TRAILER BRIDGE INC, 424B1, 1997-07-24

TRAILER BRIDGE INC
424B1, 1997-07-24
TRUCKING (NO LOCAL)

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<PAGE> 1
Filed Pursuant to Rule 424(b)(1)
Registration No. 333-28221

2,700,000 Shares

Trailer Bridge Logo

TRAILER BRIDGE, INC.
COMMON STOCK
------------------

All of the shares of Common Stock offered hereby are being sold by Trailer
Bridge, Inc. ("Trailer Bridge" or the "Company"). Prior to this offering, there
has been no public market for the Common Stock of the Company. See
"Underwriting" for a discussion of the factors considered in determining the
initial public offering price. The Common Stock has been approved for quotation
on the Nasdaq National Market under the symbol "TRBR."

Existing stockholders will beneficially own approximately 71% of the
outstanding Common Stock after the offering. See "Principal Stockholders."
Approximately $6.3 million of the net proceeds of the offering will be used to
repay indebtedness of the Company to an affiliate and $6.0 million will be used
to pay an S Corporation dividend to existing stockholders. See "Use of
Proceeds." The Common Stock is subject to certain restrictions on ownership by
non-U.S. citizens designed to maintain the Company's eligibility to own and
operate vessels in the U.S. domestic trade. Non-U.S. citizens will be required
to redeem or sell their Common Stock if ownership of the Common Stock by
non-U.S. citizens exceeds these restrictions. See "Description of Capital
Stock -- Foreign Ownership Restrictions and Possible Divestiture of Stock."

------------------

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 8.
------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
=============================================================================================================
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS COMPANY(1)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share......................... $10.00 $.70 $9.30
- -------------------------------------------------------------------------------------------------------------
Total(2).......................... $27,000,000 $1,890,000 $25,110,000
=============================================================================================================
</TABLE>

(1) Before deducting expenses of the offering estimated at $332,000.

(2) The Company has granted the Underwriters a 30-day option to purchase up to
an additional 405,000 shares of Common Stock solely to cover over
allotments, if any. To the extent that the option is exercised, the
Underwriters will offer the additional shares to the public at the Price to
Public shown above. If the option is exercised in full, the total Price to
Public, Underwriting Discounts and Commissions and Proceeds to Company will
be $31,050,000, $2,173,500 and $28,876,500, respectively. See
"Underwriting."

-----------------------

The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them, and subject to
the right of the Underwriters to reject any order in whole or in part. It is
expected that delivery of the shares of Common Stock will be made at the offices
of Alex. Brown & Sons Incorporated, Baltimore, Maryland, on or about July 29,
1997.

ALEX. BROWN & SONS
INCORPORATED

THE DATE OF THIS PROSPECTUS IS JULY 23, 1997.
<PAGE> 2

Omitted Graphic and Image Material

The following is a narrative description of graphic and image material
contained in the printed version of the Prospectus which has been omitted from
the version filed electronically.

Inside front cover:

Three photographs (counterclockwise from the top) depicting (i)
a Trailer Bridge tractor and trailer leaving a customer's premises,
(ii) a trailer being pulled onto one of the Company's tripledeck
barges, and (iii) the loaded barge being towed out to the open sea.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING BY ENTERING STABILIZING BIDS, EFFECTING SYNDICATE COVERING
TRANSACTIONS OR IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "UNDERWRITING."

The Company intends to furnish its stockholders with annual reports
containing audited financial statements and an opinion thereon expressed by
independent certified public accountants and with quarterly reports for the
first three quarters of each year containing unaudited financial information.

2
<PAGE> 3

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and the financial statements and notes thereto appearing elsewhere
in this Prospectus. Except as otherwise specified, all information in this
Prospectus assumes (i) a 15,700-for-one split of the shares of Common Stock, and
(ii) no exercise of the Underwriters' over-allotment option. See "Underwriting."

THE COMPANY

Trailer Bridge, headquartered in Jacksonville, Florida, is an integrated
trucking and marine freight carrier that provides truckload freight
transportation primarily between the continental U.S. and Puerto Rico. Founded
in 1991 by transportation pioneer Malcom P. McLean, the Company combines an
efficient and dedicated motor carrier with a low cost barge and tug marine
transportation system. Trailer Bridge is the only company serving markets
governed by the Jones Act which exclusively operates marine vessels fully
configured to carry 48' and 53' long, 102" wide, "high-cube" trailers. This
configuration enables the Company to achieve equipment utilization rates and
other operating efficiencies not readily available to traditional ocean carriers
that primarily use smaller capacity equipment, such as 40' containers. The
Company believes that as a result of these and other efficiencies, its total
unit costs per mile are the lowest of any carrier operating between the
continental U.S. and Puerto Rico.

Trailer Bridge intends to achieve significant growth by providing the
lowest cost freight transportation service to markets well suited to its
high-cube integrated truckload and marine freight system. Based on volume and
pricing data, the Company believes that there are a number of markets in which
the Company's unique transportation system can provide superior full-load
service at a significant cost advantage over existing modes of truckload and
rail intermodal transportation.

Trailer Bridge's differentiated service quickly gained the acceptance of
U.S. to Puerto Rico shippers, leading to rapid growth and high equipment
utilization. In 1993, the Company's first full year of operation, Trailer Bridge
achieved a 93% outbound (continental U.S. to Puerto Rico) vessel utilization
rate and captured 5% of the continental U.S. to Puerto Rico marine freight
market. In response to the rapid market share gains experienced by Trailer
Bridge, in 1996 the Company increased its vessel capacity by 56% by inserting
midsections ("mid-bodies") into its two existing barges, increasing the capacity
of each barge from 266 to 416 48' equivalent truckload units. These
roll-on/roll-off barges are chartered from an affiliate.

Trailer Bridge will increase its vessel capacity by an additional 56% in
late 1997 and early 1998 when it takes delivery of two 408' long container
carrying barges designed specifically for the Company's integrated truckload
marine transportation system and bearing the Company's Triplestack Box
Carrier(TM) trade name. The Triplestack Box Carriers(TM) will be versatile,
low-draft vessels that have a capacity of 213 53' containers, stacked three-high
on a single deck. Construction of these two vessels began in March 1997. Upon
completion, the vessels will be deployed in the Company's existing Puerto Rico
freight operation. Trailer Bridge also intends to contract for the construction
of three additional Triplestack Box Carriers(TM) which it intends to deploy in
coastwise service between New York and Florida. The Company plans to investigate
other marine markets which are well suited for its unique, cost-efficient
transportation service, such as from the continental U.S. to Hawaii or Alaska.

Management believes that the Company's principal competitive strengths are:

Significant Operating Cost Advantage. Trailer Bridge believes that it
is the lowest cost provider of freight transportation between the
continental U.S. and Puerto Rico. Lower overall operating costs are
achieved through significantly higher equipment utilization and lower
marine linehaul costs than those of traditional ocean carriers. The
Company's inland trucking operation achieves higher equipment utilization
and lower unit trucking costs by using 48' and
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<PAGE> 4

53' high-cube trailers. These trailers provide customers with over 50% more
interior capacity than 40' marine containers but with similar inland
trucking costs. The Company's marine system uses towed ocean-going barges
instead of self-propelled container ships to deliver equivalent units of
capacity at significantly lower capital and operating costs.

Domestic Truckload Operations. The Company believes that it is the
only carrier using its own fleet of tractors and high-cube dry van trailers
to provide transportation services between interior points within the
continental U.S. and Puerto Rico. By using high-cube equipment, the
mainstay of the domestic truckload industry and a centralized dispatch
system, the Company can more effectively compete for and obtain domestic
non-Puerto Rico truckload freight while repositioning equipment for Puerto
Rico shipments. As a result, the Company believes that it operates with
lower empty miles and higher equipment utilization than its competitors in
the Puerto Rico trade.

Centralized Operation in Strategic Location. Trailer Bridge operates
a centralized truckload operation from its headquarters in Jacksonville.
Because approximately 70% of the Company's truckload freight is dispatched
through Jacksonville on a regular schedule to meet weekly barge sailings to
Puerto Rico, the Company is able to achieve purchasing, maintenance and
other operating efficiencies and higher driver retention. Additionally, the
Company's centralized Jacksonville headquarters is strategically located
near key southern rail and highway endpoints which connect U.S. cities to
Puerto Rico and other Caribbean points.

Emphasis on U.S. Domestic Ocean Trade. The Company concentrates its
marine operations in markets governed by the Jones Act. The Jones Act
prevents foreign-built or foreign-crewed vessels from competing in ocean
trade between ports in the U.S., including the non-contiguous areas of
Puerto Rico, Alaska, Hawaii and Guam.

Experienced Management Team. The Company's officers and directors
have extensive experience in the transportation industry, including an
average of over 15 years in the marine and trucking industries. All but one
member of the Company's management team have been with the Company since
its inception. The scope of management experience at Trailer Bridge is well
balanced between both trucking and marine transportation.

Trailer Bridge's strategy for continuing its profitable growth includes (i)
increasing capacity in its Puerto Rico service by 56% with the addition of two
new Triplestack Box Carriers(TM), (ii) initiating a new coastwise marine
transportation service that will offer twice-weekly sailings from New York to
Florida utilizing three additional Triplestack Box Carriers(TM) to be built in
1998, and (iii) initiating marine service to other Jones Act protected markets
such as Hawaii and Alaska.

Trailer Bridge was incorporated under the laws of Delaware in April 1991.
The Company's headquarters is located at 9550 Regency Square Blvd, Jacksonville,
Florida 32225, and its telephone number is (800) 554-1589.
4
<PAGE> 5

THE OFFERING

Common Stock offered hereby................. 2,700,000 shares

Common Stock to be outstanding after the
offering.................................... 9,372,500 shares (1)

Use of Proceeds............................. To purchase revenue equipment
(approximately $10.3 million),
reduce indebtedness to an
affiliate (approximately $6.3
million), fund an S
Corporation dividend to
existing stockholders ($6.0
million), and partially fund the
acquisition of new vessels
(approximately $2.2 million).
See "Use of Proceeds."

Nasdaq National Market Symbol............... TRBR
- ---------------

SUMMARY FINANCIAL AND OPERATING DATA
(In thousands, except per share amounts and operating data)

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------------ -----------------
1992 1993 1994 1995 1996(1) 1996(1) 1997
-------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating revenues.................... $ 38,778 $67,613 $72,192 $62,531 $63,148 $14,568 $16,446
Operating income (loss)............... (9,309) 5,094 6,175 8,778 4,425 966 1,748
Nonoperating expense (net)............ (864) (944) (1,805) (1,314) (1,015) (256) (264)
Income (loss) before provision and pro
forma provision (benefit) for income
taxes............................... (10,173) 4,150 4,370 7,464 3,410 710 1,484
Pro forma net income (loss)(2)........ (6,313) 2,526 2,343 4,360 2,073 443 909
Pro forma net income per common
share(3)............................ $ .29 $ .13
Pro forma weighted average shares
outstanding(3)...................... 7,273 7,273
Supplementary pro forma net income per
common share(4)..................... $ .29 $ .12
OPERATING DATA:
Operating ratio(5).................... 124.0% 92.5% 91.4% 86.0% 93.0% 93.4% 89.4%
Vessel utilization outbound........... 60.1% 93.5% 90.9% 96.0% 88.4%(6) 96.3% 78.1%(6)
Vessel utilization inbound............ 12.1% 36.6% 52.8% 51.6% 42.0%(6) 59.8% 33.6%(6)
Overall vessel capacity utilization... 36.1% 65.0% 71.8% 73.8% 65.3%(6) 78.1% 55.8%(6)
Tractor loaded mile percentage........ 79.1% 87.1% 86.2% 81.0% 81.5% 83.0% 80.5%
Weighted average tractors............. 178 199 256 187 163 174 154
Weighted average trailers............. 923 1,629 1,605 1,458 1,762 1,400 1,983
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1997 PRO FORMA
----------------------- AS
ACTUAL PRO FORMA(7) ADJUSTED(8)
-------- ------------ -----------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)................................. $ (2,823) $(8,823)(9) $ 3,477
Net property and equipment................................ 14,349 14,349 24,627
Total assets.............................................. 26,440 26,440 39,340
Long-term debt, capital lease obligations and due to
affiliate(10)........................................... 15,242 15,242 9,364
Stockholders' equity...................................... 6,314 314 24,442
</TABLE>

- ---------------

(3) Pro forma net income per share reflects a 15,700-for-1 stock split that
will become effective in connection with the offering and the issuance of
600,000 shares of Common Stock to fund the payment of a $6.0 million S
Corporation dividend to existing stockholders with a portion of the net
proceeds of the offering.
(4) The Company expects to use a portion of the net proceeds from the offering
to repay amounts due to affiliate. Supplementary pro forma net income per
share reflects the interest savings and the issuance of approximately
782,500 shares of Common Stock to fund the repayment, assuming the issuance
and repayment had occurred on January 1, 1996.
(5) Operating expenses as a percentage of revenue.
(6) From mid-February through mid-July 1996, only one of the Company's two
vessels was in service at a time due to the Company's mid-body expansion
program, and the Company operated during this period with a second, smaller
substitute vessel. Vessel capacity outbound to Puerto Rico and inbound to
the U.S. increased from 266 48' trailer equivalents at February 1, 1996 to
416 48' trailer equivalents at July 31, 1996.
(7) Adjusted to reflect the $6.0 million S Corporation dividend to be paid to
existing stockholders with a portion of the net proceeds of the offering.
(8) Adjusted to reflect (i) the sale of 2,700,000 shares of Common Stock
offered by the Company and the application of the estimated net proceeds
therefrom as described under "Use of Proceeds," and (ii) a non-cash charge
(that would have been approximately $650,000 at March 31, 1997) that will
result from the termination of the Company's S Corporation status. See "S
Corporation Status."
(9) Reflects short-term obligation to fund dividend payable to existing
stockholders.
(10) Includes current maturities.
7
<PAGE> 8

RISK FACTORS

In addition to the other information in this Prospectus, the following risk
factors should be considered carefully in evaluating an investment in the
Company's Common Stock.

OPERATIONS DEPENDENT ON LIMITED FLEET AND SPECIAL LOADING STRUCTURES

The Company's current operations are dependent upon two vessels and triple
deck loading ramps at the Company's port facilities in Jacksonville, Florida and
San Juan, Puerto Rico, the loss of any of which could have a material adverse
effect on the Company. The operation of any marine vessel involves the risk of
catastrophic events due to various perils of sea. In addition, port facilities
in Jacksonville and San Juan are vulnerable to the risk of hurricanes. In the
event of either a total loss of or major damage to any vessel or ramp, there can
be no assurance that the Company could locate a suitable replacement, or if
available, that such replacement could be obtained on suitable terms. The
Company also would be adversely affected if unexpected maintenance or repairs
were required for any vessel or ramp, all of which have been specially
configured for the Company. The Company does not maintain business interruption
insurance. Accordingly, there can be no assurance that the loss of, damage to or
significant required repair to any of the Company's vessels or port facilities
in the future would not have a material adverse effect on the Company.

CURRENT RELIANCE ON SINGLE MARKET

Most of the Company's present revenue is attributable to freight moving
either to or from Puerto Rico. Freight moving to or from Puerto Rico accounted
for 89.2% of the Company's revenue in 1996 and 93.5% during the three months
ended March 31, 1997. The Company's current results are therefore affected by
economic conditions and business cycles in Puerto Rico that may or may not be
similar to those in the U.S. The Company's present reliance on the Puerto Rico
market makes it susceptible to changes that it would not otherwise be exposed to
if it operated in a more geographically diverse market, including a downturn in
the local economy, local economic and competitive factors, changes in government
regulations and political changes. The U.S. Congress has passed legislation that
establishes a phase-out of Section 936 of the Internal Revenue Code, which
allows for favorable U.S. tax treatment of profits resulting from manufacturing
operations in Puerto Rico. The phase-out began in January 1996 and continues
until January 2006. This favorable tax provision has contributed to economic
growth in Puerto Rico in the past by enticing U.S. corporations to establish
manufacturing operations in Puerto Rico. Any change in Puerto Rico's political
status with the U.S., or the ongoing debate on such status, could affect the
economy of Puerto Rico. The ultimate effect of the phase-out of Section 936 or
of possible changes in Puerto Rico's governmental and political status is
uncertain and, accordingly, there can be no assurance that such issues will not
adversely affect the Company.

NEW VENTURE RISKS

A key element of the Company's strategy for future growth is to expand into
new markets, including the domestic coastwise traffic lanes such as New York to
Florida, while continuing to build the Company's presence in the Puerto Rico
market. In addition, the Company's expansion in both the Puerto Rico and
coastwise traffic lanes will be accomplished with its new Triplestack Box
Carrier(TM) vessels which will require the Company's acquisition of containers,
chassis units and loading equipment that may not be compatible with the
Company's existing vessels and revenue equipment. The planned use of Triplestack
Box Carriers(TM) and expansion into coastal traffic lanes are subject to risks
of establishing a new business, including lack of experience, unforeseen design,
operating and maintenance problems and lack of market acceptance. In the case of
the coastwise traffic lanes, there is presently no comparable marine service and
the Company will be competing with the rail intermodal and truckload industries.
Many competitors in these industries have substantially greater financial
resources, operate more equipment, or carry a larger volume of freight than the
Company. Moreover, the expansion in Puerto Rico with the Triplestack Box
Carriers(TM) and

8
<PAGE> 9

the entry into new coastal traffic lanes will require new marketing strategies,
additional personnel and a continuing evaluation of management structure. No
assurance can be given that Trailer Bridge will be able to attract a sufficient
number of customers at freight rates that result in profitable operations in
Puerto Rico, the Company's anticipated new traffic lanes and the markets it
expects to expand into in the future. See "Business -- Growth Strategy."

SHIP CONSTRUCTION RISKS

The Company has entered into a fixed-price contract for the Company's two
Triplestack Box Carriers(TM), and construction has commenced with the first
vessel scheduled for delivery in November 1997 and the second vessel scheduled
for delivery two months later. No assurance can be given that there will be no
changes in the contract specifications, either as required by various regulatory
bodies or as requested by the Company, which result in an increase in
construction cost and/or a delay in the delivery of the vessels. Construction of
the Triplestack Box Carriers(TM) also involves the risks associated with any
large construction project, such as weather interference, labor shortages, work
stoppages and unforeseen engineering problems, any of which could have the
effect of increasing project costs and/or delaying delivery. During the
construction of a vessel, as a matter of state law, laborers and others who
perform services in connection with such construction may have liens against the
vessel under construction.

RAPID GROWTH OF BUSINESS

The Company expects to increase its capacity by approximately 56% between
October 31, 1997 and January 31, 1998. This new vessel capacity will result in a
need for additional revenue equipment (tractors and trailers) and drivers. There
can be no assurance that the Company will be able to attract and retain enough
qualified drivers to operate planned additions to the equipment fleet. Further,
expected growth, if achieved, may place a significant strain on the Company's
management, working capital, and accounting and other operating systems. There
is no assurance that such systems will be adequate to handle such growth or that
operating margins will not be adversely affected by future changes in and
expansion of the Company's business. Finally, the Company may be required to
curtail its plans for growth due to changes in economic conditions.

POTENTIAL LOSS OF JONES ACT PROTECTION

The Company's marine operations are conducted in the U.S. domestic trade,
which, by virtue of a set of federal laws known as the Jones Act, require that
only U.S. built, owned and crewed vessels move freight between ports in the
U.S., including the non-contiguous areas of Puerto Rico, Alaska, Hawaii and
Guam. There have been repeated attempts to repeal these laws, and efforts to
effect such repeal are expected to continue in the future. The Company is
already subject to vigorous competition and potential additional competition in
its marine operations, including competition by companies with financial
resources greater than those of the Company that could be committed to the
construction of new vessels in excess of market requirements. Repeal of or
significant changes to the Jones Act could result in additional competition from
vessels built in lower-cost foreign shipyards and manned by foreign nationals
accepting lower wages than U.S. citizens. There is no assurance that such repeal
or changes would not have a material adverse effect on the Company in the
domestic trades it now serves or expects to serve in the future.

ECONOMIC FACTORS

The Company has 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, would adversely affect the
Company's operating results. Economic recessions, temporary inventory imbalances
or downturns in customers' business cycles also could have a material adverse
effect upon the operating results of the Company. If the resale value of the
Company's revenue equipment were to decline, the

9
<PAGE> 10

Company could receive less upon the disposition of equipment or find it
necessary to retain its equipment longer, with a resulting increase in operating
expenses. The marine and trucking industries are cyclical with corresponding
changes in revenue and profits. Changes in the level of economic 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 the Company. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

RECRUITMENT AND RETENTION OF QUALIFIED DRIVERS

Competition for drivers is intense in the trucking industry, and the
Company occasionally experiences difficulty attracting and retaining enough
qualified drivers. There is, and historically has been, an industry-wide
shortage of qualified drivers, and this shortage could affect the quality and
reliability of the Company's service, force the Company to significantly
increase the compensation it pays to driver employees, curtail the Company's
growth or otherwise affect the Company's profitability. Difficulty in attracting
and retaining qualified drivers would have a material adverse effect upon the
Company's operations and ability to grow. See "Business -- Driver Recruiting and
Retention."

ACQUISITION OF REVENUE EQUIPMENT

The Company's strategy for continued growth is dependent on the acquisition
and deployment of additional revenue equipment. The Company currently has orders
for the purchase of 100 tractors through February 1998 as part of its normal
tractor replacement program. The Company also has contracted for the
construction of 53' containers and chassis units whose delivery is expected to
coincide with the vessel construction schedule for its new Triplestack Box
Carriers(TM). Delays in the availability of equipment could occur due to work
stoppages at the manufacturer, equipment or supply shortages or other factors
beyond the Company's control. Any delay or interruption in the availability of
equipment in the future could have a material adverse effect on the Company.

COMPETITION

The trucking industry is highly competitive and fragmented and the Puerto
Rico freight market is also highly competitive. The Company currently competes
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. The
Company's planned service in the coastwise traffic lanes will compete with rail
intermodal service and trucking companies. Competition for the freight
transported by the Company is based primarily on freight rates, and, to a lesser
degree, on service and efficiency. Most of the Company's current and future
competitors have substantially greater financial resources, operate more
equipment, or carry a larger volume of freight than the Company. See
"Business -- Competition."

DEPENDENCE ON KEY PERSONNEL

The Company's success depends upon key members of management, particularly
John D. McCown. The loss of Mr. McCown could have a material adverse effect on
the Company. The Company does not maintain key man life insurance policies on
any of its officers or management.

Because Mr. McCown also serves as President and Chief Executive Officer of
the Company's affiliate that owns the two barges operated by the Company, he
will not devote 100% of his working time to Trailer Bridge. It is anticipated
that he will devote less than 5% of his working time to his duties with the
affiliate. See "Management."

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<PAGE> 11

SEASONALITY

The Company's operations are affected by the seasonality of the Puerto Rico
freight market where shipments are generally reduced during the first calendar
quarter and increased during the fourth calendar quarter of each year in
anticipation of Christmas. This seasonality is expected to have a greater impact
on the Company when it increases its capacity with the addition of two new
Triplestack Box Carriers(TM). In addition, the Company's operating expenses have
historically been higher in the winter months due to decreased fuel efficiency
and increased maintenance costs in colder weather. The Company's operating
revenue and net income may vary as a result of these factors, and accordingly,
results of operations are subject to fluctuation, and results in any period
should not be considered indicative of the results to be expected for any future
period. Fluctuations in operating results may also result in fluctuations in the
price of the Common Stock. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Seasonality."

FUEL PRICE FLUCTUATIONS

Fuel is one of the Company's largest operating expenses and was 9.5% of
total revenue for the three months ended March 31, 1997. The cost and
availability of fuel is subject to many economic and political factors. Any
increase in fuel taxes or fuel prices, to the extent not offset by freight rate
increases, or any interruption in the supply of fuel, could have a material
adverse effect on the Company's operating results. The Company has no agreement
in place that assures either price or availability and a dramatic increase in
the price of fuel or a shortage of fuel could have a material adverse impact on
the Company. See "Business -- Fuel Availability and Cost."

ENVIRONMENTAL MATTERS

The Company's operations are subject to various environmental laws and
regulations dealing with the transportation, storage, presence, use, disposal
and handling of hazardous materials and hazardous wastes, discharge of storm
water and vessel fuel delivery. The Company does not maintain either aboveground
or underground fuel storage tanks on its properties. Contractors under the
direction of the tug owner handle the delivery of fuel to ocean-going tugs. The
Company is not aware of any fuel spills on land or at sea or hazardous substance
contamination on its properties and believes that its operations are in material
compliance with existing environmental laws and regulations. However, if any
such substances were found on the Company's properties or if the Company were
found to be in violation of applicable laws and regulations, the Company could
be responsible for clean-up costs, property damage, and fines or other
penalties, any one of which could have a material adverse effect on the Company.

CLAIMS EXPOSURE AND INSURANCE COSTS

Trucking and marine transportation companies, including the Company, face
multiple claims for personal injury and property damage relating to accidents,
cargo damage and workers' compensation. The Company currently maintains a broad
range of liability and property insurance covering its business. To the extent
that the Company experiences a material increase in the frequency or severity of
accidents or workers' compensation claims, or unfavorable developments on
existing claims, the Company's operating results and financial condition could
be materially adversely affected. Significant increases in the Company's claims
and insurance cost, to the extent not offset by rate increases, would reduce the
Company's profitability. See "Business -- Safety and Insurance."

GOVERNMENT REGULATION

The Company is subject to regulation by various federal and state agencies,
including the Surface Transportation Board, the successor agency to the
Interstate Commerce Commission, the United States Department of Transportation,
the U.S. Coast Guard and various similar state agencies.

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<PAGE> 12

These regulatory authorities have broad powers, generally governing activities
such as authority to engage in motor carrier operations, operational safety,
accounting systems, tariff filings of freight rates, certain mergers,
consolidations and acquisitions, and financial reporting. The Company's marine
operations are conducted in the U.S. domestic trade, which, by virtue of a set
of federal laws known as the Jones Act, require that only U.S. built, owned and
crewed vessels move freight between ports in the U.S., including the
noncontiguous areas of Puerto Rico, Alaska, Hawaii and Guam. The Company is also
subject to regulations promulgated by the Environmental Protection Agency and
similar state agencies. Although management believes that its operations are in
material compliance with current laws and regulations, there can be no assurance
that current regulatory requirements will not change or that currently
unforeseen environmental incidents will not occur or that contamination or past
noncompliance with environmental laws will not be discovered on properties on
which the Company has operated. See "Business -- Regulation."

RELIANCE ON SIGNIFICANT CUSTOMERS

For the year ended December 31, 1996, the Company's 25 largest customers
represented 35.2% of revenue, its ten largest customers represented 22.9% of
revenue, and its five largest customers represented 15.8% of revenue. Those same
customers represented 26.7%, 17.8% and 13.6%, respectively, of total revenue for
the year ended December 31, 1995. Most of the Company's contracts with customers
are cancelable on 30 days' notice and the penalties for a shipper for breach of
contract are minimal. The loss of any of its major customers could have a
material adverse effect on the Company's operating results and profitability.
See "Business -- Marketing and Customers."

CAPITAL REQUIREMENTS

The trucking industry and the vessels utilized to move truckload freight
require extensive investment in revenue equipment. The Company historically has
relied upon vessel charters, debt and equipment leases to finance revenue
equipment, and it has granted its lenders liens on substantially all of its
assets. If in the future the Company were unable to borrow sufficient funds,
enter into acceptable lease arrangements, sell or trade its used equipment at
acceptable prices, or raise additional equity capital, the resulting capital
shortage would limit the Company's growth and force the Company to operate its
revenue equipment for longer periods, which would be likely to adversely affect
the Company's growth and profitability. See "Use of Proceeds," "Capitalization,"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

VOTING CONTROL OF THE COMPANY

Upon completion of the offering, Malcom P. McLean and Clara L. McLean will
beneficially own approximately 71% of all of the outstanding shares of Common
Stock. Accordingly, Malcom P. McLean and Clara L. McLean will have the ability
to elect the entire Board of Directors of the Company, determine the outcome of
all matters involving a stockholder vote, and take certain actions by written
consent with notice to the other stockholders. See "Principal Stockholders" and
"Description of Capital Stock."

RESTRICTION ON FOREIGN OWNERSHIP AND POSSIBLE REQUIRED DIVESTITURE OF STOCK

In order to maintain the eligibility of the Company to own and operate
vessels in the U.S. domestic trade, 75% of the outstanding capital stock and
voting power of the Company is required to be held by U.S. citizens. Although
the Company's Certificate of Incorporation contains provisions limiting
non-citizenship ownership of its capital stock, the Company could lose its
ability to conduct operations in the U.S. domestic trade if such provisions
prove unsuccessful in maintaining the required level of citizen ownership. Such
loss would have a material adverse effect on the Company. If the Company
determines that persons who are not citizens of the U.S. own more than 24.99% of
the Company's outstanding capital stock or more than 24.99% of the voting power
of the Company,

12
<PAGE> 13

the Company may redeem such stock or, if redemption is not permitted by
applicable law or the Board of Directors, in its discretion, elects not to make
such redemption, the Company may require the non-citizens who most recently
acquired shares to divest such excess shares to persons who are U.S. citizens in
such manner as the Board of Directors directs. The required redemption would be
at a price equal to the average closing price during the preceding 30 trading
days, which price could be materially different from the current price of the
Common Stock or the price at which the non-citizen acquired the Common Stock. If
a non-citizen purchases the Common Stock, there can be no assurance that he will
not be required to divest the shares and such divestiture could result in a
material loss. See "Description of Capital Stock -- Foreign Ownership
Restrictions."

LIMITATIONS ON TAKEOVERS

Certain corporate governance and statutory provisions may inhibit changes
in control of the Company. Applicable provisions of Delaware law restrict the
ability of certain acquirers to engage in un-approved business combinations with
the Company. The Company's Certificate of Incorporation permits the issuance of
additional shares of authorized but unissued Common Stock and allows the Board
of Directors to establish all relevant provisions of and issue up to 1,000,000
shares of preferred stock without further action by the stockholders. Such
preferred stock could be used, for example, in a stockholder rights plan. See
"Description of Capital Stock." In addition, Malcom P. McLean and Clara L.
McLean beneficially own stock entitled to a majority of the voting power of all
of the Company's outstanding Common Stock. The effect of these provisions and
the concentration of stock ownership could be to make a takeover more difficult
or to discourage a person from attempting a takeover, including a takeover that
some stockholders may deem to be in their best interests.

SHARES ELIGIBLE FOR FUTURE SALE

Sales of a substantial number of shares of Common Stock or the availability
of such shares for sale in the public market following the offering may
adversely affect prevailing market prices for the Common Stock and may make it
more difficult for the Company to sell its equity securities in the future on
terms it deems acceptable. Upon completion of the offering, the Company will
have 9,372,500 shares of outstanding Common Stock. All 2,700,000 shares of
Common Stock offered hereby will be freely tradable without restriction. The
remaining 6,672,500 shares owned by existing stockholders will be eligible for
sale under Rule 144 of the Securities Act of 1933 (the "Securities Act")
beginning 180 days after the date of this Prospectus.

LACK OF DIVIDENDS

After the closing of the offering, the Company intends to retain its
earnings to finance the growth and development of its business and does not
anticipate paying cash dividends. Any payment of cash dividends in the future
will depend upon the Company's financial condition, capital requirements,
earnings, restrictions under loan agreements and other factors the Board of
Directors may deem relevant. See "Dividend Policy."

NO PRIOR PUBLIC MARKET FOR COMMON STOCK; DETERMINATION OF OFFERING PRICE

Prior to the offering, there has been no public market for the Common
Stock, and there can be no assurance that an active trading market will develop
or, if developed, that such market will be sustained or that the stock will
trade at or above the initial public offering price. The initial public offering
price of the Common Stock offered hereby will be determined by negotiation
between the Company and the Underwriters and may bear no relationship to the
price at which the Common Stock will trade after completion of the offering. See
"Underwriting" for a discussion of the factors to be considered in determining
the initial public offering price. In addition, from time to time the stock
market experiences price and volume volatility, which may affect the market
price of the Common Stock for reasons unrelated to the Company's performance.

13
<PAGE> 14

DILUTION

Purchasers of Common Stock in the offering will incur immediate and
substantial dilution in net tangible book value of $7.49 per share. While such
purchasers will have provided virtually 100% of the aggregate consideration paid
for the shares of Common Stock that will be outstanding after the offering, they
will beneficially own only 28.8% of such shares. See "Dilution."

S CORPORATION STATUS

Since January 1, 1992, the Company has been treated as an S Corporation
under the Internal Revenue Code and the laws of the states that recognize S
Corporation status. Accordingly, the Company's net income was reported by and
taxed directly to the Company's stockholders rather than to the Company. The
Company's S Corporation status will terminate with the closing of the offering,
and in future periods the Company will be subject to federal and state taxes at
applicable rates. The termination of the Company's S Corporation status will
result in a one-time, non-cash charge to the Company (that would have been
approximately $650,000 at March 31, 1997) in recognition of deferred income
taxes.

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 2,700,000 shares of
Common Stock offered hereby are estimated to be approximately $24.8 million
($28.5 million if the Underwriters' over-allotment option is exercised in full),
after deducting underwriting discounts, commissions and estimated expenses of
the offering.

Approximately $10.3 million of the net proceeds will be used to purchase
revenue equipment scheduled for delivery in late 1997 and early 1998. The
revenue equipment includes the 53' containers and chassis units that will be
utilized with the two Triplestack Box Carriers(TM) now being constructed to
expand the Company's service in the Puerto Rico traffic lane. Approximately $6.3
million of the net proceeds will be used to repay debt due to Kadampanattu
Corp., which is wholly owned by Malcom P. McLean, the Company's principal
stockholder. An additional $6.0 million will be used to fund the payment of an S
Corporation dividend to existing stockholders. The debt to be repaid bears
interest at 8.0% per annum and matures on December 31, 1997. Approximately $1.5
million of such debt was incurred in 1997 to fund the Company's 12.5% down
payment on the construction of two Triplestack Box Carriers(TM). The
approximately $2.2 million of remaining net proceeds will be used to fund the
required 12.5% down payment on three additional Triplestack Box Carriers(TM),
which is currently expected to be made in the third quarter of 1997.

The net proceeds from any exercise of the Underwriters' over-allotment
option will be used to purchase additional revenue equipment and for working
capital and general corporate purposes.

Pending application of the net proceeds as described above, the Company
intends to invest such proceeds in short-term, investment grade,
interest-bearing securities.

DIVIDEND POLICY

The Company currently intends to retain its earnings to finance the growth
and development of its business and does not anticipate paying cash dividends.
Any payment of cash dividends in the future will depend upon the Company's
financial condition, capital requirements, earnings, restrictions under loan
agreements and other factors the Board of Directors may deem relevant.

As an S Corporation, the Company has paid dividends to its stockholders
from time to time in part to partially fund or offset their tax liability with
respect to S Corporation earnings. See "S Corporation Status." Since the
Company's inception, it has paid aggregate dividends of $2.6 million. The
Company also intends to pay an S Corporation dividend of $6.0 million to its
existing stockholders with a portion of the net proceeds of the offering.

14
<PAGE> 15

CAPITALIZATION

The following table sets forth the current portion of long-term debt,
capital lease obligations, due to affiliate and capitalization of the Company as
of March 31, 1997 (i) on an actual basis after giving retroactive effect to the
stock split and related increase in authorized capital stock in connection with
this offering, (ii) on a pro forma basis to give effect to the contemplated $6.0
million S Corporation dividend to existing stockholders, and (iii) on a pro
forma basis as adjusted to give effect to the application of the net proceeds
from the sale of the 2,700,000 shares of Common Stock pursuant to this offering
as set forth in "Use of Proceeds":

<TABLE>
<CAPTION>
MARCH 31, 1997
---------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Current portion of long-term debt and capital lease
obligations........................................ $ 2,902 $2,902 $ 2,902
Due to affiliate..................................... 5,878 5,878 --
------- ------ -------
$ 8,780 $8,780 $ 2,902
======= ====== =======

Long-term debt and capital lease obligations (net of
current portion)................................... $ 6,462 $6,462 $ 6,462
Stockholders' equity:
Preferred stock: $.01 par value, 1,000,000 shares
authorized, no shares outstanding............... -- -- --
Common Stock, $.01 value, 20,000,000 shares
authorized; 6,672,500 shares issued and
outstanding, 9,372,500 shares issued and
outstanding as adjusted(1)...................... 67 67 94
Additional paid-in capital........................... (67) (67) 24,684
Retained earnings.................................... 6,314 314 (336)(2)
------- ------ -------
Total stockholders' equity...................... 6,314 314 24,442(2)
------- ------ -------
Total capitalization....................... $12,776 $6,776 $30,904
======= ====== =======
</TABLE>

- ---------------

(1) Excludes 785,000 shares of Common Stock reserved for issuance to employees
under the Company's Incentive Stock Plan (of which options to purchase
471,000 shares at the initial public offering price have been granted). See
"Management -- Incentive Stock Plan."
(2) Reflects a non-cash charge (that would have been $650,000 at March 31, 1997)
that will result from the termination of the Company's S Corporation status.
See Note 3 to the Financial Statements.

15
<PAGE> 16

DILUTION

The net tangible book value of the Company's Common Stock as of March 31,
1997 was approximately $5.4 million, or $.80 per share. Net tangible book value
per share represents the amount of the Company's stockholders' equity, less
intangible assets (consisting of goodwill), divided by 6,672,500 shares of
Common Stock outstanding.

Net tangible book value dilution per share represents the difference
between the amount per share paid by purchasers of shares of Common Stock in the
offering made hereby and the pro forma net tangible book value per share of
Common Stock immediately after completion of the offering. After giving effect
to (i) the sale of 2,700,000 shares of Common Stock in the offering, (ii) the
application of the estimated net proceeds therefrom, and (iii) the non-cash
charge (that would have been $650,000 at March 31, 1997) in recognition of
deferred income taxes as described in "S Corporation Status," the pro forma net
tangible book value of the Company as of March 31, 1997, would have been $23.5
million, or $2.51 per share. This represents an immediate increase in net
tangible book value of $1.81 per share to existing stockholders and an immediate
dilution in pro forma net tangible book value of $7.49 per share to purchasers
of shares of Common Stock in the offering, as illustrated in the following
table:

<TABLE>
<S> <C> <C>
Public offering price per share............................. $10.00
Net tangible book value per share at March 31, 1997....... $ .80
Pro forma non-cash adjustment to recognize deferred income
taxes.................................................. (.10)
Increase per share attributable to new investors.......... 1.81
Pro forma net tangible book value per share after the
offering.................................................. 2.51
------
Net tangible book value dilution per share to new
investors................................................. $ 7.49
======
</TABLE>

The following table sets forth as of March 31, 1997 the difference between
existing stockholders and the purchasers of shares in the offering with respect
to the number of shares purchased from the Company, the total consideration
paid, and the average price per share paid:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------- --------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders................. 6,672,500 71.2% $ 425 --% $ --
New investors......................... 2,700,000 28.8% 27,000,000 100.0% $10.00
--------- ----- ----------- -----
Total....................... 9,372,500 100.0% $27,000,425 100.0%
========= ===== =========== =====
</TABLE>

16
<PAGE> 17

SELECTED FINANCIAL AND OPERATING DATA

The selected financial data set forth below has been derived from the
financial statements of the Company. The financial statements as of December 31,
1995 and 1996 and for each of the three years in the period ended December 31,
1996 have been audited by Deloitte & Touche LLP, independent auditors, and such
financial statements and the report thereon are included in this Prospectus. The
financial statements as of December 31, 1992, 1993 and 1994 and for each of the
two years in the period ended December 31, 1993 have also been audited and are
not included herein. The financial statements as of March 31, 1996 and 1997 and
for the three months then ended are unaudited. However, in the opinion of
management, all adjustments of a normal recurring nature which are necessary to
present a fair statement of the results for the interim periods have been made.
The unaudited results of operations for the interim periods are not necessarily
indicative of the results for the full year. The selected financial information
set forth below should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Financial
Statements appearing elsewhere in this Prospectus, including the notes thereto.

<TABLE>
<CAPTION>
Three Months
Ended
Year Ended December 31, March 31,
---------------------------------------------------- -------------------
1992 1993 1994 1995 1996(1) 1996(1) 1997
-------- -------- -------- -------- -------- -------- --------
(In thousands, except per share amounts and operating data)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating revenues...................... $ 38,778 $ 67,613 $ 72,192 $ 62,531 $ 63,148 $ 14,568 $ 16,446
Operating expenses:
Salaries, wages and benefits.......... 10,443 15,831 19,307 14,592 13,289 3,435 3,404
Rent and purchased transportation..... 17,320 23,398 19,616 14,497 16,231 3,430 4,211
Fuel.................................. 3,440 4,240 5,429 5,256 5,883 1,468 1,557
Operations and maintenance............ 7,512 9,192 11,781 10,553 14,211 3,046 3,206
Taxes and licenses.................... 392 989 960 589 455 138 156
Insurance and claims.................. 1,331 2,051 2,202 1,861 2,121 514 522
Communications and utilities.......... 631 824 834 621 608 143 134
Depreciation and amortization......... 1,418 1,370 2,647 2,761 2,944 701 689
Other operating expenses.............. 5,600 4,624 3,241 3,023 2,981 727 819
-------- -------- -------- -------- -------- -------- --------
Total operating expenses.......... 48,087 62,519 66,017 53,753 58,723 13,602 14,698
-------- -------- -------- -------- -------- -------- --------
Operating income (loss)................. (9,309) 5,094 6,175 8,778 4,425 966 1,748
Interest expense, net................... (864) (1,384) (1,817) (1,362) (1,082) (247) (264)
Gain (loss) on sale of equipment........ -- 440 12 48 67 (9) --
-------- -------- -------- -------- -------- -------- --------
Total nonoperating expense, net... (864) (944) (1,805) (1,314) (1,015) (256) (264)
-------- -------- -------- -------- -------- -------- --------
Income (loss) before provision and pro
forma provision (benefit) for income
taxes................................. (10,173) 4,150 4,370 7,464 3,410 710 1,484
Provision for income taxes.............. -- 9 12 67 39 8 29
-------- -------- -------- -------- -------- -------- --------
Income (loss) before pro forma provision
(benefit) for income taxes............ (10,173) 4,141 4,358 7,397 3,371 702 1,455
Pro forma provision (benefit) for income
taxes(2).............................. (3,860) 1,615 2,015 3,037 1,298 259 546
-------- -------- -------- -------- -------- -------- --------
Pro forma net income (loss)(2).......... $ (6,313) $ 2,526 $ 2,343 $ 4,360 $ 2,073 $ 443 $ 909
======== ======== ======== ======== ======== ======== ========
Pro forma net income per common
share(3).............................. $ .29 $ .13
======== ========
Pro forma weighted average shares
outstanding(3)........................ 7,273 7,273
Supplementary pro forma net income per
common share(4)....................... $ .29 $ .12
OPERATING DATA:
Operating ratio(5)...................... 124.0% 92.5% 91.4% 86.0% 93.0% 93.4% 89.4%
Vessel utilization outbound............. 60.1% 93.5% 90.9% 96.0% 88.4%(6) 96.3% 78.1%(6)
Vessel utilization inbound.............. 12.1% 36.6% 52.8% 51.6% 42.0%(6) 59.8% 33.6%(6)
Overall vessel capacity utilization..... 36.1% 65.0% 71.8% 73.8% 65.3%(6) 78.1% 55.8%(6)
Tractor loaded mile percentage.......... 79.1% 87.1% 86.2% 81.0% 81.5% 83.0% 80.5%
Weighted average tractors............... 178 199 256 187 163 174 154
Weighted average trailers............... 923 1,629 1,605 1,458 1,762 1,400 1,983
</TABLE>

17
<PAGE> 18

<TABLE>
<CAPTION>
December 31, March 31,
---------------------------------------------------- -------------------
1992 1993 1994 1995 1996(1) 1996(1) 1997
-------- -------- -------- -------- -------- -------- --------
(In thousands, except per share amounts and operating data)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital deficit................. $(15,725) $(13,174) $(10,188) $ (4,697) $ (1,719) $ (3,712) $ (2,823)
Net property and equipment.............. 4,620 9,428 11,118 8,851 12,512 8,189 14,349
Total assets...................... 13,816 20,688 23,521 20,226 24,764 18,557 26,440
Long-term debt, capitalized leases and
due to affiliate(7)................... 18,597 22,771 20,776 13,461 13,879 11,085 15,242
Stockholders' equity (deficit).......... (11,356) (7,214) (2,856) 2,673 6,045 3,376 6,314
</TABLE>

- ---------------

(1) During 1996, each of the Company's barge vessels was increased in size
through a mid-body expansion program that resulted in a 56% increase in
vessel capacity and was accomplished over a six-month period. From
mid-February through mid-July 1996, only one of the Company's vessels was in
service at a time. To maintain weekly service frequency, a smaller
substitute vessel was utilized, resulting in both reduced revenue and
additional costs. For these reasons, management believes that overall 1996
results are not indicative of the results that would be expected had both of
the Company's vessels remained in service throughout the year.
(2) Since January 1, 1992, the Company has operated as an S Corporation under
the Internal Revenue Code and the laws of the states that recognize S
Corporation status. As a result, the Company's taxable earnings were taxed
directly to the Company's then-existing stockholders. Pro forma net income
assumes that the Company was subject to federal and state income taxes and
was taxed as a C Corporation at the effective tax rates that would have
applied for all periods. See Note 2 to the Financial Statements. With the
closing of the offering, the Company will become subject to federal and
state income taxes. The pro forma statement of operations data do not give
effect to a non-cash charge (that would have been approximately $650,000 at
March 31, 1997) in recognition of deferred income taxes that will result
from the termination of the Company's S Corporation status upon
effectiveness of the offering.
(3) Pro forma net income per share reflects a 15,700-for-1 stock split that will
become effective in connection with the offering and the issuance of 600,000
shares of Common Stock to fund the payment of a $6.0 million S Corporation
dividend to existing stockholders with a portion of the net proceeds of the
offering.
(4) The Company expects to use a portion of the net proceeds from the offering
to repay amounts due to affiliate. Supplementary pro forma net income per
share reflects the interest savings and the issuance of approximately
782,500 shares of Common Stock to fund the repayment, assuming the issuance
and repayment had occurred on January 1, 1996.
(5) Operating expenses as a percentage of revenue.
(6) From mid-February through mid-July 1996, only one of the Company's two
vessels was in service at a time due to the Company's mid-body expansion
program, and the Company operated during this period with a second, smaller
substitute vessel. Vessel capacity outbound to Puerto Rico and inbound to
the U.S. increased from 266 48' trailer equivalents at February 1, 1996 to
416 48' trailer equivalents at July 31, 1996.
(7) Includes current maturities.

18
<PAGE> 19

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Trailer Bridge was incorporated in 1991. In February 1992, the Company
commenced integrated truckload and marine services between the U.S. and Puerto
Rico utilizing high-cube truckload equipment and two ocean-going barges. The
Company generates revenue by providing integrated truckload and marine freight
transportation between Puerto Rico and points within the continental U.S.
("Puerto Rico revenue") and to a lesser extent by providing truckload freight
transportation between points within the continental U.S. ("non-Puerto Rico
revenue"). In April 1992, Trailer Bridge acquired a Midwestern truckload carrier
with significant non-Puerto Rico revenue, primarily to increase the size of the
Company's truckload fleet. Starting in late 1994, Trailer Bridge began to
increase its focus on serving marine related markets by reducing inland
truckload service in traffic lanes which were not complementary to lanes serving
Puerto Rico freight customers.

The table below reflects Puerto Rico revenue, non-Puerto Rico revenue and
total revenue for the three years ended December 31, 1996 and the three months
ended March 31, 1996 and 1997:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------------------------------------- -------------------------------------
1994 1995 1996 1996 1997
----------------- ----------------- ----------------- ----------------- -----------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Puerto Rico............. $50,829 70.4% $53,167 85.0% $56,347 89.2% $12,638 86.8% $15,378 93.5%
Non-Puerto Rico......... 21,363 29.6 9,364 15.0 6,801 10.8 1,930 13.2 1,068 6.5
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Total................... $72,192 100.0% $62,531 100.0% $63,148 100.0% $14,568 100.0% $16,446 100.0%
======= ===== ======= ===== ======= ===== ======= ===== ======= =====
</TABLE>

During 1996, each of the Company's barge vessels was increased in size
through a mid-body expansion program that resulted in a 56% increase in vessel
capacity and was accomplished over a six-month period. From mid-February through
mid-July 1996, only one of the Company's vessels was in service at a time. To
maintain weekly service frequency, a smaller substitute vessel was utilized,
resulting in both reduced revenue and additional costs. For these reasons,
management believes that overall 1996 results are not indicative of the results
that would be expected had both of the Company's vessels remained in service
throughout the year.

The Company is in the process of compiling preliminary results for the
second quarter of 1997 and expects to report revenues of approximately $16
million for the three months ended June 30, 1997. See "-- Seasonality." In
addition, on May 21, 1997, the majority stockholder of the Company granted to
the Company's Chairman and Chief Executive Officer, an option to purchase up to
942,000 shares of Common Stock (adjusted for the 15,700-for-1 stock split) owned
by him at $.95 per share or an aggregate price of $891,330 for all shares. These
options are immediately exercisable and have a term of 10 years. In connection
with this option, the Company expects to record a nonrecurring, noncash charge
for compensation expense and a credit to paid-in capital of approximately $8.5
million in the second quarter of 1997, representing the difference between the
exercise price and the initial public offering price of $10.00 per share. This
option does not involve the issuance of additional shares of Common Stock by the
Company and therefore, any subsequent purchase of shares under the option will
not have a dilutive effect on the Company's book value or earnings per share
amounts. As a result of the grant of the option, the Company will report a
significant loss in the second quarter of 1997.

19
<PAGE> 20

RESULTS OF OPERATIONS

The following table sets forth the percentage relationship of certain items
to operating revenues for the periods indicated:

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------ -------------
1994 1995 1996 1996 1997
------ ------ ------ ----- -----
<S> <C> <C> <C> <C> <C>
Operating revenues................................. 100.0% 100.0% 100.0% 100.0% 100.0%
Operating expenses:
Salaries, wages, and benefits.................... 26.7 23.3 21.0 23.6 20.7
Rent and purchased transportation................ 27.2 23.2 25.7 23.6 25.6
Fuel............................................. 7.5 8.4 9.3 10.1 9.5
Operations and maintenance....................... 16.3 17.0 22.5 20.9 19.5
Taxes and licenses............................... 1.3 0.9 0.7 0.9 0.9
Insurance and claims............................. 3.1 3.0 3.4 3.5 3.2
Communications and utilities..................... 1.2 1.0 1.0 1.0 0.8
Depreciation and amortization.................... 3.7 4.4 4.7 4.8 4.2
Other operating expenses......................... 4.4 4.8 4.7 5.0 5.0
----- ----- ----- ----- -----
Total operating expenses................. 91.4 86.0 93.0 93.4 89.4
----- ----- ----- ----- -----
Operating income................................... 8.6 14.0 7.0 6.6 10.6
Interest expense, net.............................. (2.5) (2.2) (1.7) (1.7) (1.6)
Gain (loss) on sale of equipment................... 0.0 0.1 0.1 (0.0) 0.0
----- ----- ----- ----- -----
Total nonoperating expense, net.................. (2.5) (2.1) (1.6) (1.7) (1.6)
Income before provision and pro forma provision for
income taxes..................................... 6.1 11.9 5.4 4.9 9.0
Provision for income taxes......................... 0.1 0.1 0.1 0.1 0.2
----- ----- ----- ----- -----
Income before pro forma provision for income
taxes............................................ 6.0 11.8 5.3 4.8 8.8
Pro forma provision for income taxes............... 2.8 4.8 2.0 1.8 3.3
----- ----- ----- ----- -----
Pro forma net income............................... 3.2% 7.0% 3.3% 3.0% 5.5%
===== ===== ===== ===== =====
</TABLE>

Three Months Ended March 31, 1997 Compared to Three Months Ended March 31,
1996

Operating revenues increased $1.8 million, or 12.9%, to $16.4 million
during the three months ended March 31, 1997 from $14.6 million during the year
earlier period. This increase was due to a $2.7 million (21.7%) increase in
Puerto Rico revenue through the utilization of a portion of the additional
capacity resulting from the mid-body project, partially offset by a $862,000
(44.7%) decrease in non-Puerto Rico revenue as available tractor capacity was
targeted further towards Puerto Rico revenue. Vessel capacity utilization on the
core continental U.S. to Puerto Rico traffic lane was 78.1% during the three
months ended March 31, 1997, compared to 96.3% during the year earlier period
during which a smaller substitute vessel was utilized.

Salaries, wages, and benefits expense was $3.4 million for the three months
ended March 31, 1997, a decrease of $31,000 from the year earlier period due to
a reduction in drivers. As a percentage of revenue, salaries, wages and benefits
expense decreased to 20.7% during the three months ended March 31, 1997 from
23.6% for the year earlier period. This decrease was attributable to the
increased relative proportion of Puerto Rico revenue, which is not as labor
intensive as non-Puerto Rico revenue.

Rent and purchased transportation expense (which includes the tug
time-charter and vessel charter paid by the Company as well as expenses related
to leasing of rolling stock) increased $781,000 from the year earlier period
primarily due to a $980,000 increase in charter fees for the expanded vessels,
partially offset by a $242,000 net reduction in rolling stock rental costs as a
result

20
<PAGE> 21

of an increase in the proportion of owned as compared to leased equipment. Rent
and purchased transportation increased to 25.6% of revenue during the three
months ended March 31, 1997 compared to 23.6% of revenue during the year earlier
period as a result of the increased charter fees.

Fuel expense as a percentage of revenue was 9.5% during the three months
ended March 31, 1997 compared to 10.1% during the year earlier period. This
decrease was primarily due to additional Puerto Rico revenue that generally has
a lower fuel cost compared to non-Puerto Rico revenue, partially offset by an
increase in average fuel prices.

Operations and maintenance expense (which includes marine terminal rental
and cargo-handling costs) was $3.2 million for the three months ended March 31,
1997, up from $3.0 million for the year earlier period. As a percentage of
revenue, operations and maintenance expense decreased to 19.5% from 20.9% during
the year earlier period. The improvement resulted from the elimination of
temporary inefficiencies and increased per unit handling costs associated with
the use of a smaller substitute vessel during the 1996 mid-body expansion
program, partially offset by the higher operating costs associated with the
Company's expanded Puerto Rico operations.

Insurance and claims expense decreased to 3.2% of revenue during the three
months ended March 31, 1997 from 3.5% of revenue during the year earlier period.
This decrease was attributable to additional Puerto Rico revenue, which
generally has a lower payroll insurance cost than non-Puerto Rico revenue.

Communications and utilities expense decreased to 0.8% of revenue during
the three months ended March 31, 1997 from 1.0% of revenue during the year
earlier period. This decrease was attributable to additional Puerto Rico
revenue, which generally requires less communication and therefore has a lower
communication cost than non-Puerto Rico revenue.

Depreciation and amortization expense decreased to 4.2% of revenue during
the three months ended March 31, 1997 from 4.8% of revenue during the year
earlier period. This decrease was attributable to the increased relative
significance of Puerto Rico revenue, which to date has not required the same
proportionate investment in depreciable equipment as non-Puerto Rico revenue.
Unlike the present vessels, the Triplestack Box Carriers(TM) being built in 1997
will be owned by the Company and will be depreciated by the Company.

Other operating expense (which includes office building rent and general
supplies) was $819,000 during the three months ended March 31, 1997, compared to
$727,000 for the year earlier period. As a percentage of revenue, other
operating expense remained constant at 5.0%.

The Company's operating ratio improved to 89.4% during the first quarter of
1997 from 93.4% during the year earlier period primarily as a result of the
increased Puerto Rico revenue that resulted from the Company's 1996 mid-body
expansion program, as well as a related increase in the Company's ability to use
available trucking capacity for its more profitable core Puerto Rico traffic.

Interest expense (net) decreased slightly to 1.6% of revenue during the
three months ended March 31, 1997 due to reductions in average outstanding
balances (primarily amounts owed to an affiliate).

As a result of the factors described above, pro forma net income more than
doubled to $909,000 (5.5% of revenue) during the three months ending March 31,
1997 from $443,000 (3.0% of revenue) during the year earlier period.

Year ended December 31, 1996 Compared to Year ended December 31, 1995

During 1996, the Company implemented an expansion program that increased
the capacity of its vessels by 56% through the insertion of a mid-body in both
of its vessels. Throughout the six-month construction period, only one of the
Company's vessels was in service along with, first, a substitute vessel
one-third smaller, followed by a substitute vessel more than two-thirds smaller
than the Company's pre-modified vessels. One of the Company's vessels was out of
service from

21
<PAGE> 22

mid-February to mid-May, while the other was out of service from mid-May to
mid-July 1996. Although weekly service was maintained, the resulting
fluctuations in vessel capacity led to inefficiencies, temporary loss of
business and increased costs in all cost categories, most notably in the marine
cargo handling area.

Operating revenues increased $617,000 (1.0%) to $63.1 million during 1996
from $62.5 million during 1995. This reflects a $3.2 million (6.0%) increase in
Puerto Rico revenue, substantially offset by a $2.6 million (27.4%) decrease in
non-Puerto Rico revenue. The decrease in non-Puerto Rico revenue resulted from a
shift in the Company's business away from domestic traffic lanes which were not
complementary to Puerto Rico traffic lanes and a decrease in the average length
of domestic hauls.

Salaries, wages and benefits expense decreased slightly to $13.3 million
during 1996 from $14.6 million for 1995, and decreased as a percentage of
revenue to 21.0% during 1996 from 23.3% during 1995. This decrease as a
percentage of revenues was attributable to the shift away from non-Puerto Rico
domestic traffic lanes, resulting in a reduction in the number of truck drivers
employed by the Company.

Rent and purchased transportation expense increased $1.7 million to $16.2
million due to a $2.2 million increase in charter fees on the enlarged vessels,
partially offset by a $500,000 decrease in rolling stock rental expense. As a
percentage of revenue, rent and purchased transportation expense increased to
25.7% during 1996 compared to 23.2% during 1995. Such increase was primarily due
to (i) the increase in post-modification barge charter fees, and (ii) the
Company's payment of pre-modification charter fees during the mid-body project
while using smaller capacity substitute vessels. While the Company's larger
roll-on/roll-off barges were undergoing renovations, the Company leased smaller
substitute barges from a third party and incurred $1.2 million of additional
barge rent and $500,000 of other transitional expenses, which were reimbursed by
the charterer of the roll-on/roll-off vessels. Accordingly, there was not a net
increase in the aggregate rental expense attributable to the substitute vessels.

Fuel expense increased $627,000 to $5.9 million and increased to 9.3% of
revenue during 1996 from 8.4% of revenue during 1995, primarily due to an
increase in average fuel prices.

Operations and maintenance expense increased $3.6 million to $14.2 million
in 1996 from $10.6 million in 1995. Operations and maintenance expense increased
as a percentage of revenue to 22.5% during 1996 from 17.0% during 1995. These
increases were attributable to an increase in cargo handling costs related to
the complexity of loading substitute vessels during the mid-body modification
project.

Taxes and licenses expense decreased to .7% of revenue during 1996 compared
to .9% of revenue during 1995. This decrease resulted from a reduction in
non-Puerto Rico revenue which has a higher tax and license cost (primarily
highway taxes and local taxes and licenses) than Puerto Rico revenue.

Insurance and claims expense increased to 3.4% of revenue during 1996 from
3.0% of revenue during 1995. This increase was attributable to increased cargo
claims due to the use of smaller substitute vessels during the mid-body
modification project and increased insurance levels related to a higher
concentration of owned revenue equipment and the higher replacement cost of the
enlarged vessels.

Depreciation and amortization expense increased to $2.9 million, or 4.7% of
revenue, during 1996 from $2.8 million, or 4.4% of revenue, during 1995. This
increase resulted from increases in owned trailers, some of which replaced
trailers utilized under operating leases, partially offset by a reduction in
owned tractors which were previously utilized in the non-Puerto Rico traffic
lanes.

Other operating expense remained flat at $3.0 million during 1995 and 1996.
There was a slight decrease in other operating expense as a percentage of
revenue to 4.7% for 1996 from 4.8% for 1995.

22
<PAGE> 23

The Company's operating ratio increased to 93.0% during 1996 from 86.0%
during 1995 primarily as a result of the midbody expansion project and
inefficiencies related to the substitute vessels, including increased labor and
cargo handling fees and use of specialized equipment, temporary loss of business
and increased charter fees for the expanded vessels.

Interest expense (net) decreased to $1.1 million, or 1.7% of revenue,
during 1996 from $1.4 million, or 2.2% of revenue, during 1995 due to reductions
in average outstanding balances (primarily amounts owed to an affiliate).

As a result of the factors described above, pro forma net income decreased
52.5% to $2.1 million (3.3% of revenue) during 1996 from $4.4 million (7.0% of
revenue) during 1995.

Year ended December 31, 1995 Compared to Year ended December 31, 1994

During 1995, the Company continued to tailor its non-Puerto Rico revenue
services to its core Puerto Rico traffic lanes. As a result, many of the traffic
lanes previously served by a truckload carrier acquired in 1992 which did not
complement the Company's continental U.S. to Puerto Rico traffic lanes were
eliminated, and non-Puerto Rico trucking revenue decreased 56.2% to $9.4 million
in 1995 from $21.4 million in 1994.

Operating revenues decreased 13.4% to $62.5 million during 1995 from $72.2
million during 1994 as a direct result of a $12.0 million, or 56.2%, reduction
in non-Puerto Rico revenue, partially offset by a $2.3 million increase in
Puerto Rico revenue. Overall, Puerto Rico revenue increased 4.6% in 1995
compared to 1994.

Salaries, wages and benefits expense decreased $4.7 million to $14.6
million, or 23.3% of revenue, during 1995 from $19.3 million, or 26.7% of
revenue, during 1994. This decrease was primarily attributable to the reduction
in non-Puerto Rico revenue and the related reduction in the number of drivers
employed by the Company, primarily owner-operators.

Rent and purchased transportation expense was $14.5 million, or 23.2% of
revenue, during 1995 compared to $19.6 million, or 27.2% of revenue, during
1994. This decrease resulted from a reduction in the number of owner-operator
tractors due to the reduction in non-Puerto Rico revenue.

Although fuel expense decreased slightly to $5.3 million in 1995 from $5.4
million in 1994, it increased to 8.4% of revenue in 1995 compared to 7.5% of
revenue in 1994 due to the reduction in the number of owner-operator tractors,
whose fuel cost is included in rent and purchased transportation.

Operations and maintenance expense decreased to $10.6 million in 1995 from
$11.8 million in 1994, primarily due to a reduction in the number of
owner-operators. Operations and maintenance expense as a percentage of revenue
increased to 17.0% in 1995 from 16.3% in 1994, reflecting a higher proportion of
Puerto Rico revenue and its related cargo handling expense.

Taxes and licenses expense decreased to .9% of revenue during 1995 from
1.3% of revenue during 1994. This decrease was attributable to the reduction in
non-Puerto Rico revenue, which generally has a higher tax and license cost than
Puerto Rico revenue.

Insurance and claims expense decreased to 3.0% of revenue during 1995 from
3.1% of revenue during 1994. This decrease was attributable to the reduction in
non-Puerto Rico revenue, which generally has a higher insurance cost than Puerto
Rico revenue.

Communications and utilities expense decreased to 1.0% of revenue during
1995 from 1.2% during 1994. This decrease was attributable to the lower level of
non-Puerto Rico revenue, which generally requires more communication and
therefore has a higher communication cost than Puerto Rico revenue.

23
<PAGE> 24

Depreciation and amortization expense increased to $2.8 million, or 4.4% of
revenue, during 1995 from $2.6 million, or 3.7% of revenue, during 1994 as a
result of purchases of both tractor and trailer equipment and a reduction in
non-Puerto Rico revenue.

Other operating expenses increased to 4.8% of revenue in 1995 from 4.4% of
revenue in 1994 due to a non-recurring expense for the off-hire of equipment
utilized in domestic traffic lanes which were not complementary to Puerto Rico
traffic lanes.

The Company's operating ratio improved to 86.0% in 1995 from 91.4% during
1994 primarily as a result of elimination of non-Puerto Rico traffic lanes and
increase in Puerto Rico revenue.

Interest expense (net) decreased to $1.4 million, or 2.2% of revenue,
during 1995 from $1.8 million, or 2.5% of revenue, during 1994 due to reductions
in outstanding average balances (primarily amounts owed to an affiliate).

As a result of the factors described above, pro forma net income increased
86.1% to $4.4 million (7.0% of revenue) in 1995 from $2.3 million (3.2% of
revenue) during 1994.

LIQUIDITY AND CAPITAL RESOURCES

The growth of the Company's business has required significant investment in
revenue equipment that the Company historically has financed with charters,
borrowings under installment notes payable to commercial lending institutions
and equipment leases from third-party lessors. The Company's primary sources of
liquidity historically have been funds provided by operations, borrowings,
leases with financial institutions and financial support from an affiliate.

At March 31, 1997, working capital was negative $2.8 million, which
reflects $5.8 million due to an affiliate that will be repaid from the net
proceeds of the offering. The Company expects that in future years it will
continue to finance substantially all revenue equipment additions through
borrowing or leasing transactions. Management also expects that the offering and
its effect on the Company's capitalization will enable Trailer Bridge to finance
revenue equipment on more favorable terms than those obtained in the past. The
Company currently has a line of credit from a financial institution for up to
$7.1 million to fund the replacement of 125 tractors, the material terms of
which are described below. At March 31, 1997, approximately $1.1 million was
utilized under this line of credit, which is secured by the purchased tractors.
The interest rate on amounts outstanding under the line of credit is 1.40% above
the financial institution's three-year cost of funds in effect from time to time
(7.98% at March 31, 1997). The Company may elect different interest accrual
options for future borrowings under the line of credit (see Note 7 to the
Financial Statements). The Company had outstanding long-term debt, capitalized
lease obligations and due to affiliate (including current portions) of
approximately $15.2 million at March 31, 1997, most of which comprised
obligations for the purchase of revenue equipment. See Notes 6 and 7 to the
Financial Statements.

Net cash provided by operating activities was $7.2 million in 1996,
compared to $8.1 million in 1995. The difference between the Company's 1996 cash
flow and its $3.4 million in net income was primarily attributable to $3.0
million of depreciation, a $674,000 provision for bad debt and a $659,000
increase in payables. The Company's operating cash flow of $2.9 million during
the first quarter of 1997 reflects $689,000 of depreciation, a $622,000 decrease
in prepaid expenses, and a $590,000 increase in accrued liabilities, partially
offset by a $622,000 decrease in accounts payable.

Net cash used in investing activities was $9.5 million in 1996 compared to
$5.0 million in 1995. The Company's 1996 cash flow reflects $6.7 million of
capital expenditures and $3.2 million of repayments of debt to an affiliate. Net
cash used in investing activities of $1.2 million in the first quarter of 1997
reflects $2.5 million of capital expenditures, which was primarily attributable
to the down-payment on the Company's two new Triplestack Box Carriers(TM) as
well as the purchase of revenue equipment, and an increase in due to affiliate
of $1.2 million.

24
<PAGE> 25

Net cash provided by financing activities was $3.4 million in 1996,
compared to $4.5 million of net cash used in financing activities in 1995. The
Company's 1996 cash flow reflects increased borrowings to finance the Company's
capital expenditure program. Net cash used in financing activities of $1.0
million for the first quarter of 1997 reflects $1.2 million in dividends
partially offset by net additional borrowings under notes payable of $152,000.

The Company expects vessel and equipment purchases to total approximately
$32.3 million in 1997, of which $12.0 million will be used for new vessel
purchases, $13.2 million for related container and chassis equipment additions
and $7.1 million for replacement tractors. The Company's projected capital
expenditures for its new Triplestack Box Carriers(TM) have been funded with a
12.5% down-payment ($1.5 million) from working capital advanced by the Company's
affiliate and to be repaid out of the proceeds of this offering. The 87.5%
remaining balance will be funded from the $10.5 million escrowed proceeds of a
Title XI bond offering completed in June 1997. The Title XI bonds require equal
semi-annual sinking fund payments of $210,300 over a 25 year term and bear
interest at a rate of 7.07% per annum. The approximately $13.2 million in 53'
container and chassis equipment for the new vessels will be funded from the net
proceeds of this offering and additional borrowings. See "Use of Proceeds." The
Company's $7.1 million tractor replacement program will be funded through the
sale of used tractors and the line of credit described above.

During 1997, the Company will complete the construction of a new office
building adjacent to its Jacksonville truck terminal that will centralize all
Jacksonville administrative personnel. The remaining cost of the office building
will be funded with escrowed proceeds from an existing mortgage and cash flows
from operations.

The Company has a pending application with the U.S. Maritime Administration
for a Title XI guaranty commitment to finance 87.5% of the construction costs of
an additional three Triplestack Box Carriers(TM) which the Company intends to
utilize in the coastwise traffic lanes. The required $2.2 million down payment,
which is expected to be funded in the third quarter of 1997, will be funded from
the net proceeds of this offering. The Company anticipates that, subsequent to
this offering, it will obtain a formal Title XI commitment from the U.S.
Maritime Administration similar to that obtained in connection with the first
two Triplestack Box Carriers(TM). Construction of those vessels will then
commence immediately under the Company's fixed-priced contract with Halter
Marine Group, Inc. The initial vessel is expected to be delivered seven months
after construction commences, with additional vessels to follow in two month
increments. Trailer Bridge intends to finance the approximately $17.7 million in
container and chassis equipment needed in 1998 for these three Triplestack Box
Carriers(TM) under existing proposals it has received from financial
institutions.

The Company utilizes tugs, terminals, office space, certain trailers and
miscellaneous equipment under a number of operating leases, some of which
include labor and other cost items. The minimum expected payment under all of
these operating leases is $16.1 million in 1997, including $7.6 million due an
affiliate for charter of existing vessels. The Company also expects to enter
into operating leases for additional miscellaneous equipment related to its
Triplestack Box Carriers(TM), including reacher-stacker lift trucks used in
cargo operations.

Management believes that available borrowings under the line of credit,
equipment financings, cash flow generated from operations and the net proceeds
of this offering will allow the Company to meet its working capital
requirements, anticipated capital expenditures and other obligations at least
through calendar 1998.

INFLATION

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

25
<PAGE> 26

SEASONALITY

The Company's marine operations are subject to the seasonality of the
Puerto Rico freight market where shipments are generally reduced during the
first calendar quarter and increased during the fourth calendar quarter of each
year in anticipation of Christmas. This seasonality is expected to have a
greater impact on the Company when it increases its capacity with the addition
of two new Triplestack Box Carriers(TM). However, to date, the Company has not
been materially affected by such seasonality because its vessel capacity
utilization has been relatively high due to the Company's capacity limits prior
to the mid-body expansion program. The Company's over-the-road truckload
operation experiences some seasonal fluctuations in freight volume, as shipments
have historically decreased during the first calendar quarter. In addition, the
Company's operating expenses historically have been higher in the winter months
due to decreased fuel efficiency and increased maintenance costs in colder
weather. Moreover, the Company's quarterly operating revenue and net income may
continue to fluctuate due to the timing of changes in capacity and other
factors. Accordingly, results of operations are subject to fluctuation, and
results in any period should not be considered indicative of the results to be
expected for any future period.

The following table sets forth certain unaudited financial information for
the Company for each of the last nine quarters (in thousands except per share
amounts):

<TABLE>
<CAPTION>
1995 1996 1997
------------------------------------- ------------------------------------- -------
FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH FIRST
QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues............. $15,257 $15,832 $15,430 $16,012 $14,568 $14,274 $16,288 $18,018 $16,446
Operating income (loss)........ 2,097 2,537 1,790 2,354 966 (187) 1,331 2,315 1,748
Pro forma net income
(loss)(1).................... 1,039 1,254 841 1,226 443 (199) 636 1,193 909
</TABLE>

- ---------------

(1) See Note 3 to the Financial Statements.

26
<PAGE> 27

INDUSTRY OVERVIEW

Trailer Bridge currently operates in the full-load dry van segment of the
continental U.S. to Puerto Rico freight market and to a lesser degree in the
truckload segment of the domestic trucking industry. The Company also intends to
initiate integrated truckload and marine service between interior points along
the east coast of the continental U.S. which will compete primarily with
truckload and rail intermodal service in north-south traffic lanes. Management
is investigating a number of other potential markets in which the Company could
replicate its unique integrated service model.

The ocean freight market between the continental U.S. and Puerto Rico is
approximately an $800 million market and is currently estimated to consist of
approximately 310,000 loads per year. The market is unbalanced with more than
three times as much cargo moving to Puerto Rico from the continental U.S. as is
moving in the opposite direction. North-south freight flow imbalances result in
equipment imbalances at interior U.S. points and significantly lower rates for
inbound U.S. cargo compared to outbound U.S. cargo. Puerto Rico shippers select
carriers based primarily upon price. To a lesser extent, criteria such as
frequency, transit time, consistency, billing accuracy and claims experience are
considered.

Freight moving between the continental U.S. and Puerto Rico is primarily
carried via truck over the inland segment of the freight shipment and via ship
or barge over the marine segment. Most traditional ocean carriers in the Puerto
Rico trade use standard containerized freight systems, employing 20' and 40'
marine containers which for over-the-water shipment are carried on container
ships and for over-the-road shipment are placed on chassis and pulled by
conventional tractors. Ocean carriers generally provide motor carriage of
containers through independent contractors, hired on an as-needed basis.

As customers realized the cost benefits of consolidating more freight in a
single movement and federal and state governments eased restrictions on
equipment sizes, the prevailing standard trailer size in the domestic inland
truckload industry progressively increased to today's high capacity 53' long,
102" wide dry van trailer. By contrast, the capacity of freight containers used
by shipping companies has not progressively increased over the past 25 years due
to, among other reasons, the significant capital expenditures required to
reconfigure existing ships. Despite the trend of motor carriers toward more
efficient high-cube trailers, the ocean liner trade has retained the use of 20'
and 40' marine containers as the standard unit of containerized marine freight
capacity. Today, no major truckload motor carrier in the U.S. operates 40'
trailers.

The Company plans to be the first carrier to provide integrated truckload
and marine service between U.S. domestic coastwise points along the eastern
seaboard such as New York and Florida, utilizing high-cube 53' equipment. Based
on studies by Reebie Associates, an independent consultant, the Company believes
that the eastern domestic long-haul, north-to-south full load market is
approximately $3.8 billion per year. The Company will target its planned
coastwise service primarily at long-haul, price-sensitive domestic freight which
is currently moving on rail intermodal. The railroad movement of trailers and
containers on flatcars has rapidly grown into a $5.8 billion industry in recent
years, primarily due to the per mile linehaul cost advantage of rail intermodal
over comparable truckload rates on longer hauls. The Company's planned
integrated coastwise truckload and marine freight service is designed to take
further advantage of shippers' proven willingness to move from one mode of
transport to another to reduce distribution costs. Accordingly, the Company will
primarily compete with truckload and rail intermodal service on the basis of
price.

27
<PAGE> 28

BUSINESS

OVERVIEW

COMPETITIVE STRENGTHS

Management believes that the Company's principal competitive strengths are:

- Significant Operating Cost Advantage. Trailer Bridge believes that it is
the lowest cost provider of freight transportation between the continental
U.S. and Puerto Rico. Lower overall operating costs are achieved through
significantly higher equipment utilization and lower marine linehaul costs
than those of traditional ocean carriers. The Company's inland trucking
operation achieves higher equipment utilization and lower unit trucking
costs by using 48' and 53' high-cube trailers. This system provides
customers with over 50% more interior capacity than 40' marine containers
but with similar inland trucking costs. The Company's marine system uses
towed ocean-going barges instead of self propelled container ships to
deliver equivalent units of capacity at significantly lower capital and
operating costs. Barges are less complex and equipment intensive and
therefore can be acquired or built at lower costs per unit of capacity
than container ships. Furthermore, towed barge systems can be

28
<PAGE> 29

operated with lower per unit personnel and fuel costs due to the less
restrictive Coast Guard manning requirements and lower maximum speed of
ocean going tugs. Other components of the Company's low-cost operating
structure include Trailer Bridge's use of uniform, modern fleet equipment
to maximize utilization and flexibility and minimize operating costs, as
well as an emphasis on hiring and retaining qualified and reliable drivers
to reduce the costs of insurance, recruiting, fuel and maintenance.

- Domestic Truckload Operations. The Company believes that it is the only
carrier using its own fleet of tractors and high-cube dry van trailers to
provide transportation services between interior points in the continental
U.S. and Puerto Rico. By using high-cube equipment, the mainstay of the
domestic truckload industry, and a centralized dispatch system, the
Company can more effectively compete for and obtain domestic non-Puerto
Rico truckload freight while repositioning equipment for Puerto Rico
shipments. As a result, the Company believes that it operates with lower
empty miles and higher equipment utilization than its competitors in the
Puerto Rico trade. The Company believes that it is able to provide more
reliable and consistent service with a company-operated truckload fleet
than traditional ocean carriers generally provide using a variety of
smaller independent contractors.

- Centralized Operation in Strategic Location. Trailer Bridge operates a
centralized truckload operation from its headquarters in Jacksonville.
Because approximately 70% of the Company's truckload freight is dispatched
through Jacksonville on a regular schedule to meet weekly barge sailings
to Puerto Rico, the Company is able to purchase a large portion of its
fuel locally at favorable bulk rates and can schedule and perform routine
maintenance at the Company's terminal facilities at lower cost and with
minimal interruption to tractor dispatch efficiency. Regular truck routing
through Jacksonville also enables the Company to offer its drivers a more
routine schedule with more frequent stops at home, leading to higher
driver retention. Additionally, the Company's centralized Jacksonville
headquarters is also strategically located near key southern rail and
highway endpoints, connecting cities in the continental U.S. to Puerto
Rico and other Caribbean points.

- Emphasis on U.S. Domestic Ocean Trade. The Company concentrates its
marine operations in markets governed by the Jones Act. The Jones Act
prevents foreign-built or foreign-crewed vessels from competing in ocean
trade between ports in the U.S., including the non-contiguous areas of
Puerto Rico, Alaska, Hawaii and Guam. Although the Company believes that
its costs are competitive with those of foreign flagged carriers, it has
initially focused on Jones Act protected markets to take advantage of the
larger differential between its costs and the costs of other Jones Act
protected U.S. flag carriers. Furthermore, two of the largest carriers in
the Puerto Rico trade have agreed with the U.S. Maritime Administration to
certain restrictions on adding capacity in the Jones Act trades, including
their respective Puerto Rico services, as a condition to the receipt of
certain payments.

- Experienced Management Team. The Company's officers and directors have
extensive experience in the transportation industry, including an average
of over 15 years in the marine and trucking industries. All but one member
of the Company's management team have been with the Company since its
inception. The scope of management experience at Trailer Bridge is
well-balanced between both trucking and marine transportation. The
Company's Chief Executive Officer and President have been involved in
maritime trade for 19 and 26 years, respectively, and the Company's Vice
President of Sales has over 25 years of experience in the trucking
industry. The Company believes that the diverse skills of its management
team have permitted Trailer Bridge to conceive, implement and expand a
unique integrated transportation system that applies the best practices of
this country's cost-efficient truckload business to the marine sector.

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GROWTH STRATEGY

The following are the key elements of the Company's growth strategy:

- Increased Market Share of Puerto Rico Market. Trailer Bridge plans to
increase the capacity of its Puerto Rico service by adding two Triplestack
Box Carriers(TM), which will increase the Company's overall capacity by
56% and allow the Company to increase its frequency of service to Puerto
Rico to two sailings per week from the current weekly service. Management
believes that the Company's lack of available capacity and its limited
service frequency have, to date, limited its volume of business with
certain existing customers and precluded other customers from utilizing
the Company's services. The Triplestack Box Carriers(TM) are designed
specifically to carry high capacity 53' containers, which the Company
believes are preferred by customers and will therefore increase demand for
its services. Added vessel capacity and frequency will also allow the
Company to pursue additional backhaul revenue opportunities and seek high
equipment utilization because of the more balanced availability of
trucking capacity.

- Initiation of Coastwise Service. Following its planned expansion of
Puerto Rico service, the Company intends to commence a twice-weekly New
York to Florida coastwise service utilizing three additional Triplestack
Box Carriers(TM). These vessels, combined with the Company's trucking
capabilities and expertise in operating an integrated system, are expected
to provide lower linehaul costs than typical intermodal truckload and rail
doublestack train service. This will in turn allow the Company to compete
effectively with truckload and rail intermodal carriers on the basis of
price. The Company believes the New York to Florida traffic lane is the
most attractive market in which to initiate its coastwise service but
believes there are numerous other coastwise traffic lanes (including Gulf
coast and West coast lanes) in which the Company can provide a more cost
efficient freight service for shippers. There can be no assurance that the
Company will be able to compete effectively with truckload and rail
intermodal carriers. The Company will not be able to match the delivery
times offered by many truckload carriers and may not be able to match the
delivery times of all rail intermodal carriers.

- Service to Other Jones Act and Offshore Markets. The freight markets
between the continental U.S. and points in Hawaii and Alaska are similar
in overall size to the Puerto Rico market and are served by traditional
marine carriers that do not utilize 48' or 53' conveyance units. The lack
of appropriate and available port facilities in Hawaii and Alaska acts as
a barrier to entry in those markets. However, the design and loading
requirements of the Company's Triplestack Box Carrier(TM) should allow the
Company to serve these and other new markets from waterfront sites that do
not require the traditional infrastructure investments associated with
port facilities. Additionally, the Company believes there are other
potential non-Jones Act markets such as the Dominican Republic and Mexico
where the Triplestack Box Carrier(TM) system could be quickly implemented
with minimal investment in port facilities. The Company has no current
plans to expand to any such markets.

- Capacity and Environmental Constraints on Other Modes. On a longer-term
basis, the Company believes that its planned coastwise service will
benefit from growing capacity constraints in both the rail and highway
systems. Management also believes that the Company's planned coastwise
service will be more environmentally attractive than the rail and truck
transport sectors, as it emits lower fuel emissions and operates at
greater distances from densely populated areas. Finally, the increasing
publicity attendant to train and truck accidents, particularly those
involving passenger automobiles, should offer an attractive political
environment for expansion of the Company's maritime service.

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<PAGE> 31

OPERATIONS

Trailer Bridge operates a fleet of 154 tractors and 1,937 high-cube
trailers which transport truckload freight between the Company's Jacksonville
port facility and inland points in the U.S. The Company also provides full
truckload service between interior points within the continental U.S., primarily
to increase equipment utilization, minimize empty miles and maximize revenue
while repositioning equipment to carry Puerto Rico bound freight. The Company
maintains a centralized dispatch and customer service operation at its
Jacksonville headquarters to schedule pickup and delivery of customer freight.
The operations center features a fully integrated computerized dispatch and
customer service network. Customer service representatives solicit and accept
freight, quote freight rates and serve as the primary contact with customers.
Dispatch and customer service personnel work together to coordinate Puerto Rico
and non-Puerto Rico freight to achieve the most optimum load balance and
minimize empty miles within the Company's truckload operation.

Trailer Bridge currently operates two 736' triple-deck, roll-on/roll-off
ocean-going barges chartered from an affiliate. See "Certain Transactions."
Loading of the barges is performed with small maneuverable yard tractors
operated by stevedores hired by an outside contractor. Once per week, the
Company's two barge vessels sail between San Juan and Jacksonville, one in each
direction. One vessel is scheduled to arrive in Jacksonville on Tuesday at 8:00
a.m. and depart on Thursday at 2:00 p.m., while the other vessel is scheduled to
arrive in San Juan on Wednesday at 6:00 a.m. and depart on Wednesday at 8:00
p.m. Each barge is towed at approximately 9 knots by one 8,000 horsepower
diesel-powered tug. The tugs are time-chartered and are manned by employees of
the unaffiliated tug owner. Compared to a self-propelled vessel, a towed barge
has reduced Coast Guard manning requirements and higher fuel efficiency.
Similarly, the large number of U.S. tugs available for charter provides the
Company with a reliable source for towing services.

MARKETING AND CUSTOMERS

The Company's sales and marketing function is led by senior management and
sales professionals based in Jacksonville, San Juan and other key strategic U.S.
cities. These sales personnel aggressively market Trailer Bridge to shippers as
a customer-oriented provider of value-priced and dependable service. The Company
targets 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 is involved. Nonetheless, the Company also believes that
Trailer Bridge has a competitive advantage through its ability to provide better
service that results from its single company control of the entire freight
movement over land and water. This service frees the customer from the
operational complexities of coordinating the interface between over-the-road and
marine service. The Company's customer service philosophy has generated
increasing demand from existing customers for additional equipment and sailings
and has led to ongoing relationships with customers such as Chrysler, General
Motors, K Mart, General Electric and DuPont.

The Company has a diversified customer base. Typical shipments to Puerto
Rico include furniture, consumer goods, toys, new and used cars and apparel.
Typical shipments from Puerto Rico include health products, electronics, shoes
and scrap aluminum. Management intends to continue the Company's efforts both to
increase business with existing customers and add new core carrier
relationships. The Company's top 5, 10, and 25 customers accounted for 15.8%,
22.9% and 35.2% of revenue, respectively, in 1996.

The Company has 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. Although a contract typically
runs for a specified term of at least one year, it generally may be terminated
by either party upon 30 days' notice. The penalties for a shipper for breach of
contract are minimal.

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<PAGE> 32

EXISTING AND PLANNED VESSELS

The Company's present vessels are 736' by 104' triple-deck roll-on/roll-off
barges chartered from an affiliate. Each deck has ten lanes which are accessed
from the stern of the vessel via ramp structures in Jacksonville and San Juan
that have been built specifically for the Company. Four lanes on each vessel
have been converted to carry new and used automobiles on car decks that allow
approximately 11 cars to fit in the space previously used for one 48' trailer.
The trailers are secured on the vessel by attachment to pullman stands which are
engaged and disengaged with specially configured yard tractors used to pull the
trailers into position on the vessel. The present vessels can be fully
discharged and re-loaded within one eight hour shift, although the Company
generally makes use of additional available slack time in Jacksonville to
schedule cargo activity over periods that will minimize total cost.

The two Triplestack Box Carriers(TM) to be used in the Puerto Rico traffic
lane are single deck barges. These 408' by 100' vessels are being built at
Halter Marine Group, Inc.'s Pearlington, Mississippi shipyard under fixed-priced
contracts which call for delivery of the first vessel in November 1997 and the
second vessel in January 1998. In the Puerto Rico service, the two Triplestack
Box Carriers(TM) are expected to achieve the scheduled service speed of 9 knots
with a 6,500 horsepower tug and attain tow speeds of approximately 11 knots with
larger tugs. These vessels will utilize the same port facilities as the existing
barge vessels. See "Business -- Port Facilities." Wheeled vehicles known as
reacher-stackers will carry and load the containers. These highly maneuverable
vehicles are currently used by railroads to load containers on rail cars for
intermodal transportation. The reacher-stackers are significantly less expensive
than the cranes typically required for loading and unloading containers from the
holds of large cargo ships and will instead directly access the deck of the
vessel via simple and movable linear ramps. The Company believes that the total
cargo handling cost per unit of the Triplestack Box Carriers(TM) in the Puerto
Rico traffic lane will be similar to that experienced with its present
roll-on/roll-off vessels. The Company intends to acquire three additional
Triplestack Box Carriers(TM) in 1998 to use in the coastwise traffic lanes as a
cost-efficient alternative to truckload and rail intermodal. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and "Business -- Growth
Strategy."

REVENUE EQUIPMENT

Trailer Bridge's equipment strategy is to operate modern tractors and
trailers in order to (i) reduce fuel, maintenance and parts costs, (ii) increase
reliability, and (iii) help attract and retain drivers. At March 31, 1997, the
Company had 154 tractors. The Company's practice is to trade or replace its
tractors on a 450,000-mile cycle which generally occurs during the fourth year.

Trailer Bridge has scheduled deliveries of approximately 75 new tractors
during the remainder of 1997 and 25 new tractors during 1998. After the planned
trade-in or sale during 1997 of all its model year 1993 tractors, the Company
will have a fleet of approximately 145 owned tractors with an average age of
nine months. Management anticipates that the Company's ongoing fleet upgrade
program will significantly decrease its maintenance, repair and parts expenses.
In addition, the Company has a fuel consumption incentive program for the
drivers, which is expected to improve the fuel consumption of its new fleet. All
of the new power units are conventional tractors (engine-forward) that are
preferred by drivers. These units include, among other amenities, a large
"condo" sleeper compartment with full standing room.

At March 31, 1997, the Company operated 1,937 dry van trailers, 1,772 of
which were 48' x 102" models and 165 of which were 53' x 102" models. The
Company's current practice is to trade or replace owned trailers on a seven-year
cycle and replace leased trailers with owned trailers as leases expire. Since
the trailers spend a significant amount of time on the Company's vessels and in
Puerto Rico, the Company's trailers incur less mileage per year than those used
by a typical truckload carrier. For instance, in 1996 the Company averaged
approximately 10,500 highway miles per trailer

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compared to approximately 50,000 miles per year averaged by typical domestic
truckload carriers. For this reason, the Company believes that its trailers have
a longer effective life despite the corrosive ocean environment encountered on
the vessels.

The Company has scheduled deliveries of approximately 850 new containers
during late 1997 and early 1998, all of which are 53' models that will be
utilized by the two new Triplestack Box Carriers(TM) to be deployed in the
Puerto Rico traffic lane. These containers are being built to the Company's
specifications and are similar to the 53' containers utilized on the most
efficient rail doublestack operation. The Company has also contracted to
purchase 550 new chassis units which will be utilized in combination with the
53' containers for over-the-road carriage. Under its fixed-price contract with a
large container manufacturer, Trailer Bridge has an option to increase its order
by up to 250 additional 53' container and chassis units.

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

DRIVER RECRUITING AND RETENTION

Trailer Bridge places great emphasis on driver satisfaction and has made
significant investments to improve its drivers' employment experience. The
Company offers competitive compensation and full health care benefits
differentiating it from many truckload operators. Management also promotes
driver retention by assigning drivers to a single dispatcher, regardless of
geographic area, awarding dedicated routes and offering more predictable home
time resulting from a central hub of operations. The Company believes its driver
turnover is well below that typically reported by other truckload carriers
despite an industry-wide driver shortage and vigorous competition for drivers
during the past several years.

In recent periods the Company has significantly reduced the number of
owner-operators in connection with its decision to decrease domestic truckload
business not related to Puerto Rico movements. At March 31, 1997, the Company
had only 13 owner-operators. Nevertheless, the Company intends to utilize the
flexibility of adding and removing owner-operators from its driver work force to
address driver and equipment needs in the future. The Company compensates owner-
operators as employees, affording them the same benefits as regular Company
drivers. Owner-operators receive a flat rate per mile to cover equipment costs,
fuel and maintenance.

FUEL AVAILABILITY AND COST

The Company actively manages its fuel costs by requiring drivers to fuel in
Jacksonville at an offsite fuel facility where the Company has established a
bulk purchasing arrangement. Whenever possible enroute, drivers are required to
fuel at truck stops and service centers with which the Company has established
volume purchasing arrangements. The Company offers fuel-conservation bonuses to
its drivers based on achieving miles per gallon goals.

Although the Company pays for the marine fuel used by the large tugs it
charters, the actual fuel loading is controlled by tug crew personnel employed
by the tug owner. The fuel is purchased and loaded in Jacksonville at a nearby
fuel facility during cargo loading operations. By negotiating directly with fuel
vendors and offering volume contracts for its marine fuel needs, the Company has
obtained better prices than it would have otherwise been able to attain.

Trailer Bridge does not engage in any fuel hedging activities. The Company
historically has been able to pass through most increases in fuel prices to
customers in the form of higher rates, although there can be no assurance that
this will continue in the future. See "Risk Factors -- Fuel Price Fluctuations."

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SAFETY 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 five years of verifiable commercial driving experience, a safe
driving history and a successful physical examination, including drug and
alcohol testing. Its ongoing driver safety program includes an initial
orientation for all new drivers, 100% log monitoring and strong adherence to all
speed and weight regulations.

The Company bids annually for both marine and land insurance policies.
Major coverages include hull and protection indemnity, pollution, excess
liability, marine cargo, truckers liability, workers' compensation and
commercial property. Management believes existing coverages are adequate to
cover reasonably anticipated claims. However, there can be no assurance that
premium levels will not increase or that coverage will be adequate in the
future. See "Risk Factors -- Claims Exposure and Insurance Costs."

TECHNOLOGY

The Company utilizes an IBM AS-400 computer system to handle its accounting
and operations requirements. The computer system links Company headquarters, the
truck operations center, the San Juan office and the 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 is
designed to accelerate receivables collection. The Company's largest customers
require EDI service from their core carriers. Management believes that advanced
technology will be required by an increasing number of large shippers as they
reduce the number of carriers they use in favor of core carriers.

The Company believes that the open structure of the internet will replace
many of the traditional EDI functions and intends to expand its website
(www.trailerbridge.com) to accommodate such technology.

PROPERTIES

Trailer Bridge is headquartered in Jacksonville, Florida, where it is
completing construction of a 16,000 square foot office building adjacent to its
owned truck operations center. Upon completion in mid-1997, this facility will
centralize 75 Jacksonville personnel in one location. The new office building
has also been designed so that additions can be constructed to serve the
Company's future needs. The truck operations center property was purchased in
1996 and consists of 17.8 acres near Interstate 95, approximately 2 miles from
the Company's marine terminal on Blount Island. In addition to the new office
building, the property includes a 11,400 square foot tractor maintenance shop
where oil changes and light preventative maintenance are performed, a trailer
washing facility, a drivers lounge and parking space for tractors and trailers.
The Company believes that additional acreage contiguous to its truck operations
center will be available to accommodate future expansion.

The Company maintains small sales office facilities in Georgia, North
Carolina, Illinois, Ohio and New Jersey which are utilized by sales personnel.
The Company also rents a 2,600 square foot office in San Juan where 11 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 terminal in Jacksonville is located on Blount
Island and consists of a berthing area and 17 acres leased from the

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<PAGE> 35

Jacksonville Port Authority. The lease, which expires in 2002, allows the
Company to use the berthing area on a preferential, although non-exclusive,
basis and the land area on an exclusive basis. The Company pays the Jacksonville
Port Authority a monthly rental payment plus a wharfage payment based upon total
cargo volume. The Company's marine terminal in San Juan consists of a berthing
area and 31 acres that the Company utilizes on a preferential basis under a
stevedoring services agreement with the contractor who provides cargo handing
services. This agreement, which expires in 2006, 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.

Both of the present port facilities have been improved with triple-deck
floating ramp structures. These ramp facilities were built by the present vessel
owner and are included in the charter payments Trailer Bridge makes to such
affiliated owner. The new Triplestack Box Carriers(TM) will not need to utilize
the existing ramps but will instead be accessed from simple, movable ramps which
will be substantially smaller than the existing ramps used by the Company.
Trailer Bridge believes that its present marine terminals in Jacksonville and
Puerto Rico are sufficient to accommodate the expected growth from the
introduction of the two new vessels.

The Company's expansion into coastwise traffic lanes will require new port
facilities. Due to their shallow draft, relatively small overall size and
ability to load without significant shore-side ramp facilities or cranes,
Triplestack Box Carriers(TM) can be utilized at port facilities that would not
be appropriate for the Company's present vessels or for other similar-sized
vessels. These facilities include private sites that have not previously been
utilized for cargo operations. Trailer Bridge believes that it will be able to
find sufficient marine sites that lend themselves to the low-cost unloading and
loading operation it envisions for the Triplestack Box Carriers(TM) to be
deployed in the coastwise traffic lanes. The Company has identified several
suitable sites but has not reached any agreements or understandings regarding
their use.

COMPETITION

The Company currently competes with four carriers for freight moving
between the U.S. and Puerto Rico. The current operators in the Puerto Rico trade
are Navieras de Puerto Rico ("NPR"), Sea-Land Service, Inc., Crowley American
Transport, Sea-Barge Marine and Trailer Bridge. Based on available industry data
for the first quarter of 1997, NPR, which was purchased from the Puerto Rico
government in a leveraged buyout in 1995, has approximately 32% of the market
and operates five container vessels configured to carry primarily 40' marine
containers. Sea-Land Service, Inc., a subsidiary of CSX Corporation, has
approximately 24% of the market and operates five container vessels that also
carry mainly 40' containers. Crowley American Transport, a subsidiary of
privately held Crowley Maritime Corp., has approximately 30% of the market and
operates nine roll-on/roll-off barges in various services between the U.S. and
Puerto Rico. Although Crowley now uses some 48' trailers, its main equipment
size is 45' by 96" wide trailers. Sea Barge Marine has approximately 7% of the
market with four container barges that primarily carry 40' marine containers.

Puerto Rico shippers select carriers based primarily upon price. To a
lesser extent, criteria such as frequency, transit time, consistency, billing
accuracy and claims experience are considered. The Company faces vigorous price
competition from competitors in the Puerto Rico market, two of which are part of
larger transportation organizations that possess greater financial resources
than the Company. While the Company believes it is the lowest cost per unit
operator in the Puerto Rico traffic lane, it does not always offer the lowest
effective price as certain operators at times engage in a practice of freight
rate discounting.

The Company's planned coastwise service is expected to compete primarily
with large railroads that move intermodal freight and, to a lesser extent,
trucking companies. Intermodal freight service competes primarily on the basis
of price. Although trucking companies serving the same routes as the Company's
contemplated coastwise service typically target a customer base that requires
faster delivery times, such trucking companies also compete primarily on the
basis of price. Many of the

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Company's potential competitors are significantly larger and possess
substantially greater financial resources than the Company. The Company intends
to compete by offering customers value-based pricing derived from its lower
linehaul cost per unit. The Company will target customers with less time
sensitive-freight whose priority is reducing freight costs rather than obtaining
the shortest possible transit times.

The truckload segment of the trucking industry is highly competitive and
fragmented, and no carrier or group of carriers dominates the market. The
Company's non-Puerto Rico domestic truckload operations, which are used
primarily to balance its core Puerto Rico service, compete with a number of
trucking companies as well as private truck fleets used by shippers to transport
their own products. Truckload carriers compete primarily on the basis of price.
The Company's truck freight service also competes to a limited extent with rail
and rail-truck intermodal service, but the Company attempts to limit this
competition by seeking more time and service-sensitive freight. There are other
trucking companies, including diversified carriers with larger fleets,
possessing substantially greater financial resources and operating more
equipment than the Company.

REGULATION

As a common and contract motor carrier, the Company is regulated by the
Surface Transportation Board (the successor federal agency to the Interstate
Commerce Commission) 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. For routes in Canadian provinces,
the Company must comply with certain customs and border crossing requirements
and other Canadian regulations, none of which have a material effect on the
Company.

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. A
set of federal laws known as the Jones Act requires that only U.S. built, owned
and crewed vessels move freight between ports in the U.S., including the
noncontiguous areas of Puerto Rico, Alaska, Hawaii and Guam. These marine
operations are subject to regulation by various federal agencies, including the
Surface Transportation Board, 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, but there can be no assurance that current regulatory
requirements will not change. See "Risk Factors -- Potential Loss of Jones Act
Protection."

EMPLOYEES

At March 31, 1997, Trailer Bridge had 244 employees, 140 of whom were
drivers. Management believes that its computerized operation and efficient work
force will permit significant fleet expansion without a corresponding increase
in the number of non-driver employees. Management believes it has a good
relationship with the Company's employees.

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LEGAL PROCEEDINGS

The Company from time to time is a party to litigation arising in the
ordinary course of its business, substantially all of which involves claims for
personal injury and property damage incurred in the transportation of freight.
The Company presently is not a party to any legal proceeding other than
litigation arising from vehicle accidents or cargo damage, and management is not
aware of any claims or threatened claims that reasonably would be expected to
exceed insurance limits or have a material adverse effect upon the Company's
operations or financial position.

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The table below sets forth information concerning the Company's executive
officers and directors:

<TABLE>
<CAPTION>
NAME AGE POSITION(1)
---- --- -----------
<S> <C> <C>
Malcom P. McLean................................ 83 Director
John D. McCown(2)............................... 42 Chairman of the Board and Chief Executive
Officer
Ralph W. Heim................................... 51 President and Chief Operating Officer
Wayne Hodges.................................... 47 Vice President of Sales
J. Edward Morley................................ 49 Vice President of Operations
Mark A. Tanner.................................. 45 Vice President of Administration and Chief
Financial Officer
Robert van Dijk................................. 51 Vice President of Pricing
William G. Gotimer, Jr.......................... 38 Secretary and General Counsel
</TABLE>

- ---------------

(1) Directors are elected annually. Executive officers serve at the pleasure of
the Board of Directors.
(2) Will become a member of the Audit Committee upon the closing of the
offering.

Mr. McLean, a director since April 1991, is the founder and principal
stockholder of Trailer Bridge. His principal business activity during the past
five years has related to developing Trailer Bridge. He served as President from
June 1991 to July 1992 and from January 1995 to November 1995. Mr. McLean is a
pioneer in transportation who is responsible for a number of innovations in both
trucking and shipping and who is best known as the founder of container
shipping. He built McLean Trucking Company into one of the largest and most
profitable trucking companies in the U.S., where it was the first major user of
diesel engines in its tractors. In the mid-1950's, he purchased two steamship
companies which were combined to form Sea-Land Service, Inc. ("Sea-Land") which
introduced and developed container shipping. Following the sale of Sea-Land in
1968, Mr. McLean went on to found McLean Industries whose principal subsidiary,
U.S. Lines, became the largest container shipping company in the world. His
business accomplishments led to his induction in the Fortune Magazine Business
Hall of Fame, and he was referred to by a leading business magazine as "one of
the few men who changed the world."

Mr. McCown, a director since April 1991, has served as the Chairman of the
Board and non-employee Chief Executive Officer since November 1995. From July
1992 to November 1995, Mr. McCown was Vice President of the Company. In addition
to his role at Trailer Bridge, he is President and Chief Executive Officer of
Kadampanattu Corp., an affiliate of Trailer Bridge that owns the two vessels now
utilized by Trailer Bridge in its present Puerto Rico service. Mr. McCown has
worked for Malcom P. McLean in various capacities since 1980. Mr. McCown is a
graduate of Harvard Business School (MBA, 1980) and Louisiana State University
(BBA, 1975). Prior to joining McLean Industries in 1980, Mr. McCown worked at
U.S. Lines, a subsidiary of McLean Industries, and at National Bank of North
America as a corporate loan officer. Commencing with this offering, Mr. McCown
will become an employee of the Company and is expected to devote substantially
all of his working time to the Company. See "Risk Factors -- Dependence on Key
Personnel" and "Certain Transactions."

Mr. Heim has served as President since November 1995 and Chief Operating
Officer since January 1992. From May 1991 until November 1995, Mr. Heim served
as Vice President of the Company. Prior to joining Trailer Bridge in 1991, Mr.
Heim worked at Crowley Maritime Corporation for five years in various operating
capacities primarily related to its Puerto Rico service. His other
transportation experience includes more than 15 years with Sea-Land, Puerto Rico
Marine Manage-

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ment and U.S. Lines in diverse domestic and international assignments. Mr. Heim
graduated from Jacksonville University with a B.S. in Business Management.

Mr. Hodges has served as Vice President of Sales since November 1995. Prior
to joining Trailer Bridge in September 1995, he served as General Sales Manager
for M.S. Carriers, a major nationwide truckload carrier based in Memphis. Mr.
Hodges was that company's first salesman, beginning in 1982. Prior to his
association with M.S. Carriers, Mr. Hodges' trucking experience included
terminal manager positions at Mistletoe Express and United Parcel Service as
well as a branch manager position at a trailer sales dealer.

Mr. Morley has served as Vice President of Operations since July 1992 and
is responsible for marine and terminal operations. Prior to joining Trailer
Bridge in 1991, Mr. Morley was with Sea-Land where he was responsible for
operations in Puerto Rico from 1990 to 1991. Mr. Morley's overall transportation
experience with major container transportation companies spans over 25 years.

Mr. Tanner, a CPA, has served as Vice President of Administration and Chief
Financial Officer since January 1992. Mr. Tanner joined Trailer Bridge in 1991
from Crowley Maritime where he was Manager of Analysis and Statistics for four
years. His prior experience includes three years as Manager of Corporate
Planning for The Charter Company, which was a Jacksonville based $5 billion
publicly-held company, and five years in public accounting.

Mr. van Dijk has served as Vice President of Pricing since July 1992 and
directs all pricing related activities. Prior to joining Trailer Bridge in 1991,
Mr. van Dijk worked for Crowley Maritime, where he directed pricing for the
Puerto Rico service. Mr. van Dijk's pricing related experience includes over 30
years with American Transport, U.S. Lines, Weyerhauser Shipping, Sea-Land and
Holland America Lines.

Mr. Gotimer has served as non-employee General Counsel since 1991. Mr.
Gotimer also acts as legal counsel for Malcom P. McLean, including General
Counsel for Kadampanattu Corp. His previous experience includes legal counsel
with British Airways, Plc., Pan American World Airways and McLean Industries.
Mr. Gotimer has an LL.M. degree in Taxation from New York University School of
Law and both a JD and BS degree in accounting from St. John's University.
Commencing with this offering, Mr. Gotimer will become a part-time employee of
the Company. See "Certain Transactions."

Following completion of the offering, the Company intends to add two
independent directors to its Board. The Company has not yet chosen such
directors.

COMMITTEES

Following completion of the offering, the Board of Directors intends to
establish an Audit Committee comprised initially of John D. McCown and the
Company's two independent directors and a Compensation Committee comprised of
the Company's two independent directors. The Audit Committee will have
responsibility for reviewing audit plans and discussing audit work, internal
controls and related matters with the Company's independent public accountants,
reviewing the audit report and any accompanying recommendations, and nominating
independent public accountants to perform the annual audit. The Compensation
Committee will have responsibility for reviewing the compensation of the
Company's executive officers, making recommendations to the Board of Directors
and administering the Company's Incentive Stock Plan. See "Management --
Incentive Stock Plan."

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<PAGE> 40

EXECUTIVE COMPENSATION

The following table summarizes the compensation paid or accrued by the
Company, for services rendered during 1996, to the Company's Chief Executive
Officer and its other five most highly compensated executive officers:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1)
--------------------------- ---- -------- ------- ---------------
<S> <C> <C> <C> <C>
John D. McCown................................. 1996 $235,864(2) $37,311 $ --
Chairman and Chief Executive Officer
Ralph W. Heim.................................. 1996 154,904 64,446 7,625
President and Chief Operating Officer
J. Edward Morley............................... 1996 112,405 37,311 6,459
Vice President of Operations
Robert van Dijk................................ 1996 108,724 37,311 6,923
Vice President of Pricing
Mark A. Tanner................................. 1996 104,635 37,311 3,523
Vice President of Administration
and Chief Financial Officer
Wayne Hodges................................... 1996 104,183 37,311 3,707
Vice President of Sales
</TABLE>

- ---------------

(1) Consists of amounts contributed by the Company for the account of the named
executive under the Company's 401(k) plan and excess group term life
insurance premiums, respectively, as follows: Mr. Heim, $4,500 and $1,613;
Mr. Morley, $3,344 and $606; Mr. van Dijk, $3,523 and $965; Mr. Tanner,
$3,400 and $578; and Mr. Hodges, $3,125 and $582.
(2) In 1996 and prior years, Mr. McCown provided services to the Company in
connection with the Company's vessel charter from its affiliate,
Kadampanattu Corp. The amount shown as salary on the above table was paid by
the affiliate. Commencing with the closing of the offering, all of Mr.
McCown's compensation will be paid directly by the Company, and the
Company's charter payments will be reduced. See "Certain Transactions."

CASH BONUS PLAN

The Company has historically paid bonuses to employees from an overall
bonus pool equivalent to 10% of pretax income. Partial bonuses equal to one-half
of the expected amount are distributed on a cumulative quarterly basis, with the
final payment made based on audited annual results. The distribution to
individual employees is determined based on a point system which includes
approximately one-half of the Company's non-driver employees.

INCENTIVE STOCK PLAN

The Company's Board of Directors and stockholders have adopted an Incentive
Stock Plan designed to attract and retain employees and outside directors and
motivate them through incentives that are aligned with the Company's goals of
increased profitability and stockholder value. The Incentive Stock Plan, the
material terms of which are described below, is intended to afford the Company
wide discretion in making awards. Awards under the Incentive Stock Plan will be
made by the Compensation Committee of the Board of Directors, which will be
formed upon consummation of the offering and will be comprised solely of persons
who qualify as (i) "non-employee directors," as such term is used in Rule 16b-3
under the Securities Exchange Act of 1934, as amended, and (ii) "outside
directors" as defined under Section 162(m) of the Internal Revenue Code (the
"Code"). Awards may be in the form of incentive options or non-qualified
options. An employee who exercises an incentive option will not be required to
recognize taxable income (and the

40
<PAGE> 41

Company will not be entitled to a tax deduction) if the employee holds the
shares issued on exercise for the requisite holding period. By contrast, an
employee who exercises a non-qualified option will be required to recognize
taxable income on the date of exercise equal to the spread between the fair
market value of the underlying shares on the date of exercise and the exercise
price, and the Company will be entitled to a corresponding tax deduction.
Incentive options will be designed to comply with applicable provisions of the
Code, including a requirement that exercise prices be equal to at least 100% of
the fair market value of the Common Stock on the date of grant and a ten-year
restriction on the option term. Options for more than 235,500 shares may not be
awarded to any individual during any 12-month period.

The Company has reserved 785,000 shares of Common Stock for issuance
pursuant to the Incentive Stock Plan, and has awarded non-qualified options to
executives covering an aggregate of 392,500 shares at an exercise price equal to
the initial public offering price of the Common Stock, as follows: Mr. Heim,
137,375 shares; and Messrs. Hodges, Morley, Tanner, van Dijk and Gotimer, 51,025
shares each. Such options become exercisable at the rate of 20% per year
beginning on the first anniversary date of the offering. The Board of Directors
has granted nonqualified options to purchase 78,500 additional shares to 63
other employees at an exercise price equal to the initial public offering price.
Options that expire unexercised or are forfeited become available again for
issuance under the Incentive Stock Plan. Unvested options will become
exercisable in full upon a "change of control," as defined in the award
agreements. The Compensation Committee to be established after the offering may
determine when and in what amounts future awards vest and options become
exercisable. Terms of awards need not be the same for all participants. The
price payable upon exercise of an option may be satisfied in cash or, in the
Committee's discretion, with previously acquired shares of Common Stock.

401(K) PROFIT SHARING PLAN

The Company maintains a defined contribution plan (the "401(k) Plan"),
which is intended to satisfy the tax qualification requirements of the Code. All
Company personnel age 18 or older are eligible to participate in the 401(k) Plan
after one year of service with the Company. The 401(k) Plan permits participants
to contribute up to 15% of their annual compensation from the Company, subject
to the limit imposed by the Code. All amounts deferred under the 401(k) Plan by
a participant fully vest immediately. The 401(k) Plan provides for matching
contributions by the Company at a rate not in excess of 3.0% of compensation and
also permits discretionary contributions. The Company contributed $142,994 to
the 401(k) Plan in 1996. Amounts contributed by the Company vest 20% each year
from the second through the sixth year after contribution. The Company has no
defined benefit or actuarial plans.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company's Compensation Committee to be established following the
completion of the offering will be comprised of the Company's two independent
directors. Prior to the offering, Malcom P. McLean and John D. McCown made all
decisions concerning executive officer compensation. Mr. McLean is the sole
stockholder and Mr. McCown is the President and Chief Executive Officer of
Kadampanattu Corp., which charters the two vessels currently used by the
Company. See "Certain Transactions."

DIRECTORS' COMPENSATION

After this offering, each non-employee director will receive an annual
retainer of $5,000 and $1,000 for each meeting of the Board of Directors or
committee of the Board of Directors attended by such director (if such committee
meeting is held other than on the day of a Board meeting), plus reimbursement of
expenses incurred in attending such meetings.

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<PAGE> 42

CERTAIN TRANSACTIONS

The Company charters two roll-on/roll-off barge vessels and the right to
use related ramp structures in Jacksonville, Florida and San Juan, Puerto Rico
from Kadampanattu Corp. ("K Corp"), which is wholly owned by Malcom P. McLean,
the Company's founder, controlling stockholder and a director. The charters
currently provide for a per vessel payment to K Corp of $10,500 per day and also
require the Company to maintain and repair the vessels and ramps. The charters
expire at the later of September 1, 2010 or the repayment of all obligations
under K Corp's construction loan for the 1996 mid-body expansion program. Such
obligations are scheduled to be repaid in quarterly installments ending June 30,
2003. Upon the expiration of the charters, the Company has the option to extend
the charters for an additional eight years at $11,000 per day per vessel, or may
purchase the vessels at their then fair market value. Total expense under these
charters from K Corp was $3.6 million, $3.6 million and $5.9 million in 1994,
1995 and 1996, respectively. The charter payments were increased from $5,000 per
day per vessel in 1996 following completion of the mid-body expansion. In the
opinion of the Board of Directors, the terms of the charters are at least as
favorable as those that could be obtained from unaffiliated third parties.

K Corp has also provided the Company with the services of Messrs. McCown
and Gotimer pursuant to the charter arrangements and, accordingly, K Corp has
borne the entire salary expense attributable to such officers' services. See
"Management -- Executive Compensation." Effective with the offering, Mr. McCown
will become an employee of the Company, and the daily charter fee payable by the
Company will be reduced from $10,500 to $10,050 per vessel. In addition, the
Company has agreed to pay Mr. Gotimer an annual salary of $50,000 for his legal
services. The reduction in charter fees offsets the Company's compensation
expense for Messrs. McCown and Gotimer after the offering. Accordingly, giving
retroactive effect to these arrangements would not result in a pro forma
increase in the Company's expenses.

During 1991, 1992 and early 1993, K Corp advanced funds to the Company. K
Corp also agreed to defer receipt of certain charter payments due for 1992. The
advances were used by the Company to fund various construction projects and
general and administration expenses. The advances are represented by a
promissory note, which bears interest at 8% and is due on December 31, 1997 (the
"Note"). The highest outstanding principal balance on the Note during 1994, 1995
and 1996 was $15.4 million, $12.4 million and $7.8 million, respectively, and
the total outstanding principal balance at December 31, 1994, 1995 and 1996 was
$12.4 million, $7.8 million and $4.6 million, respectively. The 1996 amount also
reflects a credit of $1.7 million for substitute vessel costs paid by the
Company while the K Corp vessels were undergoing renovations as part of the
mid-body insertion project. In 1997, the Note was increased by $1.5 million to
reflect an advance made by K Corp to fund the Company's down payment on the two
Triplestack Box Carriers(TM). Approximately $6.3 million of the net proceeds of
the offering will be used to repay the Note in full, including accrued interest.
See "Use of Proceeds."

The Company has guaranteed the $26.5 million term loan obtained by K Corp
for the 1996 mid-body expansion of the vessels chartered to the Company. The
lender has agreed to release the Company from this guarantee and to subordinate
its rights to the Company's charter, contingent upon the Company receiving net
proceeds of at least $20.0 million from the offering. Such loan is scheduled to
be repaid in quarterly installments ending June 30, 2003 (currently $750,000 per
quarter, increasing to $1,250,000 per quarter on June 30, 2001). The outstanding
amount of the loan at March 31, 1997 was $24.2 million. The loan is also secured
by a mortgage on K Corp's vessels and a lien on the related ramp structures. The
aggregate of the latest appraised values of the vessels and related ramps that
secure this indebtedness is $63 million.

The Company has long term debt arrangements and lease obligations which are
guaranteed by K Corp and which contain financial covenants that require the
Company and K Corp, on a combined basis, to maintain certain financial ratios
which are calculated as of the end of each fiscal quarter. The Company and K
Corp were in compliance with such covenants at March 31, 1997. The aggregate

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<PAGE> 43

amount of such obligations guaranteed by K Corp at December 31, 1996 was $9.2
million. See Note 7 to the Financial Statements. The Company intends to seek
release of such guaranties contingent upon this offering.

The Company will continue a policy that any transactions with affiliated
persons or entities will be on terms no less favorable to the Company than those
that could have been obtained on an arms-length basis from unaffiliated third
parties. Any such future transactions must also be approved by a majority of the
disinterested directors.

PRINCIPAL STOCKHOLDERS

The following table sets forth information regarding the beneficial
ownership of the Common Stock as of the date of this Prospectus, and as adjusted
to reflect the sale of the shares of Common Stock offered hereby, by each person
known by the Company to beneficially own more than 5% of the outstanding shares
of Common Stock; each of the Company's directors and executive officers
identified in the Summary Compensation Table who beneficially owns any Common
Stock; and all directors and executive officers as a group. Unless otherwise
indicated, each of the stockholders has sole voting and investment power with
respect to the shares beneficially owned. The Company has two stockholders of
record at the date of this Prospectus.

<TABLE>
<CAPTION>
PERCENT
-----------------------
NUMBER BEFORE AFTER
NAME AND ADDRESS OF SHARES OFFERING OFFERING(1)
- ---------------- --------- -------- -----------
<S> <C> <C> <C>
Malcom P. McLean(2)..................................... 5,338,000 80.0% 56.9%
Clara L. McLean(2)...................................... 1,334,500 20.0 14.2
John D. McCown(2)....................................... 1,334,500(3) 20.0 14.2
All directors and executive officers as a group (8)
persons).............................................. 5,338,000 80.0 56.9
</TABLE>

- ---------------

(1) Excludes shares subject to options granted to executive officers under the
Company's Incentive Stock Plan which become exercisable 20% per year
beginning on the first anniversary date of the offering.
(2) The address of each of the individuals listed above is 500 Park Avenue, 5th
Floor, New York, NY 10022.
(3) Consists of shares subject to immediately exercisable options granted by
Malcom P. McLean to Mr. McCown in February 1994 and May 1997. The February
1994 options cover 392,500 shares with an exercise price of $.001 per share
and the May 1997 options cover 942,000 shares with an exercise price of $.95
per share.

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<PAGE> 44

DESCRIPTION OF CAPITAL STOCK

GENERAL

The Company is authorized to issue up to 20,000,000 shares of Common Stock,
$.01 value per share, and 1,000,000 shares of preferred stock, $.01 par value
per share. At the date of this Prospectus 6,672,500 shares of Common Stock and
no shares of preferred stock were issued and outstanding. All of the outstanding
Common Stock is, and the shares of Common Stock offered by the Company hereby
when issued and paid for will be, fully paid and non-assessable.

COMMON STOCK

Voting. Holders of Common Stock are entitled to one vote per share. All
actions submitted to a vote of stockholders are voted on by holders of Common
Stock voting together as a single class. Holders of Common Stock are not
entitled to cumulative voting in the election of directors.

Dividends. Holders of Common Stock are entitled to receive dividends
payable in cash or property other than Common Stock on an equal basis, if and
when such dividends are declared by the Board of Directors from funds legally
available, subject to any preference in favor of outstanding shares of preferred
stock, if any.

Liquidation. In the event of liquidation, holders of Common Stock
participate on a ratable basis in the net assets of the Company available for
distribution after payment or provision for liabilities of the Company and
payment of the liquidation preference, if any, on any outstanding shares of
preferred stock.

Other Terms. Holders of Common Stock are not entitled to preemptive rights
and the Common Stock is not subject to redemption.

The rights, preferences, and privileges of holders of Common Stock are
subject to, and may be adversely affected by, the rights of the holders of
shares of any series of preferred stock which the Company may designate and
issue in the future.

PREFERRED STOCK

The Board of Directors is authorized to issue, from time to time and
without approval of the stockholders, up to 1,000,000 shares of preferred stock
in one or more series. The Board of Directors may fix for each series (i) the
distinctive serial designation and number of shares of the series; (ii) the
voting powers and the right, if any, to elect a director or directors (and the
terms of office of any such directors); (iii) the dividend rights, if any; (iv)
the terms of redemption, and the amount of and provisions regarding any sinking
fund for the purchase or redemption thereof; (v) the liquidation preferences and
the amounts payable on dissolution or liquidation; (vi) the terms and conditions
under which shares of the series may or shall be converted into any other series
or class of stock or debt of the Company; and (vii) and any other terms or
provisions which the Board of Directors is legally authorized to fix or alter.

It is not possible to state the actual effect of the authorization of the
preferred stock upon the rights of holders of the Common Stock until the Board
determines the specific rights of the holders of any series of preferred stock.
Depending upon the rights granted to any series of preferred stock, issuance
thereof could adversely affect the voting power, liquidation rights, or other
rights of the holders of Common Stock or other preferred stock. The Board's
authority to issue shares of preferred stock provides a potential vehicle for
use in possible acquisitions and other corporate purposes, including in
connection with a stockholder rights plan. Any such issuance could have the
effect of making it more difficult for a third party to acquire, or of
discouraging a third party from acquiring, control of the Company. The Company
has no present plans to issue any shares of preferred stock.

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<PAGE> 45

FOREIGN OWNERSHIP RESTRICTIONS

The Company's Certificate of Incorporation ("Certificate") (i) contains
provisions limiting the aggregate percentage ownership by Non-Citizens of the
Company's capital stock (including the Common Stock) to 24.99% of the
outstanding shares (the "Permitted Percentage"), and no more than the Permitted
Percentage of the voting power of the Company, to ensure that such foreign
ownership will not exceed the maximum percentage permitted by applicable federal
law (presently 25.0%); (ii) requires institution of a dual stock certificate
system to help determine such ownership, and (iii) permits the Board of
Directors to make such determinations as may reasonably be necessary to
ascertain such ownership and implement such limitations. These provisions are
intended to protect the Company's ability to operate its vessels in the U.S.
domestic trade governed by the Jones Act. The ability of the Company to so
operate is necessary to avoid default under certain of the Company's financings,
may enhance the Company's ability to incur additional debt, and may have other
effects upon the Company. See "Risk Factors -- Restriction on Foreign Ownership
and Possible Required Divestiture of Stock." The Certificate permits the Board
of Directors to revoke any or all of the foreign ownership restrictions
described herein if the Board, in its discretion, determines that compliance
with the citizenship requirements of the Jones Act, or any or all of such
restrictions, are not in the best interest of the Company.

To provide a method to enable the Company reasonably to determine stock
ownership by Non-Citizens, the Certificate requires the Company to institute
(and to implement through the transfer agent for the Common Stock) a dual stock
certificate system, pursuant to which certificates representing shares of Common
Stock will bear legends that designate such certificates as either "citizen" or
"non-citizen," depending on the citizenship of the owner. The Company may also
issue non-certificated shares through depositories if the Company determines
such depositories have established procedures that allow the Company to monitor
the ownership of Common Stock by Non-Citizens.

For purposes of the dual stock certificate system, a "Non-Citizen" is
defined as any person other than a Citizen, and a "Citizen" is defined as: (i)
any individual who is a citizen of the U.S. by birth, naturalization, or as
otherwise authorized by law; (ii) any corporation (a) organized under the laws
of the U.S., or a state, territory, district, or possession thereof, (b) of
which title to not less than 75% of its stock is beneficially owned by and
vested in Citizens, free from any trust or fiduciary obligation in favor of
Non-Citizens, (c) of which not less than 75% of the voting power is vested in
Citizens, free from any contract or understanding through which it is arranged
that such voting power may be exercised directly or indirectly on behalf of
Non-Citizens, (d) of which there are no other means by which control is
conferred upon or permitted to be exercised by Non-Citizens, (e) whose president
or chief executive officer, chairman of the board of directors and all officers
authorized to act in their absence or disability are Citizens, and (f) of which
more than 50% of that number of its directors necessary to constitute a quorum
are Citizens; (iii) any partnership (a) organized under the laws of the U.S., or
a state, territory, district, or possession thereof, (b) all general partners of
which are Citizens, and (c) of which not less than a 75% interest is
beneficially owned and controlled by, and vested in, Citizens, free and clear of
any trust or fiduciary obligation in favor of Non-Citizens; (iv) any association
(a) organized under the laws of the U.S., or a state, territory, district, or
possession thereof, (b) of which 100% of the members are Citizens, (c) whose
president, chief executive officer, or equivalent position, chairman of the
board of directors, or equivalent committee or body, and all persons authorized
to act in their absence or disability are Citizens, (d) of which not less than
75% of the voting power is beneficially owned by Citizens, free and clear of any
trust or fiduciary obligation in favor of Non-Citizens, and (e) of which more
than 50% of that number of its directors or equivalent persons necessary to
constitute a quorum are Citizens; (v) any limited liability company (a)
organized under the laws of the U.S., or a state, territory, district or
possession thereof, (b) of which not less than 75% of the membership interests
are beneficially owned by and vested in Citizens, free from any trust or
fiduciary obligation in favor of Non-Citizens, and the remaining membership
interests are beneficially owned by and vested in persons meeting the

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<PAGE> 46

requirements of 46 U.S.C. Sec. 12102 (a), (c) of which not less than 75% of the
voting power is vested in Citizens, free from any contract or understanding
through which it is arranged that such voting power may be exercised directly or
indirectly on behalf of Non-Citizens, (d) of which there are no other means by
which control is conferred upon or permitted to be exercised by Non-Citizens,
(e) whose president or other chief executive officer or equivalent position,
chairman of the board of directors or equivalent committee or body, managing
members (or equivalent), if any, and all persons authorized to act in their
absence or disability are citizens, free and clear of any trust or fiduciary
obligation in favor of any Non-Citizens, and (f) of which more than 50% of that
number of its directors or equivalent persons necessary to constitute a quorum
are Citizens; (vi) any joint venture, if not an association, corporation,
partnership, or limited liability company (a) organized under the laws of the
U.S., or a state, territory, district, or possession thereof, and (b) of which
100% of the equity is beneficially owned and vested in Citizens, free and clear
of any trust or fiduciary obligation in favor of any Non-Citizens; and (vii) any
trust (a) domiciled in and existing under the laws of the U.S., or a state,
territory, district, or possession thereof, (b) the trustee of which is a
Citizen, and (c) of which not less than a 75% interest is held for the benefit
of Citizens, free and clear of any trust or fiduciary obligation in favor of any
Non-Citizens; and (viii) any other entity not specifically listed above which
the Board of Directors reasonably determines is a "Citizen" consistent with the
foregoing definitions and the Jones Act. The foregoing definition is applicable
at all tiers of ownership and in both form and substance at each tier of
ownership. The Board of Directors is specifically authorized to make reasonable
determinations and interpretations of terms used in the Certificate in defining
a "Citizen" to assure compliance with the Jones Act in accordance with
applicable law and the Certificate. The Board of Directors also may, but is not
required to, exempt any person from classification as a "Non-Citizen" if the
Board determines, based on evidence it deems appropriate, that doing so would
not cause the Company to cease being in compliance with the Jones Act and
applicable law.

Shares of Common Stock are transferable to Citizens at any time and are
transferable to Non-Citizens if, at the time of such transfer, the transfer
would not increase the aggregate ownership by Non-Citizens, or the aggregate
voting power of Non-Citizens, above the Permitted Percentage in relation to the
total outstanding shares and the total voting power of the Company. Non-Citizen
certificates may be converted to Citizen certificates upon a showing,
satisfactory to the Company, that the holder is a Citizen. Any purported
transfer to Non-Citizens of shares or of an interest in shares of the Company
represented by a Citizen certificate in excess of the Permitted Percentage will
be ineffective as against the Company for all purposes (including for purposes
of voting, dividends, and any other distribution, upon liquidation or
otherwise). In addition, the shares may not be transferred on the books of the
Company, and the Company, whether or not such stock certificate is validly
issued, may refuse to recognize the holder thereof as a stockholder of the
Company except to the extent necessary to effect any remedy available to the
Company. Subject to the foregoing limitations, upon surrender of any stock
certificate for transfer, the transferee will receive citizen certificates or
non-citizen certificates, as applicable.

The Certificate establishes procedures with respect to the transfer of
shares to enforce the limitations referred to above and authorize the Board of
Directors to implement such procedures. The Board of Directors may take other
actions or make interpretations of the Company's foreign ownership policy as it
deems necessary in order to implement the policy. Pursuant to the procedures
established in the Certificate, as a condition precedent to each issuance and/or
transfer of stock certificates representing shares of Common Stock (including
the shares of Common Stock being sold in the offering), a citizenship
certificate may be required from all transferees (and from any recipient upon
original issuance) of Common Stock and, with respect to the beneficial owner of
the Common Stock being transferred, if the transferee (or the original
recipient) is acting as a fiduciary or nominee for such beneficial owner. The
registration of the transfer (or original issuance) will be denied upon refusal
to furnish such citizenship certificate, which must provide information about
the purported transferee's or beneficial owner's citizenship. Furthermore, as
part of the dual stock certificate system, depositories holding shares of the
Company's Common Stock will be required to

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<PAGE> 47

maintain separate accounts for "Citizen" and "Non-Citizen" shares. When the
beneficial ownership of such shares is transferred, the depositories'
participants will be required to advise such depositories as to the account in
which the transferred shares should be held. In addition, to the extent
necessary to enable the Company to determine the number of shares owned by
Non-Citizens, the Company may from time to time require record holders and
beneficial owners of shares of Common Stock to confirm their citizenship status
and may, in the discretion of the Board of Directors, temporarily withhold
dividends payable to, and deny voting rights to, any such record holder or
beneficial owner until confirmation of citizenship is received.

Should the Company (or its transfer agent for the Common Stock) become
aware that the ownership by Non-Citizens of Common Stock at any time exceeds the
Permitted Percentage (the "Excess Shares"), the Board of Directors is authorized
to withhold dividends and other distributions temporarily on the Excess Shares,
pending the transfer of such shares to a Citizen or the reduction in the
percentage of shares owned by Non-Citizens to or below the Permitted Percentage,
and to deny voting rights with respect to the Excess Shares. If dividends and
distributions are to be withheld, they will be set aside for the account of the
Excess Shares. At such time as such shares are transferred to a Citizen or the
ownership of such shares by Non-Citizens will not result in aggregate ownership
by Non-Citizens in excess of the Permitted Percentage, the dividends withheld
shall be paid to the then record holders of the related shares. Excess Shares
shall, so long as the excess exists, not be deemed to be outstanding for
purposes of determining the vote required on any matter brought before the
stockholders for a vote. The Certificate provides that the Board of Directors
has the power, in its reasonable discretion and based upon the records
maintained by the Company's transfer agent, to determine those shares of Common
Stock that constitute the Excess Shares. Such determination will be made by
reference to the date or dates on which such shares were purchased by
Non-Citizens, starting with the most recent acquisition of shares by a
Non-Citizen and including, in reverse chronological order, all other
acquisitions of shares by Non-Citizens from and after the acquisition that first
caused the Permitted Percentage to be exceeded; provided that Excess Shares
resulting from a determination that a record holder or beneficial owner is no
longer a Citizen will be deemed to have been acquired as of the date of such
determination. To satisfy the Permitted Percentage described above, the
Certificate authorizes the Board of Directors, in its discretion, to redeem
(upon written notice) Excess Shares in order to reduce the aggregate ownership
by Non-Citizens to the Permitted Percentage. As long as the shares of Common
Stock offered hereby continue to be authorized for quotation on the Nasdaq
National Market, the redemption price will be the average of the closing sale
price of the shares (as reported by the Nasdaq National Market) during the 30
trading days next preceding the date of the notice of redemption. The redemption
price for Excess Shares will be payable in cash. In the event the Company is not
permitted by applicable law to make such redemption or the Board of Directors,
in its discretion, elects not to make such redemption, the Company may direct
the holder of Excess Shares to sell all such Excess Shares for cash in such
manner as the Board of Directors directs.

CERTAIN PROVISIONS OF CERTIFICATE AND BYLAWS

Provisions with Anti-Takeover Implications. Certain provisions of the
Company's Certificate and Bylaws deal with matters of corporate governance and
the rights of stockholders. Under the Company's Certificate, the Board of
Directors may issue shares of preferred stock and set the voting rights,
preferences, and other terms thereof. The Bylaws provide that a special meeting
of stockholders may be called only by the Chairman of the Board or a majority of
the directors. Such provisions could be deemed to have an anti-takeover effect
and discourage takeover attempts not first approved by the Board of Directors
(including takeovers which certain stockholders may deem to be in their best
interest). Any such discouraging effect upon takeover attempts could potentially
depress the market price of the Common Stock or inhibit temporary fluctuations
in the market price of the Common Stock that otherwise could result from actual
or rumored takeover attempts.

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<PAGE> 48

Indemnification and Limitation of Liability. Under its Certificate, the
Company may indemnify, to the full extent permitted by Delaware law, its
directors, officers and employees who are a party, or are threatened to be made
a party, to an action or proceeding, by reason of the fact that the person
serves or served the Company as a director, officer or employee. The Company
also is authorized to purchase insurance and enter into indemnification
agreements whereby it agrees to otherwise grant broader indemnification rights.
The Company intends to enter into indemnification agreements with its executive
officers and directors and purchase directors' and officers' liability insurance
coverage on their behalf. The Certificate also eliminates the liability of
directors and officers to the Company or its stockholders for monetary damages
for breach of fiduciary duty except to the extent such exemption from liability
or limitation thereof is not permitted under applicable law. This provision does
not eliminate the duty of care or loyalty and, in appropriate circumstances,
equitable remedies such as injunctive or other forms of non-monetary relief will
remain available under Delaware law. In addition, each director continues to be
subject to liability for monetary damages for acts or omissions involving breach
of the duty of loyalty, acts or omissions not in good faith, intentional
misconduct, knowing violations of law, unlawful distributions and any
transaction from which the director derived an improper personal benefit. The
Company believes that these provisions of its Certificate and Bylaws are
necessary to attract and retain qualified persons as directors and officers.

DELAWARE BUSINESS COMBINATION STATUTE

Section 203 of the Delaware General Corporation Law ("Section 203")
provides that, subject to certain exceptions specified therein, an interested
stockholder of a Delaware corporation shall not engage in any business
combination with the corporation for a three-year period following the date that
such stockholder becomes an interested stockholder unless (i) prior to such
date, the board of directors of the corporation approved either the business
combination or the transaction which resulted in the stockholder becoming an
interested stockholder, (ii) upon consummation of the transaction which resulted
in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding certain shares), or
(iii) on or subsequent to such date, the business combination is approved by the
board of directors of the corporation and authorized at an annual or special
meeting of stockholders by the affirmative vote of at least 66 2/3% of the
outstanding voting stock which is not owned by the interested stockholder.
Except as otherwise specified in Section 203, an interested stockholder is
defined to include (x) any person that is the owner of 15% or more of the
outstanding voting stock of the corporation, or is an affiliate or associate of
the corporation, and was the owner of 15% or more of the outstanding voting
stock of the corporation at any time within three years immediately prior to the
relevant date, and (y) the affiliates and associates of any such person.

Under certain circumstances, Section 203 makes it more difficult for a
person who would be an interested stockholder to effect various business
combinations with a corporation for a three-year period, although the
stockholders may elect to exclude a corporation from the restrictions imposed
thereunder. The Certificate does not exclude the Company from the restrictions
imposed under Section 203. The provisions of Section 203 may encourage companies
interested in acquiring the Company to negotiate in advance with the Board of
Directors since the stockholder approval requirement would be avoided if a
majority of the directors then in office approve either the business combination
or the transaction which results in the stockholder becoming an interested
stockholder. Such provisions also may have the effect of preventing changes in
the management of the Company. It is possible that such provisions could make it
more difficult to accomplish transactions which stockholders may otherwise deem
to be in their best interests.

48
<PAGE> 49

TRANSFER AGENT AND REGISTRAR

BankBoston, N.A. will be the Transfer Agent and Registrar for the Common
Stock. The address of the Transfer Agent and Registrar is BankBoston, N.A., c/o
Boston EquiServe, Blue Hills Office Park, 150 Royall Street, Canton,
Massachusetts 02021, and its phone number is (617) 575-2000.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the offering, the Company will have 9,372,500 shares
outstanding. Of these shares, all 2,700,000 shares sold in the offering will be
freely transferable by persons, other than "affiliates" of the Company, without
further restriction under the Securities Act. The Company and all current
stockholders and executive officers have agreed not to offer, sell or otherwise
dispose of any shares of Common Stock owned (or in the case of the Company,
owned or issuable) by them for 180 days from the commencement of the offering
without the prior written consent of Alex. Brown & Sons Incorporated. Commencing
with the expiration of the 180-day period, the 6,672,500 shares of Common Stock
held by current stockholders of the Company will be eligible for sale without
registration in the public market, subject to Rule 144.

In general, Rule 144 provides that, subject to its provisions and other
applicable federal and state securities law requirements, any person (or persons
whose shares are aggregated), including any person who may be deemed an
"affiliate" as defined under the Securities Act, who has beneficially owned
shares for at least one year is entitled to sell, within any three-month period,
a number of shares that does not exceed the greater of (i) the average weekly
trading volume of the same class of securities during the four calendar weeks
preceding the filing of notice of the sale with the Securities and Exchange
Commission and (ii) 1% of the same class of securities then outstanding, subject
in each case to certain manner-of-sale provisions, notice requirements and the
availability of current information concerning the Company. A person who is not
deemed an "affiliate" of the Company and who has beneficially owned shares for
at least two years is entitled to sell shares under Rule 144 without regard to
the volume limitations and current public information, manner of sale and notice
requirements described above. Restricted shares will also be eligible for sale
to "qualified institutional buyers" pursuant to Rule 144A under the Securities
Act without regard to the volume limitations contained in Rule 144.

Prior to the offering, there has been no public market for the Common Stock
and no determination can be made as to the effect, if any, that the sale or
availability for sale of additional shares of the Common Stock will have on the
market price of the Common Stock prevailing from time to time. Nevertheless,
sales of substantial amounts of the shares in the public market could adversely
affect the market price of the Common Stock and could impair the Company's
ability to raise capital through sale of its equity securities.

The Company intends to file a registration statement under the Securities
Act to register shares of Common Stock reserved for issuance under its Incentive
Stock Plan, thus permitting the resale of such shares by non-affiliates in the
public market without restriction under the Securities Act. A total of 785,000
shares (including 471,000 shares subject to outstanding options) are reserved
for issuance under the Incentive Stock Plan.

49
<PAGE> 50

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below (the "Underwriters"), through their Representative,
Alex. Brown & Sons Incorporated, have severally agreed to purchase from the
Company the following respective numbers of shares of Common Stock at the
initial public offering price less the underwriting discounts and commissions
set forth on the cover page of this Prospectus:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
Alex. Brown & Sons Incorporated............................. 1,470,000
Deutsche Morgan Grenfell Inc................................ 90,000
Donaldson, Lufkin & Jenrette Securities Corporation......... 90,000
A.G. Edwards & Sons, Inc.................................... 90,000
Oppenheimer & Co., Inc...................................... 90,000
PaineWebber Incorporated.................................... 90,000
Schroder & Co. Inc.......................................... 90,000
Smith Barney Inc............................................ 90,000
Robert W. Baird & Co. Incorporated.......................... 60,000
George K. Baum & Company.................................... 60,000
William Blair & Company, L.L.C.............................. 60,000
Allen C. Ewing & Co......................................... 60,000
Furman Selz LLC............................................. 60,000
Hoefer & Arnett, Inc........................................ 60,000
Morgan Keegan & Company, Inc................................ 60,000
Raymond James & Associates, Inc............................. 60,000
The Robinson-Humphrey Company, Inc.......................... 60,000
Roney & Co.................................................. 60,000
---------
Total....................................................... 2,700,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all shares of the Common Stock offered hereby if any
of such shares are purchased.

The Company has been advised by the Representative of the Underwriters that
the Underwriters propose to offer the shares of Common Stock to the public at
the initial public offering price set forth on the cover page of this Prospectus
and to certain dealers at such price less a concession not in excess of $.40 per
share. The Underwriters may allow, and such dealers may reallow, a concession
not in excess of $.10 per share to certain other dealers. After the initial
public offering, the offering price and other selling terms may be changed by
the Representative of the Underwriters.

The Company has granted to the Underwriters an option, exercisable not
later than 30 days after the date of this Prospectus, to purchase up to 405,000
additional shares of Common Stock at the public offering price less the
underwriting discounts and commissions set forth on the cover page of this
Prospectus. To the extent that the Underwriters exercise such option, each of
the Underwriters will have a firm commitment to purchase approximately the same
percentage thereof that the number of shares of Common Stock to be purchased by
it shown in the above table bears to 405,000, and the Company will be obligated,
pursuant to the option, to sell such shares to the Underwriters. The
Underwriters may exercise such option only to cover over-allotments made in
connection with the sale of Common Stock offered hereby. If purchased, the
Underwriters will offer such additional shares on the same terms as those on
which the 2,700,000 shares are being offered.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.

In connection with the offering, certain Underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market

50
<PAGE> 51

price of the Common Stock. Such transactions may include stabilization
transactions effected in accordance with Rule 104 of Regulation M, pursuant to
which such persons may bid for or purchase Common Stock for the purpose of
stabilizing its market price. The Underwriters also may create a short position
for the account of the Underwriters by selling more Common Stock in connection
with the offering than they are committed to purchase from the Company, and in
such case may purchase Common Stock in the open market following completion of
the offering to cover all or a portion of such short position. The Underwriters
may also cover all or a portion of such short position, up to 405,000 shares, by
exercising the Underwriters' over-allotment option referred to above. The
Representative, on behalf of the Underwriters, may impose "penalty bids" under
contractual arrangements with the Underwriters whereby it may reclaim from an
Underwriter (or dealer participating in the offering), for the account of the
other Underwriters, the selling concession with respect to the Common Stock that
is distributed in the offering but subsequently purchased for the account of the
Underwriters in the open market. Any of the transactions described in this
paragraph may result in the maintenance of the price of the Common Stock at a
level above that which might otherwise prevail in the open market. None of these
transactions described in this paragraph is required, and, if undertaken, they
may be discontinued at any time.

Stockholders and executive officers of the Company, holding in the
aggregate 6,672,500 shares of Common Stock, have agreed not to offer, sell or
otherwise dispose of any of such Common Stock for a period of 180 days after the
date of this Prospectus without the prior consent of the Representatives of the
Underwriters. See "Shares Eligible for Future Sale."

The Representative of the Underwriters has advised the Company that the
Underwriters do not intend to confirm sales to any account over which they
exercise discretionary authority.

Prior to this offering, there has been no public market for the Common
Stock of the Company. Consequently, the initial public offering price for the
Common Stock was determined by negotiation between the Company and the
Representative of the Underwriters. Among the factors considered in such
negotiations were prevailing market conditions, the results of operations of the
Company in recent periods, the history of and prospects for the Company's
business and the industry in which it competes, current market valuations of
publicly traded corporations that are comparable to the Company, an assessment
of the Company's management and other factors deemed relevant.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Foley & Lardner, Jacksonville, Florida. Certain legal
matters in connection with the offering are being passed upon for the
Underwriters by Greenberg Traurig Hoffman Lipoff Rosen & Quentel, P.A., Miami,
Florida.

EXPERTS

The financial statements as of December 31, 1995 and 1996 and for each of
the three years in the period ended December 31, 1996 included in this
Prospectus and the related financial statement schedule included elsewhere in
the Registration Statement have been audited by Deloitte & Touche LLP,
independent auditors, as indicated in their reports appearing herein and
elsewhere in the Registration Statement, and have been so included herein in
reliance upon the reports of said firm given upon their authority as experts in
accounting and auditing.

51
<PAGE> 52

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (the "Registration
Statement") under the Securities Act with respect to the Common Stock offered
hereby. This Prospectus, which is part of the Registration Statement, does not
contain all the information set forth in the Registration Statement and the
exhibits and schedules thereto, certain items of which are omitted in accordance
with the rules and regulations of the Commission. For further information with
respect to the Company and the Common Stock, reference is hereby made to the
Registration Statement and such exhibits and schedules filed as a part thereof,
which may be inspected, without charge, at the Public Reference Section of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC
20549, and at the regional offices of the Commission located at 7 World Trade
Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of all or any
portion of the Registration Statement may be obtained from the Public Reference
Section of the Commission, upon payment of prescribed fees. The Commission also
maintains a Web site that contains reports, proxy and information statements and
other information regarding Registrants, including the Company, that file
electronically with the Commission. The address of such Web site is
http://www.sec.gov.

Statements contained in this Prospectus as to the content of any contract,
agreement, or other document referred to are not necessarily complete, and, in
each instance, reference is made to the copy of such contract, agreement, or
document filed as an exhibit to the Registration Statement, each such statement
being qualified in its entirety by such reference.

52
<PAGE> 53

TRAILER BRIDGE, INC.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report................................ F-2
Balance Sheets.............................................. F-3
Statements of Operations.................................... F-4
Statements of Changes in Common Stockholders' Equity
(Deficit)................................................. F-5
Statements of Cash Flows.................................... F-6
Notes to Financial Statements............................... F-7
</TABLE>

F-1
<PAGE> 54

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Trailer Bridge, Inc.
Jacksonville, Florida

We have audited the accompanying balance sheets of Trailer Bridge, Inc. as
of December 31, 1995 and 1996, and the related statements of operations, changes
in common stockholders' equity (deficit), and cash flows for each of the three
years in the period ended December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Trailer Bridge, Inc. as of December 31, 1995
and 1996, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 1996 in conformity with generally
accepted accounting principles.

Deloitte & Touche LLP

Jacksonville, Florida
February 28, 1997
(July 18, 1997 as to Note 11)

F-2
<PAGE> 55

TRAILER BRIDGE, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
------------------------- MARCH 31, 1997
1995 1996 1997 PRO FORMA
----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
(NOTE 3)
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............ $ 498,328 $ 1,658,921 $ 2,246,206 $ 2,246,206
Trade receivables, less allowance for
doubtful accounts of $655,440,
$905,581 and $1,178,737........... 8,909,418 8,305,872 8,252,435 8,252,435
Prepaid expenses..................... 611,229 964,971 343,003 343,003
----------- ----------- ----------- -----------
Total current assets......... 10,018,975 10,929,764 10,841,644 10,841,644
----------- ----------- ----------- -----------
PROPERTY AND EQUIPMENT, net............ 8,851,225 12,512,130 14,348,862 14,348,862
GOODWILL, less accumulated amortization
of $170,984, $217,763 and $229,458... 997,958 951,179 939,484 939,484
OTHER ASSETS........................... 357,375 370,592 310,280 310,280
----------- ----------- ----------- -----------
TOTAL ASSETS................. $20,225,533 $24,763,665 $26,440,270 $26,440,270
=========== =========== =========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable..................... $ 1,322,044 $ 1,981,421 $ 1,359,062 $ 1,359,062
Other accrued liabilities............ 2,489,555 2,635,099 3,225,631 9,225,631
Current portion of notes payable..... 2,677,870 3,117,069 2,865,326 2,865,326
Current portion of capital lease
obligations....................... 122,435 38,197 36,365 36,365
Unearned revenue..................... 278,898 223,627 299,881 299,881
Due to affiliate..................... 7,825,136 4,653,192 5,878,364 5,878,364
----------- ----------- ----------- -----------
Total current liabilities.... 14,715,938 12,648,605 13,664,629 19,664,629
NOTES PAYABLE, less current portion.... 2,836,425 5,909,072 6,312,977 6,312,977
CAPITAL LEASE OBLIGATIONS, less current
portion.............................. 161,444 149,077 149,077
----------- ----------- ----------- -----------
TOTAL LIABILITIES............ 17,552,363 18,719,121 20,126,683 26,126,683
----------- ----------- ----------- -----------
COMMITMENTS (Notes 5, 8 and 10)
STOCKHOLDERS' EQUITY (Note 11):
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;
6,672,500 shares issued and
outstanding....................... 66,725 66,725 66,725 66,725
Additional paid-in capital........... (66,300) (66,300) (66,300) (66,300)
Retained earnings.................... 2,672,745 6,044,119 6,313,162 313,162
----------- ----------- ----------- -----------
Total stockholders' equity... 2,673,170 6,044,544 6,313,587 313,587
----------- ----------- ----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY....... $20,225,533 $24,763,665 $26,440,270 $26,440,270
=========== =========== =========== ===========
</TABLE>

See notes to financial statements.

F-3
<PAGE> 56

TRAILER BRIDGE, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
--------------------------------------- -------------------------
1994 1995 1996 1996 1997
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES.................. $72,192,336 $62,531,365 $63,148,218 $14,568,079 $16,446,066
OPERATING EXPENSES:
Salaries, wages and benefits...... 19,307,773 14,591,795 13,288,633 3,434,673 3,404,267
Rent and purchased transportation:
Related party................... 3,650,000 3,650,000 5,900,000 910,000 1,890,000
Other........................... 15,966,059 10,847,200 10,331,461 2,520,047 2,320,837
Fuel.............................. 5,426,143 5,255,979 5,883,378 1,468,256 1,557,433
Operating and maintenance
(exclusive of depreciation shown
separately below)............... 11,781,830 10,553,364 14,210,787 3,045,731 3,205,616
Taxes and licenses................ 960,781 588,565 455,407 138,263 156,237
Insurance and claims.............. 2,202,489 1,860,997 2,121,039 514,040 521,612
Communications and utilities...... 833,840 620,815 607,833 143,284 134,448
Depreciation and amortization..... 2,646,573 2,761,139 2,944,069 701,283 689,016
Other operating expenses.......... 3,241,356 3,023,161 2,981,104 726,751 818,701
----------- ----------- ----------- ----------- -----------
66,016,844 53,753,015 58,723,711 13,602,328 14,698,167
----------- ----------- ----------- ----------- -----------
OPERATING INCOME.................... 6,175,492 8,778,350 4,424,507 965,751 1,747,899
NONOPERATING INCOME (EXPENSE):
Interest expense, net:
Related party................... (1,159,702) (822,558) (457,743) (143,182) (91,400)
Other........................... (657,775) (539,554) (623,332) (103,627) (172,016)
Gain (loss) on sale of equipment,
net............................. 12,143 47,834 66,523 (9,173)
----------- ----------- ----------- ----------- -----------
(1,805,334) (1,314,278) (1,014,552) (255,982) (263,416)
----------- ----------- ----------- ----------- -----------
INCOME BEFORE PROVISION AND PRO
FORMA PROVISION FOR INCOME
TAXES............................. 4,370,158 7,464,072 3,409,955 709,769 1,484,483
PROVISION FOR INCOME TAXES.......... (11,859) (67,316) (38,581) (7,301) (29,690)
----------- ----------- ----------- ----------- -----------
NET INCOME BEFORE PRO FORMA
PROVISION FOR INCOME TAXES........ 4,358,299 7,396,756 3,371,374 702,468 1,454,793
PRO FORMA PROVISION FOR INCOME TAXES
(Note 3).......................... (2,015,594) (3,037,048) (1,298,442) (259,647) (545,530)
----------- ----------- ----------- ----------- -----------
PRO FORMA NET INCOME (Note 3)....... $ 2,342,705 $ 4,359,708 $ 2,072,932 $ 442,821 $ 909,263
=========== =========== =========== =========== ===========
PRO FORMA NET INCOME PER SHARE (Note
3)................................ $ 0.29 $ 0.13
=========== ===========
PRO FORMA WEIGHTED AVERAGE SHARES
OUTSTANDING....................... 7,172,500 7,172,500
=========== ===========
</TABLE>

See notes to financial statements.

F-4
<PAGE> 57

TRAILER BRIDGE, INC.

STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS' EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 AND
(UNAUDITED) THREE MONTHS ENDED MARCH 31, 1997

<TABLE>
<CAPTION>
RETAINED
COMMON STOCK ADDITIONAL EARNINGS
--------------------- PAID-IN (ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT) TOTAL
---------- -------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1993......... 7,850,000 $ 78,500 $(78,000) $(7,214,813) $(7,214,313)
Net income......................... 4,358,299 4,358,299
---------- -------- -------- ----------- -----------
BALANCE AT DECEMBER 31, 1994......... 7,850,000 78,500 (78,000) (2,856,514) (2,856,014)
Repurchase and retirement of
1,177,500 shares of common
stock........................... (1,177,500) (11,775) 11,700 (517,195) (517,270)
Cash dividends ($.20 per share).... (1,350,302) (1,350,302)
Net income......................... 7,396,756 7,396,756
---------- -------- -------- ----------- -----------
BALANCE AT DECEMBER 31, 1995......... 6,672,500 66,725 (66,300) 2,672,745 2,673,170
Net income......................... 3,371,374 3,371,374
---------- -------- -------- ----------- -----------
BALANCE AT DECEMBER 31, 1996......... 6,672,500 66,725 (66,300) 6,044,119 6,044,544
Cash dividends ($.18 per share)
(unaudited)..................... (1,185,750) (1,185,750)
Net income (unaudited)............. 1,454,793 1,454,793
---------- -------- -------- ----------- -----------
BALANCE AT MARCH 31, 1997
(UNAUDITED)........................ 6,672,500 $ 66,725 $(66,300) $ 6,313,162 $ 6,313,587
========== ======== ======== =========== ===========
</TABLE>

See notes to financial statements.

F-5
<PAGE> 58

TRAILER BRIDGE, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
--------------------------------------- -------------------------
1994 1995 1996 1996 1997
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income.................................... $ 4,358,299 $ 7,396,756 $ 3,371,374 $ 702,468 $ 1,454,793
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization............... 2,646,572 2,761,139 2,944,069 701,283 689,016
Provision for uncollectible accounts........ 515,302 158,995 673,699 106,063 120,413
(Gain) loss on sale of equipment............ (12,143) (47,834) (66,523) 9,173
Change in assets and liabilities:
Decrease (increase) in trade
receivables............................. (904,486) (1,282,693) (70,153) 1,136,321 (66,976)
Decrease (increase) in prepaid expenses... 728,100 649,459 (353,742) (346,741) 621,968
Increase (decrease) in accounts payable... 284,066 (289,355) 659,377 131,411 (622,359)
Increase (decrease) in accrued
liabilities............................. 46,434 (1,125,571) 145,544 (242,844) 590,532
Increase (decrease) in unearned revenue... 137,618 (95,288) (55,271) 116,946 76,254
----------- ----------- ----------- ----------- -----------
Net cash provided by operating
activities............................ 7,799,762 8,125,608 7,248,374 2,314,080 2,863,641
----------- ----------- ----------- ----------- -----------
INVESTING ACTIVITIES:
Increase (decrease) in due to affiliate....... (2,930,298) (4,617,442) (3,171,944) (1,725,996) 1,225,172
Purchases and construction of property and
equipment................................... (4,598,587) (1,430,179) (6,707,075) (43,862) (2,514,053)
Proceeds from the sale of equipment........... 320,609 1,031,000 426,462 7,150
(Increase) decrease in other assets........... (82,643) 7,080 (13,217) (25,336) 60,312
----------- ----------- ----------- ----------- -----------
Net cash used in investing activities... (7,290,919) (5,009,541) (9,465,774) (1,788,044) (1,228,569)
----------- ----------- ----------- ----------- -----------
FINANCING ACTIVITIES:
Proceeds from borrowings on notes payable..... 4,127,158 1,032,500 6,637,569 1,134,018
Payments on notes payable..................... (2,612,244) (3,410,552) (3,125,722) (626,815) (981,856)
Payments of dividends......................... (1,350,302) (1,185,750)
Payments for repurchase of stock.............. (517,270)
Payments on capital lease obligations......... (578,938) (318,484) (133,854) (24,127) (14,199)
----------- ----------- ----------- ----------- -----------
Net cash provided by (used in) financing
activities................................ 935,976 (4,564,108) 3,377,993 (650,942) (1,047,787)
----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS................................... 1,444,819 (1,448,041) 1,160,593 (124,906) 587,285
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD........................................ 501,550 1,946,369 498,328 498,328 1,658,921
----------- ----------- ----------- ----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD........ $ 1,946,369 $ 498,328 $ 1,658,921 $ 373,422 $ 2,246,206
=========== =========== =========== =========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION AND NONCASH
INVESTING AND FINANCING ACTIVITIES:
Amounts paid for state income taxes........... $ 5,154 $ 10,524 $ 68,035 $ 6,629
=========== =========== =========== ===========
Amounts paid for interest:
Related party............................... $ 1,142,955 $ 824,538 $ 457,151 $ 143,991
Other....................................... 680,646 632,549 652,554 111,851 $ 283,620
----------- ----------- ----------- ----------- -----------
$ 1,823,601 $ 1,457,087 $ 1,109,705 $ 255,842 $ 283,620
=========== =========== =========== =========== ===========
Equipment acquired under capital lease
agreements.................................. $ 211,060
===========
</TABLE>

See notes to financial statements.

F-6
<PAGE> 59

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 AND
(UNAUDITED) THREE MONTHS ENDED MARCH 31, 1996 AND 1997

1. ORGANIZATION

Trailer Bridge, Inc. (the "Company") is a domestic trucking and marine
transportation company with contract and common carrier authority. Highway
transportation services are offered primarily in the continental United States,
while marine transportation is offered between Jacksonville, Florida and San
Juan, Puerto Rico.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents. For purposes of the statement of cash flows,
the Company considers all highly liquid securities with original maturities of
three months or less to be cash equivalents.

Fair Value of Financial Instruments. The carrying value of the Company's
financial instruments, which include capital lease obligations and notes
payable, approximate fair value based on the borrowing rates currently available
to the Company for capital leases and notes payable with similar terms and
maturities.

Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles 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.

Allowance for Doubtful Accounts. The Company provides an allowance for
doubtful accounts on trade receivables based upon estimated collectibility and
collection experience.

Property and Equipment. Property and equipment are stated at cost less
accumulated depreciation. Property and equipment are depreciated on a
straight-line method based on the following estimated useful lives:

<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Buildings and structures.................................... 40
Office furniture and equipment.............................. 6-10
Freight equipment........................................... 4-12
Leasehold improvements...................................... 2-5
Equipment under capital leases.............................. 5
</TABLE>

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.
Maintenance and repairs which do not materially extend useful life and minor
replacements are charged to earnings as incurred.

Goodwill. Goodwill is being amortized on a straight-line basis over
twenty-five years.

Insurance. The Company is self-insured for employee medical coverage above
deductible amounts. Reinsurance is obtained to cover losses in excess of certain
limits. Provisions for losses are determined on the basis of claims reported and
an estimate of claims incurred but not reported.

Revenue Recognition. Common carrier operations revenue is recorded on the
percentage-of-completion basis and direct costs are expensed as incurred.

F-7
<PAGE> 60

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Income Taxes. The Company is organized under Subchapter S of the Internal
Revenue Code for income tax purposes and therefore, all Federal and certain
state income taxes are the responsibility of the Company's stockholders. The
Company is subject to state income taxes in those states that do not recognize
Subchapter S elections. State income tax expense for 1994, 1995 and 1996 was not
significant due to the utilization of net operating loss carryforwards.

NEW ACCOUNTING STANDARDS

Effective January 1, 1996, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of" (SFAS No. 121)
which requires that long-lived assets and certain intangibles to be held and
used by the Company be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The adoption of SFAS No. 121 did not have a material impact on the
Company.

Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS
No. 123). SFAS 123 establishes a fair value based method of accounting for
stock-based employee compensation plans; however, it also allows an entity to
continue to measure compensation cost for those plans using the intrinsic value
based method of accounting prescribed by Accounting Principles Board ("APB")
Opinion No. 25, "Accounting for Stock Issued to Employees". Under the fair value
based method, compensation cost is measured at the grant date based on the value
of the award and is recognized over the service period, which is usually the
vesting period. The Company has elected to account for its employee stock
compensation plan under APB Opinion No. 25 with pro forma disclosures of net
earnings and earnings per share, as if the fair value based method of accounting
defined in SFAS No. 123 has been applied.

In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share." This Statement
establishes standards for computing and presenting earnings per share ("EPS")
and applies to all entities with publicly held common stock or potential common
stock. This Statement replaces the presentation of primary EPS and fully diluted
EPS with a presentation of basic EPS and diluted EPS, respectively. Basic EPS
excludes dilution and is computed by dividing earnings available to common
stockholders by the weighted-average number of common shares outstanding for the
period. Similar to fully diluted EPS, diluted EPS reflects the potential
dilution of securities that could share in the earnings. This Statement is not
expected to have a material effect on the Company's reported EPS amounts. This
Statement is effective for the Company's financial statements for the year ended
December 31, 1997.

3. INTERIM AND PRO FORMA INFORMATION

Unaudited Interim Information. The financial information with respect to
the three-month periods ended March 31, 1996 and 1997 is unaudited. The results
of operations for the three-month period ended March 31, 1997 are not
necessarily indicative of the results to be expected for the full year. In the
opinion of management, such information contains all adjustments, consisting
only of normal recurring adjustments, necessary for a fair presentation of the
results of such periods.

Pro Forma Adjustments. The Company is organized under Subchapter S of the
Internal Revenue Code. The Company has not been subject to Federal income taxes
and state income tax expense has not been significant due to the utilization of
net operating loss carryforwards. Prior to the closing of the proposed public
offering, the Company will terminate its status as an S Corporation. The pro
forma adjustments reflect a provision for income taxes that would have been
incurred had the Company not been organized under Subchapter S of the Internal
Revenue Code.

F-8
<PAGE> 61

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The effective rate differs from the Federal statutory rate of 34% due to state
income taxes (net of Federal income tax benefits), amortization of goodwill and
other nondeductible expenses and due to the utilization of the net operating
loss carryforwards of a business acquired in 1992. The pro forma statement of
operations data do not give effect to the one-time, non-cash charge of
approximately $650,000 in recognition of deferred income taxes resulting from
the termination of the Company's S Corporation status upon the effectiveness of
the Company's proposed stock offering.

Pro Forma Balance Sheet. The Company intends to declare a dividend payable
to existing stockholders in the aggregate amount of $6 million. Such dividend
will be paid with a portion of the net proceeds of the Company's proposed stock
offering. Upon completion of the proposed stock offering, the remaining retained
earnings will be reclassified to additional paid-in capital.

Pro Forma Net Income Per Share. Pro forma net income per share reflects a
15,700-for-1 stock split that will become effective in connection with the
proposed stock offering and the issuance of 600,000 shares of common stock to
fund the payment of a $6.0 million S Corporation dividend to the Company's
existing stockholders with a portion of the net proceeds of this offering.

Supplementary Pro Forma Net Income Per Share. The Company expects to use a
portion of the proceeds from its initial public offering to repay amounts due to
affiliate. Pro forma net income per share adjusted for the interest savings and
the issuance of approximately 782,500 shares of Common Stock to fund the
repayment, assuming the issuance and repayment had occurred on January 1, 1996
would have been $0.29 and $0.12 for the year ended December 31, 1996 and the
three months ended March 31, 1997, respectively.

4. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------- MARCH 31,
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Land........................................ $ $ 504,703 $ 504,703
Construction in progress.................... 90,512 1,601,450
Buildings and structures.................... 89,005 1,137,127 1,137,127
Office furniture and equipment.............. 1,088,937 1,058,381 1,060,269
Freight equipment........................... 12,444,515 16,726,428 16,507,080
Leasehold improvements...................... 716,347 712,798 712,799
Equipment under capital leases.............. 365,540 536,495 536,495
Less accumulated depreciation and
amortization.............................. (5,853,119) (8,254,314) (7,711,061)
----------- ----------- -----------
Property and equipment, net................. $ 8,851,225 $12,512,130 $14,348,862
=========== =========== ===========
</TABLE>

Depreciation and amortization expense on property and equipment and
equipment under capital leases was $2,599,793, $2,714,360 and $2,897,290 in
1994, 1995 and 1996, respectively, and was $689,588 and $677,321 for the three
months ended March 31, 1996 and 1997, respectively.

F-9
<PAGE> 62

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

5. TRANSACTIONS WITH AFFILIATED COMPANY

Due to Affiliate. Amounts due to affiliate include cash advanced to the
Company from an affiliated company to fund various construction projects,
general and administrative expenses, interest payable on such cash advances and
barge rent. The advances bear interest at 8% and are due on December 31, 1997.
The affiliated company has indicated that it is willing to extend the payment
date of such notes for another term of one year in the event that the Company is
unable to pay such amounts on December 31, 1997. Management of the Company
believes that such indebtedness will be repaid through a combination of cash
flows from future operations with such debt to be refinanced on a long-term
basis and from the proceeds of equity offerings.

Lease Agreements. The Company leases two roll-on/roll-off barge vessels
and a ramp system from an affiliate under operating lease agreements. For the
period from January 1, 1994 through May 10, 1996 for one vessel and through July
19, 1996, as to the other vessel, the lease payment was $5,000 per day for each
vessel. Upon completion of the renovations to the vessels during 1996 which
extended the barges from a length of approximately 500 feet to a length of
approximately 750 feet, the lease payments were increased to $10,500 per day for
each vessel. The leases expire at the later of September 1, 2010 or the
repayment of all obligations under an affiliate's construction loan related to
the vessel renovations, which payment has been guaranteed by the Company. Such
construction loan is scheduled to be repaid in quarterly installments ending
June 30, 2003. The leases provide the Company the option to extend the leases
through September 1, 2018 for total payments of $11,000 per vessel per day or,
alternatively, the Company may purchase the vessels at their then fair market
values. Total lease expense under these leases from affiliate totaled
$3,600,000, $3,600,000 and $5,900,000 in 1994, 1995 and 1996.

While the vessels were undergoing renovations, the Company leased barges
from a third party. In recognition of the $1,160,000 of additional barge rent
and $509,000 of other transitional expenses incurred in 1996 during the
renovation period, the affiliate agreed to reduce the charter rental due from
the Company by approximately $1,669,000.

Guarantee Agreement. The Company is the guarantor on an affiliated
company's construction loan for $26.5 million, and has pledged all assets to
secure this agreement. The loan is also collateralized by a mortgage on the
vessels and a lien on the related ramp structures which are owned by the
affiliate and leased to the Company.

6. CAPITAL LEASE OBLIGATIONS

Future minimum lease payments under capital leases as of December 31, 1996
are as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31:
- ------------------------
<S> <C>
1997........................................................ $ 55,727
1998........................................................ 50,400
1999........................................................ 50,400
2000........................................................ 50,400
2001........................................................ 45,378
--------
Total minimum lease payments................................ 252,305
Interest portion............................................ (52,664)
--------
Present value of minimum lease payments..................... 199,641
Less current portion........................................ (38,197)
--------
$161,444
========
</TABLE>

F-10
<PAGE> 63

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

7. LONG-TERM DEBT

Following is a summary of long-term debt:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1996 MARCH 31,
---------- ---------- ----------
<S> <C> <C> <C>
Notes payable to finance company totaling
$4,957,569 maturing from June to October
2001; payable in 60 monthly installments of
principal and interest; interest at fixed
rates ranging from 8.867% to 9.290%;
collateralized by trailers with a carrying
value of $4,763,490 at December 31, 1996..... $4,626,830 $4,420,979
Note payable to bank totaling $1,680,000
maturing October 2006; payable in 120 monthly
installments of principal and interest;
interest at fixed rate of 7.95%;
collateralized by land, construction in
progress and buildings and structures with a
carrying value of $1,703,900 at December 31,
1996......................................... 1,652,000 1,610,000
Notes payable to bank totaling $6,333,512,
maturing November 1997 to July 1998; payable
in 48 monthly installments of principal and
interest; interest at variable or fixed rate
selected by the Company (7.125% at December
31, 1996); collateralized by tractors with a
carrying value of $2,775,799 at December 31,
1996......................................... $3,225,131 1,641,754 1,175,482
Notes payable to finance company totaling
$1,032,500 maturing June 2000; payable in 60
monthly installments of principal and
interest; interest at a rate of 3.5% above
LIBOR (8.875% at December 31, 1996);
collateralized by trailers with a carrying
value of $917,386 at December 31, 1996....... 894,834 681,800 630,364
Notes payable to finance company totaling
$3,068,796, maturing July to November 1997;
payable in 48 monthly installments of
principal and interest; interest at a rate of
3.75% above LIBOR (9.125% at December 31,
1996); collateralized by tractors with a
carrying value of $772,975 at December 31,
1996......................................... 1,090,330 322,424 106,127
</TABLE>

F-11
<PAGE> 64

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1996 MARCH 31,
---------- ---------- ----------
<S> <C> <C> <C>
Unsecured notes payable due in 1997; interest
at prime plus 1% (9.25% at December 31,
1996); principal is payable in semiannual
installments................................. $ 304,000 $ 101,333 $ 101,333
Borrowings under $7.1 million line of credit
maturing April 1, 2000; payable in 35 monthly
installments of principal and interest plus a
final payment of $340,205 plus interest;
interest on outstanding borrowings at fixed
rate of 7.98%; collateralized by tractors
with a carrying value of $1,446,646 at March
31, 1997 (unaudited)......................... 1,134,018
---------- ---------- ----------
5,514,295 9,026,141 9,178,303
Less current portion........................... (2,677,870) (3,117,069) (2,865,326)
---------- ---------- ----------
$2,836,425 $5,909,072 $6,312,977
========== ========== ==========
</TABLE>

In March 1997, the Company obtained a $7.1 million line of credit from a
financial institution. At the election of the Company, interest on each
borrowing under the line of credit will accrue at (a) a variable interest rate
of the financial institution's Base Rate, (b) a variable interest rate of 1.40%
above the financial institution's Eurodollar Rate or (c) a fixed interest rate
of 1.40% above the financial institution's three year cost of funds. The line
will be used to purchase tractors which will be used as collateral.

All long-term debt agreements at 1995 and 1996 are guaranteed by an
affiliated company. The notes include financial covenants that require that the
Company and affiliate, on a combined basis, maintain certain financial ratios
which are calculated as of the end of each fiscal quarter. As of December 31,
1996, the Company and affiliate were in compliance with such covenants.

Following are maturities of long-term debt for each of the next five years:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31:
- ------------------------
<S> <C>
1997........................................................ $3,117,069
1998........................................................ 1,465,021
1999........................................................ 1,396,740
2000........................................................ 1,375,147
2001........................................................ 860,164
Thereafter.................................................. 812,000
----------
$9,026,141
==========
</TABLE>

F-12
<PAGE> 65

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

8. OPERATING LEASES

The Company has various operating lease agreements, principally for its
office facilities, terminals and equipment. Certain of the leases contain
provisions calling for additional contingent rentals based on volume of
transportation activity.

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, 1996 are as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31:
- ------------------------
<S> <C>
1997........................................................ $16,095,651
1998........................................................ 8,070,107
1999........................................................ 3,051,030
2000........................................................ 1,823,277
2001........................................................ 1,789,768
Thereafter.................................................. 5,202,719
-----------
Total minimum payments required............................. $36,032,552
===========
</TABLE>

Lease expense for all operating leases, including leases with terms of less
than one year, was $10,330,913, $12,683,332 and $14,806,980 for 1994, 1995 and
1996.

9. PROFIT SHARING/401(K) PLAN

The Company has a profit sharing/401(k) Plan which covers substantially all
employees. Participants are allowed to make contributions of up to 15% of their
compensation not to exceed certain limits. The Company makes matching
contributions to the Plan at a rate not in excess of 3.0% of compensation. The
Company contributed approximately $137,640, $60,546 and $142,994 to the Plan
during 1994, 1995 and 1996. The Company made an optional contribution of $32,700
in December 1996.

10. COMMITMENT

At December 31, 1996, the Company is obligated under construction
agreements totaling approximately $1.7 million.

11. RECAPITALIZATION

In July 1997, the Company's Board of Directors and stockholders authorized
the following which will become effective in connection with the Company's
initial public offering: (i) a 15,700-for-1 stock split, (ii) an increase in the
authorized number of common shares from 2,000 to 20,000,000, (iii) a change in
the par value of common stock from $1.00 to $.01 and (iv) 1,000,000 shares of
preferred stock with a par value of $.01 per share. Stockholders' equity has
been restated to give retroactive recognition to the stock split and change in
par value in prior periods. In addition, all references in the financial
statements to the number of shares and per share amounts have been restated.

F-13
<PAGE> 66

TRAILER BRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

12. SUBSEQUENT EVENTS (UNAUDITED)

In January 1997, the Company entered into an agreement to purchase 100
tractors at an aggregate cost of approximately $7.2 million.

In March 1997, the Company entered into an agreement for the construction
of two vessels, known as Triplestack Box Carriers(TM), for a total cost of
approximately $12 million. The Company plans to finance approximately $10.5
million of the acquisition cost with the assistance of the sale of bonds with a
Title XI guaranty commitment issued by the U.S. Maritime Administration. The
Title XI bonds sold in June 1997 call for even semi-annual principal payments
over a 25 year term. In addition, the Company has contracted for the
construction of 53' containers and chassis units with an aggregate cost of
approximately $13 million.

On May 21, 1997, the majority stockholder of the Company granted to the
Company's Chairman and Chief Executive Officer, an option to purchase up to
942,000 shares of common stock (adjusted for the 15,700-for-1 stock split) owned
by him at $.95 per share or an aggregate price of $891,330 for all shares. These
options are immediately exercisable and have a term of 10 years. In connection
with this option, the Company expects to record a nonrecurring, noncash charge
for compensation expense and a credit to paid-in capital of approximately $8.5
million in the second quarter of 1997, representing the difference between the
exercise price and the initial public offering price of the common stock of
$10.00 per share. This option does not involve the issuance of additional shares
of common stock by the Company and therefore, any subsequent purchase of shares
under the option will not have a dilutive effect on the Company's book value or
earnings per share amounts.

In June 1997, the Company entered into amendments to its leases of two
roll-on/roll-off barge vessels and ramp system. The amendment reduces the total
payments under the lease from $21,000 to $20,100 per day effective with this
offering.

In July 1997, the Company's Board of Directors and stockholders authorized
the establishment of an Incentive Stock Plan with a maximum of 785,000 shares
issuable under the Plan and the grant of options for 471,000 shares under the
Plan subject to consummation of the Company's initial public offering. These
options have an exercise price equal to the initial public offering price and
vest equally over a period of five years.

The Company is in the process of an initial public offering of its shares
of common stock.

F-14
<PAGE> 67

======================================================

NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.

------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 8
S Corporation Status.................. 14
Use of Proceeds....................... 14
Dividend Policy....................... 14
Capitalization........................ 15
Dilution.............................. 16
Selected Financial and Operating
Data................................ 17
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 19
Industry Overview..................... 27
Business.............................. 28
Management............................ 38
Certain Transactions.................. 42
Principal Stockholders................ 43
Description of Capital Stock.......... 44
Shares Eligible for Future Sale....... 49
Underwriting.......................... 50
Legal Matters......................... 51
Experts............................... 51
Additional Information................ 52
</TABLE>

------------------
UNTIL AUGUST 17, 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE COMMON STOCK OFFERED HEREBY, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
======================================================
======================================================

2,700,000 SHARES

[Trailer Bridge Logo]

TRAILER BRIDGE, INC.
COMMON STOCK
-----------------------
PROSPECTUS
-----------------------
ALEX. BROWN & SONS
INCORPORATED

July 23, 1997
======================================================