                           |  |      |             |   |      |   |             |      |  |   |             |  
|OPERATING INCOME                                                                           |  |      | 7,665,614   |   |      |   | 12,730,635  |      |  |   | 6,959,841   |  
|                                                                                           |  |      |            
|NONOPERATING (EXPENSE) INCOME:                                                             |  |      |             |   |      |   |             |      |  |   |             |  
|Interest expense                                                                           |  |      | (9,944,981  | ) |      |   | (10,388,060 | )    |  |   | (10,354,015 | )
|Gain on debt extinguishment                                                                |  |      |            |   |      |   | 132,500     |      |  |   |            |  
|Interest income                                                                            |  |      | 44,714      |   |      |   | 129,405     |      |  |   | 164,479     |  
|                                                                                           |  |      |             |   |      |   |             |      |  |   |             |  
|                                                                                           |  |      |            
|(LOSS) INCOME BEFORE (PROVISION) BENEFIT FOR INCOME TAXES                                  |  |      | (2,234,653  | ) |      |   | 2,604,480   |      |  |   | (3,229,695  | )
|                                                                                           |  |      |            
|(PROVISION) BENEFIT FOR INCOME TAXES                                                       |  |      | (82,281     | ) |      |   | 1,396       |      |  |   | (9,046      | )
|                                                                                           |  |      |             |   |      |   |             |      |  |   |             |  
|                                                                                           |  |      |            
|NET (LOSS) INCOME                                                                          |  | $    | (2,316,934  | ) |      | $ | 2,605,876   |      |  | $ | (3,238,741  | )
|                                                                                           |  |      |             |   |      |   |             |      |  |   |             |  
|                                                                                           |  |      |            
|PER SHARE AMOUNTS:                                                                         |  |      |             |   |      |   |             |      |  |   |             |  
|                                                                                           |  |      |            
|NET (LOSS) INCOME PER SHARE BASIC                                                          |  | $    | (0.19       | ) |      | $ | 0.22        |      |  | $ | (0.27       | )
|                                                                                           |  |      |             |   |      |   |             |      |  |   |             |  
|NET (LOSS) INCOME PER SHARE DILUTED                                                        |  | $    | (0.19       | ) |      | $ | 0.22        |      |  | $ | (0.27       | )
|                                                                                           |  |      |             |   |      |   |             |      |  |   |             |  
|                                                                                           |  |      |            
|BASIC WEIGHTED AVERAGE SHARES OUTSTANDING                                                  |  |      | 12,025,475  |   |      |   | 11,899,149  |      |  |   | 11,929,672  |  
|                                                                                           |  |      |             |   |      |   |             |      |  |   |             |  
|DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING                                                |  |      | 12,025,475  |   |      |   | 12,034,922  |      |  |   | 11,929,672  |  
|                                                                                           |  |      |             |   |      |   |             |      |  |   |             |  

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



Page 37



---

##### Table of Contents

TRAILER BRIDGE, INC.

STATEMENT OF CHANGES IN STOCKHOLDERS (DEFICIT) EQUITY



|                                  |  |              |            |  |                |   |         |                           |  |  |                 |   |  |       |          |   |  |   |            |   |  |   |             |   |  |   |            |  
|--------------------------------- |  | ------------ | ---------- |  | -------------- | - | ------- | ------------------------- |  |  | --------------- | - |  | ----- | -------- | - |  | - | ---------- | - |  | - | ----------- | - |  | - | ---------- | -
|                                  |  | Common Stock |            |  | Treasury Stock |   |         | AdditionalPaid-In Capital |  |  | Capital Deficit |   |  | Total |         
|                                  |  | Shares       |            |  | Amount         |   |         | Shares                    |  |  | Amount          |   |  |       |          |   |  |   |            |   | 
|                                  |  |              |            |  |                |   |        
|Balance January 1, 2008           |  |              | 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  |  
|                                  |  |              |            |  |                |   |         |                           |  |  |                 |   |  |       |          |   |  |   |            |   |  |   |             |   |  |   |            |  
|                                  |  |              |            |  |                |   |        
|Net Loss                          |  |              |           |  |                |   |        |                           |  |  |                |   |  |       |         |   |  |   |           |   |  |   | (2,316,934  | ) |  |   | (2,316,934 | )
|Compensation  Stock Options      |  |              |           |  |                |   |        |                           |  |  |                |   |  |       |         |   |  |   | 904,285    |   |  |   |            |   |  |   | 904,285    |  
|Options Exercised                 |  |              | 70,880     |  |                |   | 709     |                           |  |  |                |   |  |       |         |   |  |   | (1,723     | ) |  |   |            |   |  |   | (1,014     | )
|Purchase of Treasury Stock        |  |              |           |  |                |   |        |                           |  |  | (46,733         | ) |  |       | (161,448 | ) |  |   |           |   |  |   |            |   |  |   | (161,448   | )
|                                  |  |              |            |  |                |   |         |                           |  |  |                 |   |  |       |          |   |  |   |            |   |  |   |             |   |  |   |            |  
|                                  |  |              |            |  |                |   |        
|Balance December 31, 2010         |  |              | 12,102,587 |  |                | $ | 121,026 |                           |  |  | (85,906         | ) |  | $     | (318,140 | ) |  | $ | 54,613,643 |   |  | $ | (54,732,924 | ) |  | $ | (316,395   | )
|                                  |  |              |            |  |                |   |         |                           |  |  |                 |   |  |       |          |   |  |   |            |   |  |   |             |   |  |   |            |  

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



Page 38



---

##### Table of Contents

TRAILER BRIDGE, INC.

STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER
31,



|                                                                                         |  |      |            |   |      |   |            |      |  |   |            |  
|---------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                                                         |  | 2010 |            |   | 2009 |   |            | 2008 | 
|Operating activities:                                                                    |  |      |            |   |      |   |            |      |  |   |            |  
|Net (loss) income                                                                        |  | $    | (2,316,934 | ) |      | $ | 2,605,876  |      |  | $ | (3,238,741 | )
|Adjustments to reconcile net (loss) income to net cash provided by operating activities: |  |      |            |   |      |   |            |      |  |   |            |  
|Depreciation and amortization                                                            |  |      | 6,203,333  |   |      |   | 6,222,958  |      |  |   | 6,160,384  |  
|Amortization of loan costs                                                               |  |      | 911,774    |   |      |   | 866,930    |      |  |   | 745,439    |  
|Non-cash stock compensation expense                                                      |  |      | 904,285    |   |      |   | 398,867    |      |  |   | 399,600    |  
|Provision for doubtful accounts                                                          |  |      | 1,198,526  |   |      |   | 1,038,210  |      |  |   | 913,009    |  
|Deferred tax expense (benefit)                                                           |  |      | 53,211     |   |      |   | (29,396    | )    |  |   | (93,776    | )
|Loss on sale of property and equipment                                                   |  |      | 25,598     |   |      |   | 33,144     |      |  |   | 232,397    |  
|Gain on extinguishment of debt                                                           |  |      |           |   |      |   | (132,500   | )    |  |   |           |  
|(Increase) decrease in:                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Trade receivables                                                                        |  |      | (1,405,843 | ) |      |   | 2,965,307  |      |  |   | (1,936,734 | )
|Prepaid and other current assets                                                         |  |      | 46,388     |   |      |   | (560,396   | )    |  |   | 835,580    |  
|Other assets                                                                             |  |      | (92,262    | ) |      |   | (131,488   | )    |  |   | (38,579    | )
|Increase (decrease) in:                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Accounts payable                                                                         |  |      | 4,323,058  |   |      |   | (2,171,231 | )    |  |   | (1,698,434 | )
|Accrued liabilities                                                                      |  |      | (1,772,837 | ) |      |   | (1,552,880 | )    |  |   | 2,165,174  |  
|Unearned revenue                                                                         |  |      | 799,816    |   |      |   | 225,688    |      |  |   | (61,316    | )
|                                                                                         |  |      |            |   |      |   |            |      |  |   |            |  
|                                                                                         |  |      |           
|Net cash provided by operating activities                                                |  |      | 8,878,113  |   |      |   | 9,779,089  |      |  |   | 4,384,003  |  
|                                                                                         |  |      |            |   |      |   |            |      |  |   |            |  
|                                                                                         |  |      |           
|Investing activities:                                                                    |  |      |            |   |      |   |            |      |  |   |            |  
|Purchases of property and equipment                                                      |  |      | (4,057,179 | ) |      |   | (1,883,951 | )    |  |   | (2,094,797 | )
|Proceeds from sale of property and equipment                                             |  |      | 113,262    |   |      |   | 64,890     |      |  |   | 181,761    |  
|Additions to other assets                                                                |  |      | (385,999   | ) |      |   |           |      |  |   | (124,058   | )
|                                                                                         |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash used in investing activities                                                    |  |      | (4,329,916 | ) |      |   | (1,819,061 | )    |  |   | (2,037,094 | )
|                                                                                         |  |      |            |   |      |   |            |      |  |   |            |  
|                                                                                         |  |      |           
|Financing activities:                                                                    |  |      |            |   |      |   |            |      |  |   |            |  
|Cash proceeds from note payable                                                          |  |      |           |   |      |   |           |      |  |   | 5,433,030  |  
|Principal payments on notes payable                                                      |  |      | (3,891,149 | ) |      |   | (4,284,599 | )    |  |   | (2,080,803 | )
|Exercise of stock options                                                                |  |      | (1,014     | ) |      |   | (154,333   | )    |  |   | (15,388    | )
|Purchase of treasury stock                                                               |  |      | (161,448   | ) |      |   |           |      |  |   | (400,000   | )
|Reissuance of treasury stock to CEO                                                      |  |      |           |   |      |   | 250,000    |      |  |   |           |  
|                                                                                         |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash (used in) provided by financing activities                                      |  |      | (4,053,611 | ) |      |   | (4,188,932 | )    |  |   | 2,936,839  |  
|                                                                                         |  |      |            |   |      |   |            |      |  |   |            |  
|                                                                                         |  |      |           
|Net increase in cash and cash equivalents                                                |  |      | 494,586    |   |      |   | 3,771,096  |      |  |   | 5,283,748  |  
|Cash and cash equivalents, beginning of the period                                       |  |      | 10,987,379 |   |      |   | 7,216,283  |      |  |   | 1,932,535  |  
|                                                                                         |  |      |            |   |      |   |            |      |  |   |            |  
|                                                                                         |  |      |           
|Cash and cash equivalents, end of the period                                             |  | $    | 11,481,965 |   |      | $ | 10,987,379 |      |  | $ | 7,216,283  |  
|                                                                                         |  |      |            |   |      |   |            |      |  |   |            |  
|                                                                                         |  |      |           
|Supplemental cash flow information:                                                      |  |      |            |   |      |   |            |      |  |   |            |  
|                                                                                         |  |      |           
|                                                                                         |  | 2010 |            |   | 2009 |   |            | 2008 | 
|Cash paid for interest                                                                   |  | $    | 9,982,213  |   |      | $ | 10,438,563 |      |  | $ | 10,363,998 |  
|                                                                                         |  |      |            |   |      |   |            |      |  |   |            |  
|Cash paid for income taxes                                                               |  | $    | 34,300     |   |      | $ | 21,670     |      |  | $ | 85,901     |  
|                                                                                         |  |      |            |   |      |   |            |      |  |   |            |  

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



Page 39



---

##### 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. At times, such amounts on deposit may be in excess of the F.D.I.C. insurance limits. All of the Companys non-interest bearing cash balances were fully insured at December 31, 2010
due to a temporary federal program in effect from December 31, 2010 through December 31, 2012. Under the program, there is no limit to the amount of insurance for eligible accounts. Beginning in 2013, insurance coverage will revert to
$250,000 per depositor at each financial institution, and our non-interest bearing cash balances may again exceed federally insured 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.



Page 40



---

##### 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 $17.6 million, $14.0 million, and $26.1 million for the years ended
December 31, 2010, 2009 and 2008, respectively.

Income Taxes  ASC 740-10 Accounting for Uncertainty in 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, 2010, 2009 and 2008:



|                                                         |  |                              |            |  |      |  |            |      |  |  |            | 
|-------------------------------------------------------- |  | ---------------------------- | ---------- |  | ---- |  | ---------- | ---- |  |  | ---------- | 
|                                                         |  | For years ended December 31, |           
|                                                         |  | 2010                         |            |  | 2009 |  |            | 2008 | 
|Basic weighted average common shares outstanding         |  |                              | 12,025,475 |  |      |  | 11,899,149 |      |  |  | 11,929,672 | 
|                                                         |  |                              |           
|Effect of dilutive securities:                           |  |                              |            |  |      |  |            |      |  |  |            | 
|Common stock issuable upon the exercise of stock options |  |                              |           |  |      |  | 135,773    |      |  |  |           | 
|                                                         |  |                              |            |  |      |  |            |      |  |  |            | 
|                                                         |  |                              |           
|Dilutive weighted average common shares outstanding      |  |                              | 12,025,475 |  |      |  | 12,034,922 |      |  |  | 11,929,672 | 
|                                                         |  |                              |            |  |      |  |            |      |  |  |            | 

Options to purchase 1,485,223, 1,171,664, and 383,564 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, 2010, 2009 and 2008, respectively.



Page 41



---

##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



Stock-Based Compensation  The Company accounts for stock-based compensation in accordance with ASC
718-10 Compensation  Stock Compensation For the years ended December 31, 2010, 2009, and 2008 compensation expense in the amounts of $904,285, $398,867, and $399,600, 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, 2010, 2009, and 2008 were $8,853, $38,955, and $27,530, 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 January 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2010-06, Improving Disclosures about Fair Value Measurements (ASU
2010-06) which amends ASC 820 to add new requirements for disclosures about transfers into and out of Levels 1 and 2 and separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements. ASU 2010-06 also
clarifies existing fair value disclosures about level of disaggregation and about inputs and valuation techniques used to measure fair value. Further, ASU 2010-06 amends guidance on employers disclosures about postretirement benefit plan
assets under ASC 715, Compensation  Retirement Benefits to require that disclosures be provided by classes of assets instead of by major categories of assets. ASU 2010-06 is effective for the first reporting period beginning after
December 15, 2009, except for the requirement to provide the Level 3 activity of purchases, sales, issuance, and settlements on a gross basis, which will be effective for fiscal years beginning after December 15, 2010, and for interim
periods within those fiscal years. The adoption of this standard had no material impact on the Companys financial statements and the Company expects no material impact for the requirement effective for fiscal years beginning after
December 15, 2010, and for interim periods within those fiscal years.

In February 2010, the FASB issued ASU 2010-09, Amendments to
Certain Recognition and Disclosure Requirements, (ASU 2010-09) which amends ASC 855, Subsequent Events, to address certain implementation issues related to an entitys requirement to perform and disclose subsequent events
procedures. ASU 2010-09 requires SEC filers to evaluate subsequent events through the date the financial statements are issued and exempts SEC filers from disclosing the date through which subsequent events have been evaluated. The ASU was effective
immediately upon issuance. The adoption of ASU 2010-09 did not have a material impact on the Companys financial statements.

In October
2009, the FASB issued ASU No. 2009-13, Multiple  Deliverable Revenue Arrangements, (ASU 2009-13). ASU 2009-13 amends existing revenue recognition accounting pronouncements that are currently within the scope of ASC
Subtopic 605-25, Multiple  Element Arrangements. ASU 2009-13 provides accounting principles and application guidance on whether multiple deliverables exist, how the arrangement should be separated and the consideration allocated. This
guidance eliminates the requirement to establish the fair value of undelivered products and services and also eliminates the residual method of allocating arrangement consideration. The new guidance provides for separate revenue recognition based
upon managements estimate of the selling price for an undelivered item when there is no other means to determine the fair value of that undelivered item. Under the previous guidance,



Page 42



---

##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



if the fair value of all of the elements in the arrangement was not determinable, then revenue was deferred until all of the items were delivered or fair value was determined. This new approach
is effective for fiscal years beginning on or after June 15, 2010. Entities can elect to apply ASU 2009-13 (i) prospectively to new or materially modified arrangements after its effective date or (ii) retrospectively for all periods
presented. The Company is currently evaluating the impact that the adoption of ASU 2009-13 will have on the Companys financial statements.

In July 2010, the FASB issued ASU 2010-20, Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses (ASU 2010-20). ASU 2010-20 improves
disclosures about the credit quality of an entitys financing receivables and related allowance for credit losses by facilitating evaluation of the nature of credit risk inherent in an entitys portfolio of financing receivables, how that
risk is analyzed and assessed in arriving at the allowance for credit losses and the changes and reasons for those changes in the allowance for credit losses. A financing receivable is defined as a contractual right to receive money on demand or on
fixed or determinable dates that is recognized as an asset in the entitys statement of financial position including loans, trade accounts receivable, notes receivable, credit cards receivables and lease receivables, except for operating
leases. Short term trade receivables and receivables measured at fair value or lower of cost or fair value are excluded. Further, the standard defines two levels of disaggregation for disclosure purposes: portfolio segment and class of financing
receivables. The disclosures relating to disaggregated investment balances, allowance for credit losses, nonaccrual status, credit quality indicators, credit risk factors and impairment of financing receivables are effective for interim and annual
periods ending on or after December 15, 2010. The disclosures about activity that occurs during a reporting period are effective for interim and annual reporting periods beginning on or after December 15, 2011. The adoption of this
standard had no material impact on the Companys financial statements.

2. GOING CONCERN, LIQUIDITY, AND MANAGEMENTS PLANS

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. As shown in the balance sheet, as of December 31, 2010 the Company had short-term debt obligations of $85,374,700, including the $82,500,000 of the 9.25% Senior Secured Notes (the
Notes) which become due in November 2011. The Companys available liquidity plus the expected additional cash generated by operations will not be sufficient to pay this debt, without additional financing. The financial
statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going
concern.

The Companys continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its
current debt obligations on a timely basis through refinancing, and ultimately to attain successful operations. The Company is actively working with two identified lenders on a combined refinancing to redeem the Notes and other indebtedness of the
Company. The interest rate the Company pays on its overall debt will be greater under the expected refinancing and the Company will incur significant expenses in completing the refinancing. The Company expects to issue notice of prepayment of
the Notes in accordance with the Indenture related thereto, prior to their maturities. Such prepayment would occur at least 45 days but not more than 60 days after such notice is given by the Company.



Page 43



---

##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



3. PROPERTY AND EQUIPMENT, NET

Property and equipment at December 31, 2010 and 2009 consist of the following:



|                                                |  |      |             |   |      |   |             |  
|----------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                |  | 2010 |             |   | 2009 |  
|Vessels                                         |  | $    | 55,911,201  |   |      | $ | 56,059,595  |  
|Containers and trailers                         |  |      | 36,697,488  |   |      |   | 36,823,014  |  
|Chassis                                         |  |      | 20,556,958  |   |      |   | 20,565,758  |  
|Leasehold improvements                          |  |      | 5,705,869   |   |      |   | 1,798,705   |  
|Tractors                                        |  |      | 5,078,045   |   |      |   | 5,140,289   |  
|Office furniture and equipment                  |  |      | 4,294,966   |   |      |   | 4,019,555   |  
|Buildings and structures                        |  |      | 2,797,668   |   |      |   | 2,797,668   |  
|VTMs                                           |  |      | 2,453,222   |   |      |   | 2,461,437   |  
|Land                                            |  |      | 1,254,703   |   |      |   | 1,254,703   |  
|                                                |  |      |             |   |      |   |             |  
|                                                |  |      | 134,750,120 |   |      |   | 130,920,724 |  
|less: accumulated depreciation and amortization |  |      | (52,119,070 | ) |      |   | (46,028,802 | )
|                                                |  |      |             |   |      |   |             |  
|                                                |  |     
|                                                |  | $    | 82,631,050  |   |      | $ | 84,891,922  |  
|                                                |  |      |             |   |      |   |             |  

Depreciation and amortization expense on property and equipment was $6,203,333, $6,222,958, and $6,160,384, in 2010, 2009,
and 2008, respectively.

4. 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 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). Approximately $830,000 was recorded in salaries, wages, and benefits in 2008 related to Mr. McCowns severance agreement.



Page 44



---

##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



5. LONG-TERM DEBT

Following is a summary of long-term debt at December 31, 2010 and 2009:



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |      |             |   |      |   |             |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | 2010 |             |   | 2009 |  
|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 $34.6 million on two roll-on/roll-off barges,
certain equipment and the Jacksonville, Florida office and terminal, including associated real estate. |  | $    | 82,500,000  |   |      | $ | 83,500,000  |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |     
|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 $12,432,198 at December 31,2010; amount is guaranteed by The United States of America under the Title XI Federal Ship Financing Program                                                                                                            |  |      | 9,310,716   |   |      |   | 10,055,574  |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |     
|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 $7,989,855 at December 31, 2010; amount is guaranteed by The United States of America under the Title XI Federal Ship Financing Program                                                                                                        |  |      | 5,568,519   |   |      |   | 6,032,563   |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |     
|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 $14,410,297 at December 31, 2010. The interest rate on this note for the years ended December 31, 2010 and
2009 was equal to the Prime rate of 3.25%.                                                           |  |      | 5,791,292   |   |      |   | 7,457,091   |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |      |             |   |      |   |             |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | $    | 103,170,527 |   |      | $ | 107,045,228 |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |     
|Less current portion                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |      | (85,374,700 | ) |      |   | (3,874,700  | )
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |      |             |   |      |   |             |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | $    | 17,795,827  |   |      | $ | 103,170,528 |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |      |             |   |      |   |             |  

(A) SENIOR SECURED NOTES

The $82.5 million 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. 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.



Page 45



---

##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



(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 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, 2010 and 2009, 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 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, 2010 and 2009, 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 $4.6 million and $4.2 million as of December 31, 2010 and 2009, 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 $7.4 million as of
December 31, 2010. Based on the adjusted earnings, as defined in the agreement, the Company did not have a deposit requirement in 2010 and 2008. The Company did have a deposit requirement based on adjusted earnings in 2009 which was
approximately $0.4 million and was deposited in the first quarter of 2010. If the Company retires this debt prior to the maturity date, the Company will be subject to certain prepayment penalties as defined in the agreement.

(C) WACHOVIA TERM LOAN

The Company has
access to a term loan that provides for a maximum availability of $10 million on which the ability to draw expires April 2012. The term loan provides for interest equal to the prime rate and principal payments over a 72 month period through December
2014. At December 31, 2010, approximately $5.8 million was outstanding which was drawn to fund previous equipment purchases. This term loan is collateralized by eligible equipment with a carrying value of $14.4 million at December 31,
2010.



Page 46



---

##### 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, 2010, 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, 2010, the Company had $7.1 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, 2010:



|           |  |   |             | 
|---------- |  | - | ----------- | 
|2011       |  | $ | 85,374,700  | 
|2012       |  |   | 2,874,700   | 
|2013       |  |   | 2,874,700   | 
|2014       |  |   | 2,002,800   | 
|2015       |  |   | 1,208,902   | 
|Thereafter |  |   | 8,834,725   | 
|           |  |   |             | 
|           |  | $ | 103,170,527 | 
|           |  |   |             | 

6. 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,
2010, 2009, and 2008, 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, 2010, are as follows:



|     |  |   |            | 
|---- |  | - | ---------- | 
|2011 |  | $ | 7,073,268  | 
|2012 |  |   | 3,399,655  | 
|2013 |  |   | 2,590,287  | 
|2014 |  |   | 1,202,119  | 
|2015 |  |   | 893,124    | 
|     |  |   |            | 
|     | 
|     |  | $ | 15,158,453 | 
|     |  |   |            | 

Included in the amounts in the table above is tug charter hire of $3.8 million in 2011 and $0.2 million in 2012,
respectively.

Rent expense for all operating leases, including leases with terms of less than one year, was $13,641,024, $13,385,984, and
$14,531,028 for 2010, 2009, and 2008, respectively, and is recorded as a part of purchased transportation and other rent on the statement of operations. Included in the $13.6 million of rent expense for 2010 is $10.5 million related to tug
charter hire, of which $5.3 million is directly related to chartering the tugs and approximately $5.2 million was related to the labor associated with the tug charters.



Page 47



---

##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



7. OTHER ASSETS

Other assets consist of the following at December 31, 2010 and 2009:



|                                                     |  |      |           |  |      |   |           | 
|---------------------------------------------------- |  | ---- | --------- |  | ---- | - | --------- | 
|                                                     |  | 2010 |           |  | 2009 |  
|                                                     |  |     
|Debt issuance costs, net of accumulated amortization |  | $    | 1,533,660 |  |      | $ | 2,349,042 | 
|Other                                                |  |      | 470,766   |  |      |   | 513,869   | 
|                                                     |  |      |           |  |      |   |           | 
|                                                     |  |     
|                                                     |  | $    | 2,004,426 |  |      | $ | 2,862,911 | 
|                                                     |  |      |           |  |      |   |           | 

Amortization expense for the years ended December 31, 2010, 2009, and 2008 was $996,980, $971,561, and $838,978,
respectively, and is recorded as part of interest expense in the statement of operations.

8. ACCRUED LIABILITIES

Accrued liabilities consist of the following at December 31, 2010 and 2009:



|                         |  |      |           |  |      |   |           | 
|------------------------ |  | ---- | --------- |  | ---- | - | --------- | 
|                         |  | 2010 |           |  | 2009 |  
|Marine expense           |  | $    | 1,866,193 |  |      | $ | 2,308,986 | 
|Interest                 |  |      | 1,226,372 |  |      |   | 1,263,006 | 
|Other                    |  |      | 611,996   |  |      |   | 641,096   | 
|Salaries and wages       |  |      | 568,990   |  |      |   | 1,509,601 | 
|Fringe benefits          |  |      | 231,163   |  |      |   | 256,683   | 
|Rent                     |  |      | 101,819   |  |      |   | 259,864   | 
|Purchased transportation |  |      | 71,019    |  |      |   | 191,764   | 
|Taxes                    |  |      | 47,478    |  |      |   | 27,760    | 
|                         |  |      |           |  |      |   |           | 
|                         |  |     
|                         |  | $    | 4,725,030 |  |      | $ | 6,458,760 | 
|                         |  |      |           |  |      |   |           | 

9. INCOME TAXES

The (provision) benefit for income taxes is comprised of the following for the years ended December 31, 2010, 2009 and 2008:



|                                        |  |      |         |   |      |   |         |      |  |   |          |  
|--------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | -------- | -
|                                        |  | 2010 |         |   | 2009 |   |         | 2008 | 
|Current:                                |  |      |         |   |      |   |         |      |  |   |          |  
|Federal                                 |  | $    | (29,070 | ) |      | $ | (28,000 | )    |  | $ | (29,000  | )
|State                                   |  |      |        |   |      |   |        |      |  |   | 113,729  |  
|                                        |  |      |         |   |      |   |         |      |  |   |          |  
|                                        |  |      |        
|                                        |  |      | (29,070 | ) |      |   | (28,000 | )    |  |   | 84,729   |  
|                                        |  |      |         |   |      |   |         |      |  |   |          |  
|                                        |  |      |        
|Deferred                                |  |      |         |   |      |   |         |      |  |   |          |  
|Federal                                 |  |      | (4,787  | ) |      |   | (799    | )    |  |   | (1,316   | )
|State                                   |  |      | (59,418 | ) |      |   | 37,763  |      |  |   | 24,143   |  
|                                        |  |      |         |   |      |   |         |      |  |   |          |  
|                                        |  |      |        
|                                        |  |      | (64,205 | ) |      |   | 36,964  |      |  |   | 22,827   |  
|Valuation allowance decrease (increase) |  |      | 10,994  |   |      |   | (7,568  | )    |  |   | (116,602 | )
|                                        |  |      |         |   |      |   |         |      |  |   |          |  
|                                        |  |      |        
|Total income tax (provision) benefit    |  | $    | (82,281 | ) |      | $ | 1,396   |      |  | $ | (9,046   | )
|                                        |  |      |         |   |      |   |         |      |  |   |          |  



Page 48



---

##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



Income tax (provision) benefit for the years ended December 31, 2010, 2009 and 2008 differs from
the amounts computed by applying the statutory Federal corporate rate to (loss) income before (provision) benefit for income taxes. The differences are reconciled as follows:



|                                                              |  |      |          |   |      |   |          |      |  |   |            |  
|------------------------------------------------------------- |  | ---- | -------- | - | ---- | - | -------- | ---- |  | - | ---------- | -
|                                                              |  | 2010 |          |   | 2009 |   |          | 2008 | 
|Tax benefit (provision) at statutory Federal rate             |  | $    | 759,781  |   |      | $ | (885,523 | )    |  | $ | 1,098,097  |  
|Qualifying shipping income                                    |  |      | (784,064 | ) |      |   | 857,199  |      |  |   | (1,128,856 | )
|(Decrease) increase in deferred tax asset valuation allowance |  |      | 10,994   |   |      |   | (7,568   | )    |  |   | (116,602   | )
|Nondeductible expenses                                        |  |      | (4,470   | ) |      |   | (3,869   | )    |  |   | (4,298     | )
|State income taxes                                            |  |      | (64,522  | ) |      |   | 41,157   |      |  |   | 142,613    |  
|                                                              |  |      |          |   |      |   |          |      |  |   |            |  
|                                                              |  |      |         
|Total income tax (provision) benefit                          |  | $    | (82,281  | ) |      | $ | 1,396    |      |  | $ | (9,046     | )
|                                                              |  |      |          |   |      |   |          |      |  |   |            |  

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, 2010 and 2009 are as follows:



|                                       |  |      |           |  |      |   |           | 
|-------------------------------------- |  | ---- | --------- |  | ---- | - | --------- | 
|                                       |  | 2010 |           |  | 2009 |  
|Deferred tax assets:                   |  |      |           |  |      |   |           | 
|Net operating loss carry forwards      |  | $    | 1,948,441 |  |      | $ | 2,245,891 | 
|Employee stock option                  |  |      | 52,290    |  |      |   | 32,643    | 
|Intangible Asset                       |  |      | 2,680     |  |      |   | 4,644     | 
|Allowance for bad debts                |  |      | 26,542    |  |      |   | 12,066    | 
|Accrued vacation                       |  |      | 5,756     |  |      |   | 7,008     | 
|Other                                  |  |      | 1,479     |  |      |   | 5,964     | 
|                                       |  |      |           |  |      |   |           | 
|Gross deferred assets                  |  |      | 2,037,188 |  |      |   | 2,308,216 | 
|                                       |  |     
|Deferred tax liabilities:              |  |      |           |  |      |   |           | 
|Fixed asset basis                      |  |      | 1,476,834 |  |      |   | 1,683,657 | 
|                                       |  |      |           |  |      |   |           | 
|                                       |  |     
|Gross deferred tax liabilities         |  |      | 1,476,834 |  |      |   | 1,683,657 | 
|Deferred tax asset valuation allowance |  |      | 334,709   |  |      |   | 345,703   | 
|                                       |  |      |           |  |      |   |           | 
|                                       |  |     
|Net deferred tax asset                 |  | $    | 225,645   |  |      | $ | 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 2007, the Company concluded 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 income with its net operating loss carryforwards (NOLs) and, therefore, results in a much larger cash outlay in comparison to the required payments associated with the tonnage tax regime. The Company made
the election to be



Page 49



---

##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



taxed under the tonnage tax regime on its 2007 federal tax return. This election applies to all subsequent federal income tax returns unless the Company revokes this tax treatment. As a result,
it was more likely than not that the Company would not be able to utilize its deferred tax asset. The remaining deferred tax asset at December 31, 2010 and 2009 of approximately $226,000 and $279,000, respectively, represents primarily the
state portion of the Companys deferred tax asset. The Companys research of the tonnage tax suggests that states do not recognize the tonnage tax and, therefore, NOLs related to state qualifying shipping income would not be
suspended. The Company is accounting for this election as a change in status of its qualifying shipping activities. As a result of the change in status, federal deferred tax assets and liabilities, including approximately $85 million of federal
NOLs, which were previously offset by a valuation allowance, have been suspended. It cannot be assured that there will not be future efforts to repeal all, or any portion of, the tonnage tax as it applies to our shipping activities. The
federal tax expense under the tonnage tax method is estimated to be $29,000 and $28,000 for 2010 and 2009, respectively, which can not be offset by the Companys existing NOLs under the tonnage tax regime.

In accordance with ASC 790-10, 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, 2010 and 2009. 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.
During the first quarter of 2011, the Company received notice that the IRS will be conducting an audit of its 2009 tax year. The Company intends to fully cooperate with the IRS and all of its requests during the audit. Filed federal tax returns for
the years of 2007, 2008 and 2009 remain subject to examination by the IRS. The Company is not currently involved in any state income tax examination.

10. 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 has reserved 2,425,000 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, 2010, there were 45,675 options available for grant under the Plan. An amendment to the Plan to increase the number of shares available for issuance
by 125,000 was approved at the 2010 Annual Meeting of stockholders.

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. Since inception, the Company has reserved 225,000 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



Page 50



---

##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



date of the grant and the maximum term for a grant is ten years. As of December 31, 2010, there were 9,889 options available for grant under the Director Plan. An amendment to the Plan to
increase the number of shares available for issuance by 175,000 was approved at the 2010 Annual Meeting of stockholders.

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. On January 15, 2010 the Company granted options to purchase 175,000 shares of the Companys common stock under the Companys Non-Employee Director 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, 2008, 2009 and 2010 are as follows:



|                        |  |      |           |   |      |  |                |      |  |  |           |  
|----------------------- |  | ---- | --------- | - | ---- |  | -------------- | ---- |  |  | --------- | -
|                        |  | 2008 |           |   | 2009 |  |                | 2010 | 
|Expected Term           |  |      | 6.5 years |   |      |  | 6.5 years      |      |  |  | 6.5 years |  
|Volatility              |  |      | 45.98     | % |      |  | 64.84% - 65.13 | %    |  |  | 64.53     | %
|Risk-free interest rate |  |      | 3.40      | % |      |  | 2.49% - 3.09   | %    |  |  | 3.17      | %
|Dividends               |  |      | None      |   |      |  | None           |      |  |  | None      |  

The weighted average fair value of
options granted for the years ended December 31, 2010, 2009, and 2008 was $3.64, $2.83, and $5.49, respectively.

A summary of option
activity under the Companys stock-based compensation plan at December 31, 2010 and during the year then ended is presented below:



|                                                                    |  |         |           |   |                              |   |      |                         |  |   |   | 
|------------------------------------------------------------------- |  | ------- | --------- | - | ---------------------------- | - | ---- | ----------------------- |  | - | - | 
|                                                                    |  | 2010    |          
|                                                                    |  | Options |           |   | WeightedAverageExercisePrice |   |      | AggregateIntrinsicValue | 
|Outstanding at beginning of year                                    |  |         | 1,533,822 |   |                              | $ | 4.91 |                         |  |   |   | 
|Granted                                                             |  |         | 175,000   |   |                              |   | 5.77 |                         |  |   |   | 
|Exercised                                                           |  |         | (182,889  | ) |                              |   | 2.84 |                         |  |   |   | 
|Forfeited                                                           |  |         | (40,710   | ) |                              |   | 7.85 |                         |  |   |   | 
|                                                                    |  |         |           |   |                              |   |      |                         |  |   |   | 
|                                                                    |  |         |          
|Outstanding at end of year                                          |  |         | 1,485,223 |   |                              | $ | 5.18 |                         |  | $ |  | 
|                                                                    |  |         |           |   |                              |   |      |                         |  |   |   | 
|Grants exercisable at year-end                                      |  |         | 513,703   |   |                              | $ | 5.33 |                         |  | $ |  | 
|                                                                    |  |         |           |   |                              |   |      |                         |  |   |   | 
|                                                                    |  |         |          
|Fair value of options granted during the year at the price of $3.64 |  | $       | 637,000   |   |                              |   |      |                         |  |   |   | 

The intrinsic value of the options exercised during 2010, 2009 and 2008 was $344,827, $545,546 and $97,538,
respectively.



Page 51



---

##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



The following table summarizes information about the outstanding options at December 31, 2010:



|              |       |  |                    |  |           |                                           |  |  |                    |  |  |  |         | 
|------------- | ----- |  | ------------------ |  | --------- | ----------------------------------------- |  |  | ------------------ |  |  |  | ------- | 
|ExercisePrice |       |  | OptionsOutstanding |  |           | Weighted-AverageRemainingContractual Life |  |  | OptionsExercisable | 
|$             | 2.88  |  |                    |  | 172,209   |                                           |  |  | 1.4 years          |  |  |  | 172,209 | 
|              | 8.61  |  |                    |  | 171,514   |                                           |  |  | 5.9 years          |  |  |  | 137,394 | 
|              | 10.90 |  |                    |  | 54,000    |                                           |  |  | 7.1 years          |  |  |  | 21,600  | 
|              | 3.44  |  |                    |  | 87,500    |                                           |  |  | 8.3 years          |  |  |  | 17,500  | 
|              | 4.26  |  |                    |  | 500,000   |                                           |  |  | 8.7 years          |  |  |  | 100,000 | 
|              | 5.22  |  |                    |  | 325,000   |                                           |  |  | 8.9 years          |  |  |  | 65,000  | 
|$             | 5.77  |  |                    |  | 175,000   |                                           |  |  | 9.1 years          |  |  |  |        | 
|              |       |  |                    |  |           |                                           |  |  |                    |  |  |  |         | 
|              |       |  |                    |  | 1,485,223 |                                           |  |  |                    |  |  |  | 513,703 | 
|              |       |  |                    |  |           |                                           |  |  |                    |  |  |  |         | 

As of December 31, 2010, the remaining non-exercisable options become exercisable and the related compensation expense
is expected to be recognized in future years as follows:



|     |  |         |         |  |         |   |           | 
|---- |  | ------- | ------- |  | ------- | - | --------- | 
|     |  | Options |         |  | Expense |  
|2011 |  |         | 273,654 |  |         | $ | 900,028   | 
|2012 |  |         | 239,533 |  |         |   | 682,759   | 
|2013 |  |         | 223,333 |  |         |   | 627,374   | 
|2014 |  |         | 200,000 |  |         |   | 476,607   | 
|2015 |  |         | 35,000  |  |         |   | 4,888     | 
|     |  |         |         |  |         |   |           | 
|     |  |         | 971,520 |  |         | $ | 2,691,656 | 
|     |  |         |         |  |         |   |           | 

During the first and second quarters of 2010, the Compensation Committee approved the use of the cashless exercise method
for the Companys Officer Group for the March 2000 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 41,452 shares being issued to the Officer Group upon
exercise of 153,600 options to purchase common stock.

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 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 resulted in an aggregate of 5,429 shares issued to the Officer Group out of 90,000 options to purchase common stock.

11. 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 $0.1 million to the Plan during 2010 and $0.2 million to the Plan during each of the years 2009 and 2008.



Page 52



---

##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



In addition, the Company has a 165(e) Plan that covers substantially all employees in Puerto Rico. The
Company made contributions of approximately $21,000, $22,000, and $28,000 to the Plan during 2010, 2009, and 2008, respectively.

The Company
has an Incentive Bonus Program and expensed $431,533 during 2009, which was recorded as a part of salaries, wages, and benefits in the statement of operation. There were no Incentive Bonus expenses in 2010 and 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.

12. CONTINGENCIES
AND COMMITMENTS

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 40 purported class actions against domestic ocean carriers, including
Horizon Lines, Sea Star Lines, Crowley Liner Services and the Company. The actions alleged that the defendants inflated prices and engaged in other allegedly anti-competitive conduct 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.

On April 30, 2010, in a non-final order, the Court granted the Companys motion to be dismissed with prejudice as to the claims of the named plaintiffs against the Company. This order will not
become final and appealable until further order or judgment is entered by the Court. The Company intends to continue its vigorous defense of these actions, if necessary.

Horizon Lines, Crowley Liner Services, Sea Star Lines, LLC, Saltchuck Resources, an affiliate of Sea Star Lines, LLC, and their related companies entered into settlement agreements 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. All of these settlements received Preliminary Approval from the court in August, 2010, and
notices to the putative class members were mailed in September, 2010. The settling defendants have reported that enough potential claimants have opted-out of the settlement class that the settling defendants have the option to terminate the
settlement agreements. The Court has set a date of April 29, 2011 for the settling defendants to declare whether they will terminate all or some of the settlement agreements. It is not clear what impact, if any, such a termination and
subsequent class litigation may have on the Company, which is not a party to any of the settlement agreements.

Even if the settlement
agreements are not terminated, the opt-outs are likely to pursue claims against the settling defendants. It is not clear whether an individual opt-out plaintiff would attempt to bring an action against the Company in such a proceeding or even
whether they could do so in light of the Companys dismissal with prejudice from the underlying MDL. Moreover, it is not clear what, if any, impact these settlements, whether or not ultimately terminated or finally approved, will have on
further prosecution of the MDL 1960 or other claims on the Company, or on the trade, in general.



Page 53



---

##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



On March 15, 2011, Horizon Lines, LLC plead guilty to a charge of violating federal antitrust laws
with respect to the Puerto Rico trade lane in which the Company operates. Horizon Lines, LLC was sentenced to pay a fine of $45 million over five years and was placed on criminal probation. It is unclear what, if any, impact the Horizon Lines, LLC
plea will have on the civil actions discussed above, on the Company, or on the trade, in general.

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 we will cooperate fully with this investigation and have provided requested documents to such authorities.

The Company understands that on February 22, 2011, all currently named defendants in the indirect purchaser action entered into a Memorandum of Understanding with the Commonwealth of Puerto Rico and
attorneys representing a putative class of indirect purchasers to resolve all of the alleged claims of the Commonwealth of Puerto Rico and the indirect purchasers related to ocean shipping services in the Puerto Rico trade lane. The exact terms of
that agreement have not been reported. The Company is not a party to the indirect purchaser litigation, nor is it a party to the reported Memorandum of Understanding. It is unclear what, if any, impact this Memorandum of Understanding will have on
the future course of the investigation by the Puerto Rican 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, 2010, and 2009, costs were approximately $37,000 and $676,000,
respectively. During the twelve month periods ended December 31, 2010, and 2009, costs were approximately $679,000 and $1,728,000, 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 was held in the Middle District of Florida, Jacksonville Division, and was captioned: Trailer Bridge, Inc. v. Illinois National Insurance Company. On July 23, 2010 the Court denied the Companys motion and
granted summary judgement in favor of the defendant. The Company appealed this decision to the Eleventh Circuit Court of Appeals on August 19, 2010. Oral argument has been scheduled for the week of May 24, 2011, however, the appeals outcome
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, including
employee discrimination claims, 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.



Page 54



---

##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



In the second quarter of 2010, the Company committed to capital expenditures of approximately $5.5
million for modifications and improvements at its San Juan, Puerto Rico terminal. As of December 31, 2010 approximately $3.8 million of this amount has been spent.

13. 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
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,
2010, the estimated fair value of the Companys long-term debt is less than the carrying values by approximately $287,000.

14. 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 2010, 2009, and 2008 was $17.9 million, $10.5 million, and $7.2 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.

15. 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. At December 31, 2010 more than 10% of the Companys trade accounts receivable was dependent upon Puerto Rico government funding.



Page 55



---

##### Table of Contents

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(continued)



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.

16. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)



|                                                |  |               |            |   |              |   |            |                   |  |   |                  |  |  |   |            |     
|----------------------------------------------- |  | ------------- | ---------- | - | ------------ | - | ---------- | ----------------- |  | - | ---------------- |  |  | - | ---------- | ----
|Quarter Ended                                   |  | March 31,2010 |            |   | June 30,2010 |   |            | September 30,2010 |  |   | December 31,2010 | 
|                                                |  |               |            |  
|Operating revenues                              |  | $             | 28,844,964 |   |              | $ | 31,656,653 |                   |  | $ | 29,287,787       |  |  | $ | 28,396,224 |     
|Operating income (loss)                         |  |               | 2,230,706  |   |              |   | 3,390,822  |                   |  |   | 2,462,030        |  |  |   | (417,944   | )   
|Net (loss) income                               |  |               | (307,569   | ) |              |   | 897,462    |                   |  |   | 6,876            |  |  |   | (2,913,703 | )   
|Net (loss) income attributable to common shares |  |               | (307,569   | ) |              |   | 897,462    |                   |  |   | 6,876            |  |  |   | (2,913,703 | )(a)
|Net (loss) income per share                    |  |               |            |   |              |   |            |                   |  |   |                  |  |  |   |            |     
|basic                                           |  | $             | (0.03      | ) |              | $ | 0.07       |                   |  | $ |                 |  |  | $ | (0.24      | )   
|diluted                                         |  | $             | (0.03      | ) |              | $ | 0.07       |                   |  | $ |                 |  |  | $ | (0.24      | )   



|(a) | During the fourth quarter of 2010, the Company had a decrease in other revenues related to its vessel charter hire. The Company also experienced an increase in
its marine costs, dry-docking costs associated with the regulatory dry-docking of one of its ro/ro vessels, and increased fuel costs.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                |  |               |            |   |              |   |            |                   |  |   |                  |  |  |   |            | 
|----------------------------------------------- |  | ------------- | ---------- | - | ------------ | - | ---------- | ----------------- |  | - | ---------------- |  |  | - | ---------- | 
|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       | 



Page 56



---

##### Table of Contents

SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS

FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED December 31, 2010

Allowance for Doubtful Accounts



|     |  |                                |           |  |                              |   |           |                        |  |   |                       |   |  |   |           | 
|---- |  | ------------------------------ | --------- |  | ---------------------------- | - | --------- | ---------------------- |  | - | --------------------- | - |  | - | --------- | 
|Year |  | Balance atBeginning of theyear |           |  | Charged to Costsand Expenses |   |           | Deductions(Chargeoffs) |  |   | Balance at end ofyear |  
|2010 |  | $                              | 441,985   |  |                              | $ | 1,198,526 |                        |  | $ | (574,556              | ) |  | $ | 1,065,955 | 
|2009 |  | $                              | 599,017   |  |                              | $ | 1,038,210 |                        |  | $ | (1,195,242            | ) |  | $ | 441,985   | 
|2008 |  | $                              | 1,010,341 |  |                              | $ | 913,009   |                        |  | $ | (1,324,333            | ) |  | $ | 599,017   | 

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. | 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 the
paragraph 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, 2010. 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, 2010. 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.



Page 57



---

##### Table of Contents

This annual report on Form 10-K does not include an attestation report of the Companys
independent registered certified public accounting firm regarding internal control over financial reporting.



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

On
March 31, 2011, the Company entered into a letter agreement with Mark A. Tanner, the Companys Vice President of Administration and Chief Financial Officer. The letter agreement provides that if, within the one year period following the
consummation of a Change in Control (as defined in the letter agreement), the Company terminates Mr. Tanners employment without Cause (as defined in the letter agreement), then, subject to the other terms and conditions of the letter
agreement, including the execution of a general release, Mr. Tanner shall be entitled to receive (i) severance payments in an amount equal to one year of the then current annual base salary, payable over a period of twelve months in
accordance with the Companys normal payroll practices; (ii) continued medical benefits for up to one year; (iii) any unpaid base salary through and including the date of the termination; (iv) any bonus earned, but unpaid, for
the year prior to the year in which the termination occurs; (v) pay for accrued but unused vacation; (vi) unreimbursed business expenses; and (vii) any other amounts or benefits required to be paid or provided by law or under any
plan, program, policy or practice of the Company.

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 Accountant 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 June 7, 2011 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.



Page 58



---

##### 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, 2010, 2009 and
2008.

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.



Page 59



---

##### 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).)                                                                                                                                                                                                                                                                         



Page 60



---

##### 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.)                                                                                                                                                                           
|              | 
|10.4.11#      |  | Amendment No. 2 to the Trailer Bridge, Inc. Non-Employee Director Stock Incentive Plan. (Incorporated by reference to the Companys Form 10-Q for the quarter ended
June 30, 2010.)                                                                                                                                
|              | 
|10.4.12#      |  | Amendment No. 5 to the Trailer Bridge, Inc. Stock Incentive Plan. (Incorporated by reference to the Companys Form 10-Q for the quarter ended June 30,
2010.)                                                                                                                                                      
|              | 
|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).



Page 61



---

##### Table of Contents

|              |  |                                                                                                                                                                                                                                                                                                                                                                                                             
|------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBITNUMBER |  | DESCRIPTION OF EXHIBITS                                                                                                                                                                                                                                                                                                                                                                                     
|              | 
|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.)              
|              | 
|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 9 1/4% 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.)                                                                                                                                           



Page 62



---

##### Table of Contents

|              |  |                                                                                                                                                                                                                                                                                         
|------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBITNUMBER |  | DESCRIPTION OF EXHIBITS                                                                                                                                                                                                                                                                 
|              | 
|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.)
|              | 
|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.)                                                                                                                                     
|              | 
|10.11#        |  | Letter Agreement dated March 31, 2011 between Trailer Bridge, Inc. and Mark A. Tanner                                                                                                                                                                                                   
|              | 
|23.2          |  | Consent of BDO USA, 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.
|- | --------------------------------------------------------



Page 63



---

##### 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 thirty first day of March 2011.



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 Ivy Barton Suter             |  | Chief Executive Officer                                                                                  |  | March 31, 2011
|                                                  |  |                                                                                                         
|/s/ Mark A. Tanner Mark A. Tanner                 |  | Vice President  Administration and Chief Financial Officer (Principal Financial and Accounting Officer) |  | March 31, 2011
|                                                  |  |                                                                                                         
|/s/ Nickel van Reesema Nickel van Reesema         |  | Director                                                                                                 |  | March 31, 2011
|                                                  |  |                                                                                                         
|/s/ Allen L. Stevens Allen L. Stevens             |  | Director                                                                                                 |  | March 31, 2011
|                                                  |  |                                                                                                         
|/s/ Douglas E. Schimmel Douglas E. Schimmel       |  | Director                                                                                                 |  | March 31, 2011
|                                                  |  |                                                                                                         
|/s/ Malcom P. McLean Jr. Malcom P. McLean Jr.     |  | Director                                                                                                 |  | March 31, 2011
|                                                  |  |                                                                                                         
|/s/ Robert P. Burke Robert P. Burke               |  | Director                                                                                                 |  | March 31, 2011
|                                                  |  |                                                                                                         
|/s/ Greggory B. Mendenhall Greggory B. Mendenhall |  | Director                                                                                                 |  | March 31, 2011



Page 64