UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 20-F
(Mark One)
[ ]            REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                                       OR

[ ]               ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended ......................................................

                                       OR

[X]             TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from .......April 1, 1999 to December 31, 1999........
Commission file number 1-12874

                           TEEKAY SHIPPING CORPORATION
             (Exact name of Registrant as specified in its charter)

                                 Not Applicable
                 (Translation of Registrant's name into English)

                        Republic of The Marshall Islands
                 (Jurisdiction of incorporation or organization)

 4th Floor, Euro Canadian Centre, Marlborough Street & Navy Lyon Road, P.O. Box
                                SS-6293, Nassau,
                           Commonwealth of the Bahamas
                    (Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

     Title of each class                               Name of each exchange on
                                                            which registered

Common Stock, par value of $0.001 per share              New York Stock Exchange
8.32% First Preferred Ship Mortgage Notes due 2008       New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act.
                                      None

Securities for which there is a reporting  obligation  pursuant to Section 15(d)
of the Act.
                                      None

     Indicate the number of outstanding  shares of each of the issuer's  classes
of capital or common  stock as of the close of the period  covered by the annual
report.

     38,064,264 shares of Common Stock, par value of $0.001 per share.

    Indicate  by check mark  whether  the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

Yes [X]  No [ ]

Indicate by check mark which financial statement item the registrant has elected
to follow:

Item 17 [ ]  Item 18 [X]



<PAGE>

                           TEEKAY SHIPPING CORPORATION
                          INDEX TO REPORT ON FORM 20-F

PART I.                                                                     Page

  Item 1.        Description of Business....................................   3
  Item 2.        Description of Property....................................  10
  Item 3.        Legal Proceedings..........................................  13
  Item 4.        Control of Registrant......................................  13
  Item 5.        Nature of Trading Market...................................  13
  Item 6.        Exchange Controls and Other Limitations Affecting
                    Security Holders........................................  14
  Item 7.        Taxation...................................................  14
  Item 8.        Selected Financial Data....................................  15
  Item 9.        Management's Discussion and Analysis of Financial
                    Condition and Results of Operations.....................  17
  Item 10.       Directors and Officers of the Registrant...................  24
  Item 11.       Compensation of Directors and Officers.....................  26
  Item 12.       Options to Purchase Securities From Registrant
                    or Subsidiaries.........................................  26
  Item 13.       Interest of Management in Certain Transactions.............  26

PART II.

  Item 14.       Description of Securities to be Registered.......Not applicable

PART III.

  Item 15.       Defaults Upon Senior Securities..................Not applicable
  Item 16.       Changes in Securities, Changes in Security for
                    Registered Securities and Use of Proceeds.....Not applicable

PART IV.

  Item 17.       Financial Statements.............................Not applicable
  Item 18.       Financial Statements.......................................  27
  Item 19.       Financial Statements and Exhibits..........................  27
Signature        ...........................................................  30







<PAGE>
                                     PART I

Item 1. Description of Business

    Teekay  has  changed  its  fiscal  year end from  March 31 to  December  31,
effective December 31, 1999, in order to facilitate  comparison of its operating
results to those of other companies in the transportation industry.

The Company

    Teekay Shipping Corporation ("Teekay"),  together with its subsidiaries (the
"Company"),  is a leading  provider  of  international  crude oil and  petroleum
product transportation services through the world's largest fleet of medium size
oil  tankers.  The  Company's  modern fleet of tankers  provides  transportation
services to major oil companies, oil traders and government agencies world wide.

     The  Company's  fleet  consists of 74  vessels:  69 Aframax oil tankers and
oil/bulk/ore carriers ("O/B/Os")  (including five vessels  time-chartered-in and
three vessels owned by a joint  venture),  two smaller oil tankers,  two Suezmax
tankers, and one Very Large Crude Carrier ("VLCC"). The Company's vessels are of
Bahamian,  Norwegian,  Australian,  Liberian,  Panamanian  or  Marshall  Islands
registry.  The Company's fleet has a total cargo capacity of  approximately  7.4
million  tonnes and its Aframax  vessels  represent  approximately  10.4% of the
total tonnage of the world Aframax fleet.

    The Company's  Aframax  tanker fleet is one of the most modern fleets in the
world,  with an average age of approximately  7.4 years,  compared to an average
age for the world oil tanker fleet,  including Aframax tankers, of approximately
13.9 years and for the world Aframax tanker fleet of  approximately  12.1 years.
The Company has been  recognized  by customers  and rating  services for safety,
quality and service. Given the age profile of the world tanker fleet, increasing
emphasis  by  customers  on  quality  as a  result  of  stringent  environmental
regulations,  and  heightened  concerns about  liability for oil pollution,  the
Company  believes  that its modern  fleet and its emphasis on quality and safety
provide it with a favorable competitive profile.

    Through wholly owned subsidiaries  located  worldwide,  the Company provides
substantially  all of  the  operations,  ship  maintenance,  crewing,  technical
support,  shipyard  supervision,  insurance  and financial  management  services
necessary to support its fleet.

     The Company has a worldwide  chartering staff located in Vancouver,  Tokyo,
London,  Oslo,  Houston and Singapore.  Each office serves the Company's clients
headquartered in such office's region.  Fleet  operations,  vessel positions and
charter market rates are monitored  around the clock.  Management  believes that
monitoring  such  information is critical to making informed bids on competitive
brokered  business.  During the nine  month  period  ended  December  31,  1999,
approximately  74% of the Company's  net voyage  revenues were derived from spot
voyages or time charters and contracts of affreightment  priced on a spot market
basis.

    The  Teekay  organization  was  founded in 1973 to manage  and  operate  oil
tankers.  Prior to 1985,  the Company  chartered-in  most of the tonnage that it
subsequently  provided to its transportation  customers.  As the availability of
acceptable  chartered-in tonnage declined,  management began an expansion of its
owned fleet.  Since 1985, the Company has significantly  expanded and modernized
its owned fleet by taking delivery of 42 new vessels and acquiring 32 vessels in
the second-hand  market,  as well as disposing of 29 older tankers over the past
eight years.  In addition,  the Company  acquired  control of an  additional  26
vessels in its acquisition of Bona Shipholding Ltd. described below.

    The Company pursues an intensively customer and operations-oriented business
strategy,  emphasizing  market  concentration  and  service  quality  to achieve
superior  operating  results.   The  Company  believes  that  it  has  five  key
competitive strengths: (i) market concentration in the Indo-Pacific and Atlantic
Basin, which facilitates  comprehensive  coverage of charterer  requirements and
provides  a  base  for  efficient  operation  and  a  high  degree  of  capacity
utilization,  (ii) full-service  marine operations  capabilities and experienced
management in all functions critical to its operations,  which affords a focused
marketing effort, tight quality and cost controls, improved capacity utilization
and effective  operations and safety  monitoring,  (iii) a modern,  high-quality
fleet that operates with high fuel  efficiency and low maintenance and operating
costs and affords  greater  acceptance  among  charterers in an  environment  of
increasingly   stringent   operating  and  safety   standards,   (iv)  a  large,
uniform-size fleet of Aframax (75,000-115,000 dwt) tankers, many of which are in
sister  vessel  series  (substantially  identical  vessels),  which  facilitates
scheduling  flexibility  due to vessel  substitution  opportunities,  permitting
greater  responsiveness to customer demands and enhanced  capacity  utilization,
and which results in lower  operating  costs than those  experienced  by smaller
operators and (v) a strong  network of customer  relationships  and a reputation
for transportation excellence among quality-sensitive  customers. As a result of
its business strategy,  the Company has achieved  consistently  higher operating
cash flow per vessel as compared to an average of certain other publicly  traded
shipping  companies.  The Company's  growth strategy is to leverage its existing
competitive   strengths  to  continue  to  expand  its  business.   The  Company
anticipates  that the  continued  upgrade and  expansion  of its Aframax  tanker
business will continue to be a key component of its strategy.  In addition,  the
Company  believes  that  its  full-service   marine   operations   capabilities,
reputation  for safety and quality and strong  customer  orientation  provide it
with the opportunity to expand its business by providing additional  value-added
and  innovative  services,  in many cases to existing  customers.  Finally,  the
Company  intends  to  identify  expansion  opportunities  in new  tanker  market
segments,  geographic  areas and  services  to which the  Company's  competitive
strengths are well suited.  The Company may choose to pursue such  opportunities
through internal growth, joint ventures or business acquisitions.

    Teekay  is  incorporated  under  the laws of the  Republic  of The  Marshall
Islands and  maintains its principal  executive  headquarters  at the 4th Floor,
Euro Canadian  Centre,  Marlborough  Street & Navy Lyon Road,  P.O. Box SS 6293,
Nassau,  Commonwealth  of the Bahamas.  Its telephone  number at such address is
(242) 322-8020.  The Company's  principal  operating  office is located at Suite
1400, One Bentall  Centre,  505 Burrard  Street,  Vancouver,  British  Columbia,
Canada, V7X 1M5. Its telephone number at such address is (604) 683-3529.

Acquisition of Bona Shipholding Ltd.

On June 11,  1999,  the Company  acquired  Bona  Shipholding  Ltd.  ("Bona") for
aggregate  consideration  (including  estimated  transaction  expenses  of $19.0
million) of $450.3 million,  consisting of $39.9 million in cash, $294.0 million
of assumed debt (net of cash acquired of $91.7 million) and the balance of $97.4
million in shares of the  Company's  common  stock.  Bona was the third  largest
operator of medium-size tankers, controlling a fleet of vessels consisting of 15
Aframax tankers,  eight oil/bulk/ore  carriers and, through a joint venture, 50%
interests in one additional Aframax tanker and two Suezmax tankers. Bona engaged
in the transportation of oil, oil products, and dry bulk commodities,  primarily
in the  Atlantic  region.  Through  this  acquisition,  the Company has combined
Bona's market  strength in the Atlantic  region with the Company's  franchise in
the  Indo-Pacific  Basin.  For the year ended December 31, 1998, Bona earned net
voyage revenues of $148.9 million  resulting in income from vessel operations of
$29.5  million and net income of $16.6  million.  Bona's  operating  results are
reflected in the Company's financial statements commencing the effective date of
the acquisition.

As a result of this acquisition,  the Company anticipates annual cost savings of
approximately $10 million,  commencing after an estimated  12-month  integration
period,  through a reduction in combined  overhead costs,  increased  purchasing
power, and other  operational  efficiencies.  The Company also believes that the
acquisition will create revenue enhancement  opportunities as a result of owning
a larger fleet with a greater selection of vessels to match customer demands and
enable the Company to further  extend the  breadth of  services  provided to its
customers.

Competition

    International  seaborne  oil and  other  petroleum  products  transportation
services are provided by two main types of  operators:  captive  fleets of major
oil companies (both private and  state-owned) and independent ship owner fleets.
Many major oil companies and other oil trading companies, the primary charterers
of the vessels  owned or  controlled  by the  Company,  also  operate  their own
vessels and transport their own oil as well as oil for third party charterers in
direct  competition  with  independent  owners and  operators.  Competition  for
charters is intense and is based upon price,  location, the size, age, condition
and acceptability of the vessel,  and the vessel's  manager.  Competition in the
Aframax segment is also affected by the  availability of other size vessels that
compete in the Company's markets.  Suezmax (115,000 to 200,000 dwt) size vessels
and Panamax (50,000 to 75,000 dwt) size vessels can compete for many of the same
charters  for which the Company  competes.  Because of their  large size,  Ultra
Large Crude Carriers (320,000+ dwt) ("ULCCs") and VLCCs (200,000 to 320,000 dwt)
rarely compete  directly with Aframax  tankers for specific  charters;  however,
because ULCCs and VLCCs comprise a substantial  portion of the total capacity of
the market, movements by such vessels into Suezmax trades and of Suezmax vessels
into Aframax trades would heighten the already intense competition.

     The Company  competes  principally  with other Aframax  owners  through the
global  tanker  charter  market,  comprised  of tanker  broker  companies  which
represent  both  charterers and ship owners in chartering  transactions.  Within
this market, some transactions,  referred to as "market cargoes," are offered by
charterers  through two or more brokers  simultaneously  and shown to the widest
possible range of owners; other transactions,  referred to as "private cargoes,"
are given by the charterer to only one broker and shown selectively to a limited
number of owners whose tankers are most likely to be acceptable to the charterer
and are in  position to  undertake  the voyage.  Management  estimates  that the
Company  transacts  approximately  one-third  of its spot  voyages  from  market
cargoes, the remainder being either private cargoes or direct cargoes transacted
directly with charterers outside this market.

     Other large  operators of Aframax tonnage include Neptune Orient Lines Ltd.
(owned  partially by the Singapore  government),  with  approximately 22 Aframax
vessels, Shell International Marine, a subsidiary of Royal Dutch/Shell Petroleum
Corporation, with approximately 16 Aframax vessels, trading globally (9 of which
are on charter),  Ermis Maritime Corp.,  with  approximately 15 Aframax vessels,
and Tanker Pacific Management,  which controls approximately 11 Aframax vessels.
Management  believes  that  it has  significant  competitive  advantages  in the
Aframax  tanker market as a result of the age,  quality,  type and dimensions of
its vessels and its market share in the Indo-Pacific  and Atlantic Basins.  Some
competitors of the Company,  however,  may have greater  financial  strength and
capital resources than the Company.

    As part of its growth  strategy,  the  Company  will  continue  to  consider
strategic   opportunities,   including  business   acquisitions,   such  as  the
acquisition of Bona. To the extent the Company  enters new  geographic  areas or
tanker market segments,  there can be no assurance that the Company will be able
to compete  successfully  therein.  New markets may involve  competitive factors
which differ from those of the Aframax  market segment in the  Indo-Pacific  and
Atlantic  Basins  and may  include  participants  which have  greater  financial
strength and capital resources than the Company.

Regulation

    The business of the Company and the operation of its vessels are  materially
affected by  government  regulation  in the form of  international  conventions,
national,  state and local laws and regulations in force in the jurisdictions in
which the  vessels  operate,  as well as in the  country or  countries  of their
registration. Because such conventions, laws, and regulations are often revised,
the Company cannot predict the ultimate cost of complying with such conventions,
laws and regulations or the impact thereof on the resale price or useful life of
its vessels.  Additional conventions,  laws and regulations may be adopted which
could limit the  ability of the  Company to do business or increase  the cost of
its doing business and which may have a material adverse effect on the Company's
operations.    The   Company   is   required   by   various   governmental   and
quasi-governmental agencies to obtain certain permits, licenses and certificates
with respect to its operations.  Subject to the discussion below and to the fact
that the kinds of permits, licenses and certificates required for the operations
of the vessels  owned by the Company  will depend upon a number of factors,  the
Company  believes  that it has  been  and will be able to  obtain  all  permits,
licenses and certificates material to the conduct of its operations.

    The Company believes that the heightened  environmental and quality concerns
of  insurance  underwriters,  regulators  and  charterers  will  impose  greater
inspection and safety  requirements on all vessels in the tanker market and will
accelerate the scrapping of older vessels throughout the industry.

     Environmental  Regulation--International  Maritime Organization ("IMO"). On
March 6, 1992,  the IMO  adopted  regulations  which set forth new and  upgraded
requirements for pollution prevention for tankers. These regulations, which went
into effect on July 6, 1995, in many jurisdictions in which the Company's tanker
fleet operates,  provide that (i) tankers between 25 and 30 years old must be of
double-hull  construction or of a mid-deck design with double side construction,
unless they have wing tanks or double-bottom  spaces,  not used for the carriage
of oil,  which cover at least 30% of the length of the cargo tank section of the
hull, or are capable of hydrostatically  balanced loading which ensures at least
the same level of  protection  against oil spills in the event of  collision  or
stranding,   (ii)  tankers  30  years  old  or  older  must  be  of  double-hull
construction or mid-deck  design with  double-side  construction,  and (iii) all
tankers will be subject to enhanced inspections.  Also, under IMO regulations, a
tanker must be of double-hull construction or a mid-deck design with double side
construction  or be of  another  approved  design  ensuring  the  same  level of
protection  against  oil  pollution  in the event  that such  tanker  (i) is the
subject of a contract  for a major  conversion  or original  construction  on or
after July 6, 1993, (ii) commences a major conversion or has its keel laid on or
after January 6, 1994, or (iii) completes a major conversion or is a newbuilding
delivered on or after July 6, 1996.

    Under the current  regulations,  the single-hulled  vessels of the Company's
existing fleet will be able to operate for substantially all of their respective
economic lives before being required to have double-hulls. None of the Company's
vessels are older than 20 years,  therefore,  the IMO requirements  currently in
effect  regarding 25 and 30 year-old tankers will not affect the Company's fleet
in the near  future.  However,  compliance  with the new  regulations  regarding
inspections of all vessels may adversely  affect the Company's  operations.  The
Company  cannot at the present time evaluate the  likelihood or magnitude of any
such  adverse  effect  on  the  Company's   operations  due  to  uncertainty  of
interpretation of the IMO regulations.

    The operation of the Company's  vessels is also affected by the requirements
set forth in the IMO's  International  Management Code for the Safe Operation of
Ships  and  Pollution  Prevention  (the  "ISM  Code").  The  ISM  Code  requires
shipowners and bareboat  charterers to develop and maintain an extensive "Safety
Management  System" that  includes  the  adoption of a safety and  environmental
protection  policy setting forth  instructions and procedures for safe operation
and  describing  procedures  for  dealing  with  emergencies.  The  failure of a
shipowner  or bareboat  charterer  to comply with the ISM Code may subject  such
party to increased liability,  may decrease available insurance coverage for the
affected  vessels,  and may  result in a denial of access to, or  detention  in,
certain  ports.  Currently,  each of the  Company's  applicable  vessels  is ISM
code-certified.  However, there can be no assurance that such certification will
be maintained indefinitely.

    Environmental Regulations--The United States Oil Pollution Act of 1990 ("OPA
90"). OPA 90 established  an extensive  regulatory and liability  regime for the
protection and cleanup of the  environment  from oil spills.  OPA 90 affects all
owners and operators whose vessels trade to the United States or its territories
or possessions or whose vessels  operate in United States waters,  which include
the United States'  territorial sea and its two hundred  nautical mile exclusive
economic zone.

    Under OPA 90, vessel owners, operators and bareboat (or "demise") charterers
are "responsible parties" and are jointly, severally and strictly liable (unless
the spill  results  solely from the act or omission of a third party,  an act of
God or an act of war) for all  containment  and clean-up costs and other damages
arising from  discharges  or threatened  discharges  of oil from their  vessels.
These other damages are defined broadly to include (i) natural resources damages
and the costs of assessment  thereof,  (ii) real and personal  property damages,
(iii) net loss of taxes,  royalties,  rents, fees and other lost revenues,  (iv)
lost  profits or  impairment  of earning  capacity  due to  property  or natural
resources  damage,  (v) net  cost of  public  services  necessitated  by a spill
response,  such as protection from fire, safety or health hazards, and (vi) loss
of  subsistence  use of  natural  resources.  OPA 90  limits  the  liability  of
responsible  parties to the  greater of $1,200 per gross ton or $10  million per
tanker  that is over 3,000  gross  tons  (subject  to  possible  adjustment  for
inflation).  These  limits of  liability  would not  apply if the  incident  was
proximately  caused by violation of  applicable  United States  federal  safety,
construction  or  operating  regulations  or by the  responsible  party's  gross
negligence or willful  misconduct,  or if the responsible party fails or refuses
to report the incident or to  cooperate  and assist in  connection  with the oil
removal activities. The Company currently plans to continue to maintain for each
of its  vessels  pollution  liability  coverage  in the amount of $1 billion per
incident. A catastrophic spill could exceed the insurance coverage available, in
which event there could be a material adverse effect on the Company.

     Under OPA 90, with certain limited exceptions, all newly built or converted
tankers operating in United States waters must be built with  double-hulls,  and
existing  vessels which do not comply with the double-hull  requirement  must be
phased  out over a  25-year  period  (1990-2015)  based  on  size,  age and hull
construction.  Nine of the Company's non-double-hulled vessels are over 15 years
old, and the oldest of these vessels,  the Teekay Foam and Teekay Favour,  would
not be  phased-out  under  the  double-hull  regulations  until  April  2009 and
November  2009,  respectively.  Notwithstanding  the  phase-out  period,  OPA 90
currently permits existing single-hull tankers to operate until the year 2015 if
their  operations  within United States waters are limited to discharging at the
Louisiana  Off-Shore  Oil  Platform,  or  off-loading  by  means  of  lightering
activities within authorized lightering zones more than 60 miles off-shore.

    OPA 90 requires  owners and  operators of vessels to establish  and maintain
with the United  States  Coast Guard (the "Coast  Guard")  evidence of financial
responsibility  sufficient to meet their potential  liabilities under OPA 90. In
December 1994, the Coast Guard  implemented  regulations  requiring  evidence of
financial  responsibility  in the  amount of $1,500  per gross ton for  tankers,
coupling  the OPA  limitation  on  liability  of  $1,200  per gross ton with the
Comprehensive Environmental Response,  Compensation, and Liability Act liability
limit of $300 per gross ton. Under the  regulations,  such evidence of financial
responsibility may be demonstrated by insurance, surety bond, self-insurance, or
guaranty.  Under OPA 90, an owner or  operator of a fleet of tankers is required
only to demonstrate evidence of financial responsibility in an amount sufficient
to cover the tanker in the fleet having the greatest maximum liability under OPA
90.

    The  Coast  Guard's   regulations   concerning   certificates  of  financial
responsibility provide, in accordance with OPA 90, that claimants may bring suit
directly  against  an  insurer  or  guarantor  that  furnishes  certificates  of
financial  responsibility;  and, in the event that such  insurer or guarantor is
sued directly,  it is prohibited from asserting any contractual  defense that it
may have had against the  responsible  party and is limited to  asserting  those
defenses  available to the  responsible  party and the defense that the incident
was  caused  by  the  willful  misconduct  of  the  responsible  party.  Certain
organizations,   which  had  typically   provided   certificates   of  financial
responsibility  under  pre-OPA  90 laws,  including  the  major  protection  and
indemnity  organizations,  declined to furnish  evidence of insurance for vessel
owners and operators if they are subject to direct  actions or required to waive
insurance policy defenses.

    The Coast Guard's financial responsibility regulations may also be satisfied
by  evidence  of  surety  bond,   guaranty  or  by  self-insurance.   Under  the
self-insurance  provisions, the ship owner or operator must have a net worth and
working  capital,  measured  in assets  located  in the  United  States  against
liabilities located anywhere in the world, that exceeds the applicable amount of
financial  responsibility.  The  Company  has  complied  with  the  Coast  Guard
regulations by providing a financial  guaranty from a related company evidencing
sufficient self-insurance.

    OPA 90 specifically  permits individual states to impose their own liability
regimes  with  regard  to  oil  pollution   incidents   occurring  within  their
boundaries,  and some states have enacted  legislation  providing  for unlimited
liability  for oil  spills.  In some  cases,  states  which  have  enacted  such
legislation have not yet issued implementing regulations defining tanker owners'
responsibilities  under  these  laws.  The  Company  intends to comply  with all
applicable state regulations in the ports where the Company's vessels call.

    Owners or  operators  of  tankers  operating  in United  States  waters  are
required to file vessel  response plans with the Coast Guard,  and their tankers
are required to operate in  compliance  with their Coast Guard  approved  plans.
Such  response  plans must,  among  other  things,  (i)  address a "worst  case"
scenario and identify and ensure,  through contract or other approved means, the
availability of necessary private response resources to respond to a "worst case
discharge,"  (ii)  describe  crew  training  and  drills,  and (iii)  identify a
qualified  individual  with full  authority to implement  removal  actions.  The
Company  has filed  vessel  response  plans with the Coast Guard for the tankers
owned by the Company and has received  approval of such plans for all vessels in
its fleet to operate in United States waters.

    Environmental  Regulation--Other  Environmental  Initiatives.  The  European
Union is considering  legislation  that will affect the operation of tankers and
the  liability  of owners for oil  pollution.  It is  difficult  to predict what
legislation,  if any,  may be  promulgated  by the  European  Union or any other
country or authority.

    Although  the United  States is not a party  thereto,  many  countries  have
ratified and follow the liability  scheme  adopted by the IMO and set out in the
International  Convention on Civil Liability for Oil Pollution Damage,  1969, as
amended  (the  "CLC"),   and  the  Convention  for  the   Establishment   of  an
International  Fund  for  Oil  Pollution  of  1971,  as  amended.   Under  these
conventions, a vessel's registered owner is strictly liable for pollution damage
caused  on the  territorial  waters  of a  contracting  state  by  discharge  of
persistent oil, subject to certain complete defenses. Many of the countries that
have  ratified  the CLC have  increased  the  liability  limits  through  a 1992
Protocol to the CLC. The liability  limits in the  countries  that have ratified
this Protocol are currently approximately $4.0 million plus approximately $566.0
per gross registered tonne above 5,000 gross tonnes with an approximate  maximum
of $80.5  million,  with the exact amount tied to a unit of account which varies
according to a basket of currencies.  The right to limit  liability is forfeited
under the CLC where the spill is caused by the owner's  actual  fault or privity
and,  under  the 1992  Protocol,  where  the  spill  is  caused  by the  owner's
intentional or reckless  conduct.  Vessels  trading to  contracting  states must
provide  evidence of insurance  covering the limited  liability of the owner. In
jurisdictions where the CLC has not been adopted, various legislative schemes or
common law govern, and liability is imposed either on the basis of fault or in a
manner similar to the CLC.

Risk of Loss and Insurance

    The  operation  of any  ocean-going  vessel  carries  an  inherent  risk  of
catastrophic  marine  disasters and property  losses  caused by adverse  weather
conditions,  mechanical failures, human error, war, terrorism,  piracy and other
circumstances or events. In addition, the transportation of crude oil is subject
to the risk of crude oil spills,  and  business  interruptions  due to political
circumstances in foreign countries,  hostilities,  labor strikes,  and boycotts.
Any such event may result in loss of revenues or increased costs.

    The   Company   carries   insurance   to   protect   against   most  of  the
accident-related  risks involved in the conduct of its business and it maintains
environmental  damage and  pollution  insurance  coverage.  The Company does not
carry  insurance  covering the loss of revenue  resulting  from vessel  off-hire
time.  There can be no assurance that all covered risks are  adequately  insured
against, that any particular claim will be paid or that the Company will be able
to procure adequate insurance  coverage at commercially  reasonable rates in the
future.  More  stringent  environmental  regulations  at times in the past  have
resulted in increased costs for, and may result in the lack of availability  of,
insurance against the risks of environmental damage or pollution.

Operations Outside the United States

    The operations of the Company are primarily  conducted outside of the United
States and, therefore,  may be affected by currency fluctuations and by changing
economic,  political and  governmental  conditions  in the  countries  where the
Company is engaged in business or where its vessels are  registered.  During the
nine month period ended December 31, 1999, the Company derived approximately 57%
of its total  revenues from its  operations in the  Indo-Pacific  Basin.  In the
past,  political  conflicts in such regions,  particularly  in the Arabian Gulf,
have  included  attacks on tankers,  mining of  waterways  and other  efforts to
disrupt  shipping in the area.  Vessels  trading in such  regions have also been
subject  to,  in  limited  instances,  acts  of  terrorism  and  piracy.  Future
hostilities  or other  political  instability  in the  region  could  affect the
Company's  trade  patterns and  adversely  affect the Company's  operations  and
performance.

Crewing and Staff

    The Company employs  approximately 2,700 seagoing staff around the world and
approximately 300 personnel ashore.

    The Company  places great  emphasis on  attracting,  through its  recruiting
offices in Manila,  Glasgow,  Sydney, Mumbai and Latvia,  qualified crew members
for employment on the Company's  tankers.  Recruiting has become an increasingly
difficult  task  for  operators  in  the  tanker  industry.   The  Company  pays
competitive  salaries and provides  competitive  benefits to its  personnel  and
tries to promote,  when possible,  from within their ranks.  Management believes
that the well maintained quarters and equipment on the Company's vessels help to
attract and retain  motivated and qualified  seamen and officers.  During fiscal
1996,  the Company  entered  into a  Collective  Bargaining  Agreement  with the
Philippine  Seafarers' Union (PSU), an affiliate of the International  Transport
Workers' Federation (ITF), and a Special Agreement with ITF London, which covers
substantially  all of the Company's  junior officers and seamen.  The Collective
Bargaining Agreement and the Special Agreement did not result in any significant
increase  in the levels of wages  paid or  benefits  provided  to members of the
vessel crews.  The Company is also a party to Enterprise  Bargaining  Agreements
with three Australian  maritime unions,  covering officers and seamen.  The time
charters  covering the  Australian  vessels  provide that  increases in wages or
benefits for the  Company's  Australian-crewed  vessels will be passed on to the
customer.  Bona's officers and seamen are also covered under Special  Agreements
with ITF London.

    The Company has a cadet training program, the purpose of which is to develop
a cadre of future senior officers for the Company,  with one specially  equipped
vessel  staffed  with an  instructor  and  trainees.  In  addition  to the basic
training that all seamen are required to undergo to achieve  certification,  the
Company provides additional training of as much as one month for all newly hired
seamen and junior  officers at training  facilities in the  Philippines.  Safety
procedures are a critical element of this training and continue to be emphasized
through the Company's  onboard training program.  Management  believes that high
quality manning and training  policies will play an increasingly  important role
in distinguishing  larger  independent  tanker companies which have in-house (or
affiliate)  capabilities,  from smaller companies that must rely on outside ship
managers and crewing agents.

Customers

    Customers of the Company  include  major oil  companies,  major oil traders,
large oil consumers and petroleum product producers,  government  agencies,  and
various other  entities  dependent  upon the tanker  transportation  trade.  One
customer,  an international oil company,  accounted for 13% ($48,140,000) of the
company's  consolidated  voyage  revenues  during  the nine month  period  ended
December  31,  1999.  No  other  customer  accounted  for  more  than 10% of the
Company's consolidated voyage revenues.  Three customers,  all international oil
companies,  individually accounted for 12% ($51,411,000),  12% ($50,727,000) and
10% ($42,797,000),  respectively,  of the Company's consolidated voyage revenues
during the year ended March 31, 1999. A single  customer,  also an international
oil company,  accounted  for 14%  ($56,357,000)  of the  Company's  consolidated
voyages revenues during the year ended March 31, 1998.

Taxation of the Company

     The legal  jurisdictions  of the countries in which Teekay and the majority
of  its   subsidiaries   are  incorporated  do  not  impose  income  taxes  upon
shipping-related  activities.  The Company's Australian ship-owning subsidiaries
are subject to income taxes.  In addition,  some  subsidiaries  pay taxes in the
jurisdictions  in which they operate in  connection  with the revenue  generated
from the  services  provided  by them in that  jurisdiction.  Such tases are not
considered material to the Company.



<PAGE>

Item 2. Description of Property

The Company's Fleet

The following list provides information with respect to the Company's vessels as
at February 29, 2000.

<TABLE>
<CAPTION>

                                                                 Year
                                           Series/Yard           Built          Type           Dwt-MT       Flag
<S>                                     <C>                     <C>                 <C>            <C>        <C>

Aframax Tankers (60)
HAMANE SPIRIT..............                 Onomichi              1997           DH            105,300      Bahamian
POUL SPIRIT................                 Onomichi              1995           DH            105,300      Bahamian
TORBEN SPIRIT..............                 Onomichi              1994           DH             98,600      Bahamian
SAMAR SPIRIT...............                 Onomichi              1992           DH             98,600      Bahamian
LEYTE SPIRIT...............                 Onomichi              1992           DH             98,600      Bahamian
LUZON SPIRIT...............                 Onomichi              1992           DH             98,600      Bahamian
MAYON SPIRIT...............                 Onomichi              1992           DH             98,600      Bahamian
TEEKAY SPIRIT..............                 Onomichi              1991           SH            100,200      Bahamian
PALMSTAR LOTUS.............                 Onomichi              1991           SH            100,200      Bahamian
PALMSTAR THISTLE...........                 Onomichi              1991           SH            100,200      Bahamian
PALMSTAR ROSE..............                 Onomichi              1990           SH            100,200      Bahamian
PALMSTAR POPPY.............                 Onomichi              1990           SH            100,200      Bahamian
ONOZO SPIRIT...............                 Onomichi              1990           SH            100,200      Bahamian
PALMSTAR CHERRY............                 Onomichi              1990           SH            100,200      Bahamian
PALMSTAR ORCHID............                 Onomichi              1989           SH            100,200      Bahamian
GOTLAND SPIRIT.............                 Hyundai               1995           DH             95,400      Bahamian
FALSTER SPIRIT.............                 Hyundai               1995           DH             95,400      Bahamian
SOTRA SPIRIT...............                 Hyundai               1995           DH             95,400      Bahamian
SHILLA SPIRIT..............                 Hyundai               1990           SH            106,700      Bahamian
ULSAN SPIRIT...............                 Hyundai               1990           SH            106,700      Bahamian
NAMSAN SPIRIT..............                 Hyundai               1988           SH            106,700      Bahamian
PACIFIC SPIRIT.............                 Hyundai               1988           SH            106,700      Bahamian
PIONEER SPIRIT.............                 Hyundai               1988           SH            106,700      Bahamian
DAMPIER SPIRIT (FSO).......                 Hyundai               1988           SH            106,700      Bahamian
MERSEY SPIRIT..............                 Hyundai               1986           DS             94,700      Bahamian
CLYDE SPIRIT...............                 Hyundai               1985           DS             94,700      Bahamian
NASSAU SPIRIT..............                 Imabari               1998           DH            107,000      Bahamian
SENANG SPIRIT..............                 Imabari               1994           DH             95,700      Bahamian
SEBAROK SPIRIT.............                 Imabari               1993           DH             95,700      Bahamian
SEAFALCON*.................                 Imabari               1990           DS             97,300      Marshall Islands
SELETAR SPIRIT.............                 Imabari               1988           DS             95,000      Bahamian
SERAYA SPIRIT..............                 Imabari               1992           DS             97,300      Bahamian
SENTOSA SPIRIT.............                 Imabari               1989           DS             97,300      Bahamian
ALLIANCE SPIRIT............                 Imabari               1989           DS             97,300      Bahamian
SEMAKAU SPIRIT.............                 Imabari               1988           DS             97,300      Bahamian
SINGAPORE SPIRIT...........                 Imabari               1987           DS             97,300      Bahamian
SUDONG SPIRIT..............                 Imabari               1987           DS             97,300      Bahamian
KANATA SPIRIT..............                 Samsung               1999           DH            113,000      Bahamian
KAREELA SPIRIT.............                 Samsung               1999           DH            113,000      Bahamian
KIOWA SPIRIT...............                 Samsung               1999           DH            113,000      Bahamian
KOA SPIRIT.................                 Samsung               1999           DH            113,000      Bahamian
KYEEMA SPIRIT..............                 Samsung               1999           DH            113,000      Bahamian
AEGEAN PRIDE*..............                 Samsung               1999           DH            105,300      Liberian
SILVER PARADISE*...........                 Samsung               1998           DH            105,200      Panamanian
KYUSHU SPIRIT..............                 Mitsubishi            1991           DS             95,600      Bahamian
KOYAGI SPIRIT..............                 Mitsubishi            1989           SH             96,000      Bahamian
SABINE SPIRIT..............                 Mitsubishi            1989           DS             84,800      Bahamian
HUDSON SPIRIT..............                 Mitsubishi            1988           DS             84,800      Bahamian
COLUMBIA SPIRIT............                 Mitsubishi            1988           DS             84,800      Bahamian
SHETLAND SPIRIT............                 Mitsui                1994           DH            106,200      Bahamian
ORKNEY SPIRIT..............                 Mitsui                1993           DH            106,200      Bahamian
SEABRIDGE*.................                 Namura                1996           DH            105,200      Liberian
SEAMASTER*.................                 Namura                1990           SH            101,000      Liberian
TORRES SPIRIT..............                 Namura                1990           SH             96,000      Bahamian
MENDANA SPIRIT (1).........                 Namura                1980           SH             81,700      Bahamian
SHANNON SPIRIT.............                 Gdynia                1987           SH             99,300      Bahamian
CLARE SPIRIT...............                 Gdynia                1986           SH             95,200      Bahamian
BORNES **..................                 Solisnor              1990           DS             88,900      Liberian
MAGELLAN SPIRIT............                 Hitachi               1985           DS             95,000      Bahamian
COOK SPIRIT................                 Hashima               1987           DS             91,500      Bahamian


</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                                 Year
                                           Series/Yard           Built           Type           Dwt-MT      Flag
<S>                                     <C>                      <C>            <C>           <C>        <C>
Oil/Bulk/Ore Carriers (10)
VICTORIA SPIRIT ...........                 Hyundai               1993           DH            103,200      Bahamian
VANCOUVER SPIRIT ..........                 Hyundai               1992           DH            103,200      Bahamian
TEEKAY FORUM ..............                 Hyundai               1983           DB             78,500      Bahamian
TEEKAY FULMAR..............                 Hyundai               1983           DB             78,500      Bahamian
TEEKAY FOUNTAIN............                 Hyundai               1982           DB             78,500      Norwegian Int'l Registry
TEEKAY FORTUNA ***.........                 Hyundai               1982           DB             78,500      Norwegian Int'l Registry
TEEKAY FREIGHTER ****......                 Bremer                1982           DB             75,400      Norwegian Int'l Registry
TEEKAY FOAM................                 Hyundai               1981           DB             78,500      Bahamian
TEEKAY FAVOUR..............                 Howaldtswerke         1981           DB             82,500      Bahamian
TEEKAY FAIR................                 Bremer                1981           DH             75,500      Norwegian Int'l Registry

Other Tankers (6)
MUSASHI SPIRIT (VLCC)......                 Sasebo                1993           SH            280,700      Bahamian
INAGO **...................                 Solisnor              1993           DS            159,800      Liberian
ERATI **...................                 Solisnor              1992           DS            159,700      Liberian
BARRINGTON.................                 Samsung               1989           DH             33,300      Australian
PALMERSTON.................                 Halla                 1990           DB             36,700      Australian
SCOTLAND (2)...............                 Mitsubishi            1982           DS             40,800      Bahamian
                                                                                          ------------
                                                                                             7,526,500
                                                                                          ============

------------------------------------------------------------------------------------------------------------------------------------
DH   Double-hull tanker                         FSO  Floating storage and off-loading vessel                   *Time-chartered-in
DS   Double-sided tanker                        SH   Single-hull tanker                                        ** 50% owned
DB   Double-bottom tanker                       VLCC Very Large Crude Carrier                                  *** 67% owned
                                                                                                               **** 52% owned
(1) Sold March 23, 2000
(2) Sold March 21, 2000

</TABLE>



<PAGE>

     Many of the  Company's  vessels  have  been  designed  and  constructed  as
substantially  identical sister ships. Such vessels can, in many situations,  be
interchanged, providing scheduling flexibility and greater capacity utilization.
In  addition,  spare  parts and  technical  knowledge  can be applied to all the
vessels in the particular series,  thereby generating operating efficiencies and
economies of scale.

     See Note 6 of the  Consolidated  Financial  Statements for information with
respect to major encumbrances against vessels of the Company.

Classification and Inspection

    All of the  Company's  vessels  have been  certified  as being "in class" by
their respective classification societies: Nippon Kaiji Kyokai, Lloyds Register,
Det Norske Veritas or American  Bureau of Shipping.  Every  commercial  vessel's
hull and machinery is "classed" by a  classification  society  authorized by its
country of registry.  The  classification  society certifies that the vessel has
been built and  maintained in accordance  with the rules of such  classification
society and complies with  applicable  rules and  regulations  of the country of
registry of the vessel and the  international  conventions of which that country
is a member.  Each  vessel is  inspected  by a  surveyor  of the  classification
society every year ("Annual  Survey"),  every two to three years  ("Intermediate
Survey") and every four to five years  ("Special  Survey").  Vessels also may be
required,  as part of the Intermediate  Survey process, to be drydocked every 24
to 30 months  for  inspection  of the  underwater  parts of the  vessel  and for
necessary repair related to such inspection.  Many of the Company's vessels have
qualified with their  respective  classification  societies for drydocking every
five years in connection  with the Special  Survey and are no longer  subject to
the  Intermediate  Survey  drydocking  process.  To so qualify,  the Company was
required  to enhance  the  resiliency  of the  underwater  coatings of each such
vessel as well as to install  apparatus on each vessel to  accommodate  thorough
underwater inspection by divers.

    In  addition  to the  classification  inspections,  many  of  the  Company's
customers,  including the major oil companies,  regularly  inspect the Company's
vessels as a  precondition  to chartering  voyages on such  vessels.  Management
believes that the Company's well-maintained, high quality tonnage should provide
it  with a  competitive  advantage  in the  current  environment  of  increasing
regulation and customer emphasis on quality of service.

    Company employees perform much of the necessary  ordinary course maintenance
and regularly  inspect all of the Company's  vessels,  both at sea and while the
vessels are in port. The Company inspects its vessels two to four times per year
using predetermined and rigorous criteria.  Each vessel is examined and specific
notations  are made,  and  recommendations  are given  for  improvements  to the
overall condition of the vessel, maintenance, safety, and crew welfare.

    The  Company  has  obtained  through  Det  Norske  Veritas,   the  Norwegian
classification  society,  accreditation  with  the ISO 9000  standards  of total
quality management.  ISO 9000 is a series of international standards for quality
systems which includes ISO 9002, the standard most commonly used in the shipping
industry. The Company has also completed the implementation of the International
Safety  Management (ISM) code. The Company has obtained  Documents of Compliance
(DOC)  for  its  offices  and  Safety  Management  Certificates  (SMC)  for  its
applicable vessels.



<PAGE>


Item 3. Legal Proceedings

    From time to time the  Company  has been,  and  expects to  continue  to be,
subject to legal  proceedings and claims in the ordinary course of its business,
principally  personal injury and property casualty claims.  Such claims, even if
lacking merit,  could result in the  expenditure  of  significant  financial and
managerial  resources.  The  Company  is not aware of any legal  proceedings  or
claims that it believes will have,  individually or in the aggregate, a material
adverse  effect on the  Company  or on its  financial  condition  or  results of
operations.

Item 4. Control of Registrant

Principal Shareholders

    (a) The Company is not directly or indirectly owned or controlled by another
corporation or by any foreign government.

    (b) The following table sets forth certain information  regarding ownership,
as of March 14, 2000, of Teekay's  common  stock,  par value of $0.001 per share
(the  "Common  Stock") by (i) each person  known by the Company to own more than
10% of the Common Stock and (ii) the Directors and officers as a group:

<TABLE>
<CAPTION>


Identity of Person or Group                                                       Shares Owned      Percent of Class
---------------------------                                                       ------------      ----------------
<S>                                                                                  <C>             <C>

Cirrus Trust (1)...........................................................           14,427,397         37.90%
Alliance Capital Management................................................            4,958,301         13.03%
All Directors and officers as a group (13 persons) (2).....................              *                 *
----------
</TABLE>



(1)  JTK Trust,  which is under common  supervision  with Cirrus Trust,  owns an
     additional 2,888,293 shares (or 7.59%) of Common Stock.
(2)  Excludes  (a)  outstanding  options to purchase up to  1,445,000  shares of
     Common Stock and (b) 3,082,908 shares of Common Stock held by Leif O. Hoegh
     & Co.  ASA,  an entity  controlled  by Leif O.  Hoegh,  a  Director  of the
     Company, and an additional 524,512 shares beneficially owned by Mr. Hoegh.

* Less than one percent of outstanding shares.

    (c) The Company is not aware of any arrangements, the operation of which may
at a subsequent date result in a change in control of the Company.

Item 5. Nature of Trading Market

    The Company's  Common Stock is traded on The New York Stock  Exchange  under
the symbol "TK".  The following  table sets forth the high and low closing sales
prices  for the  Common  Stock on The New York  Stock  Exchange  for each of the
fiscal quarters indicated.

<TABLE>
<CAPTION>

                                                                                High             Low
<S>                                                                             <C>            <C>

          Year ended March 31, 1999
            First quarter.................................................  $     30 7/8    $     22 9/16
            Second quarter................................................        25 1/8          18 7/16
            Third quarter.................................................        18 7/16         15 15/16
            Fourth quarter................................................        18 7/8          14 1/4
          Nine Months ended December 31, 1999
            First quarter.................................................  $     18 5/8    $     15 1/8
            Second quarter................................................        18 15/16        15 3/16
            Third quarter.................................................        16 1/8          13 3/4
</TABLE>


     Teekay's 8.32% First  Preferred Ship Mortgage Notes due 2008 are listed for
trading on The New York Stock  Exchange.  These Notes were first  offered on the
market January 19, 1996. As no active trading market exists for these Notes,  no
historical pricing information is included here.

<PAGE>

Item 6. Exchange Controls and Other Limitations Affecting Security Holders

(a) The Company is not aware of any governmental laws, decrees or regulations in
    the Company's  country of organization that restrict the export or import of
    capital,  including,  but not limited to, foreign exchange controls, or that
    affect  the   remittance  of  dividends,   interest  or  other  payments  to
    non-resident holders of the Company's securities.

(b) The Company is not aware of any  limitations on the right of non-resident or
    foreign owners to hold or vote  securities of the Company imposed by foreign
    law or by the charter or other constituent document of the Company.

Item 7.  Taxation

    Teekay Shipping  Corporation was  incorporated in the Republic of Liberia on
February 9, 1979 and was domesticated in the Republic of The Marshall Islands on
December 20, 1999.

(a)  Republic of Liberia.  Since, (i) prior to its domestication in the Republic
     of The Marshall  Islands,  Teekay Shipping  Corporation was a "non-resident
     Liberian  entity" under the Liberian  Internal  Revenue Code,  and is now a
     "non-resident  foreign  person" under the Liberian  Internal  Revenue Code,
     (ii) the Company is not now  carrying on, and in the future does not expect
     to carry on, any  operations  within the  Republic  of  Liberia,  and (iii)
     Teekay's 8.32% First  Preferred  Ship Mortgage Notes and all  documentation
     relating to the Notes and to the public  offering of Teekay's  common stock
     were executed outside of the Republic of Liberia,  and assuming the holders
     of the Notes and the Common Stock neither reside in, maintain an office in,
     nor engage in business in, the Republic of Liberia,  under current Liberian
     law, no taxes or  withholdings  are  imposed by the  Republic of Liberia on
     payments  to be made in  respect to the Notes or on  distributions  made in
     respect of the Common Stock. Furthermore,  no stamp, capital gains or other
     taxes will be  imposed by the  Republic  of  Liberia  on the  ownership  or
     disposition of the Common Stock by holders thereof.

(b)  Republic of The Marshall Islands. Since, (i) Teekay Shipping Corporation is
     not now  carrying  on or  conducting,  and in the future does not expect to
     carry on or conduct,  any business or  transactions  within the Republic of
     The Marshall  Islands and  therefore  is now, and in the future  intends to
     remain, a "non-resident  domestic  corporation"  under The Marshall Islands
     Business  Corporations  Act, and (ii) Teekay's  8.32% First  Preferred Ship
     Mortgage  Notes  and all  documentation  relating  to the  Notes and to the
     public  offering  of Teekay's  common  stock were  executed  outside of the
     Republic of The Marshall Islands, and assuming the holders of the Notes and
     the Common  Stock  neither  reside  in,  maintain  an office in,  engage in
     business  in, nor conduct  transactions  in, the  Republic of The  Marshall
     Islands,  under current  Marshall Islands law, no taxes or withholdings are
     imposed by the Republic of The  Marshall  Islands on payments to be made in
     respect  to the Notes or on  distributions  made in  respect  of the Common
     Stock. Furthermore,  no stamp, capital gains or other taxes will be imposed
     by the Republic of The Marshall  Islands on the ownership or disposition of
     the Common Stock by holders thereof.


<PAGE>


Item 8. Selected Financial Data

     Set forth below are selected  consolidated  financial and other data of the
Company for the nine month  period  ended  December  31, 1999 and the four years
ended March 31, 1999,  which have been derived from the  Company's  Consolidated
Financial  Statements.  The data below  should be read in  conjunction  with the
Consolidated  Financial Statements and the notes thereto and the report of Ernst
& Young,  independent  Chartered  Accountants,  with  respect  to the  financial
statements for the nine month period ended December 31, 1999 and the years ended
March 31, 1999, and 1998, and "Management's Discussion and Analysis of Financial
Condition and Results of  Operations."  The Company  changed its fiscal year end
from  March  31 to  December  31,  commencing  December  31,  1999,  in order to
facilitate  comparison of its operating  results to those of other  companies in
the transportation industry.

<TABLE>
<CAPTION>

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

                                         Nine Months Ended    Year Ended     Year Ended      Year Ended    Year Ended
                                            December 31,       March 31,      March 31,      March 31,      March 31,
                                                1999             1999           1998           1997           1996
                                                ----             ----           ----           ----           ----
<S>                                          <C>            <C>             <C>           <C>            <C>
                                            (U.S. dollars in thousands, except per share and per day data and ratios)
Income Statement Data:
Voyage revenues........................    $    377,882    $    411,922    $   406,036     $   382,249     $   336,320
Voyage expenses........................         129,532          93,511        100,776         102,037          90,575
Net voyage revenues....................         248,350         318,411        305,260         280,212         245,745
Income from vessel operations..........          23,572          85,634        107,640          94,258          76,279
Interest expense.......................         (44,996)        (44,797)       (56,269)        (60,810)        (62,910)
Interest income........................           5,842           6,369          7,897           6,358           6,471
Other income (loss)....................          (4,013)          5,506         11,236           2,824           9,230
Net income before extraordinary items..         (19,595)         52,712         70,504          42,630          29,070
Extraordinary loss on bond redemption..              --          (7,306)            --              --              --
Net income (loss)......................         (19,595)         45,406         70,504          42,630          29,070
Per Share Data:
Net income (loss) before extraordinary
items..................................    $      (0.54)   $       1.70    $      2.46     $      1.52     $      1.17
Extraordinary loss on bond redemption..             --            (0.24)            --              --              --
Net income (loss)
  --basic..............................           (0.54)           1.46           2.46            1.52            1.17
  --diluted............................           (0.54)           1.46           2.44            1.50            1.17
Cash earnings-- basic(1)...............            1.19            4.72           5.78            4.75            4.51
Cash dividends declared................            0.65            0.86           0.86            0.86            0.48
Balance Sheet Data (at end of period):
Cash and marketable securities.........    $    226,381    $    132,256    $   115,254     $   117,523     $   101,780
Total assets...........................       1,982,684       1,452,220      1,460,183       1,372,838       1,355,301
Total debt.............................       1,085,167         641,719        725,369         699,726         725,842
Total stockholders' equity.............         832,067         777,390        689,455         629,815         599,395
Other Financial Data:
EBITDA(2)..............................    $     89,839    $    186,069    $   209,582     $   191,632     $   166,233
EBITDA to interest expense(2)(3).......            1.96x           3.98x          3.80x           3.22x           2.69x
Total debt to EBITDA(2)................           12.08            3.45           3.46            3.65            4.37
Total debt to total capitalization.....            56.6%           45.2%          51.3%           52.6%           54.8%
Net debt to capitalization(4)..........            50.8            39.6           46.9            48.0            51.0
Cash earnings(1).......................          43,343         146,489        165,575         133,554         112,107
Capital expenditures:
  Vessel purchases, gross..............         452,584          85,445        197,199          65,104         123,843
  Drydocking (accrual basis)...........           4,971           7,213         12,409          23,124          11,641
Fleet Data:
Average number of ships(5) ............              65              47             43              41              39
Average age of Company's Aframax fleet
(in   years)(6) .......................             7.4             8.0            7.6             7.9             6.8
TCE per ship per day(5)(7)(8)..........    $     13,410    $     19,576    $    21,373     $    20,356     $    18,438
Vessel operating expenses per ship per
  day(8)(9)............................           5,719           4,969          4,554           4,922           4,787
Operating cash flow per ship per
  day(8)(10)...........................           4,569          10,903         12,664          11,819          10,613

</TABLE>

(Footnotes on following page)


<PAGE>

(Footnotes for previous page)


(1)    Cash earnings  represents net income (loss) before  extraordinary  items,
       foreign exchange gains (losses), and before depreciation and amortization
       expense.  Cash  earnings  is  included  because  it is  used  by  certain
       investors  to measure a company's  financial  performance  as compared to
       other companies in the shipping  industry.  Cash earnings is not required
       by generally accepted accounting  principles and should not be considered
       as an alternative  to net income or any other  indicator of the Company's
       performance required by generally accepted accounting principles.

(2)    EBITDA represents net income (loss) before extraordinary items,  interest
       expense,  income tax  expense,  depreciation  and  amortization  expense,
       minority  interest,  and gains or losses arising from prepayment of debt,
       foreign exchange  translation and disposal of assets.  EBITDA is included
       because  such data is used by certain  investors  to measure a  company's
       financial  performance.  EBITDA is not  required  by  generally  accepted
       accounting  principles  and should not be considered as an alternative to
       net income or any other indicator of the Company's  performance  required
       by generally accepted accounting principles.

(3)    For purposes of computing  EBITDA to interest  expense,  interest expense
       includes capitalized interest but excludes amortization of loan costs.

(4)    Net debt represents total debt less cash, cash equivalents and marketable
       securities.

(5)    Includes  vessels  time-chartered-in,  but  excludes  vessels  of   joint
       ventures.

(6)    Average age of Company's  Aframax fleet is the average age, at the end of
       the   relevant   period,   of  all   the   vessels   owned,   leased   or
       time-chartered-in by the Company, excluding vessels of joint ventures.

(7)    TCE  (or  "time  charter   equivalent")  is  a  measure  of  the  revenue
       performance  of a vessel,  which,  on a per voyage  basis,  is  generally
       determined  by Clarkson  Research  Studies  Inc.  ("Clarkson")  and other
       industry data sources by subtracting voyage expenses (except commissions)
       which are incurred in  transporting  cargo from gross  revenue per voyage
       and dividing the  remaining  revenue by the total number of days required
       for the round-trip voyage. Voyage expenses comprise all expenses relating
       to particular voyages, including bunker fuel expense, port fees and canal
       tolls.  For purposes of  calculating  the  Company's  average TCE for the
       year, TCE has been  calculated  consistent  with  Clarkson's  method,  by
       deducting total voyage expenses  (except  commissions)  from total voyage
       revenues and dividing the  remaining  sum by the  Company's  total voyage
       days in the year.

(8)    To facilitate  comparison to prior years'  results,  excludes the results
       from the Company's Australian-crewed vessels, which comprised four of the
       Company's  vessels  during the nine month period ended December 31, 1999,
       the year ended  March 31,  1999 and the fourth  quarter of the year ended
       March 31,  1998.  Vessel  operating  expenses  for the  Australian-crewed
       vessels are substantially higher than those for the rest of the Company's
       fleet on a per ship  basis,  primarily  as a result of higher crew costs,
       with  correspondingly  higher charter rates  associated  with the charter
       arrangements for those vessels. See "Item 9. Management's  Discussion and
       Analysis of Results of Operations and Financial Condition--General."

(9)    Vessel  operating  expenses  consist  of  all  expenses  relating  to the
       operation of vessels  (other than voyage  expenses),  including  crewing,
       repairs and maintenance,  insurance,  stores and lubes, and miscellaneous
       expenses including communications.  Ship days are calculated on the basis
       of a 365-day  year  multiplied  by the  average  number of vessels in the
       Company's  fleet  for the  respective  year.  Vessel  operating  expenses
       exclude vessels time-chartered-in.

(10) Operating  cash  flow  represents   income  from  vessel   operations  plus
     depreciation  and  amortization  expense  (other than drydock  amortization
     expense).  Ship days are  calculated on the basis of a 365-day  fiscal year
     multiplied by the average number of vessels in the Company's  fleet for the
     respective year.  Operating cash flow is not required by generally accepted
     accounting principles and should not be considered as an alternative to net
     income or any other  indicator  of the  Company's  performance  required by
     generally accepted accounting principles.


<PAGE>

Item 9. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

    Teekay  has  changed  its  fiscal  year end from  March 31 to  December  31,
effective December 31, 1999, in order to facilitate  comparison of its operating
results to those of other companies in the transportation industry.

General

    Teekay is a  leading  provider  of  international  crude  oil and  petroleum
product  transportation  services to major oil companies,  major oil traders and
government  agencies  worldwide.  The  Company's  fleet  consists  of 74 vessels
(including  five vessels  time-chartered-in  and three  vessels owned by a joint
venture),  for a total  cargo-carrying  capacity  of  approximately  7.4 million
tonnes.

    During the nine months ended  December 31,  1999,  approximately  61% of the
Company's net voyage revenues were derived from spot voyages. The balance of the
Company's revenue is generated by two other modes of employment:  time charters,
whereby vessels are chartered to customers for a fixed period;  and contracts of
affreightment ("COAs"),  whereby the Company carries an agreed quantity of cargo
for a customer  over a specified  trade route within a given period of time.  In
the nine  months  ended  December  31,  1999,  approximately  13% of net  voyage
revenues were generated by time charters and COAs priced on a spot market basis.
In the aggregate,  approximately 74% of the Company's net voyage revenues during
the nine months  ended  December 31, 1999 were derived from spot voyages or time
charters and COAs priced on a spot market  basis,  with the  remaining 26% being
derived from  fixed-rate  time-charters  and COAs.  This  dependence on the spot
market,  which is within  industry  norms,  contributes to the volatility of the
Company's revenues, cash flow from operations, and net income.

    Historically, the tanker industry has been cyclical, experiencing volatility
in  profitability  and asset values resulting from changes in the supply of, and
demand for,  vessel  capacity.  In addition,  tanker  markets have  historically
exhibited  seasonal  variations in charter  rates.  Tanker markets are typically
stronger in the winter  months as a result of increased oil  consumption  in the
northern  hemisphere  and  unpredictable  weather  patterns that tend to disrupt
vessel scheduling.

    In December 1997, the Company acquired two vessels and related shore support
services from an Australian  affiliate of Caltex  Petroleum.  These two tankers,
together  with one of the Company's  existing  Aframax  tankers,  have been time
chartered to the Caltex affiliate in connection with the Company's  provision of
Caltex's oil transportation requirements formerly provided by that affiliate. In
addition,  the Company has converted  one of its existing  vessels to a floating
storage and off-loading vessel, which is sharing crews with the vessels employed
in the Caltex  arrangement  (together  with the other three vessels  involved in
this arrangement,  the "Australian Vessels").  Vessel operating expenses for the
Australian  Vessels  are  substantially  higher  than  those for the rest of the
Company's fleet, primarily as a result of higher costs associated with employing
an  Australian  crew.  The  time-charter  rates for the  Australian  Vessels are
correspondingly  higher to compensate for these increased costs. During the nine
months  ended  December  31,  1999,  the  Australian  Vessels  earned net voyage
revenues  and an  average  TCE rate (as  defined  below)  of $27.2  million  and
$25,218,  respectively,  and incurred vessel operating expenses of $9.3 million,
or $8,485 on a per ship per day  basis.  In  comparison,  during  the year ended
March 31, 1999, the Australian Vessels earned net voyage revenues and an average
TCE rate of  $38.2  million  and  $26,329,  respectively,  and  incurred  vessel
operating expenses of $14.9 million, or $10,173 on a per ship per day basis. The
results of the  Australian  Vessels are included in the  Company's  Consolidated
Financial Statements included herein.

Acquisition of Bona Shipholding Ltd.

    On June 11, 1999, the Company acquired Bona  Shipholding  Ltd.  ("Bona") for
aggregate  consideration  (including  estimated  transaction  expenses  of $19.0
million) of $450.3 million,  consisting of $39.9 million in cash, $294.0 million
of assumed debt (net of cash acquired of $91.7 million) and the balance of $97.4
million in shares of the  Company's  common  stock.  Bona was the third  largest
operator of medium-size  tankers,  controlling a fleet of vessels  consisting of
fifteen  Aframax  tankers,  eight  oil/bulk/ore  carriers  and,  through a joint
venture, 50% interests in one additional Aframax tanker and two Suezmax tankers.
Bona  engaged  in  the  transportation  of  oil,  oil  products,  and  dry  bulk
commodities,  primarily in the Atlantic region.  Through this  acquisition,  the
Company has combined  Bona's  market  strength in the  Atlantic  region with the
Company's  franchise in the Indo-Pacific  Basin. For the year ended December 31,
1998, Bona earned net voyage revenues of $148.9 million resulting in income from
vessel operations of $29.5 million and net income of $16.6 million.
     The acquisition of Bona has been accounted for using the purchase method of
accounting.  Bona's operating  results are reflected in the Company's  financial
statements commencing June 11, 1999.

    As a result of this acquisition, the Company anticipates annual cost savings
of approximately $10 million, commencing after an estimated 12-month integration
period,  through a reduction in combined  overhead costs,  increased  purchasing
power, and other  operational  efficiencies.  The Company also believes that the
acquisition will create revenue enhancement  opportunities as a result of owning
a larger fleet with a greater selection of vessels to match customer demands and
enable the Company to further  extend the  breadth of  services  provided to its
customers.

    Historically,  the  Company  has  depreciated  its  vessels  for  accounting
purposes  over an economic life of 20 years down to estimated  residual  values.
Bona depreciated its vessels over an economic life of 25 years down to estimated
scrap  values,  the method used by the  majority of  companies  in the  shipping
industry. Effective April 1, 1999, the Company revised the estimated useful life
of its vessels to 25 years and also replaced the estimated  residual values with
estimated scrap values.  Since such changes,  the Company's average depreciation
expense per vessel has decreased from historical levels.

    As a result of the Bona  acquisition,  the Company  expects that its general
and administrative  expenses,  while remaining relatively stable on a per vessel
basis during the first few fiscal quarters of combined operations, will begin to
decline on a per vessel basis as efficiencies  are obtained from the integration
of the two companies'  operations.  The Company's interest expense has increased
as a result of debt that was assumed as part of the acquisition.

    All oil/bulk/ore carriers ("O/B/O") owned by Bona have been operated through
an O/B/O pool  managed by a subsidiary  of Bona.  Net voyage  revenues  from the
O/B/O pool are currently included on a 100% basis in the Company's  consolidated
financial  statements.  Where the  Company  owns less than 50% of a vessel,  the
minority  participants'  share of the O/B/O pool is  reflected as a time charter
hire expense.  The Company anticipates that these O/B/Os will earn lower average
TCE rates than the rest of the Teekay fleet as these vessels command lower rates
than modern Aframax tankers under typical market conditions,  which reflects the
lower capital cost of these vessels.

Results of Operations

    Bulk shipping industry freight rates are commonly measured at the net voyage
revenue level in terms of "time charter equivalent" (or "TCE") rates, defined as
voyage revenues less voyage expenses (excluding commissions),  divided by voyage
ship-days for the round-trip  voyage.  Voyage revenues and voyage expenses are a
function of the type of charter,  either spot charter or time charter, and port,
canal  and fuel  costs  depending  on the  trade  route  upon  which a vessel is
sailing, in addition to being a function of the level of shipping freight rates.
For this reason,  shipowners base economic decisions regarding the deployment of
their  vessels  upon  anticipated  TCE rates,  and industry  analysts  typically
measure  bulk  shipping  freight  rates in terms of TCE  rates.  Therefore,  the
discussion of revenue below focuses on net voyage revenue and TCE rates.

Nine Months Ended December 31, 1999 versus Year Ended March 31, 1999

    As a result of the  Company's  change in  fiscal  year end from  March 31 to
December 31, the current fiscal  period's  results are for the nine month period
ended December 31, 1999, while the comparative  results are for the twelve month
period  ended March 31, 1999.  Where  indicated  in the  following  discussions,
percentage  change  figures  reflect the  annualized  results for the nine month
period ended December 31, 1999. The annualized results for the nine month period
ended  December  31,  1999 are not  necessarily  indicative  of those for a full
fiscal year.

    The results for the nine month  period  ended  December 31, 1999 include the
results of Bona commencing June 11, 1999. On an annualized  basis, the Company's
average fleet size  increased  39.5% in the nine month period ended December 31,
1999 compared to the year ended March 31, 1999.

    Aframax TCE rates declined  during the second half of 1998 and 1999 due to a
reduction  in tanker  demand,  oil  production  cutbacks  and a large  number of
newbuilding  deliveries.  TCE rates will depend upon oil production  levels, oil
consumption  growth,  the number of vessels scrapped and charterers'  preference
for modern tankers.  As a result of the Company's  dependence on the tanker spot
market, any fluctuations in Aframax TCE rates will impact the Company's revenues
and earnings.

    Net voyage  revenues  were  $248.4  million in the nine month  period  ended
December  31,  1999,  as compared to $318.4  million in the year ended March 31,
1999,  representing  a 4.0% increase on an annualized  basis from the year ended
March 31, 1999.  This is mainly the result of an increase in fleet size,  offset
by a 31.5% decrease in the Company's average TCE rate,  excluding the Australian
Vessels,  of $13,410 for the nine month  period ended  December  31, 1999,  from
$19,576 for the year ended March 31, 1999. As of December 31, 1999,  the Company
changed its process of estimating net voyage  revenues from a load  port-to-load
port basis to a discharge port-to-discharge port basis, which is consistent with
most other  shipping  companies.  This change in voyage  estimate  resulted in a
one-time  increase  in net voyage  revenues  of $5.7  million for the nine month
period ended December 31, 1999.

<PAGE>

    Vessel operating expenses,  which include crewing,  repairs and maintenance,
insurance, stores, lubes, and communication expenses, increased to $98.8 million
in the nine month period ended  December 31, 1999 from $84.4 million in the year
ended March 31, 1999, representing a 56.1% increase on an annualized basis. This
increase  was mainly  the  result of the  addition  of the Bona  vessels,  which
currently have higher operating expenses than the remainder of Teekay's fleet.

    Time charter  hire expense was $30.7  million in the nine month period ended
December  31,  1999,  up from $29.7  million in the year ended  March 31,  1999,
primarily  due to the Bona  acquisition.  The minority  pool  participants'  net
voyage  revenues in the O/B/O pool managed by a Bona  subsidiary is reflected as
time charter hire expense.  The average number of vessels  time-chartered-in  by
the Company was four in the nine month period ended  December 31, 1999, the same
as in the year ended March 31, 1999.

    Depreciation and amortization expense decreased to $68.3 million in the nine
month period ended December 31, 1999, from $93.7 million in the year ended March
31, 1999, representing a 2.8% decrease on an annualized basis. This reflects the
change in estimated  useful life of the vessels  from 20 to 25 years,  partially
offset by the  increase  in fleet size  arising  from the  acquisition  of Bona.
Depreciation and amortization expense included  amortization of drydocking costs
of $6.3 million and $8.6  million in the nine month  period  ended  December 31,
1999 and in the year ended March 31, 1999, respectively. Had Teekay retained its
previous  depreciation  policy  and  applied  this  policy  to the  Bona  fleet,
depreciation expense would have been $22.5 million higher in the current period.

    General and  administrative  expenses  were $27.0  million in the nine month
period ended  December 31, 1999,  as compared to $25.0 million in the year ended
March 31, 1999,  representing a 44.1% increase on an annualized  basis primarily
as a result of the acquisition of Bona.

    Interest  expense  increased to $45.0 million in the nine month period ended
December  31,  1999  from  $44.8  million  in the year  ended  March  31,  1999,
representing a 33.9% increase on an annualized basis. This increase reflects the
$386 million in additional  debt assumed as part of the Bona  acquisition and an
increase in interest rates.

    Interest  income  decreased  to $5.8  million in the nine month period ended
December  31,  1999 from $6.4  million in the year ended March 31,  1999.  On an
annualized  basis,  interest income  increased by 20.8% as a result of increased
interest rates and higher cash and marketable securities balances.

    Other loss of $4.0 million in the nine month period ended  December 31, 1999
consisted primarily of future income taxes related to the Australian Vessels and
one-time employee and severance-related costs, partially offset by equity income
from a 50%-owned  joint venture.  Other income of $5.5 million in the year ended
March 31, 1999 consisted primarily of gains on the sale of vessels.

    As a result of the foregoing factors, net loss was $19.6 million in the nine
month period ended December 31, 1999, compared to net income of $45.4 million in
the year ended  March 31,  1999.  The  results for the year ended March 31, 1999
included  an  extraordinary  loss  of  $7.3  million  on the  redemption  of the
Company's 9 5/8% First  Preferred Ship Mortgage Notes (the "9 5/8% Notes"),  and
gains on asset sales of $7.1 million.  There were no extraordinary  items and no
asset sales in the nine month period ended December 31, 1999.


<PAGE>

Year Ended  March 31,  1999  ("Fiscal  1999")  versus  Year Ended March 31, 1998
("Fiscal 1998")

    Operating  results for these two fiscal years  generally  reflect a cyclical
peak in  average  TCE rates in fiscal  1998  followed  by a decline in TCE rates
experienced  by the  Company's  fleet  during the second half of fiscal 1999 and
growth in the size of the Company's fleet. In addition,  the fiscal 1999 results
include a full year of results  from the four  Australian  Vessels  whereas  the
fiscal 1998  results  only  include  approximately  three months of results from
three of the Australian  Vessels,  which have higher operating expenses and earn
correspondingly  higher TCE rates.  The  Company  sold two of its older  Aframax
tankers during the fiscal year ended March 31, 1999 and added four newer Aframax
tankers (including three time-chartered-in vessels) to its fleet during the same
period. As a result,  the Company's average fleet size increased by two vessels,
or 8.9%, in fiscal 1999 compared to fiscal 1998,  following an earlier  increase
of two vessels, or 4.9% in fiscal 1998.

    Net voyage  revenues  increased  4.3% to $318.4  million in fiscal 1999 from
$305.3 million in fiscal 1998,  reflecting  the increase in the Company's  fleet
size and higher TCE rates earned on the Australian Vessels,  partially offset by
lower spot TCE rates.  The  Company's  average  overall TCE rate in fiscal 1999,
excluding  the  Australian  Vessels,  was down 8.4% to $19,576  from  $21,373 in
fiscal 1998.

    Vessel  operating  expenses  increased 19.7% to $84.4 million in fiscal 1999
from $70.5  million in fiscal 1998,  mainly as a result of higher  crewing costs
associated with the Australian  Vessels and an adjustment to crew wage rates and
salaries effective April 1, 1998.

    Time-charter  hire expense was $29.7  million in fiscal 1999,  up from $10.6
million in fiscal 1998, as the average  number of vessels  time-chartered-in  by
the Company increased to four in fiscal 1999 from two in fiscal 1998.

    Depreciation and amortization  expense decreased by 1.3% to $93.7 million in
fiscal 1999 from $94.9  million in fiscal  1998,  primarily as a result of lower
amortization of drydocking  costs during the current year due to fewer scheduled
drydockings compared to the previous fiscal year.  Depreciation and amortization
expense  included  amortization  of  drydocking  costs of $8.6 million and $11.7
million in fiscal years 1999 and 1998, respectively.

    General and  administrative  expenses  rose 16.1% to $25.0 million in fiscal
1999 from $21.5  million in fiscal 1998,  primarily as a result of the hiring of
additional   personnel  in  connection  with  the  expansion  of  the  Company's
operations,  particularly  in  Australia.  The fiscal 1999  results  include the
Australian  Vessels for the full year in  comparison  to three  months in fiscal
1998 for three of the Australian Vessels.

    Interest  expense  decreased  by 20.4% to $44.8  million in fiscal 1999 from
$56.3 million in fiscal 1998,  reflecting  the reduction in the Company's  total
debt and lower average  interest  rates on debt  borrowings.  In June 1998,  the
Company  completed  a public  offering  of its  Common  Stock  resulting  in net
proceeds to the Company of  approximately  $69.0  million.  These net  proceeds,
together  with other funds,  were applied in August 1998 to redeem the Company's
outstanding 9 5/8% Notes.

    Other  income of $5.5  million in fiscal 1999  consisted  primarily  of $7.1
million in gains on the sale of two vessels, offset partially by $1.9 million in
income taxes related to the Australian Vessels. Other income of $11.2 million in
fiscal 1998 consisted primarily of gains on the sale of vessels.

    As a result of the foregoing factors, net income was $45.4 million in fiscal
1999,  compared to net income of $70.5  million in fiscal  1998.  Net income for
fiscal 1999  included an  extraordinary  loss of $7.3  million  arising from the
redemption  of the 9 5/8% Notes and gains on asset  sales of $7.1  million.  Net
income for fiscal 1998 included $14.4 million in gains on asset sales.



<PAGE>

    The  following  table  illustrates  the  relationship   between  fleet  size
(measured in ship-days),  TCE  performance,  and operating  results per calendar
ship-day. To facilitate comparison to the prior years' results, unless otherwise
indicated, the figures in the table below exclude the results from the Company's
Australian Vessels.

<TABLE>
<CAPTION>


----------------------------------------------------------------------------------------------------------------------
                                                                      Nine Months Ended     Year Ended     Year Ended
                                                                         December 31,         March 31,     March 31,
                                                                            1999                1999           1998
----------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>                 <C>              <C>
International Fleet:
Average number of ships                                                          61                 43             42
Total calendar ship-days                                                     16,797             15,612         15,341
Revenue generating ship-days (A)                                             15,807             14,647         14,229
Net voyage revenue before commissions (1) (B) (000s)                    $   211,971        $   286,735     $  304,115
----------------------------------------------------------------------------------------------------------------------
TCE (B/A)                                                               $    13,410        $    19,576     $   21,373
----------------------------------------------------------------------------------------------------------------------
Operating results per calendar ship-day:
  Net voyage revenue                                                    $    12,190        $    17,950     $   19,358
  Vessel operating expense                                                    5,719              4,969          4,554
  General and administrative expense                                          1,510              1,465          1,375
  Drydocking expense                                                            392                613            765
----------------------------------------------------------------------------------------------------------------------

Operating cash flow per calendar ship-day                               $     4,569        $    10,903     $   12,664
----------------------------------------------------------------------------------------------------------------------

Australian Vessels:
   Operating cash flow per calendar ship-day                            $    14,643        $    14,509     $    13,482
----------------------------------------------------------------------------------------------------------------------

Total Fleet:
   Operating cash flow per calendar ship-day                            $     5,177        $    11,171     $    12,682
----------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Nine  months  ended  December  31,  1999 figure  excludes  the $5.7  million
    adjustment   arising  from  the  change  in  voyage  estimate  from  a  load
    port-to-load port basis to a discharge port-to-discharge port basis.

Liquidity and Capital Resources

    The Company's total liquidity,  including cash,  restricted cash, marketable
securities  and  undrawn  long-term  lines of credit,  was $237.4  million as at
December  31,  1999,  up from $143.3  million as at March 31,  1999,  and $186.3
million as at March 31, 1998.  The  increase in liquidity  during the nine month
period ended December 31, 1999 was primarily the result of drawing an additional
$100 million under one of the Company's revolving credit facilities.

    Net cash flow from  operating  activities  decreased to $51.5 million in the
nine month period ended  December  31, 1999,  compared to $137.7  million in the
year ended March 31, 1999,  and $161.1 million in the year ended March 31, 1998.
This primarily reflects the change in TCE rates during these periods.

    Scheduled  debt  repayments  were $32.3 million during the nine month period
ended  December 31, 1999,  compared to $50.6 million in the year ended March 31,
1999 and $33.9 million in the year ended March 31, 1998.

    Dividends declared during the nine month period ended December 31, 1999 were
$23.17  million,  or $0.645 per share,  of which $23.15 million was paid in cash
and the  remainder  was paid in the form of shares of Common  Stock issued under
the Company's dividend reinvestment plan.

    During the nine month period ended December 31, 1999,  the Company  incurred
capital  expenditures  for vessels and  equipment of $23.3  million,  consisting
mainly of payments made towards the two newbuilding  double-hull Aframax tankers
delivered in July and September of 1999. Cash  expenditures  for drydocking were
$6.6 million in the nine month period ended  December 31, 1999 compared to $11.7
million in the year  ended  March 31,  1999 and $18.4  million in the year ended
March 31, 1998.  There were fewer  scheduled  drydockings  than usual during the
nine month period ended December 31, 1999.

    As part of its growth  strategy,  the  Company  will  continue  to  consider
strategic  opportunities,  including the  acquisition of additional  vessels and
expansion into new markets.  The Company may choose to pursue such opportunities
through internal growth, joint ventures, or business  acquisitions.  The Company
intends to finance any future  acquisitions  through various sources of capital,
including internally generated cash flow, existing credit lines, additional debt
borrowings, and the issuance of additional shares of capital stock.

Market Rate Risks

    The Company is exposed to market risk from  foreign  currency and changes in
interest  rate  fluctuations.  The Company uses  interest rate swaps and forward
foreign  currency  contracts to manage these risks,  but does not use  financial
instruments for trading or speculative purposes.

Interest Rate Risk

    The  Company  invests  its  cash  and  marketable  securities  in  financial
instruments  with  maturities of less than three months within the parameters of
its investment policy and guidelines.

    The Company uses  interest  rate swaps to manage the impact of interest rate
changes on earnings  and cash  flows.  The  differential  to be paid or received
under  these  swap  agreements  is  accrued  as  interest  rates  change  and is
recognized as an adjustment to interest expense.  Premiums and receipts, if any,
are  recognized  as  adjustments  to  interest  expense  over  the  lives of the
individual contracts.

Foreign Exchange Rate Risk

    The international tanker industry's  functional currency is the U.S. dollar.
Virtually all of the Company's  revenues and most of its operating  costs are in
U.S. dollars.  The Company incurs certain operating  expenses,  drydocking,  and
overhead costs in foreign currencies, the most significant of which are Japanese
yen,  Singapore  dollars,  Canadian  dollars,  Australian  dollars and Norwegian
kroner.  During the nine months ended December 31, 1999,  approximately 20.4% of
vessel and voyage costs,  overhead and drydock  expenditures were denominated in
these currencies.  However, the Company has the ability to shift its purchase of
goods and services from one country to another and,  thus,  from one currency to
another, on relatively short notice.

    The Company  enters into  forward  contracts as a hedge  against  changes in
certain foreign  exchange rates.  Market value gains and losses are deferred and
recognized during the period in which the hedged  transaction is recorded in the
accounts.

<TABLE>
<CAPTION>

                                              Contract                Carrying Amount                  Fair
(in USD 000's)                                 Amount             Asset           Liability            Value
-------------------------------------------------------------------------------------------------------------------
<S>                                     <C>                    <C>              <C>                 <C>
December 31, 1999
FX Forward Contracts                       $      4,448           $    -         $      -            $       (20)
Interest Rate Swap Agreements                   200,000                -                -                  4,488
Debt                                          1,085,167                -            1,085,167          1,060,417

March 31, 1999
FX Forward Contracts                       $      2,905           $    -         $      -            $       (22)
Debt                                            641,719                -              641,719            637,219
----------------------------------------- -------------------------------------------------------------------------
</TABLE>


Year 2000 Compliance

    The Company relies on computer  systems,  software,  databases,  third party
electronic data  interchange  interfaces and embedded  processors to operate its
business.  The  Company  successfully  implemented  a program to  systematically
address the Year 2000 problem.  The Company was Year 2000 compliant prior to the
rollover to the Year 2000. The Company will continue to monitor  electronic date
recognition issues.



<PAGE>

FORWARD-LOOKING STATEMENTS

    The Company's  Annual Report to Shareholders for 1999 and this Annual Report
on Form  20-F for the nine  months  ended  December  31,  1999  contain  certain
forward-looking  statements  (as such  term is  defined  in  Section  27A of the
Securities Act of 1933, as amended,  and Section 21E of the Securities  Exchange
Act of 1934, as amended) concerning future events and the Company's  operations,
performance  and  financial  condition,  including,  in  particular,  statements
regarding:  Aframax TCE rates in the near-term; tanker supply and demand; supply
and demand for oil; the Company's market share; future capital expenditures; the
Company's growth strategy and measures to implement such strategy; the Company's
competitive  strengths;  future  success of the Company;  cost savings and other
benefits that may be realized in connection with the Bona acquisition;  and Year
2000  compliance.  Words  such as  "expects,"  "intends,"  "plans,"  "believes,"
"anticipates,"  "estimates" and variations of such words and similar expressions
are intended to identify  forward-looking  statements.  These statements involve
known and unknown risks and are based upon a number of assumptions and estimates
which are inherently  subject to significant  uncertainties  and  contingencies,
many of which are beyond the control of the Company.  Actual  results may differ
materially from those expressed or implied by such  forward-looking  statements.
Factors that could cause actual results to differ  materially  include,  but are
not  limited  to:  changes  in  production  of or demand  for oil and  petroleum
products,  either generally or in particular regions; the cyclical nature of the
tanker  industry  and its  dependence  on oil  markets;  the  supply of  tankers
available  to  meet  the  demand  for  transportation  of  petroleum   products;
charterers'  preference for modern tankers;  greater than anticipated  levels of
tanker  newbuilding  orders or less than anticipated  rates of tanker scrapping;
changes in trading  patterns  significantly  impacting  overall  tanker  tonnage
requirements;  changes in typical  seasonal  variations in tanker charter rates;
the Company's dependence on spot oil voyages; competitive factors in the markets
in which the Company operates; environmental and other regulation; the Company's
potential  inability  to  achieve  and  manage  growth;  risks  associated  with
operations outside the United States; the potential  inability of the Company to
generate  internal cash flow and obtain  additional debt or equity  financing to
fund capital expenditures;  the Company's ability to successfully integrate Bona
into the Company's  operations;  and other factors detailed from time to time in
the  Company's  periodic  reports  filed with the U.S.  Securities  and Exchange
Commission.  The Company  expressly  disclaims any  obligation or undertaking to
release  publicly  any updates or revisions  to any  forward-looking  statements
contained  herein to  reflect  any  change in the  Company's  expectations  with
respect thereto or any change in events,  conditions or  circumstances  on which
any such statement is based.



<PAGE>

Item 10. Directors and Officers of the Registrant

Management

    The directors,  executive  officers and senior  management  personnel of the
Company are listed below:

<TABLE>
<CAPTION>

Name                                               Age    Position
<S>                                               <C>    <C>

Day, C. Sean                                        50    Director and Chairman of the Board
Moller, Bjorn                                       42    Director, President and Chief Executive Officer
Karlshoej, Axel                                     59    Director and Chairman Emeritus
Coady, Arthur F.                                    66    Director, EVP and Secretary
Dingman, Michael D.                                 68    Director
Feder, Morris L.                                    83    Director
Hsu, Steve G. K.                                    66    Director
Hsu, Thomas Kuo-Yuen                                53    Director
Hoegh, Leif O.                                      36    Director
Antturi, Peter S.                                   41    VP, Treasurer and Chief Financial Officer
Glendinning, David                                  46    SVP, Customer Service & Marine Project Development
Meldgaard, Mads T.                                  35    VP, Chartering
Westgarth, Graham                                   45    SVP, Marine Operations

</TABLE>

    Certain  biographical  information  about each of these  individuals  is set
forth below:

    Peter S. Antturi joined the Company in September 1991 as Manager, Accounting
and was promoted to the position of Controller in March 1992, and to his current
position of Vice  President,  Treasurer and Chief  Financial  Officer in October
1997.  Prior to joining the Company,  Mr.  Antturi held various  accounting  and
finance roles in the shipping industry since 1985.

    Arthur  F.  Coady is the  Executive  Vice  President  and  Secretary  of the
Company.  He has served as a Director of the Company  since 1989.  He joined the
Company after 30 years in private law practice in Canada,  having specialized in
corporate and  commercial  law. In July 1995, Mr. Coady was appointed a Director
of the Bahamas Maritime Authority.

    C. Sean Day has been a Director of the Company since  September 1998 and has
served as the Company's  Chairman of the Board since September 1999. He has also
been Chairman of the Board of Seagin  International LLC since April 1999 and was
President and Chief Executive  Officer of Navios  Corporation from 1989 to 1999.
Navios  Corporation  is  a  large  bulk  shipping  company  based  in  Stamford,
Connecticut. Prior to this, Mr. Day held a number of senior management positions
in the shipping and finance industry.  He is also on the boards of various other
companies.  Mr. Day is now engaged on a full-time  basis as a consultant  to the
trust group that currently exercises effective control over the Company.

     Michael D. Dingman is a private investor,  industrial company executive and
corporate  director.  He has served as a Director of the Company since May 1995.
He is Chairman and Chief  Executive  Officer of The Shipston  Group  Limited,  a
diversified  international  holding company, and a Director of Fisher Scientific
International  Inc.  and of Ford  Motor  Company.  Mr.  Dingman  also  serves as
Director/Executive to a number of other industrial concerns.

    Morris L. Feder has served as a Director of the Company  since June 1993. He
is President of Worldwide  Cargo Inc., a New  York-based  chartering  firm.  Mr.
Feder has been employed in the shipping industry in excess of 50 years, of which
43 were  spent  with  Maritime  Overseas  Corporation,  from which he retired as
Executive  Vice  President and Director in December  1991. He has also served as
Senior Vice President and Director of Overseas  Shipholding Group Inc. and was a
member of the Finance and Development  Committee of its Board of Directors.  Mr.
Feder is a member of the American Bureau of Shipping,  the Connecticut  Maritime
Association  and the  Association of Shipbrokers and Agents USA Inc., as well as
being a member of the Board of Directors of American Marine Advisors, Inc.

    Captain David Glendinning joined the Chartering  Department of the Company's
London office in January  1987.  Since then, he has worked in a number of senior
positions  within  the  organization,   including  Vice  President,   Commercial
Operations,  Vice  President,  Marine and  Commercial  Operations and currently,
Senior Vice President,  Customer  Service and Marine Project  Development  since
February 1999.  Captain  Glendinning  has 18 years sea service on oil tankers of
various  types and sizes and is a Master  Mariner with  British  Class 1 Foreign
Going Certificate of Competency.

     Leif O. Hoegh was  appointed as a Director in June 1999  concurrently  with
the Company's  acquisition of Bona  Shipholding  Ltd. He served as a Director of
Bona from  November  1993 to June 1999 and served as its Chairman from June 1998
to June 1999. Mr. Hoegh is Managing  Director of Leif Hoegh (U.K.)  Limited.  He
serves  as a  Director  of  Dannebrog  Rederi  AS and Hual AS and  serves as the
Chairman of Hoegh Capital Partners, Inc. and Unicool Ltd.

     Steve G. K. Hsu has served as a Director of the Company since June 1993. He
is Chairman of Oak Maritime  (H.K.) Inc.,  Limited,  a ship  management  company
based in Hong Kong and a Director of Sincere  Navigation  Corporation,  based in
Taiwan. Mr. Hsu is a Standing Supervisor of the National  Association of Chinese
Shipowners,  Taiwan, a member of the American Bureau of Shipping,  and a council
member of the International General Committee of Bureau Veritas.

    Thomas Kuo-Yuen Hsu has served as a Director of the Company since June 1993.
He has served 28 years with,  and is presently  Executive  Director of, Expedo &
Company  (London)  Ltd.,  which is part of the Expedo  Group of  Companies  that
manages a fleet of eight  vessels,  ranging  in size from  20,000 dwt to 280,000
dwt. He has been a  Committee  Director of the  Britannia  Steam Ship  Insurance
Association Limited since 1988.

    Axel  Karlshoej  is  President of Nordic  Industries,  a California  general
construction  firm with  which he has  served  for the past 27 years.  He is the
older brother of the late J. Torben  Karlshoej,  the founder of the Company.  He
has served as a Director and Chairman of the Board of Teekay since June 1993 and
Chairman Emeritus since stepping down as Chairman in September 1999.

    Mads T. Meldgaard joined the Company's Chartering Department in January 1986
and served in the European and Singapore  offices until December  1991,  when he
was appointed  Chartering  Manager in the Vancouver  office. In January 1994, he
was  promoted  to the  position  of  General  Manager,  Chartering,  and then to
Managing  Director  (Singapore) in September  1995. In July 1998, Mr.  Meldgaard
became Vice President, Chartering based in Vancouver.

    Bjorn Moller has served as Director,  President and Chief Executive  Officer
of the  Company  in April  1998.  Mr.  Moller  has over 21 years  experience  in
shipping and has served in senior management positions with the Company for more
than 12 years.  He has headed the  Company's  overall  operations  since January
1997, following his promotion to the position of Chief Operating Officer.  Prior
to this,  Mr. Moller  headed the  Company's  global  chartering  operations  and
business development activities.

    Captain  Graham  Westgarth  joined  the  Company  in  February  1999 as Vice
President,  Marine  Operations  and was  promoted to the position of Senior Vice
President, Marine Operations in December 1999. Captain Westgarth has 28 years of
shipping  industry  experience.  Eighteen  of  those  years  were  spent at sea,
including  5 years in a command  position.  He joined the  Company  from  Maersk
Company  (U.K.),  where he joined as Master in 1987  before  being  promoted  to
General Manager in 1994.


<PAGE>

Item 11. Compensation of Directors and Officers

    The aggregate  compensation  paid to the six  executive  officers and senior
managers  listed above was $964,766 for the nine months ended December 31, 1999,
a portion of which was  attributable to payments made pursuant to bonus plans of
the Company,  which consider both Company and individual performance for a given
period. For the nine months ended December 31, 1999, the Company  contributed an
aggregate  of  $81,313 to  provide  pension  and  similar  benefits  for the six
executive  officers and senior  managers  listed  above.  During the nine months
ended  December 31, 1999,  the Company  granted an aggregate of 203,000  options
with an exercise price of $16.875 per share and 200,000 options with an exercise
price of $16.9375 per share,  to the six executive  officers and senior managers
listed above under the Company's 1995 Stock Option Plan. The options expire June
1, 2009 and  September 2, 2009,  respectively,  ten years after the date of each
grant.

    Currently,  the  non-employee  Directors  of  the  Company  receive,  in the
aggregate, approximately $120,000 for their services plus reimbursement of their
out-of-pocket  expenses in each fiscal year during  which they are  directors of
the Company. During the nine months ended December 31, 1999, the Company granted
an aggregate of 60,000  options with an exercise  price of $16.875 per share and
200,000   options  with  an  exercise  price  of  $16.9375  per  share,  to  the
non-employee  Directors  under the Company's 1995 Stock Option Plan. The options
expire June 1, 2009 and September 2, 2009 respectively, ten years after the date
of each grant.

Item 12. Options to Purchase Securities From Registrant or Subsidiaries

    Teekay's  1995 Stock  Option Plan (the  "Plan")  entitles  certain  eligible
officers, employees (including senior sea staff) and directors of the Company to
receive options to acquire Common Stock of Teekay. As of March 14, 2000, a total
of 5,991,750 shares of Common Stock are reserved for issuance under the Plan. As
of such date,  options to purchase a total of  4,000,967  shares of Common Stock
were  outstanding,  with  options to purchase a total of  1,202,889  shares then
exercisable  and with the directors  and the six  executive  officers and senior
managers listed above holding  options to purchase a total of 1,445,000  shares,
of which 389,750 were  exercisable.  The outstanding  options are exercisable at
prices  ranging  from  $16.875  to $33.50 per  share,  with a  weighted  average
exercise  price of $22.46 per share,  and expire between July 19, 2005 and March
6, 2010, ten years after the date of each grant.

Item 13. Interest of Management in Certain Transactions

    As of December 31, 1999, Cirrus Trust and JTK Trust owned, in the aggregate,
approximately 45.5% of the Company's outstanding Common Stock. The activities of
Cirrus Trust and JTK Trust are under the common  supervision  of Messrs.  Coady,
Karlshoej and Thomas Hsu, directors of Teekay, and Mr. Shigeru Matsui, President
of Matsui & Company,  a Tokyo based ship brokerage  firm. The  beneficiaries  of
such trusts include charitable institutions and affiliated trusts.

    In April 1993,  Teekay acquired all of the issued and outstanding  shares of
common stock of Palm Shipping Inc. (now known as Teekay Chartering Ltd.) from an
affiliate of Teekay for a nominal purchase price, plus an amount to be paid at a
later date (up to a maximum of $5.0 million plus accrued  interest),  contingent
upon certain future events.


<PAGE>

                                     PART II

Item 14. Description of Securities to be Registered

    Not applicable.

                                    PART III

Item 15. Defaults Upon Senior Securities

    Not applicable.

Item 16. Changes in  Securities, Changes in  Security for  Registered Securities
         and Use of Proceeds

    Not applicable.

                                     PART IV

Item 17. Financial Statements

    Not applicable.

Item 18. Financial Statements

    See item 19(a) below.

Item 19. Financial Statements and Exhibits

(a) The following financial statements and schedule, together with the report of
    Ernst & Young thereon, are filed as part of this Annual Report:

                                                                            Page

Report of Independent Public Accountants.....................................F-1
Consolidated Financial Statements
Consolidated Statements of Income and Retained Earnings......................F-2
Consolidated Balance Sheets..................................................F-3
Consolidated Statements of Cash Flows........................................F-4
Notes to the Consolidated Financial Statements...............................F-5
Schedule A to the Consolidated Financial Statements.........................F-15

    All other schedules for which provision is made in the applicable accounting
regulations  of the Securities  and Exchange  Commission  are not required,  are
inapplicable or have been disclosed in the Notes to the  Consolidated  Financial
Statements and therefore have been omitted.

(b) The following exhibits are filed as part of this Annual Report:


               2.1  Amended and  Restated  Articles of  Incorporation  of Teekay
                    Shipping Corporation.
               2.2  Articles of Amendment of Articles of Incorporation of Teekay
                    Shipping Corporation.
               2.3  Amended and Restated Bylaws of Teekay Shipping Corporation.
             **2.4  Registration  Rights  Agreement  among  Teekay,   Tradewinds
                    Trust  Co.  Ltd.,  as  Trustee  for the  Cirrus  Trust,  and
                    Worldwide Trust Services Ltd., as Trustee for the JTK Trust.
             **2.5  Specimen of Teekay Common Stock Certificate.
             ##2.6  Indenture  dated January 29, 1996 among Teekay,  VSSI Oceans
                    Inc.,  VSSI Atlantic Inc.,  VSSI Appian Inc.,  Senang Spirit
                    Inc., Exuma Spirit Inc.,  Nassau Spirit Inc.,  Andros Spirit
                    Inc.  and  United  States  Trust  Company  of New  York,  as
                    Trustee.
             ##2.7  Specimen of Teekay's  8.32% First  Preferred  Ship  Mortgage
                    Notes Due 2008.
           ##++2.8  Bahamian  Statutory  Ship Mortgage dated January 29, 1996
                    by Nassau  Spirit Inc. to United States Trust Company of New
                    York.
           ##++2.9  Deed of Covenants dated January 29, 1996 by Nassau Spirit
                    Inc. to United States Trust Company of New York.
             #2.10  First  Preferred  Ship  Mortgage  dated  January 29, 1996 by
                    VSSI Oceans Inc. to United States Trust Company of New York,
                    as Trustee.
          ##++2.11  Assignment  of Time Charter  dated  January 29, 1996 by
                    Nassau  Spirit Inc. to United  States  Trust  Company of New
                    York, as Trustee.
          ##++2.12  Assignment  of  Insurance  dated  January  29, 1996 by
                    Nassau  Spirit Inc. to United  States  Trust  Company of New
                    York, as Trustee.
            ##2.13  Pledge  Agreement and Irrevocable  Proxy dated January 29,
                    1996 by Teekay in favor of United  States  Trust  Company of
                    New York, as Trustee.
          ##++2.14  Guarantee  dated January 29, 1996 by Nassau Spirit Inc.
                    in favor of United  States  Trust  Company  of New York,  as
                    Trustee.
          ##++2.15  Assignment of Freights and Hires dated January 29, 1996
                    by Nassau  Spirit Inc. to United States Trust Company of New
                    York, as Trustee.
          ##++2.16  Cash Collateral Account Agreement dated January 29, 1996
                    between  Nassau  Spirit Inc. and United States Trust Company
                    of New York, as Trustee.
            ##2.17  Investment  Account Agreement dated January 29, 1996 between
                    Teekay  and United  States  Trust  Company  of New York,  as
                    Trustee.
            **2.18  1995 Stock Option Plan.
            **2.19  Form of Indemnification  Agreement between Teekay and each
                    of its officers and directors.
            **2.20  Reducing  Revolving Credit Facility  Agreement dated June 6,
                    1995 between Chiba Spirit Inc.,  VSSI Sun Inc.,  VSSI Gemini
                    Inc.,  VSSI  Carriers  Inc.,  Mendana  Spirit Inc.,  Musashi
                    Spirit Inc., VSSI Condor Inc., Palm Monarch Inc., VSSI Drake
                    Inc., VSSI Tokyo Inc., VSSI Marine Inc., Tasman Spirit Inc.,
                    Vancouver  Spirit Inc. and Elcano Spirit Inc. and Den norske
                    Bank AS, Christiania Bank og Kreditkasse, acting through its
                    New York Branch, and Nederlandse Scheepshypotheskbank N.V.
             +2.21  Charter Party, as amended,  dated September 21, 1989 between
                    Palm Shipping Inc. and BP Shipping Limited.
             #2.22  Time  Charter,  as amended,  dated July 3, 1995 between VSSI
                    Oceans Inc. and Palm Shipping Inc.
             #2.23  Time  Charter,  as amended,  dated  January 4, 1994  between
                    VSSI Atlantic Inc. and Palm Shipping Inc.
             #2.24  Time  Charter,  as amended,  dated  February 1, 1992 between
                    VSSI Appian Inc. and Palm Shipping Inc.
             #2.25  Time  Charter,  as amended,  dated  December 1, 1993 between
                    Senang Spirit Inc. and Palm Shipping Inc.
             #2.26  Time  Charter,  as  amended,  dated  August 1, 1992  between
                    Exuma Spirit Inc. and Palm Shipping Inc.
             #2.27  Time Charter,  as amended,  dated May 1, 1992 between Nassau
                    Spirit Inc. and Palm Shipping Inc.
             #2.28  Time  Charter,  as amended,  dated  November 1, 1992 between
                    Andros Spirit Inc. and Palm Shipping Inc.
           #++2.29  Management  Agreement,  as  amended,  dated June 1, 1992
                    between Teekay Shipping Limited and Nassau Spirit Inc.
             @2.30  Agreement,  dated  October 3, 1996,  for a U.S.  $90,000,000
                    Term  Loan   Facility  to  be  made   available  to  certain
                    subsidiaries of Teekay  Shipping  Corporation by Christiania
                    Bank og Kreditkasse, acting through its New York Branch, The
                    Bank of Nova Scotia, and Banque Indosuez.
             @2.31  Agreement,  dated October 18, 1996, for a U.S.  $120,000,000
                    Term  Loan   Facility  to  be  made   available  to  certain
                    subsidiaries  of Teekay  Shipping  Corporation by Den Norske
                    Bank ASA, Nederlandse  Scheepshypothesbank N.V., The Bank of
                    New York, and Midland Bank PLC.
            @@2.32  Agreement,  dated January 26, 1998, for a U.S.  $200,000,000
                    Reducing  Revolving  Credit Facility to be made available to
                    certain   wholly-owned   subsidiaries   of  Teekay  Shipping
                    Corporation  by Den  Norske  Bank ASA,  Christiania  Bank Og
                    Kreditkasse  ASA,  New  York  Branch,  and the  Bank of Nova
                    Scotia.
           @@@2.33  Agreement,  dated March 26, 1999,  for the  amalgamation  of
                    Northwest  Maritime Inc., a 100% owned  subsidiary of Teekay
                    Shipping Corporation, and Bona Shipholding Ltd.
              2.34  Agreement,  dated April 1997,  for a U.S.  $30,000,000  Term
                    Loan Facility to be made available to VSSI Australia Limited
                    by Rabo Australia Limited.
              2.35  Agreement,  dated December 18, 1997, for a U.S.  $44,000,000
                    Term  Loan  Facility  to be  made  available  to  Barrington
                    (Australia)  Pty  Limited  and  Palmerston  (Australia)  Pty
                    Limited by Rabo Australia Limited.
              2.36  Amended and Restated  Reimbursement  Agreement,  dated April
                    16,  1998,   among   Barrington   (Australia)  Pty  Limited,
                    Palmerston  (Australia) Pty Limited, VSSI Australia Limited,
                    VSSI Transport Inc. and Alliance  Chartering Pty Limited and
                    Nedship  Bank  (America)  N.V.,  The  Bank of New  York  and
                    Landesbank Schleswig-Holstein.
               2.37 Amendment  No. 1, dated May 1999,  to Amended  and  Restated
                    Reimbursement   Agreement   dated   April  16,   1998  among
                    Barrington  (Australia) Pty Limited,  Palmerston (Australia)
                    Pty Limited, VSSI Australia Limited, VSSI Transport Inc. and
                    Alliance  Chartering  Pty Limited and Nedship Bank (America)
                    N.V.,    The    Bank   of   New    York    and    Landesbank
                    Schleswig-Holstein.
              2.38  Amended and Restated  Agreement,  date June 11, 1999,  for a
                    $500,000,000  Revolving Loan between Bona Shipholding  Ltd.,
                    Chase Manhattan plc, Citibank  International plc and various
                    other banks.

<PAGE>

              2.39  Amendment  and  Restatement  Agreement,  dated June 11,1999,
                    relating to a U.S.  $500,000,000  Revolving  Loan  Agreement
                    between Bona Shipholding Ltd., Chase Manhattan plc, Citibank
                    International plc and various other banks.
              27.1  Financial Data Schedule
----------
**  Previously  filed as an exhibit to the Company's  Registration  Statement on
    Form F-1 (Registration No. 33-7573-4),  filed with the SEC on July 14, 1995,
    and hereby incorporated by reference to such Registration Statement.

 +  Previously filed as an exhibit to the Company's  Registration  Statement on
    Form F-1 (Registration No. 33-68680),  as declared  effective by the SEC on
    November  29,  1993,   and  hereby   incorporated   by  reference  to  such
    Registration Statement.

++  A schedule  attached to this  exhibit  identifies  all other  documents  not
    required  to  be  filed  as  exhibits   because  such  other  documents  are
    substantially  identical  to this  exhibit.  The  schedule  also sets  forth
    material details by which the omitted documents differ from this exhibit.

#   Previously  filed as an exhibit to the Company's  Registration  Statement on
    Form F-3  (Registration  No.  33-65139),  filed with the SEC on January  19,
    1996, and hereby incorporated by reference to such Registration Statement.

##  Previously  filed as an exhibit to the Company's  Annual Report on Form 20-F
    (File  No.  1-12874),  filed  with  the  SEC on  June 4,  1996,  and  hereby
    incorporated by reference to such Annual Report.

@   Previously  filed as an exhibit to the Company's  Annual Report on Form 20-F
    (File  No.  1-12874),  filed  with  the SEC on June  11,  1997,  and  hereby
    incorporated by reference to such Annual Report.

@@  Previously  filed as an exhibit to the Company's  Annual Report on Form 20-F
    (File  No.  1-12874),  filed  with  the  SEC on May  20,  1998,  and  hereby
    incorporated by reference to such Annual Report.

@@@ Previously  filed as an exhibit to the Company's  Annual Report on Form 20-F
    (File  No.1-12874),  filed  with  the  SEC on  June  11,  1999,  and  hereby
    incorporated by reference to such Annual Report.


<PAGE>


                                    SIGNATURE

    Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant  certifies that it meets all of the requirements for filing
on Form 20-F and has duly caused  this Annual  Report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                                    TEEKAY SHIPPING CORPORATION

                                    By: /s/ Peter Antturi
                                    --------------------------------------------
                                    Peter Antturi
                                    Vice President and Chief Financial Officer
                                    (Principal Financial and Accounting Officer)


Dated: March 30, 2000



<PAGE>
                                      F-1

                                AUDITORS' REPORT

To the Shareholders of
TEEKAY SHIPPING CORPORATION

    We have  audited  the  accompanying  consolidated  balance  sheets of Teekay
Shipping  Corporation  and  subsidiaries  as of December  31, 1999 and March 31,
1999, and the related  consolidated  statements of income and retained  earnings
and cash flows for the nine month  period  ended  December  31, 1999 and for the
years ended March 31, 1999 and 1998.  Our audits  also  included  the  financial
schedule  listed in the  Index:  Item  19(a).  These  financial  statements  and
schedule 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  auditing  standards  generally
accepted in the United States.  Those standards require that we plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of material misstatement. 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,  the financial  statements referred to above present fairly,
in all material respects, the consolidated financial position of Teekay Shipping
Corporation and subsidiaries as at December 31, 1999 and March 31, 1999, and the
consolidated results of their operations and their cash flows for the nine month
period ended  December 31, 1999 and for the years ended March 31, 1999 and 1998,
in  conformity  with  accounting  principles  generally  accepted  in the United
States. Also, in our opinion, the related schedule,  when considered in relation
to the  basic  financial  statements  taken as a whole,  presents  fairly in all
material aspects the information set forth therein.


Nassau, Bahamas,                            /s/ ERNST & YOUNG
February 11, 2000                            Chartered Accountants



<PAGE>
                                      F-2

                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

             CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
            (in thousands of U.S. dollars, except per share amounts)

<TABLE>
<CAPTION>

                                                                           Nine Months Ended     Year Ended       Year Ended
                                                                             December 31,         March 31,        March 31,
                                                                                 1999               1999             1998
                                                                                   $                  $               $
                                                                             -----------------------------------------------

<S>                                                                               <C>                <C>           <C>
NET VOYAGE REVENUES
Voyage revenues                                                                    377,882            411,922       406,036
Voyage expenses                                                                    129,532             93,511       100,776
----------------------------------------------------------------------------------------------------------------------------

Net voyage revenues                                                                248,350            318,411       305,260
----------------------------------------------------------------------------------------------------------------------------

OPERATING EXPENSES
Vessel operating expenses                                                           98,780             84,397        70,510
Time charter hire expense                                                           30,681             29,666        10,627
Depreciation and amortization                                                       68,299             93,712        94,941

General and administrative                                                          27,018             25,002        21,542
----------------------------------------------------------------------------------------------------------------------------

                                                                                   224,778            232,777       197,620
----------------------------------------------------------------------------------------------------------------------------

INCOME FROM VESSEL OPERATIONS                                                       23,572             85,634       107,640
----------------------------------------------------------------------------------------------------------------------------
OTHER ITEMS
Interest expense                                                                   (44,996)           (44,797)      (56,269)
Interest income                                                                      5,842              6,369         7,897

Other income (loss) (note 11)                                                       (4,013)             5,506        11,236
----------------------------------------------------------------------------------------------------------------------------

                                                                                   (43,167)           (32,922)      (37,136)
----------------------------------------------------------------------------------------------------------------------------

Net income (loss) before extraordinary loss                                        (19,595)            52,712        70,504

Extraordinary loss on bond redemption (note 6)                                         -               (7,306)          -
----------------------------------------------------------------------------------------------------------------------------

Net income (loss)                                                                  (19,595)            45,406        70,504
Retained earnings, beginning of the period                                         446,897            428,102       382,178
----------------------------------------------------------------------------------------------------------------------------

                                                                                   427,302            473,508       452,682

Dividends declared                                                                 (23,172)           (26,611)      (24,580)
----------------------------------------------------------------------------------------------------------------------------

Retained earnings, end of the period                                               404,130            446,897       428,102
----------------------------------------------------------------------------------------------------------------------------

Basic Earnings per Common Share (note 9)


o Net income (loss) before extraordinary loss                                        (0.54)             1.70           2.46


o Net income (loss)                                                                  (0.54)             1.46           2.46

Diluted Earnings per Common Share (note 9)

o Net income (loss) before extraordinary loss                                        (0.54)             1.70           2.44

o Net income (loss)                                                                  (0.54)             1.46           2.44
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.

<PAGE>
                                      F-3

                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                         (in thousands of U.S. dollars)

<TABLE>
<CAPTION>

                                                                                              As at             As at
                                                                                           December 31,       March 31,
                                                                                               1999             1999
                                                                                                $                 $
                                                                                         ----------------------------------

<S>                                                                                      <C>               <C>

ASSETS
Current
Cash and cash equivalents                                                                       220,327           118,435
Marketable securities (note 4)                                                                     -                8,771
Accounts receivable                                                                              30,753            22,995
Prepaid expenses and other assets                                                                29,579            16,195
---------------------------------------------------------------------------------------------------------------------------

Total current assets                                                                            280,659           166,396
---------------------------------------------------------------------------------------------------------------------------

Marketable securities (note 4)                                                                    6,054             5,050

Vessels and equipment (notes 1 and 6)
At cost, less accumulated depreciation of $624,727
    (March 31, 1999 -  $557,946)                                                              1,666,755         1,218,916
Advances on newbuilding contracts                                                                 -                55,623
---------------------------------------------------------------------------------------------------------------------------

Total vessels and equipment                                                                   1,666,755         1,274,539
---------------------------------------------------------------------------------------------------------------------------
Investment in joint venture                                                                      19,402              -
Other assets                                                                                      9,814             6,235
---------------------------------------------------------------------------------------------------------------------------

                                                                                              1,982,684         1,452,220
---------------------------------------------------------------------------------------------------------------------------


LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable                                                                                 20,431            11,926
Accrued liabilities (note 5)                                                                     39,515            19,285
Current portion of long-term debt (note 6)                                                       66,557            39,058
---------------------------------------------------------------------------------------------------------------------------

Total current liabilities                                                                       126,503            70,269
---------------------------------------------------------------------------------------------------------------------------
Long-term debt (note 6)                                                                       1,018,610           602,661
Other long-term liabilities                                                                       3,400             1,900
---------------------------------------------------------------------------------------------------------------------------

Total liabilities                                                                             1,148,513           674,830
---------------------------------------------------------------------------------------------------------------------------

Minority interest                                                                                 2,104              -
Stockholders' equity
Capital stock (note 9)                                                                          427,937           330,493
Retained earnings                                                                               404,130           446,897
---------------------------------------------------------------------------------------------------------------------------

Total stockholders' equity                                                                      832,067           777,390
---------------------------------------------------------------------------------------------------------------------------

                                                                                              1,982,684         1,452,220
---------------------------------------------------------------------------------------------------------------------------

Commitments and contingencies (notes 7 and 10)

</TABLE>

The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.



<PAGE>
                                      F-4

                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                         (in thousands of U.S. dollars)

<TABLE>
<CAPTION>


                                                                        Nine Months Ended      Year Ended       Year Ended
                                                                          December 31,          March 31,        March 31,
                                                                              1999                1999             1998
                                                                                $                   $                $
                                                                          ----------------------------------------------------
<S>                                                                             <C>             <C>           <C>

Cash and cash equivalents provided by (used for)

OPERATING ACTIVITIES
Net income (loss)                                                               (19,595)          45,406            70,504
Add (deduct) charges to operations not requiring a
  payment of cash and cash equivalents:
Depreciation and amortization                                                    68,299           93,712            94,941
Gain on disposition of assets                                                      -              (7,117)          (14,392)
Loss on bond redemption                                                            -               7,306             2,175
Equity income                                                                      (721)             -                 (45)
Future income taxes                                                               1,500            1,900                -
Other                                                                             1,134            1,218             2,735
Change in non-cash working capital items related to
  operating activities (note 12)                                                    896           (4,717)            5,201
------------------------------------------------------------------------------------------------------------------------------

Net cash flow from operating activities                                          51,513          137,708           161,119
------------------------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
Proceeds from long-term debt                                                    100,000          230,000           208,600
Scheduled repayments of long-term debt                                          (32,252)         (50,577)          (33,876)
Prepayments of long-term debt                                                   (10,000)        (268,034)         (150,655)
Net proceeds from issuance of Common Stock                                          -             68,751             5,126
Cash dividends paid                                                             (23,150)         (26,222)          (15,990)

Capitalized loan costs                                                              -               (690)             (994)
------------------------------------------------------------------------------------------------------------------------------

Net cash flow from financing activities                                          34,598          (46,772)           12,211
------------------------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
Expenditures for vessels and equipment                                          (23,313)         (85,445)         (197,199)
Expenditures for drydocking                                                      (6,598)         (11,749)          (18,376)
Proceeds from disposition of assets                                                 -             23,435            33,863
Net cash acquired through purchase of
  Bona Shipholding Ltd. (note 3)                                                 51,774              -                 -
Acquisition costs related to purchase of
  Bona Shipholding Ltd. (note 3)                                                (13,806)             -                 -
Net cash flow from investment                                                       -                -               6,380
Proceeds on sale of available-for-sale securities                                13,724           13,305            14,854
Purchases of available-for-sale securities                                       (6,000)             -             (42,154)
Other                                                                               -                -                (268)
------------------------------------------------------------------------------------------------------------------------------


Net cash flow from investing activities                                          15,781          (60,454)         (202,900)
------------------------------------------------------------------------------------------------------------------------------

Increase (decrease) in cash and cash equivalents                                101,892           30,482           (29,570)

Cash and cash equivalents, beginning of the period                              118,435           87,953           117,523
------------------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of the period                                    220,327           118,435           87,953
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.


<PAGE>
                                      F-5

                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
   (all tabular amounts stated in thousands of U.S. dollars, other than share
                               or per share data)

1.  Summary of Significant Accounting Policies

    Basis of presentation

    The consolidated  financial statements have been prepared in accordance with
accounting  principles generally accepted in the United States. They include the
accounts of Teekay Shipping Corporation ("Teekay"),  which is incorporated under
the laws of the  Republic  of the  Marshall  Islands,  and its  wholly  owned or
controlled  subsidiaries  (the "Company").  Significant  intercompany  items and
transactions have been eliminated upon consolidation.

    The  preparation  of  financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the amounts  reported in the financial  statements  and
accompanying notes. Actual results could differ from those estimates.

    Certain of the  comparative  figures have been  reclassified to conform with
the presentation adopted in the current period.

    Reporting currency

     The  consolidated  financial  statements are stated in U.S. dollars because
the Company  operates in  international  shipping markets which utilize the U.S.
dollar as the functional currency.

    Change in fiscal year end

    The  Company  changed  its  fiscal  year end from March 31 to  December  31,
effective  December 31, 1999.  The following is a summary of selected  financial
information for the comparative twelve and nine month periods ended December 31,
1999 and 1998:

<TABLE>
<CAPTION>

                                                  Twelve Months Ended     Twelve Months Ended      Nine Months Ended
                                                      December 31,            December 31,           December 31,
                                                           1999                    1998                  1998
                                                       (unaudited)             (unaudited)            (unaudited)
                                                            $                       $                      $
                                                 ----------------------------------------------------------------------
<S>                                                    <C>                      <C>                      <C>

RESULTS OF OPERATIONS
Net voyage revenues                                   318,348                    327,016                 248,413
Income from vessel operations                          34,189                    103,660                  75,017
Net income (loss) before extraordinary loss           (17,723)                    66,451                  50,840
Net income (loss)                                     (17,723)                    59,145                  43,534
Net income (loss) before extraordinary loss
  per common share
- basic and diluted                                     (0.50)                      2.19                    1.65
Net income (loss) per common share
- basic and diluted                                     (0.50)                      1.95                    1.41

CASH FLOWS
Net cash flow from operating activities                71,633                    151,779                 117,588
Net cash flow from financing activities                76,948                    (74,407)                (89,122)
Net cash flow from investing activities                 5,613                   (127,372)                (50,286)

</TABLE>




<PAGE>
                                      F-6

                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  (all tabular amounts stated in thousands of U.S. dollars, other than share or
                                 per share data)

    Operating revenues and expenses

    Voyage  revenues and expenses are recognized on the percentage of completion
method of  accounting.  The Company has refined its  estimation  process  from a
load-to-load  basis to a  discharge-to-discharge  basis under the  percentage of
completion method to more precisely reflect net voyage revenues. This refinement
in accounting  estimate  resulted in an increase in net voyage  revenues of $5.7
million,  or 16 cents per share,  for the nine month period  ended  December 31,
1999.

    Estimated losses on voyages are provided for in full at the time such losses
become evident.  The consolidated balance sheets reflect the deferred portion of
revenues and expenses applicable to subsequent periods.

    Voyage  expenses  comprise  all  expenses  relating to  particular  voyages,
including   bunker  fuel  expenses,   port  fees,  canal  tolls,  and  brokerage
commissions.  Vessel operating  expenses  comprise all expenses  relating to the
operation of vessels,  including  crewing,  repairs and maintenance,  insurance,
stores, lubes, communications, and miscellaneous expenses.

    Marketable securities

    The  Company's  investments  in  marketable  securities  are  classified  as
available-for-sale  securities  and are  carried at fair value.  Net  unrealized
gains or losses on available-for-sale securities, if material, are reported as a
separate component of stockholders' equity.

    Vessels and equipment

    All  pre-delivery  costs incurred during the  construction of  newbuildings,
including  interest costs,  and supervision and technical costs are capitalized.
The acquisition  cost and all costs incurred to restore used vessel purchases to
the  standard   required  to  properly  service  the  Company's   customers  are
capitalized. Depreciation is calculated on a straight-line basis over a vessel's
useful life from the date a vessel is initially placed in service.

    Effective  April 1, 1999, the Company  revised the estimated  useful life of
its vessels from 20 years to 25 years,  consistent with most other public tanker
companies.  This  change in  accounting  estimate  resulted  in a  reduction  of
depreciation expense of $22.5 million, or 62 cents per share, for the nine month
period ended December 31, 1999.

    Interest  costs  capitalized  to vessels  and  equipment  for the nine month
period  ended  December  31,  1999 and the years  ended  March 31, 1999 and 1998
aggregated $1,710,000, $3,018,000, and $283,000, respectively.

    Expenditures  incurred during  drydocking are capitalized and amortized on a
straight-line basis over the period until the next anticipated drydocking.  When
significant  drydocking  expenditures  recur prior to the expiry of this period,
the remaining balance of the original drydocking is expensed in the month of the
subsequent  drydocking.  Drydocking expenses amortized for the nine month period
ended  December 31, 1999 and the years ended March 31, 1999 and 1998  aggregated
$6,275,000, $8,583,000, and $11,737,000, respectively.

    Investment in joint ventures

    The  Company  has  a  50%  participating   interest  in  the  joint  venture
(Soponata-Teekay  Limited).  The joint venture is accounted for using the equity
method whereby the investment is carried at the Company's original cost plus its
proportionate share of undistributed earnings.

    Investment in the Panamax OBO Pool

    All oil/bulk/ore  carriers ("OBO") owned by the Company are operated through
a Panamax OBO Pool. The participants in the Pool are the companies  contributing
vessel  capacity to the Pool. The voyage  revenues and expenses of these vessels
have been included on a 100% basis in the consolidated financial statements. The
minority  pool  participants'  share of the  result  has been  deducted  as time
charter hire expense.


<PAGE>
                                      F-7

                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Cont'd)
 (all tabular amounts stated in thousands of U.S. dollars, other than share or
                                per share data)

    Other assets

    Loan costs,  including fees, commissions and legal expenses, are capitalized
and  amortized  on a straight  line basis  over the term of the  relevant  loan.
Amortization of loan costs is included in interest expense.

    Interest rate swap agreements

    The  differential  to be paid or  received,  pursuant to interest  rate swap
agreements,  is  accrued  as  interest  rates  change  and is  recognized  as an
adjustment to interest expense. Premiums and receipts, if any, are recognized as
adjustments to interest expense over the lives of the individual contracts.

    Forward contracts

    The Company  enters into  forward  contracts as a hedge  against  changes in
certain foreign  exchange rates.  Market value gains and losses are deferred and
recognized during the period in which the hedged  transaction is recorded in the
accounts.

    Cash and cash equivalents

    The Company classifies all highly liquid investments with a maturity date of
three months or less when purchased as cash and cash equivalents.

     Cash interest paid during the nine month period ended December 31, 1999 and
the years ended March 31, 1999 and 1998 totaled  $63,086,000,  $48,527,000,  and
$55,141,000, respectively.

    Income taxes

    The legal jurisdictions of the countries in which Teekay and the majority of
its   subsidiaries   are   incorporated   do  not  impose   income   taxes  upon
shipping-related  activities.  The Company's Australian ship-owning subsidiaries
are subject to income taxes (see Note 11).  The Company  accounts for such taxes
using the  liability  method  pursuant  to  Statement  of  Financial  Accounting
Standards No.
109, " Accounting for Income Taxes".

    Accounting for Stock-Based Compensation

    Under  Statement of Financial  Accounting  Standards  No. 123 ("SFAS  123"),
"Accounting   for   Stock-Based   Compensation",   disclosures   of  stock-based
compensation   arrangements  with  employees  are  required  and  companies  are
encouraged  (but not  required) to record  compensation  costs  associated  with
employee stock option awards, based on estimated fair values at the grant dates.
The Company has chosen to continue to account for stock-based compensation using
the  intrinsic  value  method  prescribed  in APB  Opinion  No.  25  ("APB  25")
"Accounting  for Stock Issued to  Employees"  and has disclosed the required pro
forma  effect on net income and earning per share as if the fair value method of
accounting  as  prescribed  in SFAS 123 had been  applied  (see Note  9--Capital
Stock).

    Comprehensive income

    The Company  follows  Statement of Financial  Accounting  Standards No. 130,
"Reporting  Comprehensive Income", which establishes standards for reporting and
displaying comprehensive income and its components in the consolidated financial
statements.  For the nine month  period ended  December 31, 1999,  and the years
ended  March 31,  1999 and 1998,  the  Company  did not have any  components  of
comprehensive income.




<PAGE>
                                      F-8

                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Cont'd)
 (all tabular amounts stated in thousands of U.S. dollars, other than share or
                                per share data)

    Recent accounting pronouncements

    In June 1998, the FASB issued  Statement of Financial  Accounting  Standards
No. 133, "Accounting for Derivative  Instruments and Hedging Activities",  which
establishes  new  standards  for  recording  derivatives  in interim  and annual
financial   statements.   This  statement   requires  recording  all  derivative
instruments as assets or liabilities, measured at fair value. Statement No. 133,
as amended by FASB  Statement No. 137, is effective  for fiscal years  beginning
after June 15, 2000.  Management has not determined the impact, if any, that the
adoption  of the  new  statement  will  have  on  the  consolidated  results  of
operations or financial position of the Company.

2.   Business Operations

    The  Company is engaged in the ocean  transportation  of  petroleum  cargoes
worldwide through the ownership and operation of a fleet of tankers.  All of the
Company's revenues are earned in international markets.

    One customer, an international oil company,  accounted for 13% ($48,140,000)
of the Company's consolidated voyage revenues during the nine month period ended
December  31,  1999.  No  other  customer  accounted  for  more  than 10% of the
Company's  consolidated  voyage revenues.  During the year ended March 31, 1999,
three customers, all international oil companies, individually accounted for 12%
($51,411,000),  12% ($50,727,000) and 10%  ($42,797,000),  respectively,  of the
Company's consolidated voyage revenues.  During the year ended March 31, 1998, a
single  customer,   also  an  international  oil  company,   accounted  for  14%
($56,357,000) of the Company's consolidated voyage revenues.

3.   Acquisition of Bona Shipholding Ltd.

    On June 11,  1999,  Teekay  purchased  Bona  Shipholding  Ltd.  ("Bona") for
aggregate  consideration  (including  estimated  transaction  expenses  of $19.0
million) of $450.3 million,  consisting of $39.9 million in cash, $294.0 million
of assumed debt (net of cash acquired of $91.7 million) and the balance of $97.4
million  in shares of  Teekay's  Common  Stock.  Bona's  operating  results  are
reflected in these  financial  statements  commencing  the effective date of the
acquisition.

    The  following  table  shows  comparative  summarized  condensed  pro  forma
financial information for the nine month period ended December 31, 1999, and for
the year ended March 31, 1999 and gives effect to the  acquisition  as if it had
taken place April 1, 1998.

<TABLE>
<CAPTION>


                                                                                              Pro Forma
                                                                                 Nine Months Ended      Year Ended
                                                                                    December 31,         March 31,
                                                                                        1999               1999
                                                                                     (unaudited)        (unaudited)
                                                                                          $                  $
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>                 <C>

Net voyage revenues                                                                     272,469            463,696
Income from vessel operations                                                            26,127            132,122
Net income (loss) before extraordinary loss                                             (22,482)            86,505
Net income (loss)                                                                       (22,482)            79,199
Net income (loss) before extraordinary loss per common share
- basic and diluted                                                                       (0.59)              2.31
Net income (loss) per common share
- basic and diluted                                                                       (0.59)              2.11
---------------------------------------------------------------------------------------------------------------------

</TABLE>


<PAGE>
                                      F-9

                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Cont'd)
   (all tabular amounts stated in thousands of U.S. dollars, other than share
                               or per share data)

4.       Investments in Marketable Securities
<TABLE>
<CAPTION>
                                                                         Gross           Gross          Approximate
                                                                       Unrealized      Unrealized       Market and
                                                          Cost           Gains           Losses       Carrying Value
                                                            $              $               $                 $
                                                      -----------------------------------------------------------------
<S>                                                    <C>            <C>            <C>            <C>
December 31, 1999
Available-for-sale securities......................        6,051           6                (3)              6,054
March 31, 1999
Available-for-sale securities......................       13,865                           (44)             13,821
</TABLE>

    The cost and approximate  market value of  available-for-sale  securities by
contractual  maturity,  as at December 31, 1999 and March 31, 1999, are shown as
follows:
<TABLE>
<CAPTION>
                                                                                                        Approximate
                                                                                                        Market and
                                                                                          Cost        Carrying Value
                                                                                            $                $
                                                                                      --------------------------------
<S>                                                                                  <C>            <C>
December 31, 1999
Less than one year .............................................................              -              -
Due after one year through five years ..........................................            6,051          6,054
                                                                                      -----------    -----------
                                                                                            6,051          6,054
                                                                                      ===========    ===========
March 31, 1999
Less than one year .............................................................            8,771          8,771
Due after one year through five years...........................................            5,094          5,050
                                                                                      -----------    -----------
                                                                                           13,865         13,821
                                                                                      ===========    ===========
</TABLE>

5.       Accrued Liabilities
<TABLE>
<CAPTION>
                                                                                      December 31,       March 31,
                                                                                         1999              1999
                                                                                           $                 $
                                                                                    ---------------------------------
<S>                                                                                  <C>            <C>
Voyage and vessel...............................................................         12,469            6,868
Interest........................................................................         12,619            7,552
Payroll and benefits............................................................         14,427            4,865
                                                                                    -----------  --------------------
                                                                                         39,515           19,285
</TABLE>

6.   Long-Term Debt
<TABLE>
<CAPTION>
                                                                                      December 31,       March 31,
                                                                                         1999              1999
                                                                                           $                 $
                                                                                    -----------------------------------
<S>                                                                                  <C>             <C>
Revolving Credit Facilities.....................................................          634,000        169,000
First Preferred Ship Mortgage Notes (8.32%)
  U.S. dollar debt due through 2008.............................................          225,000        225,000

Term Loans U.S. dollar debt due through 2009 ...................................          226,167        247,719
                                                                                       -----------   ------------
                                                                                        1,085,167        641,719
Less current portion............................................................           66,557         39,058
                                                                                       -----------   ------------
                                                                                        1,018,610        602,661
</TABLE>

<PAGE>
                                      F-10

                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Cont'd)
   (all tabular amounts stated in thousands of U.S. dollars, other than share
                               or per share data)

     The Company has two long-term Revolving Credit Facilities (the "Revolvers")
available,  which,  as at December 31, 1999,  provided for  borrowings  of up to
$645.0 million.  Interest  payments are based on LIBOR (December 31, 1999: 6.0%;
March 31, 1999: 5.0%) plus a margin  depending on the financial  leverage of the
Company;  at December 31, 1999,  the margins ranged between 0.6% and 0.9% (March
31,1999:  0.5%). The amount available under the Revolvers reduces  semi-annually
with final balloon reductions in 2006 and 2008. The Revolvers are collateralized
by first priority  mortgages  granted on forty of the Company's  Aframax tankers
and oil/bulk/ore carriers, together with certain other related collateral, and a
guarantee from the Company for all amounts outstanding under the Revolvers.

     The 8.32% First  Preferred  Ship  Mortgage  Notes due February 1, 2008 (the
"8.32% Notes") are  collateralized by first preferred  mortgages on seven of the
Company's Aframax tankers,  together with certain other related collateral,  and
are guaranteed by seven  subsidiaries  of Teekay that own the mortgaged  vessels
(the "8.32% Notes Guarantor Subsidiaries") to a maximum of 95% of the fair value
of their net assets. As at December 31, 1999, the fair value of these net assets
approximated $182.0 million. The 8.32% Notes are also subject to a sinking fund,
which will  retire  $45.0  million  principal  amount of the 8.32% Notes on each
February 1, commencing 2004.

     Upon the 8.32%  Notes  achieving  Investment  Grade  Status and  subject to
certain  other   conditions,   the  guarantees  of  the  8.32%  Notes  Guarantor
Subsidiaries will terminate,  all of the collateral  securing the obligations of
the Company and the 8.32% Notes Guarantor  Subsidiaries  under the Indenture and
the Security Documents will be released (whereupon the Notes will become general
unsecured  obligations of the Company) and certain covenants under the Indenture
will no longer be applicable to the Company.

     In August 1998, the Company  redeemed the remaining  $98.7 million of the 9
5/8% First  Preferred Ship Mortgage Notes (the "9 5/8% Notes") which resulted in
an extraordinary loss of $7.3 million, or 24 cents per share, for the year ended
March 31, 1999.

The Company has several term loans  outstanding,  which, as at December 31,1999,
totalled $226.2 million.  Interest payments are based on LIBOR plus a margin. At
December  31,1999,  the margins ranged  between 0.65% and 1.25%.  The term loans
reduce in quarterly or  semi-annual  payments  with varying  maturities  through
2009.  All term  loans of the  Company  are  collateralized  by first  preferred
mortgages on the vessels to which the loans relate,  together with certain other
collateral, and guarantees from Teekay.

     As at December 31, 1999,  the Company was committed to a series of interest
rate swap agreements  whereby $200.0 million of the Company's floating rate debt
was swapped with fixed rate obligations  having an average remaining term of 3.8
years,  expiring  between  December 2001 and February 2005.  These  arrangements
effectively  change the Company's  interest  rate exposure on $200.0  million of
debt from a floating  LIBOR rate to an average fixed rate of 6.28%.  The Company
is exposed to credit loss in the event of non-performance by the counter parties
to the interest rate swap agreements;  however,  the Company does not anticipate
non-performance by any of the counter parties.

Among other matters,  the long-term debt agreements  generally  provide for such
items as  maintenance  of certain vessel market value to loan ratios and minimum
consolidated  financial  covenants,  prepayment  privileges  (in some cases with
penalties),  and restrictions  against the incurrence of additional debt and new
investments by the individual  subsidiaries  without prior lender  consent.  The
amount of Restricted Payments,  as defined, that the Company can make, including
dividends and purchases of its own capital stock,  is limited as of December 31,
1999, to $188.0 million.  Certain of the loan agreements require a minimum level
of free cash be  maintained.  As at  December  31,  1999,  this amount was $26.0
million.

     The aggregate  annual  long-term debt principal  repayments  required to be
made for the five fiscal years  subsequent to December 31, 1999 are  $66,557,000
(fiscal   2000),   $92,196,000   (fiscal  2001),   $90,043,000   (fiscal  2002),
$132,157,000 (fiscal 2003), and $114,078,000 (fiscal 2004).



<PAGE>
                                      F-11

                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Cont'd)
   (all tabular amounts stated in thousands of U.S. dollars, other than share
                               or per share data)

7.   Leases

    Charters-out

    Time charters to third parties of the Company's vessels are accounted for as
operating  leases.  The minimum future  revenues to be received on time charters
currently in place are  $82,204,000  (fiscal 2000),  $72,158,000  (fiscal 2001),
$57,830,000 (fiscal 2002), $39,035,000 (fiscal 2003), $39,140,000 (fiscal 2004),
and $132,063,000 thereafter.

    The minimum future revenues should not be construed to reflect total charter
hire revenues for any of the years.

    Charters-in

    Minimum  commitments  under vessel operating leases are $22,795,000  (fiscal
2000) and $2,981,000 (fiscal 2001).

8.   Fair Value of Financial Instruments

    Carrying amounts of all financial instruments  approximate fair market value
except for the following:

    Long-term debt -- The fair values of the Company's fixed rate long-term debt
are based on either quoted market prices or estimated using discounted cash flow
analyses,  based on rates  currently  available  for debt with similar terms and
remaining maturities.

    Interest rate swap  agreements  and foreign  exchange  contracts -- The fair
value of interest rate swaps and foreign  exchange  contracts,  used for hedging
purposes,  is the  estimated  amount  that the Company  would  receive or pay to
terminate  the  agreements at the reporting  date,  taking into account  current
interest  rates,  the current credit  worthiness of the swap counter parties and
foreign exchange rates.

    The  estimated  fair  value of the  Company's  financial  instruments  is as
follows:

<TABLE>
<CAPTION>


                                                            December 31, 1999                  March 31, 1999
                                                     -----------------------------------------------------------------
                                                        Carrying          Fair            Carrying         Fair
                                                         Amount           Value            Amount          Value
                                                           $                $                $               $
                                                     -----------------------------------------------------------------
<S>                                                    <C>            <C>              <C>               <C>
Cash, cash equivalents and marketable
  securities
 ....................................................       226,381         226,381          132,256       132,256
Long-term debt .....................................     1,085,167       1,060,417          641,719       637,219
Interest rate swap agreements (note 6) .............          -              4,488             -             -
Foreign currency contracts (note 10) ...............          -                (20)            -              (22)
</TABLE>

     The Company  transacts  interest rate swap and foreign  currency  contracts
with investment  grade rated financial  institutions  and requires no collateral
from these institutions.



<PAGE>
                                      F-12

                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Cont'd)
   (all tabular amounts stated in thousands of U.S. dollars, other than share
                               or per share data)

9.   Capital Stock

<TABLE>
<CAPTION>
                                                                                        Common          Thousands
                                                                                         Stock          of shares
                                                                                           $                #
                                                                                    ---------------------------------
<S>                                                                                  <C>            <C>
Authorized
25,000,000  Preferred Stock with a par value of $1 per share 725,000,000  Common
Stock with a par value of $0.001 per share

Issued and outstanding
Balance March 31, 1997 .........................................................          247,637         28,328
Reinvested Dividends............................................................            8,590            273
Exercise of Stock Options.......................................................            5,126            232
                                                                                    -------------     ----------
Balance March 31, 1998..........................................................          261,353         28,833
June 15, 1998 Share Offering
   2,800,000 shares at $24.7275 per share of Common Stock
  (net of share issue costs) ...................................................           68,700          2,800
Reinvested Dividends............................................................              389             13
Exercise of Stock Options.......................................................               51              2
                                                                                    -------------     ----------
Balance March 31, 1999..........................................................          330,493         31,648
June 11, 1999 Common Stock
  issued on acquisition of Bona ................................................           97,422          6,415
Reinvested Dividends ...........................................................               22              1
                                                                                    -------------     ----------
Balance December 31, 1999 ......................................................          427,937         38,064
                                                                                    =============     ==========
</TABLE>


     In June 1998, the Company sold 2,800,000 shares in a public  offering.  The
Company used the net proceeds from the offering of approximately  $69.0 million,
together with other funds, to redeem the outstanding 9 5/8% Notes.

     In September 1998, the Company's  shareholders approved an amendment to the
Company's  1995 Stock  Option Plan (the "Plan") to increase the number of shares
of Common Stock  reserved and  available  for future grants of options under the
Plan by an additional 1,800,000 shares. As of December 31, 1999, the Company had
reserved  3,642,000 shares of Common Stock for issuance upon exercise of options
granted  pursuant to the Plan.  During the nine month period ended  December 31,
1999 and the years ended March 31, 1999 and 1998,  the Company  granted  options
under the Plan to acquire up to 1,463,500,  573,000 and 359,750 shares of Common
Stock (the "Grants"),  respectively,  to certain  eligible  officers,  employees
(including senior sea staff),  and directors of the Company.  The options have a
10-year term and vest equally over four years from the date of grant.



<PAGE>
                                      F-13

                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Cont'd)
   (all tabular amounts stated in thousands of U.S. dollars, other than share
                               or per share data)

     A summary of the Company's stock option activity,  and related  information
for the nine month period ended  December 31, 1999 and the years ended March 31,
1999 and 1998 are as follows:
<TABLE>
<CAPTION>
                                           December 31, 1999            March 31, 1999              March 31, 1998
                                       ----------------------------------------------------------------------------------
<S>                                     <C>    <C>               <C>       <C>                 <C>       <C>
                                       Options   Weighted-Average  Options   Weighted-Average  Options   Weighted-Average
                                       (000's)   Exercise Price    (000s)    Exercise Price    (000s)     Exercise Price
                                          #             $             #             $             #              $
                                       ----------------------------------------------------------------------------------

Outstanding-beginning of period          1,729         26.46        1,161         26.66         1,056           23.40
Grant..................................  1,464         17.11          573         26.05           360           33.50
Exercised..............................    -              -            (2)        21.50          (232)          22.02
Forfeited..............................    (94)        21.12           (3)        30.44           (23)          30.39
                                        ------   --------------    -------    ---------------  --------      -----------
Outstanding-end of period..............  3,099         22.14        1,729         26.46         1,161           26.66
                                        ======   ==============    =======    ===============  ========      ===========

Exercisable at end of period ..........  1,019         25.35          731         24.08           565           22.14
                                        ======   ==============    =======    ===============  ========      ===========
Weighted-average fair value
  of options granted during
  the period (per option) .............                 3.88                       5.93                          8.13
                                                 ==============               ===============                ===========
</TABLE>

     Exercise prices for the options  outstanding as of December 31, 1999 ranged
from  $16.88  to  $33.50.  These  options  have  a  weighted-average   remaining
contractual life of 8.18 years.

    As the exercise  price of the Company's  employee  stock options  equals the
market price of underlying  stock on the date of grant, no compensation  expense
is recognized under APB 25.

    Had the Company recognized compensation costs for the Grants consistent with
the methods  recommended  by SFAS 123 (see Note  1--Accounting  for  Stock-Based
Compensation),  the  Company's  net income and  earnings  per share for the nine
month period ended December 31, 1999 and the years ended March 31, 1999 and 1998
would have been stated at the pro forma amounts as follows:
<TABLE>
<CAPTION>
                                                      Nine Months Ended         Year Ended           Year Ended
                                                         December 31,            March 31,            March 31,
                                                             1999                  1999                 1998
                                                              $                      $                    $
                                                     ---------------------------------------------------------------
<S>                                                    <C>                      <C>                 <C>
Net income (loss):
As reported..........................................       (19,595)              45,406                 70,504
Pro forma............................................       (21,828)              43,715                 69,090

Basic earnings per common share:
As reported..........................................         (0.54)                1.46                   2.46
Pro forma............................................         (0.60)                1.41                   2.41

Diluted earnings per common share:
As reported..........................................         (0.54)                1.46                   2.44
Pro forma............................................         (0.60)                1.41                   2.39
</TABLE>

    Basic earnings per share is based upon the following weighted average number
of common shares outstanding:  36,384,000 shares for the nine month period ended
December 31,  1999;  31,063,000  shares for the year ended March 31,  1999;  and
28,655,000 shares for the year ended March 31, 1998. Diluted earnings per share,
which  gives  effect to the  aforementioned  stock  options,  is based  upon the
following  weighted  average  number of common  shares  outstanding:  36,405,000
shares for the nine month period ended December 31, 1999;  31,063,000 shares for
the year ended March 31, 1999;  and  28,870,000  shares for the year ended March
31, 1998.



<PAGE>
                                      F-14

                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Cont'd)
   (all tabular amounts stated in thousands of U.S. dollars, other than share
                               or per share data)

    The fair values of the Grants were estimated on the dates of grant using the
Black-Scholes  option-pricing  model with the following  assumptions:  risk-free
average  interest  rates of 5.8% for the nine month  period  ended  December 31,
1999;  and  5.40%,  and  6.29%,  for the years  ended  March 31,  1999 and 1998,
respectively;  dividend yield of 3.0%;  expected volatility of 25%; and expected
lives of 5 years.

10.  Commitments and Contingencies

    The Company has guaranteed 50% of the outstanding mortgage debt in the joint
venture company, Soponata-Teekay Limited, totalling $28.8 million as at December
31, 1999.

    The Company  has  guaranteed  its share of  committed,  uncalled  capital in
certain limited partnerships totalling $3.1 million as at December 31, 1999.

    As at December  31,  1999,  the Company was  committed  to foreign  exchange
contracts for the forward  purchase of  approximately  Japanese Yen 100 million,
Singapore  dollars  2.4  million  and  Norwegian  Kroner  16.0  million for U.S.
dollars,  at an average rate of Japanese Yen 102.06 per U.S.  dollar,  Singapore
dollar  1.65  per U.S.  dollar  and  Norwegian  Kroner  7.99  per  U.S.  dollar,
respectively,   for  the  purpose  of  hedging   accounts  payable  and  accrued
liabilities.

11.  Other Income (Loss)
<TABLE>
<CAPTION>
                                                               Nine Months Ended      Year Ended        Year Ended
                                                                 December 31,          March 31,        March 31,
                                                                     1999                1999              1998
                                                                       $                   $                $
                                                             ---------------------------------------------------------
<S>                                                         <C>                     <C>              <C>
Gain on disposition of assets.................................          -                 7,117           14,392
Equity in joint venture ......................................          721                 -                 45
Write off of loan costs due to refinancing....................          -                   -             (1,308)
Loss on extinguishment of debt................................          -                   -             (2,175)
Future income taxes ..........................................       (1,500)             (1,900)              -
Miscellaneous.................................................       (3,234)                289              282
                                                                ------------            --------        ---------
                                                                     (4,013)              5,506           11,236
                                                                ============            ========       ==========
</TABLE>

12.  Change in Non-Cash Working Capital Items Related to Operating Activities
<TABLE>
<CAPTION>
                                                               Nine Months Ended      Year Ended        Year Ended
                                                                 December 31,          March 31,        March 31,
                                                                     1999                1999              1998
                                                                       $                   $                $
                                                             ---------------------------------------------------------
<S>                                                         <C>                      <C>             <C>
Accounts receivable............................................      (5,462)              1,332              2,484
Prepaid expenses and other assets..............................         307              (2,409)               880
Accounts payable...............................................      (6,571)             (4,238)             5,814
Accrued liabilities............................................      12,622                 598             (3,977)
                                                                 -----------           ---------          ---------
                                                                        896              (4,717)             5,201
                                                                 ===========           =========          =========
</TABLE>


<PAGE>
                                      F-15

                                                                     SCHEDULE A
                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

              CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
                         (in thousands of U.S. dollars)

<TABLE>
<CAPTION>
                                                                 Nine Months Ended December 31, 1999
                                          ----------------------------------------------------------------------------------
                                                             8.32% Notes                                        Teekay
                                               Teekay         Guarantor     Non-Guarantor                   Shipping Corp.
                                           Shipping Corp.   Subsidiaries    Subsidiaries     Eliminations   & Subsidiaries
                                                 $                $               $               $                $
                                          ----------------------------------------------------------------------------------
<S>                                       <C>               <C>            <C>              <C>               <C>
Net voyage revenues                                 -            28,589         349,222         (129,461)        248,350
Operating expenses                                  493          24,056         310,304         (110,075)        224,778
                                          ----------------------------------------------------------------------------------
     Income (loss) from vessel operations          (493)          4,533          38,918          (19,386)         23,572

Net interest income (expense)                   (14,420)             87         (24,821)             -           (39,154)
Equity in net income (loss) of subsidiaries      (4,682)             -             -               4,682             -
Other income (loss)                                 -                -           (4,013)             -            (4,013)
                                          ----------------------------------------------------------------------------------
Net (loss) income                               (19,595)          4,620          10,084          (14,704)        (19,595)
Retained earnings (deficit), beginning
     of the period                              446,897         (33,570)        359,286         (325,716)        446,897
Dividends declared                              (23,172)             -             -                 -           (23,172)
                                          ==================================================================================
Retained earnings (deficit),  end of
     the period                                 404,130         (28,950)        369,370         (340,420)        404,130
                                          ==================================================================================



                                                                      Year Ended March 31, 1999
                                           ---------------------------------------------------------------------------------
                                                             8.32% Notes                                        Teekay
                                               Teekay         Guarantor     Non-Guarantor                   Shipping Corp.
                                           Shipping Corp.   Subsidiaries    Subsidiaries     Eliminations   & Subsidiaries
                                                  $               $               $               $                $
                                           ---------------------------------------------------------------------------------
Net voyage revenues                                 -            37,820         461,394        (180,803)         318,411
Operating expenses                                  356          37,214         376,010        (180,803)         232,777
                                           ---------------------------------------------------------------------------------
     Income (loss) from vessel operations          (356)            606          85,384            -              85,634

Net interest income (expense)                   (22,857)            148         (15,719)           -             (38,428)
Equity in net income of  subsidiaries            75,698              -             -           (75,698)              -
Other income                                        227              -           30,710        (25,431)            5,506
                                           ---------------------------------------------------------------------------------
Net income before extraordinary loss             52,712             754         100,375       (101,129)           52,712
Extraordinary loss on bond redemption            (7,306)             -             -               -              (7,306)
                                           ---------------------------------------------------------------------------------
Net income                                       45,406             754         100,375       (101,129)          45,406
Retained earnings (deficit),  beginning
of the year                                     428,102         (34,324)        258,911       (224,587)         428,102
Dividends declared                              (26,611)             -             -               -            (26,611)
                                           =================================================================================
Retained earnings (deficit), end of the
year                                            446,897         (33,570)        359,286       (325,716)         446,897
                                           =================================================================================
</TABLE>


<PAGE>

                                      F-15A

                                                                      SCHEDULE A
                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

              CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
                         (in thousands of U.S. dollars)

<TABLE>
<CAPTION>
                                                                       Year Ended March 31, 1998
                                           ----------------------------------------------------------------------------------
                                                             8.32% Notes                                         Teekay
                                               Teekay         Guarantor     Non-Guarantor                    Shipping Corp.
                                           Shipping Corp.   Subsidiaries     Subsidiaries    Eliminations    & Subsidiaries
                                                  $               $               $                $               $
                                           ----------------------------------------------------------------------------------
<S>                                          <C>              <C>               <C>            <C>              <C>
Net voyage revenues                                 -           36,443          495,650          (226,833)        305,260
Operating expenses                                 362          34,344          389,747          (226,833)        197,620
                                           ----------------------------------------------------------------------------------
     Income (loss) from vessel operations         (362)          2,099          105,903              -            107,640

Net interest income (expense)                  (33,011)            391          (15,752)             -            (48,372)
Equity in net income of  subsidiaries          105,936             -               -             (105,891)             45
Other income (loss)                             (2,059)            -             29,179           (15,929)         11,191
                                           ----------------------------------------------------------------------------------
Net income                                      70,504           2,490          119,330          (121,820)         70,504
Retained earnings (deficit), beginning
of the year                                    382,178         (18,124)         155,181          (137,057)        382,178
Dividends declared                             (24,580)        (18,690)         (15,600)           34,290         (24,580)
                                           ==================================================================================
Retained earnings (deficit), end of the
year                                           428,102         (34,324)         258,911          (224,587)        428,102
                                           ==================================================================================
</TABLE>
   --------------
   (See Note 6)



<PAGE>
                                      F-16
                                                                      SCHEDULE A
                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

                            CONDENSED BALANCE SHEETS
                         (in thousands of U.S. dollars)
<TABLE>
<CAPTION>
                                                                      As at December 31, 1999
                                         ----------------------------------------------------------------------------------
                                                            8.32% Notes                                        Teekay
                                              Teekay         Guarantor    Non-Guarantor                    Shipping Corp.
                                          Shipping Corp.    Subsidiaries   Subsidiaries     Eliminations   & Subsidiaries
                                                 $               $              $                $                $
                                         ----------------------------------------------------------------------------------
<S>                                     <C>                 <C>            <C>            <C>                 <C>
     ASSETS
Cash and cash equivalents                            210       39,652           180,465           -              220,327
Other current assets                                  42          582           162,084       (102,376)           60,332
                                         ----------------------------------------------------------------------------------
     Total current assets                            252       40,234           342,549       (102,376)          280,659
Vessels and equipment (net)                                   294,800         1,371,955           -            1,666,755
Advances due from subsidiaries                   121,415         -                 -          (121,415)             -
Other assets (principally marketable securities
     and investments in subsidiaries)            943,389         -               15,873       (943,394)           15,868
Investment in joint venture                         -            -               19,402           -               19,402
                                         ==================================================================================
                                               1,065,056      335,034         1,749,779     (1,167,185)        1,982,684
                                         ==================================================================================
     LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities                                7,989          991           227,331       (109,808)          126,503
Long-term debt                                   225,000          -             797,010           -            1,022,010
Due to (from) affiliates                            -          (6,337)          211,255       (204,918)             -
                                         ----------------------------------------------------------------------------------
     Total liabilities                           232,989       (5,346)        1,235,596       (314,726)        1,148,513
                                         ----------------------------------------------------------------------------------
Minority Interest                                   -             -               2,104           -                2,104
Stockholders' Equity
Capital stock                                    427,937           23             5,943         (5,966)          427,937
Contributed capital                                 -         369,307           136,766       (506,073)             -
Retained earnings (deficit)                      404,130      (28,950)          369,370       (340,420)          404,130
                                         ----------------------------------------------------------------------------------
     Total stockholders' equity                  832,067      340,380           512,079       (852,459)          832,067
                                         ==================================================================================
                                               1,065,056      335,034         1,749,779     (1,167,185)        1,982,684
                                         ==================================================================================

                                                                       As at March 31, 1999
                                         ----------------------------------------------------------------------------------
                                                            8.32% Notes                                        Teekay
                                              Teekay         Guarantor     Non-Guarantor                   Shipping Corp.
                                          Shipping Corp.    Subsidiaries   Subsidiaries     Eliminations   & Subsidiaries
                                                 $               $               $               $                $
                                         ----------------------------------------------------------------------------------
     ASSETS
Cash and cash equivalents                           5             33,313         85,117             -            118,435
Other current assets                               28                768        142,414          (95,249)         47,961
                                         ----------------------------------------------------------------------------------
     Total current assets                          33             34,081        227,531          (95,249)        166,396
Vessels and equipment (net)                       -              306,764        967,775             -          1,274,539
Advances due from subsidiaries                213,498               -              -            (213,498)           -
Other assets (principally marketable securities
     and investments in subsidiaries)         792,084               -            11,290         (792,089)         11,285
                                         ==================================================================================
                                            1,005,615            340,845      1,206,596       (1,100,836)      1,452,220
                                         ==================================================================================
     LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities                             3,225              1,095        161,944          (95,995)         70,269
Long-term debt                                225,000                -          379,561             -            604,561
Due to (from) affiliates                         -                 3,990        163,096         (167,086)           -
                                         ----------------------------------------------------------------------------------
     Total liabilities                        228,225              5,085        704,601         (263,081)         674,830
                                         ----------------------------------------------------------------------------------
Stockholders' Equity
Capital stock                                 330,493                 23          5,943           (5,966)         330,493
Contributed capital                              -               369,307        136,766         (506,073)            -
Retained earnings (deficit)                   446,897            (33,570)       359,286         (325,716)         446,897
                                         ----------------------------------------------------------------------------------
     Total stockholders' equity               777,390            335,760        501,995         (837,755)         777,390
                                         ==================================================================================
                                            1,005,615            340,845      1,206,596       (1,100,836)       1,452,220
                                         ==================================================================================
</TABLE>
 --------------
 (See Note 6)
<PAGE>
                                      F-17
                                                                      SCHEDULE A
                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

                       CONDENSED STATEMENTS OF CASH FLOWS
                         (in thousands of U.S. dollars)
<TABLE>
<CAPTION>
                                                                       Nine Months Ended December 31, 1999
                                                 --------------------------------------------------------------------------------
                                                                 8.32% Notes                                         Teekay
                                                     Teekay       Guarantor     Non-Guarantor                    Shipping Corp.
                                                 Shipping Corp.  Subsidiaries    Subsidiaries    Eliminations    & Subsidiaries
                                                       $              $               $                $               $
                                                 --------------------------------------------------------------------------------
<S>                                               <C>            <C>            <C>                 <C>            <C>
Cash and cash equivalents provided by (used for)
OPERATING ACTIVITIES
                                                 --------------------------------------------------------------------------------
     Net cash flow from operating activities            (9,844)      16,674           44,683                           51,513
                                                 --------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt                               -           -             100,000                          100,000
Prepayments of long-term debt                              -           -             (10,000)                         (10,000)
Repayments of long-term debt                               -           -             (32,252)                         (32,252)
Other                                                   49,933      (10,327)         (62,756)                         (23,150)
                                                 --------------------------------------------------------------------------------
     Net cash flow from financing activities            49,933      (10,327)          (5,008)                          34,598
                                                 --------------------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures for vessels and equipment                    -              (8)         (29,903)                         (29,911)
Net cash flow from purchase of Bona Shipholding Ltd.
     (net of cash acquired of $91,658)                 (39,884)        -                -                             (39,884)
Other                                                                                 85,576                           85,576
                                                 --------------------------------------------------------------------------------
     Net cash flow from investing activities           (39,884)          (8)          55,673                           15,781
                                                 --------------------------------------------------------------------------------
Increase in cash and cash equivalents                      205        6,339           95,348                          101,892
Cash and cash equivalents, beginning of the period           5       33,313           85,117                          118,435
                                                 ================================================================================
Cash and cash equivalents, end of the period               210       39,652          180,465                          220,327
                                                 ================================================================================

                                                                            Year Ended March 31, 1999
                                                 --------------------------------------------------------------------------------
                                                                 8.32% Notes                                         Teekay
                                                     Teekay       Guarantor     Non-Guarantor                    Shipping Corp.
                                                 Shipping Corp.  Subsidiaries    Subsidiaries    Eliminations    & Subsidiaries
                                                       $              $               $                $               $
                                                 --------------------------------------------------------------------------------
Cash and cash equivalents provided by (used for)
OPERATING ACTIVITIES
                                                 --------------------------------------------------------------------------------
     Net cash flow from operating activities          (24,829)        21,261         141,276                          137,708
                                                 --------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt                             -              -            230,000                          230,000
Prepayments of long-term debt                        (108,034)          -           (160,000)                        (268,034)
Repayments of long-term debt                          (20,645)          -            (29,932)                         (50,577)
Net proceeds from issuance of Common Stock             68,751           -               -                              68,751
Other                                                  84,740          3,252        (114,904)                         (26,912)
                                                 --------------------------------------------------------------------------------
     Net cash flow from financing activities           24,812          3,252         (74,836)                         (46,772)
                                                 --------------------------------------------------------------------------------

INVESTING ACTIVITIES
Expenditures for vessels and equipment                   -            (1,887)        (95,307)                         (97,194)
Other                                                    -              -             36,740                           36,740
                                                 --------------------------------------------------------------------------------
     Net cash flow from investing activities             -            (1,887)        (58,567)                         (60,454)
                                                 --------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents          (17)        22,626           7,873                           30,482
Cash and cash equivalents, beginning of the year           22         10,687          77,244                           87,953
                                                 ================================================================================
Cash and cash equivalents, end of the year                  5         33,313          85,117                          118,435
                                                 ================================================================================
</TABLE>




<PAGE>
                                      F-17A

                                                                      SCHEDULE A
                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

                       CONDENSED STATEMENTS OF CASH FLOWS
                         (in thousands of U.S. dollars)
<TABLE>
<CAPTION>
                                                                           Year Ended March 31, 1998
                                                ---------------------------------------------------------------------------------
                                                                 8.32% Notes                                         Teekay
                                                    Teekay        Guarantor     Non-Guarantor                    Shipping Corp.
                                                Shipping Corp.   Subsidiaries    Subsidiaries    Eliminations    & Subsidiaries
                                                       $              $               $                $               $
                                                ---------------------------------------------------------------------------------
<S>                                               <C>            <C>            <C>                 <C>            <C>
Cash and cash equivalents provided by (used for)
OPERATING ACTIVITIES
                                                ---------------------------------------------------------------------------------
     Net cash flow from operating activities        (32,624)          23,489        170,254                          161,119
                                                ---------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt                           -                -           208,600                          208,600
Prepayments of long-term debt                       (29,056)            -          (121,599)                        (150,655)
Repayments of long-term debt                           -                -           (33,876)                         (33,876)
Net proceeds from issuance of Common Stock            5,126             -              -                               5,126
Other                                                22,254          (17,968)       (21,270)                         (16,984)
                                                ---------------------------------------------------------------------------------
     Net cash flow from financing activities         (1,676)         (17,968)        31,855                           12,211
                                                ---------------------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures for vessels and equipment                 -              (3,566)      (212,009)                        (215,575)
Other                                                34,290             -           (21,615)                          12,675
                                                ---------------------------------------------------------------------------------
     Net cash flow from investing activities         34,290           (3,566)      (233,624)                        (202,900)
                                                ---------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents        (10)           1,955        (31,515)                         (29,570)
Cash and cash equivalents, beginning of the year         32            8,732        108,759                          117,523
                                                =================================================================================
Cash and cash equivalents, end of  the year              22           10,687         77,244                           87,953
                                                =================================================================================
</TABLE>
    --------------
  (See Note 6)