Trailer Bridge Reports Third Quarter Results

Trailer Bridge, Inc. reported its financial results for the third quarter ended September 30, 2001. Total revenue for the three months ended September 30, 2001 was $20,052,136, as compared to $23,151,664 for the third quarter of 2000. Compared sequentially to the second quarter of 2001, total revenue decreased $1,607,048 or 7.4 percent. In the early part of the third quarter, Trailer Bridge experienced higher vessel utilization both southbound and northbound. Based upon anticipated volume and revenue levels, Trailer Bridge had anticipated that its third quarter operating results would show a meaningful improvement over the second quarter results. Instead of higher volume and revenue that would have driven improved results, the latter part of the third quarter saw decreases in vessel utilization of a magnitude that produced these sequential declines in revenue and operating income. Trailer Bridge had 5.0% more overall vessel capacity deployed between the mainland and Puerto Rico with weekly Northeast sailings compared to bi-weekly sailings in the third quarter of 2000. Compared sequentially to the second quarter of 2001, total deployed capacity was down 8.2 percent, primarily due to selective reductions in Northeast sailings during the third quarter of 2001. The operating loss for the third quarter ended September 30, 2001 was $4,851,420, as compared to operating income of $340,337 in the year earlier period. The operating loss was due to lower volume and asset utilization, lower yields, and additional costs associated with weekly Northeast sailings. As a result, Trailer Bridge's operating ratio was 124.1% during the third quarter of 2001 compared to the 98.5% operating ratio during the year earlier period. The third quarter results include an accrual of more than $1.8 million of charter-hire to an affiliate, the payment of which has been deferred. In addition, charter-hire was accrued but deferred in the second quarter and the charter-hire that was accrued for in the first quarter results has been forgiven. These large non-cash accruals, the effect of the non-recurring dry-docking expenses in both the first and second quarter and the large non-cash depreciation charges underscore the importance of various cash flow measures as a further benchmark on the level and trend of Trailer Bridge's results. For example, the statement of cash flows as filed in Trailer Bridge's 10-Q financial statements shows that net cash used in operating activities was $1,035,099 during the third quarter, an improvement of $2.2 million compared sequentially to the second quarter of 2001. For the third quarter ended September 30, 2001, net interest expense was $807,284, down slightly from the year earlier period and sequentially from the first quarter due to debt reductions. During the third quarter of 2001, Trailer Bridge also had a gain of $38,157 related to the sale of excess 48' trailer equipment. Loss before income taxes for the third quarter was $5,620,547, a decrease of $5,179,947 from the year earlier period and a decrease of $459,474 sequentially from the second quarter of 2001. As previously disclosed, the effect of income taxes will not be reflected until profitable operations resume. Net loss per share was $.57 for the third quarter compared to net loss per share of $.02 for the year earlier period and net loss per share of $.53 for the second quarter of 2001. At September 30, 2001, cash amounted to $1,313,665 and stockholders equity was equal to $4.5 million. Current liabilities increased by $16.4 million at September 30, 2001 because the Company was not in full compliance with the terms of its revolving credit/term loan. As a result, Trailer Bridge had negative working capital of $16.1 million. The lender is continuing to provide funding to Trailer Bridge under the revolving credit facility while the Company works to address the non-compliance. To that end, the Company has reached an agreement in principle with an affiliate to provide an additional $3 million of liquidity in the fourth quarter. Trailer Bridge believes that this new facility, along with various other liquidity initiatives that the Company intends to implement, will provide it with the necessary liquidity to meet all obligations.