##### 









UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549




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FORM 20-F

|           |  |                                                                                                 
|---------- |  | ------------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                                 
|o          |  | REGISTRATION STATEMENT PURSUANT TO SECTION
	12(b) or (g)
	OF THE SECURITIES EXCHANGE ACT OF 1934
|          
|or        
|          
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR
	15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934          
|          
|           |  | For the fiscal year ended December 31,
	2001                                                    
|          
|or        
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13
	OR 15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934      

Commission file number 1-12874



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TEEKAY SHIPPING CORPORATION

(Exact name of Registrant as specified in its
charter)


Republic of The Marshall Islands

(Jurisdiction of incorporation or
organization)


TK House, Bayside Executive Park, West Bay
Street & Blake Road, P.O. Box AP-59213,
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                  
|8.875% Senior Notes due 2011                       |  | 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.

39,550,326 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  þ     No  o

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

Item 17  o     Item 18  þ



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TABLE OF CONTENTS



|                                             |                                                                                       |  |  |  |  |  |  | 
|-------------------------------------------- | ------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                      
|                                             | Item 1. Identity of Directors, Senior Management and Advisors                        
|                                             | Item 2. Offer Statistics and Expected Timetable                                      
|                                             | Item 3. Key Information                                                              
|                                             | Item 4. Information on the Company                                                   
|                                             | Item 5. Operating and Financial Review and Prospects                                 
|                                             | Item 6. Directors, Senior Management and Employees                                   
|                                             | Item 7. Major Shareholders and Related Party Transactions                            
|                                             | Item 8. Financial Information                                                        
|                                             | Item 9. The Offer and Listing                                                        
|                                             | Item 10. Additional Information                                                      
|                                             | Item 11. Quantitative and Qualitative Disclosures About Market Risk                  
|                                             | Item 12. Description of Securities Other than Equity Securities                      
|PART II                                     
|                                             | Item 13. Defaults, Dividend Arrearages and Delinquencies                             
|                                             | Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
|                                             | Item 15. [Reserved]                                                                  
|                                             | Item 16. [Reserved]                                                                  
|PART III                                    
|                                             | Item 17. Financial Statements                                                        
|                                             | Item 18. Financial Statements                                                        
|                                             | Item 19. Exhibits                                                                    
|SIGNATURE                                   
|Annual Report period ended December 31, 2001
|Amendment and Restatement Agreement         
|List of Significant Subsidiaries            

TEEKAY SHIPPING CORPORATION

INDEX TO REPORT ON FORM 20-F

|          |  |                                                                               |  |      |                | 
|--------- |  | ----------------------------------------------------------------------------- |  | ---- | -------------- | 
|          |  |                                                                               |  | Page
|          |  |                                                                               |  |     
|PART I.   |  |                                                                               |  |     
|Item 1.   |  | Identity of Directors, Senior Management and
	Advisors                        |  |      | Not applicable | 
|Item 2.   |  | Offer Statistics and Expected Timetable                                       |  |      | Not applicable | 
|Item 3.   |  | Key Information                                                               |  |      | 3              | 
|Item 4.   |  | Information on the Company                                                    |  |      | 9              | 
|Item 5.   |  | Operating and Financial Review and Prospects                                  |  |      | 21             | 
|Item 6.   |  | Directors, Senior Management and Employees                                    |  |      | 27             | 
|Item 7.   |  | Major Shareholders and Related Party Transactions                             |  |      | 31             | 
|Item 8.   |  | Financial Information                                                         |  |      | 32             | 
|Item 9.   |  | The Offer and Listing                                                         |  |      | 33             | 
|Item 10.  |  | Additional Information                                                        |  |      | 34             | 
|Item 11.  |  | Quantitative and Qualitative Disclosures About
	Market Risk                   |  |      | 36             | 
|Item 12.  |  | Description of Securities Other than Equity
	Securities                       |  |      | Not applicable | 
|PART II.  |  |                                                                               |  |     
|Item 13.  |  | Defaults, Dividend Arrearages and Delinquencies                               |  |      | 38             | 
|Item 14.  |  | Material Modifications to the Rights of Security
	Holders and Use of Proceeds |  |      | 38             | 
|Item 15.  |  | [Reserved]                                                                    |  |      | Not applicable | 
|Item 16.  |  | [Reserved]                                                                    |  |      | Not applicable | 
|PART III. |  |                                                                               |  |     
|Item 17.  |  | Financial Statements                                                          |  |      | Not applicable | 
|Item 18.  |  | Financial Statements                                                          |  |      | 38             | 
|Item 19.  |  | Exhibits                                                                      |  |      | 38             | 
|Signatur  |  | e                                                                             |  |      | 41             | 

1



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PART I

This report should be read in conjunction with
the consolidated financial statements and accompanying notes
included in this report.

In addition to historical information, this
report contains forward-looking statements that involve risks
and uncertainties. Such forward-looking statements relate to
future events and the Companys operations, objectives,
expectations, performance, financial condition and intention.
When used in this report, the words expects,
intends, plans, believes,
anticipates, estimates and variations of
such words and similar expressions are intended to identify
forward-looking statements. Forward-looking statements in this
report include, in particular, statements regarding: Aframax TCE
(or time charter equivalent) rates, tanker supply
and demand; supply and demand for oil; future capital
expenditures, the Companys growth strategy and measures to
implement such strategy; the Companys competitive
strengths; the Companys acquisition of Ugland Nordic
Shipping ASA (UNS) and its impact on the
Companys operations; the Companys ability to
continue to successfully operate UNS; and the future success of
the Company. Readers are cautioned not to place undue reliance
on these or other forward-looking statements, which speak only
as of the date of this report.

Forward-looking statements, wherever they may
occur in this report, are necessarily estimates reflecting the
best judgment of senior management and involve known and unknown
risks and uncertainties and are based upon a number of
assumptions and estimates that 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. These forward-looking statements
should, therefore, be considered in light of various important
factors, including those set forth in this report under the
heading Factors That May Affect Future
Results.

The Company undertakes no obligation to revise
any forward-looking statements in order to reflect any change in
the Companys expectations or events or circumstances that
may subsequently arise. Readers are urged to carefully review
and consider the various disclosures made in this report and in
other of the Companys filings made with the SEC that
attempt to advise interested parties of the risks and factors
that may affect our business, prospects and results of
operations.




Item 1.     Identity
of Directors, Senior Management and Advisors

Not applicable.




Item 2.     Offer
Statistics and Expected Timetable

Not applicable.




Item 3.     Key
Information

Selected Financial Data

Set forth below are selected consolidated
financial and other data of Teekay Shipping Corporation together
with its subsidiaries (sometimes referred to as
Teekay or the Company), for the years
ended December 31, 2001 and 2000, the nine month period
ended December 31, 1999 and the years ended March 31,
1999 and 1998, 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 years ended December 31, 2001 and 2000,
and the nine month period ended December 31, 1999, and
Item 5. Operating and Financial Review and
Prospects, included herein. 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.

2



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##### 



|                                                            |                                          |                                                                           |            |              |  |                   |            |            |  |            |            |        |  |   |            |        |  |   |            |         | 
|----------------------------------------------------------- | ---------------------------------------- | ------------------------------------------------------------------------- | ---------- | ------------ |  | ----------------- | ---------- | ---------- |  | ---------- | ---------- | ------ |  | - | ---------- | ------ |  | - | ---------- | ------- | 
|                                                            |                                          | Year Ended                                                                |            | Year Ended   |  | Nine Months Ended |            | Year Ended |  | Year Ended
|                                                            |                                          | December 31,                                                              |            | December 31, |  | December 31,      |            | March 31,  |  | March 31, 
|                                                            |                                          | 2001                                                                      |            | 2000         |  | 1999              |            | 1999       |  | 1998      
|                                                            |                                          |                                                                           |            |              |  |                   |            |            |  |           
|                                                            |                                          |                                                                          
|                                                            |                                          | (U.S. dollars in thousands, except per share and per day data and ratios)
|Income Statement Data:                                      |                                          |                                                                           |            |              |  |                   |            |            |  |            |            |        |  |   |            |        |  |   |            |        
|Voyage revenues                                             |                                          | $                                                                         | 1,039,056  |              |  | $                 | 893,226    |            |  | $          | 377,882    |        |  | $ | 411,922    |        |  | $ | 406,036    |        
|Voyage expenses                                             |                                          |                                                                           | 249,562    |              |  |                   | 248,957    |            |  |            | 129,532    |        |  |   | 93,511     |        |  |   | 100,776    |        
|Net voyage revenues                                         |                                          |                                                                           | 789,494    |              |  |                   | 644,269    |            |  |            | 248,350    |        |  |   | 318,411    |        |  |   | 305,260    |        
|Income from vessel operations                               |                                          |                                                                           | 383,463    |              |  |                   | 327,675    |            |  |            | 23,572     |        |  |   | 85,634     |        |  |   | 107,640    |        
|Interest expense                                            |                                          |                                                                           | (66,249    | )            |  |                   | (74,540    | )          |  |            | (44,996    | )      |  |   | (44,797    | )      |  |   | (56,269    | )      
|Interest income                                             |                                          |                                                                           | 9,196      |              |  |                   | 13,021     |            |  |            | 5,842      |        |  |   | 6,369      |        |  |   | 7,897      |        
|Other income (loss)                                         |                                          |                                                                           | 10,108     |              |  |                   | 3,864      |            |  |            | (4,013     | )      |  |   | 5,506      |        |  |   | 11,236     |        
|Net income (loss) before extraordinary loss                 |                                          |                                                                           | 336,518    |              |  |                   | 270,020    |            |  |            | (19,595    | )      |  |   | 52,712     |        |  |   | 70,504     |        
|Extraordinary loss on bond redemption                       |                                          |                                                                           |           |              |  |                   |           |            |  |            |           |        |  |   | (7,306     | )      |  |   |           |        
|Net income (loss)                                           |                                          |                                                                           | 336,518    |              |  |                   | 270,020    |            |  |            | (19,595    | )      |  |   | 45,406     |        |  |   | 70,504     |        
|Per Share Data:                                             |                                          |                                                                           |            |              |  |                   |            |            |  |            |            |        |  |   |            |        |  |   |            |        
|Net income (loss) before extraordinary loss                 |                                          | $                                                                         | 8.48       |              |  | $                 | 7.02       |            |  | $          | (0.54      | )      |  | $ | 1.70       |        |  | $ | 2.46       |        
|Extraordinary loss on bond redemption                       |                                          |                                                                           |           |              |  |                   |           |            |  |            |           |        |  |   | (0.24      | )      |  |   |           |        
|Net income (loss)  basic                                   |                                          |                                                                           | 8.48       |              |  |                   | 7.02       |            |  |            | (0.54      | )      |  |   | 1.46       |        |  |   | 2.46       |        
|Net income (loss)  diluted                                 |                                          |                                                                           | 8.31       |              |  |                   | 6.86       |            |  |            | (0.54      | )      |  |   | 1.46       |        |  |   | 2.44       |        
|Cash earnings  basic(1)                                    |                                          |                                                                           | 11.91      |              |  |                   | 9.67       |            |  |            | 1.19       |        |  |   | 4.72       |        |  |   | 5.78       |        
|Cash dividends declared                                     |                                          |                                                                           | 0.86       |              |  |                   | 0.86       |            |  |            | 0.65       |        |  |   | 0.86       |        |  |   | 0.86       |        
|Balance Sheet Data (at end of
	period):                     |                                          |                                                                           |            |              |  |                   |            |            |  |            |            |        |  |   |            |        |  |   |            |        
|Cash and marketable securities                              |                                          | $                                                                         | 196,004    |              |  | $                 | 223,123    |            |  | $          | 226,381    |        |  | $ | 132,256    |        |  | $ | 115,254    |        
|Capital stock                                               |                                          |                                                                           | 467,341    |              |  |                   | 452,808    |            |  |            | 427,937    |        |  |   | 330,493    |        |  |   | 261,353    |        
|Total assets                                                |                                          |                                                                           | 2,467,781  |              |  |                   | 1,974,099  |            |  |            | 1,982,684  |        |  |   | 1,452,220  |        |  |   | 1,460,183  |        
|Total debt                                                  |                                          |                                                                           | 935,702    |              |  |                   | 797,484    |            |  |            | 1,085,167  |        |  |   | 641,719    |        |  |   | 725,369    |        
|Total stockholders equity                                  |                                          |                                                                           | 1,398,200  |              |  |                   | 1,098,512  |            |  |            | 832,067    |        |  |   | 777,390    |        |  |   | 689,455    |        
|Number of outstanding shares of common stock                |                                          |                                                                           | 39,550,326 |              |  |                   | 39,145,219 |            |  |            | 38,064,264 |        |  |   | 31,648,318 |        |  |   | 28,832,765 |        
|Other Financial Data:                                       |                                          |                                                                           |            |              |  |                   |            |            |  |            |            |        |  |   |            |        |  |   |            |        
|EBITDA(2)                                                   |                                          | $                                                                         | 539,324    |              |  | $                 | 451,066    |            |  | $          | 95,875     |        |  | $ | 186,069    |        |  | $ | 209,582    |        
|EBITDA to interest expense(2)(3)                            |                                          |                                                                           | 8.0x       |              |  |                   | 6.1x       |            |  |            | 2.1x       |        |  |   | 4.0x       |        |  |   | 3.8x       |        
|Total debt to LTM EBITDA(2)(4)                              |                                          |                                                                           | 1.7x       |              |  |                   | 1.8x       |            |  |            | 8.3x       |        |  |   | 3.5x       |        |  |   | 3.5x       |        
|Total debt to total capitalization(5)                       |                                          |                                                                           | 39.8       | %            |  |                   | 42.1       | %          |  |            | 56.6       | %      |  |   | 45.2       | %      |  |   | 51.3       | %      
|Net debt to capitalization(6)                               |                                          |                                                                           | 34.3       | %            |  |                   | 34.3       | %          |  |            | 50.8       | %      |  |   | 39.6       | %      |  |   | 46.9       | %      
|Cash earnings(1)                                            |                                          | $                                                                         | 472,749    |              |  | $                 | 372,168    |            |  | $          | 43,343     |        |  | $ | 146,489    |        |  | $ | 165,575    |        
|Capital expenditures:                                       |                                          |                                                                           |            |              |  |                   |            |            |  |            |            |        |  |   |            |        |  |   |            |        
|                                                            | Vessel and equipment purchases, gross(7) |                                                                           |            | 184,983      |  |                   |            | 43,512     |  |            |            | 23,313 |  |   |            | 85,445 |  |   |            | 197,199 | 
|                                                            | Drydocking                               |                                                                           |            | 20,064       |  |                   |            | 11,941     |  |            |            | 6,598  |  |   |            | 11,749 |  |   |            | 18,376  | 
|Total Fleet Data(8):                                        |                                          |                                                                           |            |              |  |                   |            |            |  |            |            |        |  |   |            |        |  |   |            |        
|Average number of ships                                     |                                          |                                                                           | 82         |              |  |                   | 71         |            |  |            | 65         |        |  |   | 47         |        |  |   | 43         |        
|Average age of Companys fleet (in years at
	end of period) |                                          |                                                                           | 10.2       |              |  |                   | 9.0        |            |  |            | 8.4        |        |  |   | 8.7        |        |  |   | 7.8        |        
|Operating cash flow per ship per day(9)                     |                                          | $                                                                         | 17,682     |              |  | $                 | 16,687     |            |  | $          | 5,177      |        |  | $ | 11,171     |        |  | $ | 12,682     |        
|Spot Aframax Fleet
	Data(10):                               |                                          |                                                                           |            |              |  |                   |            |            |  |            |            |        |  |   |            |        |  |   |            |        
|Average number of ships                                     |                                          |                                                                           | 60         |              |  |                   | 59         |            |  |            | 55         |        |  |   | 43         |        |  |   | 42         |        
|Average age of Companys fleet (in years at
	end of period) |                                          |                                                                           | 9.4        |              |  |                   | 8.3        |            |  |            | 7.4        |        |  |   | 8.0        |        |  |   | 7.6        |        
|TCE per ship per day(11)                                    |                                          | $                                                                         | 30,542     |              |  | $                 | 27,138     |            |  | $          | 13,462     |        |  | $ | 19,576     |        |  | $ | 21,373     |        
|Vessel operating expenses per ship per day(12)              |                                          |                                                                           | 5,374      |              |  |                   | 4,980      |            |  |            | 5,621      |        |  |   | 4,969      |        |  |   | 4,554      |        
|Operating cash flow per ship per day(9)                     |                                          |                                                                           | 19,747     |              |  |                   | 18,145     |            |  |            | 4,731      |        |  |   | 10,903     |        |  |   | 12,664     |        

(Footnotes on following page)

3



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(Footnotes for previous page)






|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1)  | Cash earnings represents net income (loss) before
	extraordinary items, foreign exchange gains (losses), and
	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 accounting principles generally accepted in the
	United States and should not be considered as an alternative to
	net income or any other indicator of the Companys
	performance required by accounting principles generally accepted
	in the United States.                                                                                
|    
|(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
	accounting principles generally accepted in the United States
	and should not be considered as an alternative to net income or
	any other indicator of the Companys performance required
	by accounting principles generally accepted in the United States.                        
|    
|(3)  | For purposes of computing EBITDA to interest
	expense, interest expense includes capitalized interest but
	excludes amortization of loan costs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    
|(4)  | Total debt to LTM EBITDA represents total debt as
	of the end of the period compared to EBITDA for the 12 month
	period then ended.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    
|(5)  | Total capitalization represents total debt,
	minority interest and total stockholders equity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    
|(6)  | Net debt represents total debt less cash, cash
	equivalents and marketable securities. Total capitalization
	represents net debt, minority interest and total
	stockholders equity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    
|(7)  | Excludes vessels purchased in connection with the
	Companys corporate acquisitions of Bona Shipholding Ltd.
	(Bona) in 1999 and Ugland Nordic Shipping ASA
	(UNS) in 2001. See Item 5  Operating
	and Financial Review and Prospects.                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    
|(8)  | Excludes vessels of the Companys joint
	ventures and newbuildings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    
|(9)  | 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 (excluding vessels of the Companys joint ventures).
	Operating cash flow is not required by accounting principles
	generally accepted in the United States and should not be
	considered as an alternative to net income or any other
	indicator of the Companys performance required by
	accounting principles generally accepted in the United States.                                   
|    
|(10) | Includes the Companys core Aframax fleet
	that operates primarily in the spot charter market and excludes
	vessels that operate primarily under long-term fixed-rate
	contracts, including the Companys ten Aframax-size shuttle
	tankers and Aframax-size Australian-crewed vessels. Time charter
	equivalent (TCE) and vessel operating expense data is separately
	presented only for this portion of the fleet because the
	remainder of the fleet generally has varying revenue and expense
	characteristics that make period-to-period comparisons not
	meaningful. Also excludes one Aframax tanker that has been
	subject to a bareboat charter and Aframax tankers of the
	Companys joint ventures.
|    
|(11) | TCE is a measure of the revenue performance of a
	vessel. The Companys average TCE for a given period has
	been calculated 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
	period. Voyage expenses comprise all expenses relating to
	particular voyages, including bunker fuel expenses, port fees,
	canal tolls, and brokerage commissions.                                                                                                                                                                                                                                                  
|    
|(12) | 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 communications expenses. 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 expense amounts exclude
	vessels time-chartered-in.                                                                                                                                                                                                                                                      

4



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##### 



Factors That May Affect Future
Results

Cyclical Nature of the Tanker
Industry

Historically, the tanker industry has been
cyclical, experiencing volatility in profitability due to
changes in the supply of, and demand for, tanker capacity.
Increases in tanker capacity supply or decreases in tanker
capacity demand could have a material adverse effect on the
Companys business, financial condition, and results of
operations. The supply of tanker capacity is influenced by the
number and size of new vessels built, older vessels scrapped,
converted and lost and the number of vessels that are out of
service. The demand for tanker capacity is influenced by, among
other factors, global and regional economic conditions,
increases and decreases in industrial production and demand for
crude oil and petroleum products, the distance crude oil and
petroleum products need to be transported by sea, and
developments in international trade and changes in seaborne and
other transportation patterns.

Because many of the factors influencing the
supply of and demand for tanker capacity are unpredictable, the
nature, timing and degree of changes in tanker industry
conditions are also unpredictable.

Dependence on Oil Markets

Demand for tanker vessels in transporting crude
oil and petroleum products has been dependent upon world and
regional oil markets. Any decrease in shipments of crude oil in
those markets could have a material adverse effect on the
Companys business, financial condition and results of
operations. Historically, those markets have been volatile as a
result of the many conditions and events that affect the price,
production and transport of oil, as well as competition from
alternative energy sources. Demand for the Companys
vessels and services has decreased due to reduced global demand
for crude oil and petroleum products caused by the general
slowing of the United States and world economies throughout 2001.

Dependence on Spot Voyages

Due to the Companys dependence on the spot
charter market, declining charter rates in a given period
generally will result in corresponding declines in operating
results for that period. The spot charter market is highly
competitive and spot charter rates are subject to significant
fluctuations based on tanker and oil supply and demand. Charter
rates have varied dramatically in the last few years. Future
spot charters may not be available at rates that will be
sufficient to enable the Companys vessels to be operated
profitably or to provide sufficient cash flow to service its
debt obligations. See Item 5  Operating and
Financial Review and Prospects  General.

Dependence on Oil Produced From Offshore Oil
Fields

Demand for the Companys shuttle tankers in
transporting crude oil and petroleum products depends upon the
amount of oil produced from offshore oil fields, especially in
the North Sea, where the Companys shuttle tankers
primarily operate. As oil prices increase, the prospect of
offshore oil exploration and development of offshore oil fields,
which cost more to develop than land oil fields, becomes more
attractive to oil companies. However, when oil prices decline,
it becomes less attractive for oil companies to explore for oil
offshore and develop offshore oil fields. If the amount of oil
produced from offshore oil fields declines, especially in the
North Sea, the Companys shuttle tanker business could be
harmed. In addition, if for environmental or other reasons,
there is a change in policy towards using pipelines rather than
oceangoing vessels in transporting crude oil and petroleum
products from offshore oil fields, the Companys shuttle
tanker business could be adversely affected, which could have a
material adverse effect on the Companys business,
financial condition and results of operations.

5



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Long-Term Charter Contracts

Thirty-one of the Companys tankers,
including 16 of its 18 shuttle tankers, currently are subject to
long-term charter contracts. Eleven of these contracts terminate
by their terms between April 2002 and September 2003. The
20 remaining contracts terminate by their terms between
2004 and 2015. If the Company is not able to renew or replace
these contracts on favorable terms, or at all, or if a
significant number of these contracts are terminated early, it
could have a material adverse effect on the Companys
business, financial condition and results of operations.

Competition

The Company obtains employment for its vessels in
highly competitive markets. Competition arises primarily from
other Aframax and shuttle tanker owners, including major oil
companies as well as independent companies. The Companys
market share is insufficient to enforce any degree of pricing
discipline in the markets in which the Company operates and the
Companys competitive position may erode in the future. Any
new markets that the Company enters could include participants
that have greater financial strength and capital resources than
the Company. The Company may not be successful in entering new
markets. See Item 4  Information on the
Company  Competition.

Environmental and Other Regulations

The operations of the Company are affected by
extensive and changing environmental protection laws and other
regulations. The Company has incurred, and expects to continue
to incur, substantial expenses in complying with these laws and
regulations, including expenses for ship modifications and
changes in operating procedures. Additional laws and regulations
may be adopted that could limit the Companys ability to do
business or further increase the cost of doing business. This
could have a material adverse effect on the Companys
business, financial condition and results of operations. See
Item 4  Information on the Company 
Regulation.

Risk of Loss and Insurance

The operation of oil tankers carries the risk of
environmental damage from an oil spill as well as the risk of
catastrophic marine disasters and property losses inherent to
any ocean-going vessel. If any of these events occur, the
Company could lose revenue or experience increased costs.
Although, the Company carries protection and indemnity coverage
to protect against most of the accident-related risks involved
in the conduct of its business and maintains environmental
damage and pollution coverage, the Company does not carry
insurance covering the loss of revenue resulting from vessel
off-hire time. In addition, the Company may not be adequately
insured against all risks, may not be able to procure adequate
coverage at commercially reasonable rates in the future and any
particular claim may not be paid. Any uninsured loss or unpaid
claim could have a material adverse effect on the Companys
business, financial condition, and results of operations. See
Item 4  Information on the Company 
Risk of Loss and Insurance.

Potential Inability to Achieve and Manage
Growth

A principal component of the Companys
strategy is to continue to grow by expanding its business both
in the geographic areas and market segments where it has
historically focused and into new geographic areas, market
segments and services. The Company may not be successful in
expanding its operations and any expansion may not be
profitable. The Companys future growth will depend upon a
number of factors, both within and outside of the Companys
control, including: the Companys identification of new
markets; acceptance by new customers; identification and
entering into suitable joint venture opportunities;
identification and acquisition on favorable terms of suitable
acquisition candidates; successful integration of any acquired
businesses with the Companys existing operations;
continued successful operation of any acquired business; and
ability to hire and train qualified personnel and ability to
obtain required financing. The failure to effectively identify,
purchase, develop and integrate any acquired business could have
a material adverse effect on the Companys business,
financial condition and results of operations. In addition, the
results achieved to date may not be indicative of the
Companys

6



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ability to penetrate new markets many of which
may have different competitive conditions and characteristics
than the Companys traditional markets.

To the extent the Companys operations
continue to expand, it will continue to experience growth in the
number of its employees, the scope of its operating and
financial systems and the geographic area of its operations.
Recent growth has increased, and future growth would continue to
increase, the Companys operating complexity and the level
of responsibility of existing and new management personnel. The
Company may not be able to attract and retain qualified
management and employees, especially qualified officers and
other seagoing personnel, of which there is a limited supply. As
well, the Companys current operating and financial systems
and controls may not be adequate as the Company grows, and any
steps taken to attract and retain management and employees and
to improve such systems and controls may not be sufficient.

Seasonal Variations in Operating
Results

The Company operates its tankers in markets that
have historically exhibited seasonal variations in demand and,
therefore, in charter rates. This seasonality may result in
quarter-to-quarter volatility in the Companys results of
operations. Tanker markets are typically stronger in the winter
months as a result of increased oil consumption in the northern
hemisphere. In addition, unpredictable weather patterns in these
months tend to disrupt vessel scheduling. The oil price
volatility resulting from these factors has historically led to
increased oil trading activities in the winter months. As a
result, the Companys revenues have historically been
weaker during its fiscal quarters ended June 30 and
September 30, and, conversely, revenues have been stronger
in the Companys fiscal quarters ended December 31 and
March 31.

Newbuildings

The Company is typically required to expend
substantial sums as progress payments during construction of a
newbuilding, but the Company does not derive any revenue from
the vessel until after its delivery. If the Company were unable
to obtain financing required to complete payments on any of its
newbuilding orders, the Company could effectively forfeit all or
a portion of the progress payments previously made. The Company
currently has eight newbuildings on order with deliveries
scheduled between December 2002 and December 2003. The Company
may in the future order additional newbuildings.

Customer Concentration

The Company has derived, and believes that it
will continue to derive, a significant portion of its voyage
revenues from a limited number of customers. The loss of any
significant customer or a substantial decline in the amount of
services requested by a significant customer could have a
material adverse effect on the Companys business,
financial condition and results of operations. See
Item 4  Information on the Company 
Customers.

Exposure to Currency Exchange Rate and
Interest Rate Fluctuations

While virtually all of the Companys
revenues are earned in U.S. Dollars, a portion of the
Companys operating costs are incurred in currencies other
than U.S. Dollars. This partial mismatch in operating
revenues and expenses could lead to fluctuations in net income
due to changes in the value of the U.S. dollar relative to
other currencies, in particular the Japanese Yen, the Singapore
Dollar, the Canadian Dollar, the British Pound, the Norwegian
Kroner and the Australian Dollar.

At December 31, 2001, approximately
$416 million, or 44%, of the Companys debt bore
interest at floating interest rates. Increases in interest rates
would increase interest payments on this debt, and could have a
material adverse effect on the Companys business,
financial condition and results of operations. In order to
partially mitigate this interest rate exposure the Company has
entered into interest rate swaps

7



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that effectively change the Companys
interest rate exposure on $85 million of debt from a
floating LIBOR rate to an average fixed rate of 6.40%. See
Item 11  Quantitative and Qualitative
Disclosures About Market Risk.

Operations Outside the United States

The operations of the Company are primarily
conducted outside the United States and, therefore, they may be
affected by changing economic, political and governmental
conditions in the countries where the Company is engaged in
business or where its vessels are registered. Any disruption
caused by these factors could have a material adverse effect on
the Companys business, financial condition and results of
operations. See Item 4  Information on the
Company  Operations Outside the United States.

Possible Taxation of the Companys United
States Source Income

If it is not exempt from tax under
Section 883 of the United States Internal Revenue Code, the
shipping income derived from the United States sources
attributable to the Companys subsidiaries
transportation of cargoes to or from the United States will be
subject to U.S. federal income tax. If the Companys
subsidiaries were subject to such tax, the Companys net
income and cash flow would be reduced by the amount of such tax.
The tax that would be imposed would be equal to an effective
rate of 2% on U.S. source income. Although the Company
believes that its subsidiaries are exempt from taxation under
Section 883, proposed regulations, if they become final as
proposed, may not permit its subsidiaries to continue to claim
the Section 883 exemption. See Item 4 
Taxation of the Company.




Item 4.     Information
on the Company

The Company

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 worldwide.

As of March 1, 2002, the Companys
fleet consisted of 95 vessels: 63 Aframax oil tankers
(including five vessels time-chartered-in, two Aframax-size
oil/bulk/ore carriers trading exclusively as crude oil carriers,
two Aframax tankers converted to floating storage and off-take
vessels (FSOs), and two newbuildings);
18 shuttle tankers (including three newbuildings and one
vessel converted to an FSO); eight oil/bulk/ore carriers that
are operated through an O/B/O pool managed by the Company; two
smaller oil tankers; one Very Large Crude Carrier, and three
Suezmax-size newbuildings. The Companys vessels are of
Australian, Bahamian, Cayman Islands, Liberian, Marshall
Islands, Norwegian, Norwegian International Ship
(NIS), and Panamanian registry. The Companys
fleet has a total cargo capacity of approximately
9.6 million tonnes. The Companys Aframax tankers
represent approximately 10% of the total tonnage of the world
Aframax and O/B/O fleet, and the Companys shuttle tankers
represent approximately 26% of the total tonnage of the world
shuttle tanker fleet.

The Companys Aframax tanker fleet
(excluding Aframax-size shuttle tankers) has an average age of
approximately 9.4 years, compared to an average age for the
world oil tanker fleet, including Aframax tankers, of
approximately 12.4 years and for the world Aframax tanker
fleet of approximately 12.3 years. The Company has been
recognized by customers and tanker 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.

The critical ship management functions of vessel
maintenance, crewing, purchasing, shipyard

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supervision, insurance and financial management
services are carried out in-house in the
Companys various facilities around the world. Since 1995,
IUM Shipmanagement AS (IUM), a company in which
Teekay indirectly owns a one-third interest through its wholly
owned subsidiary UNS, has provided UNS ship management
services, including crewing and maintenance. IUM is under
contract to provide these services to UNS until
December 31, 2003.

The Company has chartering staff located in
Vancouver, Tokyo, London, Oslo, Houston and Singapore. Each
office serves the Companys clients headquartered in that
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 year
ended December 31, 2001, approximately 78% of the
Companys consolidated net voyage revenues were derived
from spot voyages or time charters and contracts of
affreightment priced on a spot market basis.

The Company pursues an intensively customer- and
operations-oriented business strategy designed to achieve
superior operating results. The Company believes that it has
five key competitive strengths: (i) market concentration in
the Indo-Pacific Aframax market, the Atlantic Basin Aframax
market, and the shuttle tanker market, 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 compared
to the world tanker fleet and affords greater acceptance among
charterers in an environment of increasingly stringent operating
and safety standards, (iv) a large, uniform-size fleet of
Aframax (80,000 to 120,000 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 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, such
as the Companys entry into the shuttle tanker market
through its acquisition of UNS in 2001, described below. The
Company may choose to pursue such opportunities through internal
growth, joint ventures or business acquisitions.

The Teekay organization was founded in 1973.
Teekay is incorporated under the laws of the Republic of The
Marshall Islands and maintains its principal executive
headquarters at TK House, Bayside Executive Park, West Bay
Street & Blake Road, P.O. Box AP-59213, Nassau, The
Bahamas. Its telephone number at such address is
(242) 502-8820. 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 Ugland Nordic Shipping
ASA

As of May 28, 2001, the Company had
purchased UNS, the worlds largest shuttle tanker owner.
UNS modern fleet of 18 vessels has an average age of
9.0 years (excluding three newbuildings) and operates
primarily in the North Sea under long-term fixed-rate contracts.
The total purchase price for the

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outstanding shares of UNS was approximately
$223 million (including estimated transaction expenses of
$7 million). The operating results of UNS have been
reflected in the Companys financial statements commencing
March 6, 2001, the date the Company acquired a majority
interest in UNS.

UNS large-scale and high-quality shuttle
tanker operations provides the Company with a strategic
opportunity to enter this attractive market as a market leader.
The acquisition also allows the Company to expand the portfolio
of value-added services that it offers to its customers. The
Company believes that as offshore oil fields become more
important to the global oil supply, the need for shuttle tanker
services will increase. By combining the Companys global
franchise and UNS expertise in the shuttle tanker market,
the Company believes that the shuttle tanker business represents
an area of significant growth for Teekay. The acquisition of UNS
will also provide stability to the Companys cash flow
throughout its business cycle, due to the long-term, fixed-price
nature of shuttle tanker contracts.

Acquisition of Bona Shipholding Ltd.

On June 11, 1999, the Company acquired Bona
Shipholding Ltd. (Bona) for aggregate consideration
(including 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
worlds third largest operator of medium-size tankers,
controlling a fleet of vessels consisting of 15 Aframax tankers,
eight O/B/Os 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 combined Bonas market strength in
the Atlantic region with the Companys franchise in the
Indo-Pacific Basin. Bonas operating results are reflected
in the Companys financial statements commencing the
effective date of the acquisition.

Competition

The Company competes primarily in the Aframax and
shuttle tanker markets. In the Aframax market, 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 in the Aframax spot
charter market is intense and is based upon price, location, the
size, age, condition and acceptability of the vessel, and the
reputation of the vessels manager.

The Company competes principally with other
Aframax owners in the spot charter market through the global
tanker charter market. This market is comprised of tanker broker
companies that 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.

Other large operators of modern Aframax tonnage
include American Eagle Tankers Ltd. (partially owned by the
Singapore government), which controls approximately
25 Aframax vessels, General Maritime Corporation, with
approximately 24 Aframax vessels, Tanker Pacific Management
(Singapore) Pte. Ltd., which controls approximately
14 Aframax vessels, and Overseas Shipholding Group, with
approximately 12 Aframax vessels.

The Companys competition in the Aframax
(80,000 to 120,000 dwt) market is also affected by the
availability of other size vessels that compete in the
Companys markets. Suezmax (120,000 to 200,000 dwt)
size vessels and Panamax (60,000 to 80,000 dwt) size
vessels can compete for many of the same

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charters for which the Company competes. Because
of their large size, Ultra Large Crude Carriers
(320,000+ dwt) (ULCCs) and Very Large Crude
Carriers (200,000 to 320,000 dwt) (VLCCs)
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.

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.

There currently are 58 vessels in the world
shuttle tanker fleet, excluding newbuildings, the majority of
which operate in the North Sea. Shuttle tankers typically
operate under long-term, fixed-rate contracts for a specific
offshore oil field or under contracts of affreightment for
various fields. Competition for charters is based primarily upon
price, availability, the size, technical sophistication, age and
condition of the vessel, and the reputation of the vessels
manager. Technical sophistication of the vessel is especially
important in harsh operating environments such as the North Sea.
Although the size of the world shuttle tanker fleet has been
relatively unchanged in recent years, conventional tankers could
be converted into less sophisticated shuttle tankers by adding
specialized equipment to meet the requirements of the oil
companies. Shuttle tanker demand is also affected by the
possible substitution of sub-sea pipelines that transport oil
from offshore production platforms.

The Company currently owns 15 shuttle tankers,
excluding three newbuildings. Other shuttle tanker owners in the
North Sea include Navion ASA, Knudsen O.A.S. Shipping AS, and JJ
Ugland Group, which own approximately nine, nine and six shuttle
tankers, respectively. The remaining owners in the North Sea
each own three or fewer vessels. Management believes that it has
a significant competitive advantage in the shuttle tanker market
as a result of the age and quality of the Companys
vessels, and its market share in the North Sea.

As part of its growth strategy, the Company will
continue to consider strategic opportunities, including business
acquisitions, such as the acquisitions of Bona and UNS. 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 that differ from those of the Aframax market
segment in the Indo-Pacific and Atlantic Basins and the shuttle
tanker market and may include participants that 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 and 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 their impact on the resale price or useful life
of its vessels. Additional conventions, laws and regulations may
be adopted that could limit the ability of the Company to do
business or increase the cost of its doing business and that may
materially adversely affect 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 on a number of factors,
the Company believes that it has been and will be able to
continue 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,

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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 that 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.

On April 27, 2001, the IMO revised its
regulations relating to the prevention of pollution from
tankers. These regulations, which are scheduled to take effect
on September 1, 2002, generally provide that single-hull
tankers must be phased out between 2003 and 2015. These
regulations identify three categories of single-hull tankers,
which include double-bottom and double-side tankers:



| |   |                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Category 1 oil tanker means any oil
	tanker of 20,000 dwt and above carrying crude oil, fuel
	oil, heavy diesel oil or lubricating oil as cargo, and of
	30,000 dwt and above carrying other oils, which does not
	have segregated ballast tanks;
|
| |  | Category 2 oil tanker means any oil
	tanker of 20,000 dwt and above carrying crude oil, fuel
	oil, heavy diesel oil or lubricating oil as cargo, and of
	30,000 dwt and above carrying other oils, which has
	segregated ballast tanks; and      
|
| |  | Category 3 oil tanker means an
	oil tanker of 5,000 dwt and above but less than the tonnage
	specified for Category 1 and 2 oil tankers.                                                                                                         

All of the single-hull tankers the Company
operates are Category 2 oil tankers. As illustrated in the
following table, the new regulations provide for the phase-out
on a rolling basis of Category 1 oil tankers by 2007 and of
Category 2 oil tankers by 2015.

|                       |  |                                                                                                                                                                                                                                                          
|---------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Category of Oil Tanker |  | Year To Be Removed From Service                                                                                                                                                                                                                          
|                       |  |                                                                                                                                                                                                                                                          
|Category 1             |  | 2003 for ships delivered in 1973 or earlier
	2004 for ships delivered in 1974 and 1975
	2005* for ships delivered in 1976 and 1977
	2006* for ships delivered in 1978, 1979 and 1980
	2007* for ships delivered in 1981 or later                         
|Category 2             |  | 2003 for ships delivered in 1973 or earlier
	2004 for ships delivered in 1974 and 1975
	2005 for ships delivered in 1976 and 1977
	2006 for ships delivered in 1978 and 1979
	2007 for ships delivered in 1980 and 1981
	2008 for ships delivered in 1982

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|                       |  |                                                                                                                                                                                                                                                            
|---------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Category of Oil Tanker |  | Year To Be Removed From Service                                                                                                                                                                                                                            
|                       |  |                                                                                                                                                                                                                                                            
|                       |  | 2009 for ships delivered in 1983
	2010* for ships delivered in 1984
	2011* for ships delivered in 1985
	2012* for ships delivered in 1986
	2013* for ships delivered in 1987
	2014* for ships delivered in 1988
	2015* for ships delivered in 1989 or later






|  |                                                                
|- | ---------------------------------------------------------------
|* | Subject to compliance with Condition Assessment
	Scheme Survey.

However, under certain conditions,
Category 1 and Category 2 oil tankers may continue in
operation beyond the date set forth in the table above.
Category 2 oil tankers fitted with double bottoms or double
sides may continue in service until 25 years after their
delivery date. Category 1 oil tankers over 25 years
old must have double bottoms or operate with hydrostatically
balanced loading. However, a port state may declare that it does
not accept entry of such vessels after their phase-out date. The
European Union, Cyprus and Malta have already declared that they
will not permit the entry of such vessels.

Vessels must pass a Condition Assessment Scheme
survey after 2005 for Category 1 oil tankers, and after
2010 for Category 2 oil tankers. The Conditional Assessment
Scheme Survey includes surveys of the hull structure, including
cargo tanks, pump rooms, cofferdams, pipe tunnels, void spaces
within the cargo area and all ballast tanks.

Under the current IMO regulations, the
Companys vessels will be able to operate for substantially
all of their respective economic lives before being required to
have double-hulls. Although 13 of the Companys vessels are
over 15 years old (including the eight oil/bulk/ore
carriers it acquired in the Bona acquisition), IMO regulations
do not require any of its vessels to be phased-out until 2007.
However, compliance with the 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 its
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 that 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

13



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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, including international maritime organization
conventions to which the U.S. is signature to, 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 coverage available, which could have a
materially adverse affect on the Companys business,
financial condition and results of operations.

Under OPA 90, with limited exceptions, all
newly built or converted tankers operating in United States
waters must be built with double-hulls, and existing vessels
that do not comply with the double-hull requirement must be
phased out over a 20-year period (1995-2015) based on size, age
and hull construction. Vessels with double-sides and
double-bottoms are granted an additional five years of service
life before being phased out. Of the Companys vessels, 13
are over 15 years old (including the eight oil/ bulk/ ore
carriers acquired in the Bona acquisition). Twelve of those
vessels have double-sides or double-bottoms, the oldest of which
would not be phased out until 2009. The Companys oldest
single-hull tanker is part of its shuttle tanker fleet and does
not trade in the United States. 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 offshore.

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 (COFR)
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, have 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.

14



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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 for all the Companys vessels trading into
the United States. If other vessels in the Companys fleet
trade into the United States in the future, the Company expects
to provide guaranties through self-insurance, or to obtain such
guaranties from third-party insurers.

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. The
Companys vessel response plan for OPA 90 is valid
until July 13, 2003.

OPA 90 allows U.S. State legislatures
to pre-empt associated regulation if the States
regulations are equal or more stringent. Several coastal states
such as California, Washington, and Alaska require state-
specific COFRs and vessel response plans. The Companys
vessel response plan for the state of California is valid until
April 1, 2003 and the Companys vessel response plan
for the state of Washington is valid until December 4, 2006.

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 $3.8 million plus
approximately $532 per gross registered tonne above 5,000 gross
tonnes with an approximate maximum of $75.6 million per
vessel, 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.

In addition, the IMO, various countries and
states, such as Australia, the United States, various coastal

15



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states such as California, Washington, and
Oregon, and various regulators, such as port authorities, the
U.S. Coast Guard and the U.S. Environmental Protection
Agency, have either adopted legislation or regulations, or are
separately considering the adoption of legislation or
regulations, aimed at regulating the discharge of ballast water
as a potential pollutant and regulating air emissions from
marine diesel engines.

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. The
occurrence of any of these events may result in loss of revenues
or increased costs.

The Company carries insurance coverage 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. The Company believes that its current insurance
coverage is adequate to protect against most of the
accident-related risks involved in the conduct of its business
and that it maintains appropriate levels of environmental damage
and pollution insurance coverage. The Company also carries
protection and indemnity insurance against certain liabilities
that may be incurred while its vessels are operating. The
Companys current insurance coverage for pollution is
$1 billion per vessel per incident. 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 may result 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 year ended December 31, 2001, the
Company derived approximately 50% of its total net voyage
revenues from its operations in the Indo-Pacific Basin. In the
past, political conflicts in that region, 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 the region 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.

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%
($130,818,000) of the Companys consolidated voyage
revenues during the year ended December 31, 2001. Two
customers, both international oil companies, individually
accounted for 13% ($118,306,000) and 12% ($110,241,000) of the
Companys consolidated voyage revenues during the year
ended December 31, 2000. During the nine months ended
December 31, 1999, a single customer, also an international
oil company, accounted for 13% ($48,140,000) of the
Companys consolidated voyage revenues. No other customer
accounted for more than 10% of the Companys consolidated
voyage revenues during the fiscal periods presented above. The
loss of any significant customer or a substantial decline in the
amount of services requested by a significant customer could
have a material adverse effect on the Companys business,
financial condition and results of operations.

16



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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 and its
Norwegian subsidiary, UNS (and its Norwegian ship-owning
subsidiaries), are subject to income taxes. Income taxes payable
by the Norwegian ship-owning subsidiaries are deferred until
payment of dividends. 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, but management does not consider such taxes to be
material to the Company.

The Companys Fleet

The following list provides additional
information with respect to the Companys vessels as at
March 1, 2002.

|                    |  |             |  |      |    |           |  |        |      |       |  |      |         |  |  |  |      |  |  |                 
|------------------- |  | ----------- |  | ---- | -- | --------- |  | ------ | ---- | ----- |  | ---- | ------- |  |  |  | ---- |  |  | ----------------
|                    |  |             |  | Hull |    | Percent   |  |        |      | Year  |  |     
|                    |  | Series/Yard |  | Type |    | Ownership |  | Dwt-MT |      | Built |  | Flag
|                    |  |             |  |      |    |           |  |        |      |       |  |     
|Aframax Tankers(61) |  |             |  |      |    |           |  |        |      |       |  |      |         |  |  |  |      |  |  |                 
|HAMANE SPIRIT       |  | Onomichi    |  |      | DH |           |  |        | 100% |       |  |      | 105,200 |  |  |  | 1997 |  |  | Bahamian        
|POUL SPIRIT         |  | Onomichi    |  |      | DH |           |  |        | 100% |       |  |      | 98,600  |  |  |  | 1995 |  |  | Bahamian        
|TORBEN SPIRIT       |  | Onomichi    |  |      | DH |           |  |        | 100% |       |  |      | 98,600  |  |  |  | 1994 |  |  | Bahamian        
|LEYTE SPIRIT        |  | Onomichi    |  |      | DH |           |  |        | 100% |       |  |      | 98,700  |  |  |  | 1992 |  |  | Bahamian        
|LUZON SPIRIT        |  | Onomichi    |  |      | DH |           |  |        | 100% |       |  |      | 98,600  |  |  |  | 1992 |  |  | Bahamian        
|MAYON SPIRIT        |  | Onomichi    |  |      | DH |           |  |        | 100% |       |  |      | 98,500  |  |  |  | 1992 |  |  | Bahamian        
|SAMAR SPIRIT        |  | Onomichi    |  |      | DH |           |  |        | 100% |       |  |      | 98,600  |  |  |  | 1992 |  |  | Bahamian        
|PALMSTAR LOTUS      |  | Onomichi    |  |      | SH |           |  |        | 100% |       |  |      | 100,300 |  |  |  | 1991 |  |  | Bahamian        
|PALMSTAR THISTLE    |  | Onomichi    |  |      | SH |           |  |        | 100% |       |  |      | 100,300 |  |  |  | 1991 |  |  | Bahamian        
|TEEKAY SPIRIT       |  | Onomichi    |  |      | SH |           |  |        | 100% |       |  |      | 100,300 |  |  |  | 1991 |  |  | Bahamian        
|ONOZO SPIRIT        |  | Onomichi    |  |      | SH |           |  |        | 100% |       |  |      | 100,000 |  |  |  | 1990 |  |  | Bahamian        
|PALMSTAR CHERRY     |  | Onomichi    |  |      | SH |           |  |        | 100% |       |  |      | 100,000 |  |  |  | 1990 |  |  | Bahamian        
|PALMSTAR POPPY      |  | Onomichi    |  |      | SH |           |  |        | 100% |       |  |      | 100,000 |  |  |  | 1990 |  |  | Bahamian        
|PALMSTAR ROSE       |  | Onomichi    |  |      | SH |           |  |        | 100% |       |  |      | 100,200 |  |  |  | 1990 |  |  | Bahamian        
|PALMSTAR ORCHID     |  | Onomichi    |  |      | SH |           |  |        | 100% |       |  |      | 100,000 |  |  |  | 1989 |  |  | Bahamian        
|FALSTER SPIRIT      |  | Hyundai     |  |      | DH |           |  |        | 100% |       |  |      | 95,400  |  |  |  | 1995 |  |  | Bahamian        
|GOTLAND SPIRIT      |  | Hyundai     |  |      | DH |           |  |        | 100% |       |  |      | 95,400  |  |  |  | 1995 |  |  | Bahamian        
|SOTRA SPIRIT        |  | Hyundai     |  |      | DH |           |  |        | 100% |       |  |      | 95,400  |  |  |  | 1995 |  |  | Bahamian        
|VICTORIA SPIRIT(1)  |  | Hyundai     |  |      | DH |           |  |        | 100% |       |  |      | 103,200 |  |  |  | 1993 |  |  | Bahamian        
|VANCOUVER SPIRIT(1) |  | Hyundai     |  |      | DH |           |  |        | 100% |       |  |      | 103,200 |  |  |  | 1992 |  |  | Bahamian        
|SHILLA SPIRIT       |  | Hyundai     |  |      | SH |           |  |        | 100% |       |  |      | 106,700 |  |  |  | 1990 |  |  | Bahamian        
|ULSAN SPIRIT        |  | Hyundai     |  |      | SH |           |  |        | 100% |       |  |      | 106,700 |  |  |  | 1990 |  |  | Bahamian        
|DAMPIER SPIRIT(2)   |  | Hyundai     |  |      | SH |           |  |        | 100% |       |  |      | 106,700 |  |  |  | 1988 |  |  | Bahamian        
|KARRATHA SPIRIT(2)  |  | Hyundai     |  |      | SH |           |  |        | 100% |       |  |      | 106,700 |  |  |  | 1988 |  |  | Bahamian        
|NAMSAN SPIRIT       |  | Hyundai     |  |      | SH |           |  |        | 100% |       |  |      | 106,700 |  |  |  | 1988 |  |  | Bahamian        
|PACIFIC SPIRIT      |  | Hyundai     |  |      | SH |           |  |        | 100% |       |  |      | 106,700 |  |  |  | 1988 |  |  | Bahamian        
|MERSEY SPIRIT       |  | Hyundai     |  |      | DS |           |  |        | 100% |       |  |      | 94,800  |  |  |  | 1986 |  |  | Bahamian        
|CLYDE SPIRIT        |  | Hyundai     |  |      | DS |           |  |        | 100% |       |  |      | 94,700  |  |  |  | 1985 |  |  | Bahamian        
|OPAL QUEEN(3)       |  | Imabari     |  |      | DH |           |  |        | 0%   |       |  |      | 107,200 |  |  |  | 2001 |  |  | Bahamian        
|BAHAMAS SPIRIT      |  | Imabari     |  |      | DH |           |  |        | 100% |       |  |      | 107,300 |  |  |  | 1998 |  |  | Bahamian        
|NASSAU SPIRIT       |  | Imabari     |  |      | DH |           |  |        | 100% |       |  |      | 107,200 |  |  |  | 1998 |  |  | Bahamian        
|SENANG SPIRIT       |  | Imabari     |  |      | DH |           |  |        | 100% |       |  |      | 95,700  |  |  |  | 1994 |  |  | Bahamian        
|SEBAROK SPIRIT      |  | Imabari     |  |      | DH |           |  |        | 100% |       |  |      | 95,700  |  |  |  | 1993 |  |  | Bahamian        
|SERAYA SPIRIT       |  | Imabari     |  |      | DS |           |  |        | 100% |       |  |      | 97,100  |  |  |  | 1992 |  |  | Bahamian        
|SEAFALCON(3)        |  | Imabari     |  |      | DS |           |  |        | 0%   |       |  |      | 97,100  |  |  |  | 1990 |  |  | Marshall Islands
|ALLIANCE SPIRIT     |  | Imabari     |  |      | DS |           |  |        | 100% |       |  |      | 97,100  |  |  |  | 1989 |  |  | Bahamian        
|SENTOSA SPIRIT      |  | Imabari     |  |      | DS |           |  |        | 100% |       |  |      | 97,200  |  |  |  | 1989 |  |  | Bahamian        
|SELETAR SPIRIT      |  | Imabari     |  |      | DS |           |  |        | 100% |       |  |      | 95,000  |  |  |  | 1988 |  |  | Bahamian        
|SEMAKAU SPIRIT      |  | Imabari     |  |      | DS |           |  |        | 100% |       |  |      | 97,200  |  |  |  | 1988 |  |  | Bahamian        
|SINGAPORE SPIRIT    |  | Imabari     |  |      | DS |           |  |        | 100% |       |  |      | 97,000  |  |  |  | 1987 |  |  | Bahamian        
|SUDONG SPIRIT       |  | Imabari     |  |      | DS |           |  |        | 100% |       |  |      | 98,200  |  |  |  | 1987 |  |  | Bahamian        
|KANATA SPIRIT       |  | Samsung     |  |      | DH |           |  |        | 100% |       |  |      | 113,000 |  |  |  | 1999 |  |  | Bahamian        
|KAREELA SPIRIT      |  | Samsung     |  |      | DH |           |  |        | 100% |       |  |      | 113,100 |  |  |  | 1999 |  |  | Bahamian        
|KIOWA SPIRIT        |  | Samsung     |  |      | DH |           |  |        | 100% |       |  |      | 113,300 |  |  |  | 1999 |  |  | Bahamian        
|KOA SPIRIT          |  | Samsung     |  |      | DH |           |  |        | 100% |       |  |      | 113,300 |  |  |  | 1999 |  |  | Bahamian        
|KYEEMA SPIRIT       |  | Samsung     |  |      | DH |           |  |        | 100% |       |  |      | 113,400 |  |  |  | 1999 |  |  | Bahamian        

17



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|                                  |  |               |           |      |    |           |  |        |       |       |  |      |         |  |  |  |      |  |  |               
|--------------------------------- |  | ------------- | --------- | ---- | -- | --------- |  | ------ | ----- | ----- |  | ---- | ------- |  |  |  | ---- |  |  | --------------
|                                  |  |               |           | Hull |    | Percent   |  |        |       | Year  |  |     
|                                  |  | Series/Yard   |           | Type |    | Ownership |  | Dwt-MT |       | Built |  | Flag
|                                  |  |               |           |      |    |           |  |        |       |       |  |     
|SILVER PARADISE(3)                |  | Samsung       |           |      | DH |           |  |        | 0%    |       |  |      | 105,200 |  |  |  | 1998 |  |  | Panamanian    
|KYUSHU SPIRIT                     |  | Mitsubishi    |           |      | DS |           |  |        | 100%  |       |  |      | 95,600  |  |  |  | 1991 |  |  | Bahamian      
|SABINE SPIRIT                     |  | Mitsubishi    |           |      | DS |           |  |        | 100%  |       |  |      | 84,800  |  |  |  | 1989 |  |  | Bahamian      
|KOYAGI SPIRIT                     |  | Mitsubishi    |           |      | SH |           |  |        | 100%  |       |  |      | 96,000  |  |  |  | 1989 |  |  | Bahamian      
|COLUMBIA SPIRIT                   |  | Mitsubishi    |           |      | DS |           |  |        | 100%  |       |  |      | 84,800  |  |  |  | 1988 |  |  | Bahamian      
|HUDSON SPIRIT                     |  | Mitsubishi    |           |      | DS |           |  |        | 100%  |       |  |      | 84,800  |  |  |  | 1988 |  |  | Bahamian      
|SEABRIDGE(3)                      |  | Namura        |           |      | DH |           |  |        | 0%    |       |  |      | 105,200 |  |  |  | 1996 |  |  | Liberian      
|TORRES SPIRIT                     |  | Namura        |           |      | SH |           |  |        | 100%  |       |  |      | 96,100  |  |  |  | 1990 |  |  | Bahamian      
|SEAMASTER(3)                      |  | Namura        |           |      | SH |           |  |        | 0%    |       |  |      | 101,100 |  |  |  | 1990 |  |  | Liberian      
|SHETLAND SPIRIT                   |  | Mitsui        |           |      | DH |           |  |        | 100%  |       |  |      | 106,200 |  |  |  | 1994 |  |  | Bahamian      
|ORKNEY SPIRIT                     |  | Mitsui        |           |      | DH |           |  |        | 100%  |       |  |      | 106,300 |  |  |  | 1993 |  |  | Bahamian      
|SHANNON SPIRIT                    |  | Gdynia        |           |      | SH |           |  |        | 100%  |       |  |      | 99,300  |  |  |  | 1987 |  |  | Bahamian      
|CLARE SPIRIT                      |  | Gdynia        |           |      | SH |           |  |        | 100%  |       |  |      | 99,300  |  |  |  | 1986 |  |  | Bahamian      
|MAGELLAN SPIRIT                   |  | Hitachi       |           |      | DS |           |  |        | 100%  |       |  |      | 95,000  |  |  |  | 1985 |  |  | Bahamian      
|COOK SPIRIT                       |  | Hashima       |           |      | DS |           |  |        | 100%  |       |  |      | 91,500  |  |  |  | 1987 |  |  | Bahamian      
|Subtotal Aframax Tankers          |  |               | 6,126,500 |      |    |           |  |        |       |      
|Shuttle Tankers(15)               |  |               |           |      |    |           |  |        |       |       |  |      |         |  |  |  |      |  |  |               
|STENA NATALITA                    |  | Tsuneishi     |           |      | DH |           |  |        | 50%   |       |  |      | 108,100 |  |  |  | 2001 |  |  | Cayman Islands
|STENA SIRITA                      |  | Tsuneishi     |           |      | DH |           |  |        | 50%   |       |  |      | 127,500 |  |  |  | 1999 |  |  | Norwegian     
|STENA ALEXITA                     |  | Tsuneishi     |           |      | DH |           |  |        | 50%   |       |  |      | 127,500 |  |  |  | 1998 |  |  | Norwegian     
|NORDIC SAVONITA                   |  | Tsuneishi     |           |      | DH |           |  |        | 100%  |       |  |      | 108,200 |  |  |  | 1992 |  |  | NIS           
|NORDIC TORINITA                   |  | Tsuneishi     |           |      | DH |           |  |        | 100%  |       |  |      | 106,900 |  |  |  | 1992 |  |  | Cayman Islands
|STENA AKARITA                     |  | Tsuneishi     |           |      | DH |           |  |        | 65.5% |       |  |      | 107,200 |  |  |  | 1991 |  |  | Liberian      
|PETROTROLL                        |  | Tsuneishi     |           |      | DS |           |  |        | 100%  |       |  |      | 67,400  |  |  |  | 1981 |  |  | NIS           
|NORDIC LAURITA                    |  | Tsuneishi     |           |      | SH |           |  |        | 50.5% |       |  |      | 68,100  |  |  |  | 1981 |  |  | NIS           
|NORDIC MARITA                     |  | Samsung       |           |      | DH |           |  |        | 100%  |       |  |      | 103,900 |  |  |  | 1999 |  |  | Cayman Islands
|NORDIC YUKON                      |  | Dalian        |           |      | DH |           |  |        | 100%  |       |  |      | 97,100  |  |  |  | 1992 |  |  | NIS           
|PETROTRYM                         |  | Dalian        |           |      | DH |           |  |        | 100%  |       |  |      | 80,700  |  |  |  | 1987 |  |  | NIS           
|NORDIC SVENITA                    |  | Imabari       |           |      | DH |           |  |        | 100%  |       |  |      | 106,500 |  |  |  | 1997 |  |  | Liberian      
|NORDIC SARITA                     |  | Daewoo        |           |      | DH |           |  |        | 100%  |       |  |      | 124,500 |  |  |  | 1986 |  |  | Norwegian     
|PETROSKALD                        |  | Uddevalla     |           |      | DB |           |  |        | 100%  |       |  |      | 34,800  |  |  |  | 1982 |  |  | Liberian      
|NORDIC APOLLO(2)                  |  | Avondale      |           |      | DH |           |  |        | 89%   |       |  |      | 127,000 |  |  |  | 1992 |  |  | Liberian      
|Subtotal Shuttle Tankers          |  |               | 1,495,400 |      |    |           |  |        |       |      
|Oil/Bulk/Ore Carriers (8)         |  |               |           |      |    |           |  |        |       |       |  |      |         |  |  |  |      |  |  |               
|TEEKAY FORUM                      |  | Hyundai       |           |      | DB |           |  |        | 100%  |       |  |      | 78,500  |  |  |  | 1983 |  |  | Bahamian      
|TEEKAY FULMAR                     |  | Hyundai       |           |      | DB |           |  |        | 100%  |       |  |      | 78,500  |  |  |  | 1983 |  |  | Bahamian      
|TEEKAY FOUNTAIN                   |  | Hyundai       |           |      | DB |           |  |        | 100%  |       |  |      | 78,500  |  |  |  | 1982 |  |  | NIS           
|TEEKAY FORTUNA                    |  | Hyundai       |           |      | DB |           |  |        | 67%   |       |  |      | 78,500  |  |  |  | 1982 |  |  | NIS           
|TEEKAY FREIGHTER                  |  | Bremer        |           |      | DB |           |  |        | 52%   |       |  |      | 75,400  |  |  |  | 1982 |  |  | NIS           
|TEEKAY FOAM                       |  | Hyundai       |           |      | DB |           |  |        | 100%  |       |  |      | 78,500  |  |  |  | 1981 |  |  | Bahamian      
|TEEKAY FAVOUR                     |  | Howaldtswerke |           |      | DB |           |  |        | 100%  |       |  |      | 82,500  |  |  |  | 1981 |  |  | Bahamian      
|TEEKAY FAIR                       |  | Bremer        |           |      | DH |           |  |        | 100%  |       |  |      | 75,500  |  |  |  | 1981 |  |  | NIS           
|Subtotal Oil/Bulk/Ore Carriers    |  |               | 625,900   |      |    |           |  |        |       |      
|Other Tankers(3)                  |  |               |           |      |    |           |  |        |       |       |  |      |         |  |  |  |      |  |  |               
|MUSASHI SPIRIT (VLCC)             |  | Sasebo        |           |      | SH |           |  |        | 100%  |       |  |      | 280,700 |  |  |  | 1993 |  |  | Bahamian      
|BARRINGTON                        |  | Samsung       |           |      | DH |           |  |        | 100%  |       |  |      | 33,200  |  |  |  | 1989 |  |  | Australian    
|PALMERSTON                        |  | Halla         |           |      | DB |           |  |        | 100%  |       |  |      | 36,700  |  |  |  | 1990 |  |  | Australian    
|Subtotal Other Tankers            |  |               | 350,600   |      |    |           |  |        |       |      
|Subtotal DWT  Vessels
	Delivered |  |               | 8,598,400 |      |    |           |  |        |       |      
|Newbuildings(8)                   |  |               |           |      |    |           |  |        |       |       |  |      |         |  |  |  |      |  |  |               
|SHUTTLE TANKER (HULL 1376)        |  | Samsung       |           |      | DH |           |  |        | 100%  |       |  |      | 92,000  |  |  |  | 2002 |  |  | N/A           
|SHUTTLE TANKER (HULL 1377)        |  | Samsung       |           |      | DH |           |  |        | 100%  |       |  |      | 92,000  |  |  |  | 2003 |  |  | N/A           
|SHUTTLE TANKER (HULL 1408)        |  | Samsung       |           |      | DH |           |  |        | 100%  |       |  |      | 147,500 |  |  |  | 2003 |  |  | N/A           
|SUEZMAX TANKER (HULL 1431)        |  | Hyundai       |           |      | DH |           |  |        | 100%  |       |  |      | 152,000 |  |  |  | 2003 |  |  | N/A           
|SUEZMAX TANKER (HULL 1432)        |  | Hyundai       |           |      | DH |           |  |        | 100%  |       |  |      | 152,000 |  |  |  | 2003 |  |  | N/A           
|AFRAMAX TANKER (HULL 1433)        |  | Hyundai       |           |      | DH |           |  |        | 100%  |       |  |      | 112,000 |  |  |  | 2003 |  |  | N/A           
|AFRAMAX TANKER (HULL 1434)        |  | Hyundai       |           |      | DH |           |  |        | 100%  |       |  |      | 112,000 |  |  |  | 2003 |  |  | N/A           
|SUEZMAX TANKER (HULL 1435)        |  | Hyundai       |           |      | DH |           |  |        | 100%  |       |  |      | 152,000 |  |  |  | 2003 |  |  | N/A           
|Subtotal Newbuildings             |  |               | 1,011,500 |      |    |           |  |        |       |      
|Total DWT  All Tankers           |  |               | 9,609,900 |      |    |           |  |        |       |      




|                                               |  |                                              
|---------------------------------------------- |  | ---------------------------------------------
|DH Double-hull tanker
	DB Double-bottom tanker |  | DS Double-sided tanker
	SH Single-hull tanker



|    |                                                                 
|--- | ----------------------------------------------------------------
|(1) | Oil/bulk/ore carrier trading exclusively as a
	crude oil tanker.
|   
|(2) | Floating storage and off-take vessel.                           
|   
|(3) | Time chartered-in vessel                                        

Many of the Companys vessels have been
designed and constructed as substantially identical sister ships.

18



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These 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.

Prior to 1985, the Company chartered-in most of
the tonnage it subsequently provided to its customers. As the
availability of acceptable chartered-in tonnage declined, the
Company began an expansion of its owned fleet. Since 1985, the
Company has significantly expanded its owned fleet by taking
delivery of 42 new vessels and acquiring
33 vessels in the second-hand market, as well as disposing
of 29 older tankers over the past ten years. In
addition, the Company acquired control of an additional
26 vessels in its acquisition in 1999 of Bona and an
additional 18 vessels in its acquisition of UNS in 2001, as
previously mentioned.

See Note 7 of the Consolidated Financial
Statements for information with respect to major encumbrances
against vessels of the Company.

Classification, Audits and
Inspections

All of the Companys vessels have been
certified as being in class by their respective
classification societies: Nippon Kaiji Kyokai, 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 repairs
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
qualifying 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 major oil
companies, regularly inspect the Companys vessels as a
precondition to chartering voyages on such vessels. The
Companys vessels are also subject to inspections by the
worlds leading port state control authorities such as the
U.S. Coast Guard and the Australian Maritime Safety
Authority. The Company believes that its 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
routine 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 at least two 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 and its maintenance, safety, and crew welfare.

The Company has obtained through Det Norske
Veritas (DNV), the Norwegian classification society, approval of
the Companys safety management system as in compliance
with International Safety Management (ISM) Code. To have the
Companys safety management system certified as in
compliance, the system is audited annually by DNV. In November
2000, the Companys Document of Compliance (DOC) was
certified through November 2004. As part of the Companys
ISM Code compliance, all vessels safety management
certificates (SMC) are being maintained through ongoing internal
audits performed by the Company and intermediate audits
performed by DNV. DNV has also certified the UNS

19



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shuttle tankers as ISM Code compliant. In
accordance with Australian regulations, classifications
societies are not recognized to perform ISM Code audits for the
Companys Australian-flagged vessels. Thus, the Australian
Maritime Safety Authority approves the Companys safety
management system by auditing the Companys
Australian-flagged vessels and the Companys Australian
operations.

Organizational Structure

The following is a list of the of Companys
significant subsidiaries as at March 1, 2002.

|                                             |  |                          |  |               |      | 
|-------------------------------------------- |  | ------------------------ |  | ------------- | ---- | 
|                                             |  |                          |  | Proportion of
|                                             |  | State or Jurisdiction of |  | Ownership    
|Name of Significant Subsidiary               |  | Incorporation            |  | Interest     
|                                             |  |                          |  |              
|BONA SHIPHOLDING LTD                         |  | BERMUDA                  |  |               | 100% | 
|SINGLE SHIP COMPANIES (3)                    |  | AUSTRALIA                |  |               | 100% | 
|SINGLE SHIP LIMITED LIABILITY COMPANIES (47) |  | MARSHALL ISLANDS         |  |               | 100% | 
|TEEKAY CHARTERING LIMITED                    |  | MARSHALL ISLANDS         |  |               | 100% | 
|TEEKAY SHIPPING LIMITED                      |  | BAHAMAS                  |  |               | 100% | 
|UGLAND NORDIC SHIPPING ASA                   |  | NORWAY                   |  |               | 100% | 




Item 5.     Operating
and Financial Review and Prospects

Managements Discussion and Analysis of
Financial Condition and Results of Operations

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. At March 1, 2002, the Companys fleet
consisted of 95 vessels (including eight newbuildings
on order, five vessels time-chartered-in and three vessels
owned by joint ventures), for a total cargo-carrying capacity of
approximately 9.6 million tonnes.

During the year ended December 31, 2001,
approximately 57% 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 year ended December 31, 2001, approximately
21% of net voyage revenues were generated by time charters and
COAs priced on a spot market basis. In the aggregate,
approximately 78% of the Companys net voyage revenues
during the year ended December 31, 2001 were derived from
spot voyages or time charters and COAs priced on a spot market
basis, with the remaining 22% 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.

Acquisition of Ugland Nordic Shipping
ASA

As of May 28, 2001, the Company had
purchased 100% of the issued and outstanding shares of UNS
(9% of which were purchased in fiscal 2000 and the
remaining 91% was purchased in fiscal 2001), for
approximately $223 million in cash.

20



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UNS is the worlds largest owner of shuttle
tankers, controlling a modern fleet of 18 vessels
(including three newbuildings on order)
(the UNS Fleet) that engage in the
transportation of oil from offshore production platforms to
onshore storage and refinery facilities. The UNS Fleet has
an average age of approximately 9.0 years, excluding the
three newbuildings on order, and operates primarily in the North
Sea under fixed-rate long-term contracts. In addition, as of
December 31, 2001, UNS owned approximately 11.9% of Nordic
American Tankers Shipping Ltd. (AMEX: NAT)
(NAT), a publicly traded company that owns three
Suezmax tankers on a long-term contract to BP Shipping.

For the year ended December 31, 2000, UNS
earned net voyage revenues of $69.1 million, resulting in
income from vessel operations of $23.8 million and net
income of $15.4 million, applying accounting principles
generally accepted in the United States. The operating results
of UNS have been consolidated in the Companys financial
statements commencing March 6, 2001, the date that the
Company acquired a majority interest in UNS. Minority interest
expense, which is included in other income (loss), has been
recorded to reflect the minority shareholders share of
UNS net income for the period from March 6, 2001 to
May 28, 2001, the date on which the Company acquired the
remaining UNS shares.

Since the majority of UNS revenues are
derived from fixed-rate long-term contracts, the percentage of
the Companys fleet that is dependent on the spot tanker
market has declined. Giving effect to the acquisition of UNS as
if it had occurred on January 1, 2001, the Company would
have derived 23% of its pro forma net voyage revenues from
fixed-rate time-charters and COAs during the year ended
December 31, 2001, compared to 13% when excluding UNS.

Acquisition of Bona Shipholding Ltd.

On June 11, 1999, the Company acquired Bona
for aggregate consideration (including 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 worlds 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.

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.

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s net
voyage revenues is reflected as a time charter hire expense.
These O/B/Os have earned lower average time charter
equivalent (TCE) rates than the rest of the
Teekay fleet as these vessels command lower rates than modern
Aframax tankers under typical market conditions.

Results of Operations

Bulk shipping industry freight rates are commonly
measured at the net voyage revenue level in terms of 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 market 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.

TCE rates are dependent on oil production levels,
oil consumption growth, the number of vessels

21



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scrapped, the number of new buildings delivered
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.

Year Ended December 31, 2001 versus Year
Ended December 31, 2000

The Companys average fleet size increased
15.3% in the year ended December 31, 2001 compared to the
year ended December 31, 2000, primarily due to the
acquisition of UNS in March 2001.

Average TCE rates were higher in 2001, compared
to 2000, due to increased demand for tankers, primarily arising
from increased oil production in the first half of 2001. The
Companys average TCE rate increased 12.1% to $28,768 for
the year ended December 31, 2001 (excluding the
Companys vessels on bareboat charter), from $25,661 for
the year ended December 31, 2000. In response to a slowing
global economy, a series of OPEC oil production cuts during 2001
have resulted in a reduction in tanker demand and thus a decline
in TCE rates in the second half of 2001 and into the first
quarter of 2002.

Net voyage revenues were $789.5 million in
the year ended December 31, 2001, as compared to
$644.3 million in the year ended December 31, 2000,
representing a 22.5% increase. This was the result of the
increase in fleet size and an increase in the Companys
average TCE rate.

Vessel operating expenses, which include crewing,
repairs and maintenance, insurance, stores, lubes, and
communication expenses, increased 23.5% to $154.8 million
in the year ended December 31, 2001, from
$125.4 million in the year ended December 31, 2000,
primarily as a result of the increase in fleet size, and higher
repairs and maintenance costs.

Time charter hire expense increased 23.3% to
$66.0 million in the year ended December 31, 2001,
from $53.5 million in the prior year, due primarily to an
increase in the average number of vessels time-chartered-in by
the Company and an increase in the average TCE rates earned in
the O/B/O pool managed by the Company. The minority
participants share of the O/B/O pools net
voyage revenues, which is reflected as a time-charter expense,
was $27.6 million for the year ended December 31,
2001, compared to $26.3 million in the year ended
December 31, 2000. The average number of vessels
time-chartered-in by the Company, excluding the O/B/Os, was six
in the year ended December 31, 2001, compared to five in
the prior year.

Depreciation and amortization expense increased
36.1% to $136.3 million in the year ended December 31,
2001, from $100.2 million in the prior year, mainly due to
the acquisition of UNS, which resulted in an increase in the
average size and average cost base of the Companys owned
fleet, and an increase in drydock amortization expense.
Depreciation and amortization expense included amortization of
drydocking costs of $14.2 million in the year ended
December 31, 2001, compared to $9.2 million in the
prior year.

General and administrative expenses increased
30.5% to $48.9 million in the year ended December 31,
2001, from $37.5 million in the prior year, primarily as a
result of the acquisition of UNS and higher senior management
bonuses, which are determined largely by Company financial
performance.

Interest expense decreased 11.1% to
$66.2 million in the year ended December 31, 2001,
from $74.5 million in the prior year. This decrease
reflects lower interest rates, partially offset by the
additional debt assumed as part of the UNS acquisition.

Interest income decreased 29.4% to
$9.2 million in the year ended December 31, 2001,
compared to $13.0 million in the prior year, mainly as a
result of lower interest rates.

Other income of $10.1 million for the year
ended December 31, 2001 consisted primarily of equity
income from 50%-owned joint ventures, dividend income from NAT,
gain on the disposition of available-

22



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for-sale securities, and foreign exchange gains,
partially offset by income tax expense and minority interest
expense. Equity income from joint ventures included a
$10.2 million gain on the sale of three 50%-owned vessels.
Other income for the year ended December 31, 2000 was
$3.9 million, which was comprised mainly of equity income
from a 50%-owned joint venture, partially offset by a loss on
the disposition of two vessels and income tax expense.

As a result of the foregoing factors, net income
rose to $336.5 million in the year ended December 31,
2001, from $270.0 million in the prior year.

Year Ended December 31, 2000 versus Nine
Months Ended December 31, 1999

As a result of the Companys change in
fiscal year-end from March 31 to December 31,
commencing December 31, 1999, the 2000 fiscal years
results are for the 12 month period ended December 31,
2000, while the comparative fiscal periods results are for
the nine-month period ended December 31, 1999. Where
indicated in the following discussions, percentage change
figures reflect comparison to the annualized results for the
nine-month period ended December 31, 1999. The Company
annualized the results by multiplying its results for the
nine-month period by 4/3. The annualized results for
the nine-month period ended December 31, 1999 are not
necessarily indicative of those for a full fiscal year.

Average Aframax TCE rates increased significantly
in 2000, compared to the nine-month period ended
December 31, 1999, due to increased demand for modern
tankers, arising from increased oil production and
discrimination by charterers against older tankers. The
Companys average TCE rate increased 81.2% to $25,661 for
the year ended December 31, 2000, from $14,165 for the
nine-month period ended December 31, 1999.

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 9.0% in the year ended
December 31, 2000, compared to the nine-month period ended
December 31, 1999.

Net voyage revenues were $644.3 million in
the year ended December 31, 2000, as compared to
$248.4 million in the nine-month period ended
December 31, 1999, representing a 94.6% increase on an
annualized basis from the nine-month period ended
December 31, 1999. This is mainly the result of an increase
in the average TCE rate earned by the Companys fleet. In
addition, 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.

Vessel operating expenses decreased 4.8% on an
annualized basis to $125.4 million in the year ended
December 31, 2000, from $98.8 million in the
nine-month period ended December 31, 1999. This decrease
was mainly the result of lower per-day operating expenses
arising from the application of the Companys lower-cost
structure to the Bona fleet. This decrease was partially offset
by the increase in the Companys average fleet size.

Time charter hire expense increased 30.7% on an
annualized basis to $53.5 million in the year ended
December 31, 2000, from $30.7 million in the
nine-month period ended December 31, 1999, due primarily to
the inclusion of Bonas operating results, which includes
the O/B/O vessels, for only part of the previous fiscal
period from June 11, 1999, an increase in the average TCE
rates earned in the O/B/O pool, and an increase in the
average number of vessels time-chartered-in by the Company. The
minority participants share of the O/B/O pools
net voyage revenues, which is reflected as a time-charter
expense, was $26.3 million for the year ended
December 31, 2000, compared to $10.5 million in the
nine-month period ended December 31, 1999. The average
number of vessels time-chartered-in by the Company, excluding
the O/B/Os, was five in the year ended December 31, 2000,
compared to four in the nine-month period ended
December 31, 1999.

23



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Depreciation and amortization expense increased
10.0% on an annualized basis to $100.2 million in the year
ended December 31, 2000, from $68.3 million in the
nine-month period ended December 31, 1999. This increase
primarily reflects the increase in the Companys average
fleet size arising from the acquisition of Bona. Depreciation
and amortization expense included amortization of drydocking
costs of $9.2 million in the year ended December 31,
2000, compared to $6.3 million in the nine-month period
ended December 31, 1999.

General and administrative expenses increased
4.0% on an annualized basis to $37.5 million in the year
ended December 31, 2000, from $27.0 million in the
nine-month period ended December 31, 1999. This increase
was primarily a result of the acquisition of Bona, partially
offset by overhead cost savings related to the acquisition.

Interest expense increased 24.2% on an annualized
basis to $74.5 million in the year ended December 31,
2000, from $45.0 million in the nine-month period ended
December 31, 1999. This increase reflects an increase in
interest rates and the additional debt assumed as part of the
Bona acquisition.

Interest income increased 67.2% on an annualized
basis to $13.0 million in the year ended December 31,
2000 from $5.8 million in the nine-month period ended
December 31, 1999, mainly as a result of increased interest
rates and higher cash and marketable securities balances.

Other income of $3.9 million in the year
ended December 31, 2000 consisted primarily of equity
income from a 50%-owned joint venture, partially offset by
future income taxes related to the Companys Australian
shipowning subsidiaries, and losses on the sale of two vessels.
Other loss of $4.0 million in the nine-month period ended
December 31, 1999 consisted primarily of future income
taxes related to the Companys Australian ship-owning
subsidiaries and one-time employee and severance-related costs,
partially offset by equity income from the 50%-owned joint
venture.

As a result of the foregoing factors, net income
was $270.0 million in the year ended December 31,
2000, compared to a net loss of $19.6 million in the
nine-month period ended December 31, 1999.

Liquidity and Capital Resources

As at December 31, 2001, the Company had
total cash and cash equivalents of $174.9 million, compared
to $181.3 million at December 31, 2000, and
$220.3 million as at December 31, 1999. The
Companys total liquidity, including cash, short-term
marketable securities and undrawn long-term borrowings, was
$688.2 million as at December 31, 2001, up from
$373.1 million as at December 31, 2000, and
$237.4 million as at December 31, 1999. The increase
in liquidity during the year ended December 31, 2001 was
mainly the result of net cash flow from operating activities
earned during the year and net proceeds from the issuance of
$350.0 million of the Companys unsecured 8.875%
Senior Notes due 2011 (the 8.875% Notes),
partially offset by prepayments and scheduled repayments of
certain outstanding secured debt (excluding the Revolvers, as
defined below), cash used to purchase the UNS shares, and cash
used for newbuilding instalment payments. In the Companys
opinion, working capital is sufficient for the Companys
present requirements.

Net cash flow from operating activities increased
to $520.2 million in the year ended December 31, 2001,
compared to $333.3 million in the year ended
December 31, 2000, and $51.5 million in the nine-month
period ended December 31, 1999. This primarily reflects the
change in average TCE rates during these periods and the
increase in the Companys fleet size as a result of the UNS
and Bona acquisitions.

In 2001 the Company applied a portion of its
operating cash flow and the net proceeds from the 8.875% Notes
toward the repayment of debt. Scheduled debt repayments were
$72.0 million during the year ended December 31, 2001,
compared to $63.8 million during the year ended
December 31, 2000, and $32.3 million during the
nine-month period ended December 31, 1999. Debt prepayments
during the year

24



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ended December 31, 2001 totalled
$751.7 million. Of this, $551.1 million was used to
reduce the Companys two long-term revolving credit
facilities (the Revolvers), $178.5 million was
used to reduce several of the Companys term loans, and the
remaining $22.1 million was used to repurchase a portion of
the Companys 8.32% First Preferred Ship Mortgage Notes
(the 8.32% Notes). Debt prepayments during the year
ended December 31, 2000 and nine-month period ended
December 31, 1999 totalled $429.9 million and
$10.0 million, respectively.

As at December 31, 2001, the Companys
total debt was $935.7 million, up from $797.5 million
as at December 31, 2000, mainly as a result of the
acquisition of UNS, partially offset by debt repayments made
during 2001. The Companys Revolvers provided for
additional borrowings of up to $508.2 million as at
December 31, 2001. The amount available under the Revolvers
reduces semi-annually with final balloon reductions in 2006 and
2008. The 8.32% Notes are due February 1, 2008 and are
subject to a sinking fund, which will retire $45.0 million
principal amount of the 8.32% Notes on each February 1,
commencing 2004. The 8.875% Notes are due July 15, 2011.
The Companys outstanding term loans reduce in quarterly or
semi-annual payments with varying maturities through 2010. The
aggregate annual long-term debt principal repayments required to
be made subsequent to December 31, 2001 are
$51.8 million (2002), $63.6 million (2003),
$84.9 million (2004), $109.8 million (2005), and
$128.5 million (2006).

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 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, was limited as of December 31, 2001,
to $448.0 million. Certain of the loan agreements require a
minimum level of free cash be maintained. As at
December 31, 2001, this amount was $75.0 million.

The Company manages the impact of interest rate
changes on earnings and cash flows through its interest rate
structure. For the Revolvers, the interest rate structure is
based on LIBOR plus a margin depending on the financial leverage
of the Company. Interest payments on the term loans are also
based on LIBOR plus a margin. As at December 31, 2001, the
interest rate swap agreements effectively change the
Companys interest rate exposure on $85.0 million of
debt from a floating LIBOR rate to an average fixed rate of
6.40%. The interest rate swap agreements expire between May 2002
and May 2004.

Funding and treasury activities are conducted
within corporate policies to minimize borrowing costs and
maximize investment returns while maintaining the safety of the
funds and appropriate liquidity for Company purposes. Cash and
cash equivalents are held primarily in U.S. dollars, with
some balances held in Japanese Yen, Singapore Dollars, Canadian
Dollars, Australian Dollars, British Pounds and
Norwegian Kroner.

The Company is exposed to market risk from
foreign currency fluctuations, changes in interest rates, and
bunker fuel prices. The Company uses forward foreign currency
contracts, interest rate swaps, and bunker fuel swap contracts
to manage currency, interest rate, and bunker fuel price risks,
but does not use these financial instruments for trading or
speculative purposes. As at December 31, 2001, the Company
had $65.5 million in forward foreign currency contracts,
which expire between January 2002 and December 2003. The Company
is also committed to bunker fuel swap contracts totalling 42,000
metric tonnes with a weighted-average price of $113.54 per
tonne, which expire between January 2002 and May 2004.

Dividends declared during the year ended
December 31, 2001 were $34.1 million, or
$0.86 per share.

On September 19, 2001, Teekay announced that
its Board of Directors had authorized the repurchase of up to
2,000,000 shares of its Common Stock in the open market. As at
December 31, 2001, Teekay had repurchased 512,800 shares of
Common Stock at an average price of $27.617 per share.

25



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During the year ended December 31, 2001, the
Company incurred capital expenditures for vessels and equipment
of $185.0 million. These primarily consisted of
$95.0 million for the purchase of four shuttle tankers,
$48.0 million for the reimbursement of instalments already
made on five newbuilding contracts that were assumed by the
Company in August 2001, and $22.5 million for shuttle
tanker newbuilding instalment payments. Cash expenditures for
drydocking were $20.1 million in the year ended
December 31, 2001 compared to $11.9 million in the
year ended December 31, 2000, and $6.6 million in the
nine-month period ended December 31, 1999.

As at December 31, 2001, the Company was
committed to the construction of three shuttle, three Suezmax
and two Aframax tankers scheduled for delivery between December
2002 and December 2003, at a total cost of approximately
$410.8 million. As of December 31, 2001, there have
been payments made towards these commitments of
$112.8 million and long-term financing arrangements exist
for $61.5 million of the unpaid cost of these vessels. It
is the Companys intention to finance the remaining unpaid
amount of $236.5 million through either debt borrowing or
surplus cash balances, or a combination of the two. As of
December 31, 2001, the remaining payments required to be
made under these newbuilding contracts are as follows:
$56.2 million in 2002 and $241.8 million in 2003. Upon
delivery, the vessels will be subject to long-term charter
contracts, which expire between 2009 and 2015.

The Company and certain subsidiaries of the
Company have guaranteed their share of the outstanding mortgage
debt in three 50%-owned joint venture companies. As of
December 31, 2001, the Company and these subsidiaries have
guaranteed $87.8 million of such debt, or 50% of the total
$175.6 million in outstanding mortgage debt of the joint
venture companies. These joint venture companies own three
shuttle tankers.

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.




Item 6.     Directors,
Senior Management and Employees

Directors and Senior Management

The directors and executive officers of the
Company are listed below:

|                      |  |     |    |          |  |                                                    
|--------------------- |  | --- | -- | -------- |  | ---------------------------------------------------
|Name                  |  | Age |    | Position
|                      |  |     |    |         
|C. Sean Day           |  |     | 52 |          |  | Director and Chairman of the Board                 
|Bjorn Moller          |  |     | 44 |          |  | Director, President and Chief Executive Officer    
|Axel Karlshoej        |  |     | 61 |          |  | Director and Chairman Emeritus                     
|Bruce C. Bell         |  |     | 54 |          |  | Director and Corporate Secretary                   
|Dr. Ian D. Blackburne |  |     | 56 |          |  | Director                                           
|Morris L. Feder       |  |     | 85 |          |  | Director                                           
|Thomas Kuo-Yuen Hsu   |  |     | 55 |          |  | Director                                           
|Leif O. Höegh         |  |     | 38 |          |  | Director                                           
|Eileen A. Mercier     |  |     | 54 |          |  | Director                                           
|Peter S. Antturi      |  |     | 43 |          |  | SVP, Treasurer and Chief Financial Officer         
|David Glendinning     |  |     | 48 |          |  | SVP, Customer Service & Marine Project
	Development
|Mads T. Meldgaard     |  |     | 37 |          |  | VP, Chartering                                     
|Graham Westgarth      |  |     | 47 |          |  | SVP, Marine Operations                             

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

C. Sean Dayhas
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 currently serving as a Director of CBS
Personnel, California Pellett Mills, Transmarine Navigation
Company, Genesee & Wyoming Inc., Kirby Corporation, and
Sparkling Springs Water Group and as a Director and President of
the Friends of South Africa Schools Fund, Inc. Mr. Day
is also engaged as a consultant to the trust that constitutes
the largest shareholder of the Company. See
Item 7  Related Party Transactions.

Bjorn Mollerbecame
a Director and the President and Chief Executive Officer of the
Company in April 1998. Mr. Moller has over 20 years
experience in shipping and has served in senior management
positions with the Company for more than 13 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.

Axel Karlshoejis
President and serves on the compensation committee of Nordic
Industries, a California general construction firm with which he
has served for the past 29 years. He is the older brother
of the late J. Torben Karlshoej, the founder of the Company. He
has served as a Director of the Company since 1989 and Chairman
of the Board from June 1994 to September 1999, and Chairman
Emeritus since stepping down as Chairman.

Bruce C. Bellhas
served as a Director and as the Corporate Secretary of the
Company since May 2000. He is the Managing Director of Oceanic
Bank and Trust Limited, a Bahamian bank and trust company, a
position he has held since March 1994. Prior to joining Oceanic
Bank and Trust Limited, Mr. Bell was engaged in the private
practice of law in Canada, specializing in corporate/
commercial, banking and international business transactions.

Dr. Ian D.
Blackburnewas appointed as a Director
of the Company in September 2000. Dr. Blackburne has over
25 years experience in petroleum refining and marketing,
and in March 2000, he retired as Managing Director and CEO of
Caltex Australia Limited, a large petroleum refining and
marketing conglomerate based in Australia. He is currently
serving as a Director of CSR Limited and
Suncorp-Metway Ltd., Australian public companies, and is
Chairman of the Australian Science and Technology Organization.

Morris L. Federhas
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 engaged 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.

Thomas Kuo-Yuen Hsuhas 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.

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Leif O. Höeghwas appointed as a Director in June 1999 in connection 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. Höegh is Managing Director of Leif Höegh
(UK) Ltd. and Vice-Chairman of Leif Höegh and
Co. ASA. He also serves as a Director of Dannebrog
Rederi AS and as the Chairman of Höegh Capital
Partners, Inc.

Eileen A. Mercierhas served as a Director of the Company since December 2000.
Ms. Mercier has over 30 years of experience in a wide
variety of financial and strategic planning positions, including
Senior Vice President and Chief Financial Officer for
Abitibi-Price Inc. from 1990 to 1995. Since then she has been
President of Finvoy Management Inc., a management consulting
firm specializing in financial strategy, mergers and
acquisitions, restructuring and corporate governance issues. She
also currently serves as a Director for CGI Group Inc.,
Quebecor World Inc., Winpak Ltd., Covington Fund Inc.,
ING Bank of Canada, The Workplace Safety and Insurance Board of
Ontario, York University, and the University Health Network.

Peter S. Antturijoined the Company in September 1991 as Manager, Accounting and
was promoted to the position of Controller in March 1992, and
then to Vice President, Treasurer and Chief Financial Officer in
October 1997. Mr. Antturi was appointed to his current
position of Senior Vice President, Treasurer and Chief Financial
Officer in March 2002. Prior to joining the Company,
Mr. Antturi held various accounting and finance roles in
the shipping industry since 1985.

Captain David
Glendinningjoined 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.
Since February 1999 he has served as Senior Vice President,
Customer Relations and Marine Project Development. 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.

Mads T. Meldgaardjoined 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.

Captain Graham
Westgarthjoined 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 29 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.

Compensation of Directors and Senior
Management

The aggregate compensation paid to the
Companys five executive officers listed above (the
Executive Officers) was $2,589,006 for the year
ended December 31, 2001, 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 year ended December 31, 2001,
the Company also contributed an aggregate of $232,787 to provide
pension and similar benefits for the Executive Officers. During
the year ended December 31, 2001, the Company granted stock
options to purchase an aggregate of 82,600 shares of the
Companys common stock at an exercise price of
$41.19 per share, to the Executive Officers under the
Companys 1995 Stock Option Plan. The options expire
March 14, 2011, ten years after the date of the grant.

During the year ended December 31, 2001, the
eight non-employee Directors of the Company received, in the
aggregate, approximately $180,000 for their services as
Directors plus reimbursement of their out-of-

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pocket expenses. During that same period, the
Company granted stock options to purchase an aggregate of 80,000
shares of the Companys common stock at an exercise price
of $41.19 per share, to the non-employee Directors under the
Companys 1995 Stock Option Plan. The options expire
March 14, 2011, ten years after the date of the grant.

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 15, 2002, a total of 3,981,237 shares of Common Stock
are reserved for issuance under the Plan. As of such date,
options to purchase a total of 3,729,293 shares of Common Stock
were outstanding, with options to purchase a total of 1,640,199
shares then exercisable including options to purchase a total of
1,097,350 shares held by Directors and the Executive Officers,
of which 630,331 were exercisable. The outstanding options under
the Plan are exercisable at prices ranging from $16.875 to
$41.19 per share, with a weighted average exercise price of
$26.194 per share, and expire between July 19, 2005 and
March 12, 2012, ten years after the date of each grant.

Board Practices

The Board of Directors consists of nine members.
The Board of Directors is divided into three classes, with
members of each class elected to hold office for a term of three
years in accordance with the classification indicated below or
until his or her successor is elected and qualifies. Directors
Thomas Kuo-Yuen Hsu, Axel Karlshoej, and
Bjorn Moller have terms expiring in 2002 and have been
nominated by the Board of Directors for re-election at the 2002
Annual Meeting of Shareholders. Directors Bruce C. Bell,
C. Sean Day, and Dr. Ian D. Blackburne have terms
expiring in 2003. Directors Morris L. Feder, Leif O.
Höegh, and Eileen A. Mercier have terms expiring in
2004.

Other than an employment agreement between the
Company and Mr. Moller, which provides that Mr. Moller
shall be paid cash severance upon termination of his employment,
there are no service contracts between the Company and any of
its Directors providing for benefits upon termination of their
employment or service.

The Board of Directors has standing Audit,
Executive, Governance and Resource Committees, but no standing
nominating committee. The Audit Committee oversees actions taken
by the Companys independent auditors. The Audit Committee
consists of Eileen A. Mercier, Morris L. Feder, and
Leif O. Höegh. The Executive Committee is responsible
for items that have been broadly approved by the Board, and
which are beyond the approval levels of the Companys CEO.
The Executive Committee consists of Bjorn Moller together
with C. Sean Day, Morris L. Feder, and
Axel Karlshoej. The Governance Committee is responsible for
making recommendations to the Board on corporate governance
issues. The Governance Committee consists of Bruce C. Bell,
C. Sean Day, and Eileen A. Mercier, together with
Bjorn Moller. The Resource Committee reviews the
compensation of the Companys executive officers and makes
recommendations to the Board of Directors regarding
compensation. The Resource Committee consists of
Axel Karlshoej, Thomas Kuo-Yuen Hsu, and Dr. Ian
D. Blackburne.

Crewing and Staff

As at December 31, 2001, the Company
employed approximately 4,100 seagoing and shore-based personnel.
This is an increase from 3,000 seagoing and shore-based
personnel as at December 31, 2000 and 1999.

The Company regards attracting and retaining,
motivated seagoing personnel as a top priority. Through its
global manning organization comprising of offices in Glasgow,
Latvia, Manila, Melbourne, Mumbai, Oslo, and Sydney, the Company
offers seafarers highly competitive employment packages and

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comprehensive benefits. The Company also provides
excellent opportunities for personal and career development,
which relate to the Companys philosophy of promoting
internally.

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 that covers substantially all of
the Companys junior officers and seamen. The Company is
also party to Enterprise Bargaining Agreements with various
Australian maritime unions that covers officers and seamen
employed through the Australian operations.

The Company sees its commitment to training as
fundamental to the development of the highest caliber seafarers
for its marine operations. The Companys cadet training
program is designed to balance academic learning with hands-on
training at sea. The Company has relationships with training
institutions in Canada, Croatia, India, Latvia, Norway,
Philippines, Turkey, and the United Kingdom. After receiving
formal instruction at one of these institutions, the
cadets training continues on board a Teekay vessel. The
Company also has a career development plan that is devised to
ensure a continuous flow of qualified officers who are trained
on the Company vessels and are familiar with the Companys
operational standards, systems and policies. The Company
believes that high-quality manning and training policies will
play an increasingly important role in distinguishing larger
independent tanker companies that have in-house (or affiliate)
capabilities from smaller companies that must rely on outside
ship managers and crewing agents.

Share Ownership

The following table sets forth certain
information regarding ownership, as of March 15, 2002, of
Teekays common stock, par value of $0.001 per share (the
Common Stock) by the Directors and Executive
Officers as a group. Information for certain holders is based on
information delivered to the Company.

|                                                         |  |              |         |                  |  |  |       | 
|-------------------------------------------------------- |  | ------------ | ------- | ---------------- |  |  | ----- | 
|Identity of Person or Group                              |  | Shares Owned |         | Percent of Class
|                                                         |  |              |         |                 
|All Directors and Executive Officers
	(13 persons)(1)(2) |  |              | 649,481 |                  |  |  | 1.64% | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes 630,331 shares of Common Stock subject
	to stock options exercisable within 60 days after
	March 15, 2002. Excludes (a) 467,019 shares of Common
	Stock subject to stock options first exercisable more than
	60 days after March 15, 2002 and (b) shares owned
	by Cirrus Trust and JTK Trust, which are under the common
	supervision of Axel Karlshoej and Thomas Kuo-Yuen Hsu,
	Directors of the Company. See Item 7  Major
	Shareholders and Related Party Transactions.
|   
|(2) | Each of the Directors and Executive Officers
	beneficially owns less than one percent of the outstanding
	shares of Common Stock.                                                                                                                                                                                                                                                                                                                                                      

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Item 7.     Major
Shareholders and Related Party Transactions

Major Shareholders

(a)     The following
table sets forth information regarding beneficial ownership, as
of March 15, 2002, of Teekays Common Stock by each
person known by the Company to beneficially own more than 5% of
the Common Stock. Information for certain holders is based on
their latest filings with the Securities and Exchange Commission
or information delivered to the Company.

|                               |  |              |            |                  |  |  |        | 
|------------------------------ |  | ------------ | ---------- | ---------------- |  |  | ------ | 
|Identity of Person or Group    |  | Shares Owned |            | Percent of Class
|                               |  |              |            |                 
|Cirrus Trust and JTK Trust(1)  |  |              | 16,315,690 |                  |  |  | 41.24% | 
|Neuberger Berman LLC           |  |              | 3,817,022  |                  |  |  | 9.65%  | 
|Fidelity Management & Research |  |              | 2,265,060  |                  |  |  | 5.73%  | 






|    |                                                                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Cirrus Trust and JTK Trust are under common
	supervision and beneficially own 13,427,397 shares (or 33.95%)
	of Common Stock and 2,888,293 shares (or 7.29%) of Common Stock,
	respectively.

(b)     On June 15,
1998 Cirrus Trust sold 4,200,000 shares of Common Stock as part
of an underwritten public offering. The percentage of Common
Stock owned by Cirrus Trust prior to the offering was 64.6%. The
percentage of Common Stock owned by Cirrus Trust after the
offering was 45.6%.

(c)     The
Companys major shareholders have the same voting rights as
other shareholders of the Company.

(d)     No corporation
or foreign government owns more than 50% of the Companys
outstanding Common Stock.

(e)     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.

Related Party Transactions

Approximately 41.24% of the issued and
outstanding shares of Common Stock is beneficially owned by
Cirrus Trust and JTK Trust (the Trusts), which
are under the common supervision of Axel Karlshoej and
Thomas Kuo-Yuen Hsu, Directors of the Company,
Shigeru Matsui, President of Matsui & Company, a
Tokyo based ship brokerage firm, and Arthur F. Coady,
Chairman of Oceanic Bank and Trust, an affiliate of the Trusts.
Bruce C. Bell, a Director and the Corporate Secretary of
the Company, is the Managing Director of Oceanic Bank and Trust.

Payments made by the Company to the Trusts or
companies related through common ownership in respect of port
agent services, legal and administration fees, shares office
costs and consulting fees for the years ended December 31,
2001 and 2000 and the nine month period ended December 31,
1999 totaled $1,499,700, $1,638,300, and $510,210, respectively.






Item 8.     Financial
Information


Consolidated Financial Statements and
Notes

See Item 18 below.

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.

Dividend Policy

Commencing with the fiscal quarter ended
September 30, 1995, the Company has declared and paid
quarterly cash dividends in the amount of $0.215 per share on
its Common Stock. Subject to financial results and declaration
by the Board of Directors, the Company currently intends to
continue to declare

31



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##### 



and pay a regular quarterly dividend in such
amount per share on its Common Stock. Pursuant to the
Companys dividend reinvestment program, holders of Common
Stock are permitted to choose, in lieu of receiving cash
dividends, to reinvest any dividends in additional shares of
Common Stock at then prevailing market prices, but without
brokerage commissions or service charges.

The timing and amount of dividends, if any, will
depend, among other things, on the Companys results of
operations, financial condition, cash requirements, restrictions
in financing agreements and other factors deemed relevant by the
Companys Board of Directors. Because the Company is a
holding company with no material assets other than the stock of
its subsidiaries, its ability to pay dividends on the Common
Stock is dependent on the earnings and cash flow of its
subsidiaries. The indentures relating to the Companys
8.32% First Preferred Ship Mortgage Notes due 2008 (the
Mortgage Note Indenture) and certain of the credit
agreements governing the Companys (and its subsidiaries)
credit facilities provide that the Companys ability to pay
dividends is subject to limitations based upon the
Companys cumulative net income plus certain additional
amounts, including the proceeds received by the Company from any
issuance of its capital stock. The Company does not believe that
the restrictions contained in the Mortgage Note Indenture or in
other financing agreements to which the Company and its
subsidiaries are party to will restrict payment of cash
dividends on the Common Stock for the foreseeable future.

Significant Changes

No significant change has occurred since the date
of the annual financial statements included in Item 18
below.




Item 9.     The
Offer and Listing

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 periods indicated.

|                                    |  |      |         |     |  |   |         | 
|----------------------------------- |  | ---- | ------- | --- |  | - | ------- | 
|                                    |  | High |         | Low
|                                    |  |      |         |    
|Years Ended:                        |  |      |         |     |  |   |         | 
|March 31, 1998                      |  | $    | 37.8750 |     |  | $ | 27.8750 | 
|March 31, 1999                      |  |      | 30.8750 |     |  |   | 14.2500 | 
|Nine months ended December 31, 1999 |  |      | 18.9375 |     |  |   | 13.7500 | 
|December 31, 2000                   |  |      | 50.8750 |     |  |   | 15.3125 | 
|December 31, 2001                   |  |      | 52.6100 |     |  |   | 25.4900 | 

|                |                    |      |   |         |  |  |   |         | 
|--------------- | ------------------ | ---- | - | ------- |  |  | - | ------- | 
|                |                    | High |   | Low    
|                |                    |      |   |        
|Quarters Ended: |                    |      |   |         |  |  |   |        
|                | March 31, 2000     |      | $ | 27.5625 |  |  | $ | 15.3125 | 
|                | June 30, 2000      |      |   | 34.2500 |  |  |   | 24.0000 | 
|                | September 30, 2000 |      |   | 50.8750 |  |  |   | 32.5000 | 
|                | December 31, 2000  |      |   | 47.5000 |  |  |   | 31.9375 | 
|                | March 31, 2001     |      |   | 45.6000 |  |  |   | 33.2500 | 
|                | June 30, 2001      |      |   | 52.6100 |  |  |   | 38.6200 | 
|                | September 30, 2001 |      |   | 41.0000 |  |  |   | 29.1600 | 
|                | December 31, 2001  |      |   | 35.0100 |  |  |   | 25.4900 | 

|              |                |      |   |         |  |  |   |         | 
|------------- | -------------- | ---- | - | ------- |  |  | - | ------- | 
|              |                | High |   | Low    
|              |                |      |   |        
|Months Ended: |                |      |   |         |  |  |   |        
|              | September 2001 |      | $ | 36.4000 |  |  | $ | 29.1600 | 
|              | October 2001   |      |   | 32.2000 |  |  |   | 27.6400 | 
|              | November 2001  |      |   | 30.2600 |  |  |   | 25.4900 | 
|              | December 2001  |      |   | 35.0100 |  |  |   | 30.3600 | 
|              | January 2002   |      |   | 35.0500 |  |  |   | 33.0100 | 
|              | February 2002  |      |   | 37.8500 |  |  |   | 32.0500 | 

32



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##### 



Teekays 8.32% Notes and 8.875% Senior Notes
are listed for trading on The New York Stock Exchange. The 8.32%
Notes and 8.875% Notes were first offered on the market
January 19, 1996 and August 3, 2001, respectively. As
no active trading market exists for these Notes, no historical
pricing information is included here.




Item 10.     Additional
Information

Memorandum and Articles of
Association

The Companys Articles of Incorporation and
Bylaws have previously been filed as exhibits 2.1, 2.2, and
2.3 to the Companys Annual Report on Form 20-F (File
No. 1-12874), filed with the Securities and Exchange
Commission on March 30, 2000, and are hereby incorporated
by reference into this Annual Report.

The rights, preferences and restrictions
attaching to each class of the Companys capital stock are
described in the section entitled Description of Capital
Stock of the Companys Rule 424(b) prospectus
(File No. 1-12874), filed with the Securities and Exchange
Commission on June 10, 1998, and hereby incorporated by
reference into this Annual Report, provided that since the date
of such prospectus (1) the par value of the Companys
capital stock has been changed to $0.001 per share, (2) the
authorized capital stock of the Company has been increased to
725,000,000 shares of Common Stock and 25,000,000 shares of
Preferred Stock, (3) the Company has been domesticated in
the Republic of the Marshall Islands and (4) the Company
has adopted a staggered Board of Directors, with directors
serving three-year terms.

The necessary actions required to change the
rights of holders of the stock and the conditions governing the
manner in which annual general meetings and special meetings of
shareholders are convoked are described in the Companys
Bylaws filed as exhibit 2.3 to the Companys Annual
Report on Form 20-F (File No. 1-12874), filed with the
Securities and Exchange Commission on March 30, 2000, and
hereby incorporated by reference into this Annual Report.

The Company has in place a rights agreement that
would have the effect of delaying, deferring or preventing a
change in control of the Company. The rights agreement has been
filed as part of the Companys Form 8-A (File
No. 1-12874), filed with the Securities and Exchange
Commission on September 11, 2000, and hereby incorporated
by reference into this Annual Report.

There are no limitations on the rights to own
securities, including the rights of non-resident or foreign
shareholders to hold or exercise voting rights on the securities
imposed by the laws of the Republic of the Marshall Islands or
by the Companys articles of incorporation or bylaws.

Material Contracts

The following is a summary of each material
contract, other than material contracts entered into in the
ordinary course of business, to which the Company or any of its
subsidiaries is a party, for the two years immediately preceding
the date of this Annual Report:

(a)     Indenture, dated
January 29, 1996, for U.S. $225,000,000 8.32% First
Preferred Ship Mortgage Notes due 2008, Teekay Shipping
Corporation as Issuer; United States Trust Company of New York
as Trustee; VSSI Oceans Inc., VSSI Atlantic Inc., VSSI Appian
Inc., Senang Spirit Inc., Exuma Spirit Inc., Nassau Spirit Inc.,
and Andros Spirit Inc. as Guarantors.

(b)     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.

33



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##### 



(c)     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.

(d)     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.

(e)     Amended and
Restated Reimbursement Agreement dated April 16, 1998
(amended May 1999) relating to a U.S. $74,000,000 Credit
facility made available by RABO Australia Limited to 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. as
Guarantor.

(f)     Amended and
Restated Guarantee dated April 16, 1998 made by Teekay
Shipping Corporation in favor of Nedship Bank (America) N.V.
relating to the U.S. $74,000,000 facility granted by RABO
Australia Limited and guaranteed by Nedship Bank
(America) N.V.

(g)     Agreement, dated
March 26, 1999, for the amalgamation of Northwest Maritime
Inc., a 100% owned subsidiary of Teekay Shipping Corporation,
and Bona Shipholding Ltd.

(h)     Amendment and
Restatement Agreement, dated June 11, 1999, relating to a
US$500,000,000 Revolving Loan Agreement made available to Bona
Shipholding Ltd. by Chase Manhattan plc, Citibank International
plc and various other banks.

(i)     Reimbursement
Agreement, dated February 16, 2001, between Karratha Spirit
Pty Ltd and Nedship Bank (America) N.V.

(j)     Agreement, dated
February 16, 2001, for a U.S. $34,000,000 Term Loan
Facility to be made available to Karratha Spirit Pty Ltd by Rabo
Australia Limited.

(k)     Indenture dated
June 22, 2001 among Teekay Shipping Corporation and The
Bank of New York Trust Company of Florida (formerly
U.S. Trust Company of Texas, N.A.).

(l)     Amendment and
Restatement Agreement, dated September 14, 2001, relating
to a U.S. $500,000,000 Revolving Loan Agreement between
Bona Shipholding Ltd., Teekay Shipping Corporation, J.P. Morgan
Securities Inc., Citibank International plc and various other
banks.

(m)     First
Supplemental Indenture dated as of December 6, 2001, among
Teekay Shipping Corporation and The Bank of New York Trust
Company of Florida, N.A.

Exchange Controls and Other Limitations
Affecting Security Holders

The Company is not aware of any governmental
laws, decrees or regulations in the Republic of The Marshall
Islands 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.

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 the laws of the Republic of
the Marshall Islands or the Companys articles of
incorporation and bylaws.

34



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##### 



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.

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% Notes and
8.875% Notes (the 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.

Documents on Display

Documents concerning the Company that are
referred to herein may be inspected at its principal executive
headquarters at TK House, Bayside Executive Park, West Bay
Street & Blake Road, P.O. Box AP-59213, Nassau,
The Bahamas. Those documents electronically filed via the
Electronic Data Gathering, Analysis, and Retrieval (EDGAR)
system may also be obtained from the Securities and Exchange
Commissions (SEC) website at www.sec.gov or from SEC
public reference rooms, including the SECs public
reference room at Judiciary Plaza, 450 Fifth Street,
Washington, D.C. 20549, or at Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Further information on the operation of the public
reference rooms may be obtained by calling the SEC at
1-800-SEC-0330. Copies of documents can be requested from the
SEC public reference rooms for a copying fee.




Item 11.     Quantitative
and Qualitative Disclosures About Market Risk

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

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, British Pounds
and Norwegian Kroner. During the year ended December 31,
2001, approximately 19% 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. As at
December 31, 2001, the Company had $65.5 million in
foreign exchange forward contracts that mature as follows:
$37.4 million in 2002 and $28.1 million in 2003. To
the extent the hedge is effective, changes in the fair value of
the forward contract are either offset against the fair value of
assets or liabilities through income, or recognized in other
comprehensive income until the hedged item is recognized in
income. The ineffective portion of a forward contracts
change in fair value will be immediately recognized in income.

35



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##### 



Interest Rate Risk

The Company invests its cash and marketable
securities in financial instruments with maturities of less than
six 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.
Changes in the fair value of the interest rate swaps are either
offset against the fair value of assets or liabilities through
income, or recognized in other comprehensive income until the
hedged item is recognized in income. The ineffective portion of
an interest rate swaps change in fair value will be
immediately recognized in income. Premiums and receipts, if any,
are recognized as adjustments to interest expense over the lives
of the individual contracts.

As at December 31, 2001, the Company was
committed to a series of interest rate swap agreements whereby
$85.0 million of the Companys floating rate debt was
swapped with fixed rate obligations having an average remaining
term of 1.1 years, expiring between May 2002 and May 2004.
These arrangements effectively change the Companys
interest rate exposure on $85.0 million of debt from a
floating LIBOR rate to an average fixed rate of 6.40%.

Commodity Price Risk

The Company uses bunker fuel swap contracts as a
hedge to protect against the change in the cost of forecasted
bunker fuel costs for certain vessels being time-chartered-out
and for vessels servicing certain contracts of affreightment. To
the extent the hedge is effective, changes in the fair value of
the forward contract are either offset against the fair value of
assets or liabilities through income, or recognized in other
comprehensive income until the hedged item is recognized in
income. The ineffective portion of a forward contracts
change in fair value will be immediately recognized in income.
As at December 31, 2001, the Company was committed to
bunker fuel swap contracts totaling 42,000 metric tonnes with a
weighted-average price of $113.54 per tonne, which expire
between January 2002 and May 2004.

The Company hedges certain of its voyage revenues
through the use of tanker freight rate derivatives. As at
December 31, 2001, the Company had sold a 12-month written
freight call option for $0.9 million, which could require
payments to the counterparty if monthly average freight rates
exceed a specified amount.

The following table sets forth the magnitude of
these foreign exchange forward contracts, interest rate swap
agreements, bunker fuel swap contracts, and written freight call
option:

|                              |  |                |         |                 |  |           |   |       |  |   |         |  |  |   |          |  
|----------------------------- |  | -------------- | ------- | --------------- |  | --------- | - | ----- |  | - | ------- |  |  | - | -------- | -
|                              |  |                |         |                 |  |          
|                              |  |                |         | Carrying Amount |  |          
|                              |  | Contract       |         |                 |  | Fair     
|                              |  | Amount         |         | Asset           |  | Liability |   | Value
|                              |  |                |         |                 |  |           |   |      
|                              |  |               
|                              |  | (in USD 000s)
|December 31, 2001             |  |                |         |                 |  |           |   |       |  |   |         |  |  |   |          |  
|FX Forward Contracts          |  | $              | 65,500  |                 |  | $         |  |       |  | $ | 343     |  |  | $ | (343     | )
|Interest Rate Swap Agreements |  |                | 85,000  |                 |  |           |  |       |  |   | 2,429   |  |  |   | (2,429   | )
|Bunker Fuel Swap Contracts    |  |                | 4,769   |                 |  |           |  |       |  |   | 328     |  |  |   | (328     | )
|Written Freight Call Option   |  |                | 5,998   |                 |  |           |  |       |  |   | 857     |  |  |   | (857     | )
|Debt                          |  |                | 935,702 |                 |  |           |  |       |  |   | 935,702 |  |  |   | (952,055 | )
|December 31, 2000             |  |                |         |                 |  |           |   |       |  |   |         |  |  |   |          |  
|FX Forward Contracts          |  | $              | 62,125  |                 |  | $         |  |       |  | $ |        |  |  | $ | 2,252    |  
|Interest Rate Swap Agreements |  |                | 100,000 |                 |  |           |  |       |  |   |        |  |  |   | (1,297   | )
|Debt                          |  |                | 797,484 |                 |  |           |  |       |  |   | 797,484 |  |  |   | (789,913 | )
|                              |  |                |         |                 |  |           |   |       |  |   |         |  |  |   |          |  




Item 12.     Description
of Securities Other than Equity Securities

Not applicable.

36



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##### 






PART II






Item 13.     Defaults,
Dividend Arrearages and Delinquencies


None.






Item 14.     Material
Modifications to the Rights of Security Holders and Use of
Proceeds


None.






Item 15.     [Reserved]







Item 16.     [Reserved]







PART III







Item 17.     Financial
Statements


Not applicable.






Item 18.     Financial
Statements


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

|                                                            |  |      |      | 
|----------------------------------------------------------- |  | ---- | ---- | 
|                                                            |  | Page
|                                                            |  |     
|Independent Auditors Report                                |  |      | F-1  | 
|Consolidated Financial Statements                           |  |      |      | 
|Consolidated Statements of Income                           |  |      | F-2  | 
|Consolidated Balance Sheets                                 |  |      | F-3  | 
|Consolidated Statements of Cash Flows                       |  |      | F-4  | 
|Consolidated Statements of Changes in
	Stockholders Equity |  |      | F-5  | 
|Notes to the Consolidated Financial Statements              |  |      | F-6  | 
|Schedule A to the Consolidated Financial
	Statements        |  |      | F-20 | 

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.






Item 19.     Exhibits


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

| |     |  |  |                                                                                                                                                                                                                                                                          
| | --- |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1.1 |  |  | Amended and Restated Articles of Incorporation of
	Teekay Shipping Corporation.(9)                                                                                                                                                                                       
| | 1.2 |  |  | Articles of Amendment of Articles of
	Incorporation of Teekay Shipping Corporation.(9)                                                                                                                                                                                   
| | 1.3 |  |  | Amended and Restated Bylaws of Teekay Shipping
	Corporation.(9)                                                                                                                                                                                                          
| | 2.1 |  |  | Registration Rights Agreement among Teekay
	Shipping Corporation, Tradewinds Trust Co. Ltd., as Trustee for
	the Cirrus Trust, and Worldwide Trust Services Ltd., as Trustee
	for the JTK Trust.(1)                                                                      
| | 2.2 |  |  | Specimen of Teekay Shipping Corporation Common
	Stock Certificate.(1)                                                                                                                                                                                                    
| | 2.3 |  |  | Indenture dated January 29, 1996 among
	Teekay Shipping Corporation, 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.(5)
| | 2.4 |  |  | Specimen of Teekay Shipping Corporations
	8.32% First Preferred Ship Mortgage Notes Due 2008.(5)                                                                                                                                                                        
| | 2.5 |  |  | Bahamian Statutory Ship Mortgage dated
	January 29, 1996 by Nassau Spirit Inc. to United States
	Trust Company of New York.(3)(5)                                                                                                                                        
| | 2.6 |  |  | Deed of Covenants dated January 29, 1996 by
	Nassau Spirit Inc. to United States Trust Company of New
	York.(3)(5)                                                                                                                                                       
| | 2.7 |  |  | First Preferred Ship Mortgage dated
	January 29, 1996 by VSSI Oceans Inc. to United States Trust
	Company of New York, as Trustee.(4)                                                                                                                                    
| | 2.8 |  |  | Assignment of Time Charter dated January 29,
	1996 by Nassau Spirit Inc. to United States Trust Company of New
	York, as Trustee.(3)(5)                                                                                                                                  
| | 2.9 |  |  | Assignment of Insurance dated January 29,
	1996 by Nassau Spirit Inc. to United States Trust Company of New
	York, as Trustee.(3)(5)                                                                                                                                     

37



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##### 



| |      |  |  |                                                                                                                                                                                                                                                                                                                                                                     
| | ---- |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2.10 |  |  | Pledge Agreement and Irrevocable Proxy dated
	January 29, 1996 by Teekay in favor of United States Trust
	Company of New York, as Trustee.(5)                                                                                                                                                                                                                       
| | 2.11 |  |  | Guarantee dated January 29, 1996 by Nassau
	Spirit Inc. in favor of United States Trust Company of New York,
	as Trustee.(3)(5)                                                                                                                                                                                                                                     
| | 2.12 |  |  | Assignment of Freights and Hires dated
	January 29, 1996 by Nassau Spirit Inc. to United States
	Trust Company of New York, as Trustee.(3)(5)                                                                                                                                                                                                                       
| | 2.13 |  |  | Cash Collateral Account Agreement dated
	January 29, 1996 between Nassau Spirit Inc. and United
	States Trust Company of New York, as Trustee.(3)(5)                                                                                                                                                                                                                
| | 2.14 |  |  | Investment Account Agreement dated
	January 29, 1996 between Teekay Shipping Corporation and
	United States Trust Company of New York, as Trustee.(5)                                                                                                                                                                                                               
| | 2.15 |  |  | Indenture dated June 22, 2001 among Teekay
	Shipping Corporation and The Bank of New York Trust Company of
	Florida (formerly U.S. Trust Company of Texas, N.A.).(14)                                                                                                                                                                                               
| | 2.16 |  |  | First Supplemental Indenture dated as of
	December 6, 2001, among Teekay Shipping Corporation and The
	Bank of New York Trust Company of Florida, N.A.(15)                                                                                                                                                                                                          
| | 2.17 |  |  | Exchange and Registration Rights Agreement dated
	June 22, 2001 among Teekay Shipping Corporation and
	Goldman, Sachs & Co., Morgan Stanley & Co. Incorporated,
	Salomon Smith Barney Inc., Deutsche Banc Alex. Brown Inc. and
	Scotia Capital (USA) Inc.(14)                                                                                                       
| | 2.18 |  |  | Exchange and Registration Rights Agreement dated
	December 6, 2001 between Teekay Shipping Corporation and
	Goldman, Sachs & Co.(15)                                                                                                                                                                                                                                
| | 2.19 |  |  | Specimen of Teekay Shipping Corporations
	8.875% Senior Notes due 2011.(14)                                                                                                                                                                                                                                                                                        
| | 4.1  |  |  | 1995 Stock Option Plan.(1)                                                                                                                                                                                                                                                                                                                                          
| | 4.2  |  |  | Amendment to 1995 Stock Option Plan.(10)                                                                                                                                                                                                                                                                                                                            
| | 4.3  |  |  | Amended 1995 Stock Option Plan.(12)                                                                                                                                                                                                                                                                                                                                 
| | 4.4  |  |  | Form of Indemnification Agreement between Teekay
	and each of its officers and directors.(1)                                                                                                                                                                                                                                                                        
| | 4.5  |  |  | Charter Party, as amended, dated
	September 21, 1989 between Palm Shipping Inc. and BP
	Shipping Limited.(2)                                                                                                                                                                                                                                                        
| | 4.6  |  |  | Time Charter, as amended, dated July 3, 1995
	between VSSI Oceans Inc. and Palm Shipping Inc.(4)                                                                                                                                                                                                                                                                    
| | 4.7  |  |  | Time Charter, as amended, dated January 4,
	1994 between VSSI Atlantic Inc. and Palm Shipping Inc.(4)                                                                                                                                                                                                                                                               
| | 4.8  |  |  | Time Charter, as amended, dated February 1,
	1992 between VSSI Appian Inc. and Palm Shipping Inc.(4)                                                                                                                                                                                                                                                                
| | 4.9  |  |  | Time Charter, as amended, dated December 1,
	1993 between Senang Spirit Inc. and Palm Shipping Inc.(4)                                                                                                                                                                                                                                                              
| | 4.10 |  |  | Time Charter, as amended, dated August 1,
	1992 between Exuma Spirit Inc. and Palm Shipping Inc.(4)                                                                                                                                                                                                                                                                 
| | 4.11 |  |  | Time Charter, as amended, dated May 1, 1992
	between Nassau Spirit Inc. and Palm Shipping Inc.(4)                                                                                                                                                                                                                                                                   
| | 4.12 |  |  | Time Charter, as amended, dated November 1,
	1992 between Andros Spirit Inc. and Palm Shipping Inc.(4)                                                                                                                                                                                                                                                              
| | 4.13 |  |  | Management Agreement, as amended, dated
	June 1, 1992 between Teekay Shipping Limited and Nassau
	Spirit Inc.(3)(4)                                                                                                                                                                                                                                                 
| | 4.14 |  |  | 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.(6)                                                                                
| | 4.15 |  |  | 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.(6)                                                                                          
| | 4.16 |  |  | 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.(7)                                                            
| | 4.17 |  |  | Agreement, dated March 26, 1999, for the
	amalgamation of Northwest Maritime Inc., a 100% owned subsidiary
	of Teekay Shipping Corporation, and Bona Shipholding Ltd.(8)                                                                                                                                                                                            
| | 4.18 |  |  | Agreement, dated April 16, 1998, for a
	U.S. $30,000,000 Term Loan Facility to be made available to
	VSSI Australia Limited by Rabo Australia Limited.(9)                                                                                                                                                                                                           
| | 4.19 |  |  | 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.(9)                                                                                                                                                    
| | 4.20 |  |  | 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.(9)                                  
| | 4.21 |  |  | 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.(9)
| | 4.22 |  |  | Amended and Restated Agreement, date
	June 11, 1999, for a U.S. $500,000,000 Revolving Loan
	between Bona Shipholding Ltd., Chase Manhattan plc, Citibank
	International plc and various other banks.(9)                                                                                                                                                            
| | 4.23 |  |  | 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.(9)                                                                                                                                   

38



---



##### 



| |      |  |  |                                                                                                                                                                                                                                                                         
| | ---- |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 4.24 |  |  | Rights agreement, dated as of September 8,
	2000, between Teekay Shipping Corporation and The Bank of New
	York, as Rights Agent.(11)                                                                                                                                   
| | 4.25 |  |  | Reimbursement Agreement, dated January 1,
	2000, between Fleet Management Inc. and Teekay Shipping
	Corporation.(12)                                                                                                                                                    
| | 4.26 |  |  | Reimbursement Agreement, dated February 16,
	2001, between Karratha Spirit Pty Ltd and Nedship Bank (America)
	N.V.(13)                                                                                                                                                 
| | 4.27 |  |  | Agreement, dated February 16, 2001, for a
	U.S. $34,000,000 Term Loan Facility to be made available to
	Karratha Spirit Pty Ltd by Rabo Australia Limited.(13)                                                                                                          
| | 4.28 |  |  | Amendment and Restatement Agreement, dated
	September 14, 2001, relating to a U.S. $500,000,000
	Revolving Loan Agreement between Bona Shipholding Ltd., Teekay
	Shipping Corporation, J.P. Morgan Securities Inc., Citibank
	International plc and various other banks.
| | 8.1  |  |  | List of Significant Subsidiaries                                                                                                                                                                                                                                        






|    |                                                                                                                                                                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | 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.                                                              
|   
|(2) | 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.                                             
|   
|(3) | 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.
|   
|(4) | 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.                                                            
|   
|(5) | 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.                                                                                           
|   
|(6) | 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.                                                                                          
|   
|(7) | 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.                                                                                           
|   
|(8) | 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.                                                                                          
|   
|(9) | Previously filed as an exhibit to the
	Companys Annual Report on Form 20-F (File
	No. 1-12874), filed with the SEC on March 30, 2000,
	and hereby incorporated by reference to such Annual Report.                                                                                         



|     |                                                                                                                                                                                                                               
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Previously filed as an exhibit to the
	Companys Form 6-K (File No. 1-12874), filed with
	the SEC on May 2, 2000, and hereby incorporated by
	reference to such Annual Report.                                                
|    
|(11) | Previously filed as an exhibit to the
	Companys Form 8-A (File No. 1-12874), filed with
	the SEC on September 11, 2000, and hereby incorporated by
	reference to such Annual Report.                                         
|    
|(12) | Previously filed as an exhibit to the
	Companys Annual Report on Form 20-F (File
	No. 1-12874), filed with the SEC on April 2, 2001, and
	hereby incorporated by reference to such Annual Report.                            
|    
|(13) | Previously filed as an exhibit to the
	Companys Form 6-K (File No. 1-12874), filed with
	the SEC on May 24, 2001, and hereby incorporated by
	reference to such Report.                                                      
|    
|(14) | Previously filed as an exhibit to the
	Companys Registration Statement on Form F-4
	(Registration No. 333-64928), filed with the SEC on
	July 11, 2001, and hereby incorporated by reference to such
	Registration Statement.

39



---



##### 





|     |                                                                                                                                                                                                                                              
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(15) | Previously filed as an exhibit to the
	Companys Registration Statement on Form F-4
	(Registration No. 333-76922), filed with the SEC on
	January 17, 2002, and hereby incorporated by reference to
	such Registration Statement.            
|    
|(16) | Previously filed as an exhibit to the
	Companys Registration Statement on Form F-4, as
	Amended (Registration No. 333-76922), filed with the SEC on
	February 5, 2002, and hereby incorporated by reference to
	such Registration Statement.




SIGNATURE

The registrant hereby certifies that it meets all
of the requirements for filing on Form 20-F and that it has
duly caused and authorized the undersigned to sign this Annual
Report on its behalf.

| |  |                             |  |                                                                                                                                                                         
| |  | --------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | TEEKAY SHIPPING CORPORATION
| |  | By:                         |  | /s/  PETER ANTTURI
	---------------------------------------------
	Peter AntturiVice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

Dated: March 28, 2002

40



---



##### 



AUDITORS 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, 2001 and 2000, and the
related consolidated statements of income, changes in
stockholders equity and cash flows for the years ended
December 31, 2001 and 2000, and the nine month period ended
December 31, 1999. Our audits also included the financial
schedule listed in the Index: Item 18. These financial
statements and schedule are the responsibility of the
Companys management. Our responsibility is to express an
opinion on these financial statements and schedule based on our
audits. We did not audit the financial statements of Ugland
Nordic Shipping ASA, a wholly-owned subsidiary, which statements
reflect total assets and net voyage revenues constituting
21 percent and 10 percent, respectively of the related
consolidated totals. Those statements were audited by other
auditors whose report has been furnished to us, and our opinion,
insofar as it relates to the amounts included for Ugland Nordic
Shipping ASA, is based solely on the report of other auditors.

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, based on our audit and the report
of the other auditors, 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, 2001 and 2000, and the
consolidated results of their operations and their cash flows
for the years ended December 31, 2001 and 2000, and the
nine month period ended December 31, 1999 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.

| |  |                                                                                                
| |  | -----------------------------------------------------------------------------------------------
| |  | /s/  ERNST & YOUNG LLP
	------------------------------------------------
	Chartered Accountants

Vancouver, Canada

February 8, 2002


F-1



---



##### 



TEEKAY SHIPPING CORPORATION AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands of U.S. dollars, except per
share amounts)


|                                          |  |              |           |              |  |              |         |   |  |  |         |  
|----------------------------------------- |  | ------------ | --------- | ------------ |  | ------------ | ------- | - |  |  | ------- | -
|                                          |  |              |           |              |  | Nine Months 
|                                          |  | Year Ended   |           | Year Ended   |  | Ended       
|                                          |  | December 31, |           | December 31, |  | December 31,
|                                          |  | 2001         |           | 2000         |  | 1999        
|                                          |  |              |           |              |  |             
|                                          |  | $            |           | $            |  | $           
|NET VOYAGE REVENUES                       |  |              |           |              |  |              |         |   |  |  |         |  
|Voyage revenues                           |  |              | 1,039,056 |              |  |              | 893,226 |   |  |  | 377,882 |  
|Voyage expenses                           |  |              | 249,562   |              |  |              | 248,957 |   |  |  | 129,532 |  
|                                          |  |              |           |              |  |              |         |   |  |  |         |  
|Net voyage revenues                       |  |              | 789,494   |              |  |              | 644,269 |   |  |  | 248,350 |  
|                                          |  |              |           |              |  |              |         |   |  |  |         |  
|OPERATING EXPENSES                        |  |              |           |              |  |              |         |   |  |  |         |  
|Vessel operating expenses                 |  |              | 154,831   |              |  |              | 125,415 |   |  |  | 98,780  |  
|Time charter hire expense                 |  |              | 66,019    |              |  |              | 53,547  |   |  |  | 30,681  |  
|Depreciation and amortization             |  |              | 136,283   |              |  |              | 100,153 |   |  |  | 68,299  |  
|General and administrative                |  |              | 48,898    |              |  |              | 37,479  |   |  |  | 27,018  |  
|                                          |  |              |           |              |  |              |         |   |  |  |         |  
|                                          |  |              | 406,031   |              |  |              | 316,594 |   |  |  | 224,778 |  
|                                          |  |              |           |              |  |              |         |   |  |  |         |  
|INCOME FROM VESSEL OPERATIONS             |  |              | 383,463   |              |  |              | 327,675 |   |  |  | 23,572  |  
|                                          |  |              |           |              |  |              |         |   |  |  |         |  
|OTHER ITEMS                               |  |              |           |              |  |              |         |   |  |  |         |  
|Interest expense                          |  |              | (66,249   | )            |  |              | (74,540 | ) |  |  | (44,996 | )
|Interest income                           |  |              | 9,196     |              |  |              | 13,021  |   |  |  | 5,842   |  
|Other income (loss) (note 12)             |  |              | 10,108    |              |  |              | 3,864   |   |  |  | (4,013  | )
|                                          |  |              |           |              |  |              |         |   |  |  |         |  
|                                          |  |              | (46,945   | )            |  |              | (57,655 | ) |  |  | (43,167 | )
|                                          |  |              |           |              |  |              |         |   |  |  |         |  
|Net income (loss)                         |  |              | 336,518   |              |  |              | 270,020 |   |  |  | (19,595 | )
|                                          |  |              |           |              |  |              |         |   |  |  |         |  
|Earnings (loss) per common share(note 10) |  |              |           |              |  |              |         |   |  |  |         |  
| Basic                                   |  |              | 8.48      |              |  |              | 7.02    |   |  |  | (0.54   | )
| Diluted                                 |  |              | 8.31      |              |  |              | 6.86    |   |  |  | (0.54   | )
|                                          |  |              |           |              |  |              |         |   |  |  |         |  

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

F-2



---



##### 



TEEKAY SHIPPING CORPORATION AND
SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands of U.S. dollars)


|                                                                                    |  |              |           |              |  |  |           | 
|----------------------------------------------------------------------------------- |  | ------------ | --------- | ------------ |  |  | --------- | 
|                                                                                    |  | As at        |           | As at       
|                                                                                    |  | December 31, |           | December 31,
|                                                                                    |  | 2001         |           | 2000        
|                                                                                    |  |              |           |             
|                                                                                    |  | $            |           | $           
|ASSETS                                                                              |  |              |           |              |  |  |           | 
|Current                                                                             |  |              |           |              |  |  |           | 
|Cash and cash equivalents (note 7)                                                  |  |              | 174,950   |              |  |  | 181,300   | 
|Marketable securities (note 5)                                                      |  |              | 5,028     |              |  |  | 8,081     | 
|Restricted cash (note 7)                                                            |  |              | 7,833     |              |  |  |          | 
|Accounts receivable                                                                 |  |              | 57,519    |              |  |  | 80,158    | 
|Prepaid expenses and other assets                                                   |  |              | 22,139    |              |  |  | 25,956    | 
|                                                                                    |  |              |           |              |  |  |           | 
|Total current assets                                                                |  |              | 267,469   |              |  |  | 295,495   | 
|                                                                                    |  |              |           |              |  |  |           | 
|Marketable securities (note 5)                                                      |  |              | 16,026    |              |  |  | 33,742    | 
|Vessels and equipment(note 7)                                                       |  |              |           |              |  |  |           | 
|At cost, less accumulated depreciation of
	$801,985
	(December 31, 2000  $680,756) |  |              | 1,925,844 |              |  |  | 1,607,716 | 
|Advances on newbuilding contracts
	(note 14)                                        |  |              | 117,254   |              |  |  |          | 
|                                                                                    |  |              |           |              |  |  |           | 
|Total vessels and equipment                                                         |  |              | 2,043,098 |              |  |  | 1,607,716 | 
|                                                                                    |  |              |           |              |  |  |           | 
|Investment in joint ventures                                                        |  |              | 27,352    |              |  |  | 20,474    | 
|Other assets                                                                        |  |              | 26,757    |              |  |  | 16,672    | 
|Goodwill (note 1)                                                                   |  |              | 87,079    |              |  |  |          | 
|                                                                                    |  |              |           |              |  |  |           | 
|                                                                                    |  |              | 2,467,781 |              |  |  | 1,974,099 | 
|                                                                                    |  |              |           |              |  |  |           | 
|LIABILITIES AND STOCKHOLDERS
	EQUITY                                               |  |              |           |              |  |  |           | 
|Current                                                                             |  |              |           |              |  |  |           | 
|Accounts payable                                                                    |  |              | 24,484    |              |  |  | 22,084    | 
|Accrued liabilities (note 6)                                                        |  |              | 51,011    |              |  |  | 44,081    | 
|Current portion of long-term debt
	(note 7)                                         |  |              | 51,830    |              |  |  | 72,170    | 
|                                                                                    |  |              |           |              |  |  |           | 
|Total current liabilities                                                           |  |              | 127,325   |              |  |  | 138,335   | 
|                                                                                    |  |              |           |              |  |  |           | 
|Long-term debt (note 7)                                                             |  |              | 883,872   |              |  |  | 725,314   | 
|Other long-term liabilities (note 1)                                                |  |              | 39,407    |              |  |  | 7,368     | 
|                                                                                    |  |              |           |              |  |  |           | 
|Total liabilities                                                                   |  |              | 1,050,604 |              |  |  | 871,017   | 
|                                                                                    |  |              |           |              |  |  |           | 
|Minority interest                                                                   |  |              | 18,977    |              |  |  | 4,570     | 
|Stockholders equity                                                                |  |              |           |              |  |  |           | 
|Capital stock (note 10)                                                             |  |              | 467,341   |              |  |  | 452,808   | 
|Retained earnings                                                                   |  |              | 935,660   |              |  |  | 641,149   | 
|Accumulated other comprehensive (loss) income                                       |  |              | (4,801    | )            |  |  | 4,555     | 
|                                                                                    |  |              |           |              |  |  |           | 
|Total stockholders equity                                                          |  |              | 1,398,200 |              |  |  | 1,098,512 | 
|                                                                                    |  |              |           |              |  |  |           | 
|                                                                                    |  |              | 2,467,781 |              |  |  | 1,974,099 | 
|                                                                                    |  |              |           |              |  |  |           | 

Commitments and contingencies (notes 8,
13 and 14)

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

F-3



---



##### 



TEEKAY SHIPPING CORPORATION AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH
FLOWS

(in thousands of U.S. dollars)


|                                                                                                        |                                                                                                                                |              |          |              |   |              |          |         |   |  |         |        |  
|------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------ | ------------ | -------- | ------------ | - | ------------ | -------- | ------- | - |  | ------- | ------ | -
|                                                                                                        |                                                                                                                                |              |          |              |   | Nine Months 
|                                                                                                        |                                                                                                                                | Year Ended   |          | Year Ended   |   | Ended       
|                                                                                                        |                                                                                                                                | December 31, |          | December 31, |   | December 31,
|                                                                                                        |                                                                                                                                | 2001         |          | 2000         |   | 1999        
|                                                                                                        |                                                                                                                                |              |          |              |   |             
|                                                                                                        |                                                                                                                                | $            |          | $            |   | $           
|Cash and cash equivalents provided by (used for)                                                        |                                                                                                                                |              |          |              |   |              |          |         |   |  |         |       
|OPERATING ACTIVITIES                                                                                    |                                                                                                                                |              |          |              |   |              |          |         |   |  |         |       
|Net income (loss)                                                                                       |                                                                                                                                |              | 336,518  |              |   |              | 270,020  |         |   |  | (19,595 | )     
|Non-cash items:                                                                                         |                                                                                                                                |              |          |              |   |              |          |         |   |  |         |       
|                                                                                                        | Depreciation and amortization                                                                                                  |              |          | 136,283      |   |              |          | 100,153 |   |  |         | 68,299 |  
|                                                                                                        | Loss on disposition of vessels and equipment                                                                                   |              |          |             |   |              |          | 1,004   |   |  |         |       |  
|                                                                                                        | Gain on disposition of available-for-sale
	securities                                                                          |              |          | (758         | ) |              |          |        |   |  |         |       |  
|                                                                                                        | Equity income (net of dividends received:
	December 31, 2001  $33,514; December 31,
	2000  $8,474; December 31, 1999  $Nil) |              |          | 16,190       |   |              |          | (1,072  | ) |  |         | (721   | )
|                                                                                                        | Future income taxes                                                                                                            |              |          | 6,963        |   |              |          | 999     |   |  |         | 1,500  |  
|                                                                                                        | Other  net                                                                                                                    |              |          | (3,243       | ) |              |          | (1,173  | ) |  |         | 1,134  |  
|Change in non-cash working capital items related
	to operating activities (note 15)                     |                                                                                                                                |              | 28,197   |              |   |              | (36,676  | )       |   |  | 896     |       
|                                                                                                        |                                                                                                                                |              |          |              |   |              |          |         |   |  |         |       
|Net cash flow from operating
	activities                                                                |                                                                                                                                |              | 520,150  |              |   |              | 333,255  |         |   |  | 51,513  |       
|                                                                                                        |                                                                                                                                |              |          |              |   |              |          |         |   |  |         |       
|FINANCING ACTIVITIES                                                                                    |                                                                                                                                |              |          |              |   |              |          |         |   |  |         |       
|Net proceeds from long-term debt                                                                        |                                                                                                                                |              | 688,381  |              |   |              | 206,000  |         |   |  | 100,000 |       
|Scheduled repayments of long-term debt                                                                  |                                                                                                                                |              | (72,026  | )            |   |              | (63,757  | )       |   |  | (32,252 | )     
|Prepayments of long-term debt                                                                           |                                                                                                                                |              | (751,738 | )            |   |              | (429,926 | )       |   |  | (10,000 | )     
|Increase in restricted cash                                                                             |                                                                                                                                |              | (7,833   | )            |   |              |         |         |   |  |        |       
|Proceeds from issuance of Common Stock                                                                  |                                                                                                                                |              | 20,584   |              |   |              | 24,843   |         |   |  |        |       
|Repurchase of Common Stock                                                                              |                                                                                                                                |              | (14,162  | )            |   |              |         |         |   |  |        |       
|Cash dividends paid                                                                                     |                                                                                                                                |              | (34,094  | )            |   |              | (32,973  | )       |   |  | (23,150 | )     
|Other                                                                                                   |                                                                                                                                |              |         |              |   |              | 2,970    |         |   |  |        |       
|                                                                                                        |                                                                                                                                |              |          |              |   |              |          |         |   |  |         |       
|Net cash flow from financing
	activities                                                                |                                                                                                                                |              | (170,888 | )            |   |              | (292,843 | )       |   |  | 34,598  |       
|                                                                                                        |                                                                                                                                |              |          |              |   |              |          |         |   |  |         |       
|INVESTING ACTIVITIES                                                                                    |                                                                                                                                |              |          |              |   |              |          |         |   |  |         |       
|Expenditures for vessels and equipment                                                                  |                                                                                                                                |              | (184,983 | )            |   |              | (43,512  | )       |   |  | (23,313 | )     
|Expenditures for drydocking                                                                             |                                                                                                                                |              | (20,064  | )            |   |              | (11,941  | )       |   |  | (6,598  | )     
|Proceeds from disposition of assets                                                                     |                                                                                                                                |              |         |              |   |              | 9,713    |         |   |  |        |       
|Expenditure for the purchase of Ugland Nordic
	Shipping ASA (net of cash acquired of $26,605)
	(note 3) |                                                                                                                                |              | (176,453 | )            |   |              | (13,114  | )       |   |  |        |       
|Acquisition costs related to purchase of Ugland
	Nordic Shipping ASA (note 3)                           |                                                                                                                                |              | (5,067   | )            |   |              |         |         |   |  |        |       
|Net cash acquired through purchase of
	Bona Shipholding Ltd. (note 4)                                   |                                                                                                                                |              |         |              |   |              |         |         |   |  | 51,774  |       
|Acquisition costs related to purchase of
	Bona Shipholding Ltd. (note 4)                                |                                                                                                                                |              | (20      | )            |   |              | (2,685   | )       |   |  | (13,806 | )     
|Proceeds from disposition of available-for-sale
	securities                                             |                                                                                                                                |              | 35,975   |              |   |              |         |         |   |  | 13,724  |       
|Purchases of available-for-sale securities                                                              |                                                                                                                                |              | (5,000   | )            |   |              | (17,900  | )       |   |  | (6,000  | )     
|                                                                                                        |                                                                                                                                |              |          |              |   |              |          |         |   |  |         |       
|Net cash flow from investing
	activities                                                                |                                                                                                                                |              | (355,612 | )            |   |              | (79,439  | )       |   |  | 15,781  |       
|                                                                                                        |                                                                                                                                |              |          |              |   |              |          |         |   |  |         |       
|(Decrease) increase in cash and cash
	equivalents                                                       |                                                                                                                                |              | (6,350   | )            |   |              | (39,027  | )       |   |  | 101,892 |       
|Cash and cash equivalents, beginning of the period                                                      |                                                                                                                                |              | 181,300  |              |   |              | 220,327  |         |   |  | 118,435 |       
|                                                                                                        |                                                                                                                                |              |          |              |   |              |          |         |   |  |         |       
|Cash and cash equivalents, end of the
	period                                                           |                                                                                                                                |              | 174,950  |              |   |              | 181,300  |         |   |  | 220,327 |       
|                                                                                                        |                                                                                                                                |              |          |              |   |              |          |         |   |  |         |       

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

F-4



---



##### 



TEEKAY SHIPPING CORPORATION AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS EQUITY

(in thousands of U.S. dollars)


|                                                                                    |                                                                                               |              |        |        |  |          |         |               |  |               |         |               |  |  |        |        |   |  |         |        |   |  |           |        |  
|----------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------- | ------------ | ------ | ------ |  | -------- | ------- | ------------- |  | ------------- | ------- | ------------- |  |  | ------ | ------ | - |  | ------- | ------ | - |  | --------- | ------ | -
|                                                                                    |                                                                                               |              |        |        |  |          |         | Accumulated   |  |               |         |              
|                                                                                    |                                                                                               | Thousands of |        |        |  |          |         | Other         |  |               |         | Total        
|                                                                                    |                                                                                               | Common       |        | Common |  | Retained |         | Comprehensive |  | Comprehensive |         | Stockholders
|                                                                                    |                                                                                               | Shares       |        | Stock  |  | Earnings |         | Income (Loss) |  | Income (Loss) |         | Equity       
|                                                                                    |                                                                                               |              |        |        |  |          |         |               |  |               |         |              
|                                                                                    |                                                                                               | #            |        | $      |  | $        |         | $             |  | $             |         | $            
|Balance as at March 31, 1999                                                        |                                                                                               |              | 31,648 |        |  |          | 330,493 |               |  |               | 446,897 |               |  |  |       |        |   |  |         |        |   |  | 777,390   |       
|                                                                                    |                                                                                               |              |        |        |  |          |         |               |  |               |         |               |  |  |        |        |   |  |         |        |   |  |           |       
|Net income (loss)                                                                   |                                                                                               |              |        |        |  |          |         |               |  |               | (19,595 | )             |  |  |        |        |   |  | (19,595 | )      |   |  | (19,595   | )     
|Other comprehensive income                                                          |                                                                                               |              |        |        |  |          |         |               |  |               |         |               |  |  |       |        |   |  |         |        |   |  |           |       
|                                                                                    |                                                                                               |              |        |        |  |          |         |               |  |               |         |               |  |  |        |        |   |  |         |        |   |  |           |       
|Comprehensive income (loss)                                                         |                                                                                               |              |        |        |  |          |         |               |  |               |         |               |  |  |        |        |   |  | (19,595 | )      |   |  |           |       
|                                                                                    |                                                                                               |              |        |        |  |          |         |               |  |               |         |               |  |  |        |        |   |  |         |        |   |  |           |       
|Dividends declared                                                                  |                                                                                               |              |        |        |  |          |         |               |  |               | (23,172 | )             |  |  |        |        |   |  |         |        |   |  | (23,172   | )     
|June 11, 1999 common stock issued on
	acquisition of Bona Shipholding Ltd. (note 4) |                                                                                               |              | 6,415  |        |  |          | 97,422  |               |  |               |         |               |  |  |        |        |   |  |         |        |   |  | 97,422    |       
|Reinvested dividends                                                                |                                                                                               |              | 1      |        |  |          | 22      |               |  |               |         |               |  |  |        |        |   |  |         |        |   |  | 22        |       
|                                                                                    |                                                                                               |              |        |        |  |          |         |               |  |               |         |               |  |  |        |        |   |  |         |        |   |  |           |       
|Balance as at December 31, 1999                                                     |                                                                                               |              | 38,064 |        |  |          | 427,937 |               |  |               | 404,130 |               |  |  |       |        |   |  |         |        |   |  | 832,067   |       
|                                                                                    |                                                                                               |              |        |        |  |          |         |               |  |               |         |               |  |  |        |        |   |  |         |        |   |  |           |       
|Net income                                                                          |                                                                                               |              |        |        |  |          |         |               |  |               | 270,020 |               |  |  |        |        |   |  | 270,020 |        |   |  | 270,020   |       
|Other comprehensive income:                                                         |                                                                                               |              |        |        |  |          |         |               |  |               |         |               |  |  |        |        |   |  |         |        |   |  |           |       
|                                                                                    | Unrealized gain on available-for-sale securities                                              |              |        |        |  |          |         |               |  |               |         |               |  |  |        | 4,555  |   |  |         | 4,555  |   |  |           | 4,555  |  
|                                                                                    |                                                                                               |              |        |        |  |          |         |               |  |               |         |               |  |  |        |        |   |  |         |        |   |  |           |       
|Comprehensive income                                                                |                                                                                               |              |        |        |  |          |         |               |  |               |         |               |  |  |        |        |   |  | 274,575 |        |   |  |           |       
|                                                                                    |                                                                                               |              |        |        |  |          |         |               |  |               |         |               |  |  |        |        |   |  |         |        |   |  |           |       
|Dividends declared                                                                  |                                                                                               |              |        |        |  |          |         |               |  |               | (33,001 | )             |  |  |        |        |   |  |         |        |   |  | (33,001   | )     
|Reinvested dividends                                                                |                                                                                               |              | 1      |        |  |          | 28      |               |  |               |         |               |  |  |        |        |   |  |         |        |   |  | 28        |       
|Exercise of stock options                                                           |                                                                                               |              | 1,080  |        |  |          | 24,843  |               |  |               |         |               |  |  |        |        |   |  |         |        |   |  | 24,843    |       
|                                                                                    |                                                                                               |              |        |        |  |          |         |               |  |               |         |               |  |  |        |        |   |  |         |        |   |  |           |       
|Balance as at December 31, 2000                                                     |                                                                                               |              | 39,145 |        |  |          | 452,808 |               |  |               | 641,149 |               |  |  | 4,555  |        |   |  |         |        |   |  | 1,098,512 |       
|                                                                                    |                                                                                               |              |        |        |  |          |         |               |  |               |         |               |  |  |        |        |   |  |         |        |   |  |           |       
|Net income                                                                          |                                                                                               |              |        |        |  |          |         |               |  |               | 336,518 |               |  |  |        |        |   |  | 336,518 |        |   |  | 336,518   |       
|Other comprehensive income:                                                         |                                                                                               |              |        |        |  |          |         |               |  |               |         |               |  |  |        |        |   |  |         |        |   |  |           |       
|                                                                                    | Unrealized loss on available-for-sale securities                                              |              |        |        |  |          |         |               |  |               |         |               |  |  |        | (6,636 | ) |  |         | (6,636 | ) |  |           | (6,636 | )
|                                                                                    | Reclassification adjustment for gain on
	available-for-sale securities included in net income |              |        |        |  |          |         |               |  |               |         |               |  |  |        | (3,627 | ) |  |         | (3,627 | ) |  |           | (3,627 | )
|                                                                                    | Cumulative effect of accounting change
	(note 13)                                             |              |        |        |  |          |         |               |  |               |         |               |  |  |        | 4,155  |   |  |         | 4,155  |   |  |           | 4,155  |  
|                                                                                    | Unrealized loss on derivative instruments
	(note 13)                                          |              |        |        |  |          |         |               |  |               |         |               |  |  |        | (2,274 | ) |  |         | (2,274 | ) |  |           | (2,274 | )
|                                                                                    | Reclassification adjustment for gain on
	derivative instruments (note 13)                     |              |        |        |  |          |         |               |  |               |         |               |  |  |        | (974   | ) |  |         | (974   | ) |  |           | (974   | )
|                                                                                    |                                                                                               |              |        |        |  |          |         |               |  |               |         |               |  |  |        |        |   |  |         |        |   |  |           |       
|Comprehensive income                                                                |                                                                                               |              |        |        |  |          |         |               |  |               |         |               |  |  |        |        |   |  | 327,162 |        |   |  |           |       
|                                                                                    |                                                                                               |              |        |        |  |          |         |               |  |               |         |               |  |  |        |        |   |  |         |        |   |  |           |       
|Adjustment for equity income on step acquisition
	(note 3)                          |                                                                                               |              |        |        |  |          |         |               |  |               | 198     |               |  |  |        |        |   |  |         |        |   |  | 198       |       
|Dividends declared                                                                  |                                                                                               |              |        |        |  |          |         |               |  |               | (34,102 | )             |  |  |        |        |   |  |         |        |   |  | (34,102   | )     
|Reinvested dividends                                                                |                                                                                               |              | 1      |        |  |          | 8       |               |  |               |         |               |  |  |        |        |   |  |         |        |   |  | 8         |       
|Exercise of stock options                                                           |                                                                                               |              | 917    |        |  |          | 20,584  |               |  |               |         |               |  |  |        |        |   |  |         |        |   |  | 20,584    |       
|Repurchase of Common Stock                                                          |                                                                                               |              | (513   | )      |  |          | (6,059  | )             |  |               | (8,103  | )             |  |  |        |        |   |  |         |        |   |  | (14,162   | )     
|                                                                                    |                                                                                               |              |        |        |  |          |         |               |  |               |         |               |  |  |        |        |   |  |         |        |   |  |           |       
|Balance as at December 31, 2001                                                     |                                                                                               |              | 39,550 |        |  |          | 467,341 |               |  |               | 935,660 |               |  |  | (4,801 | )      |   |  |         |        |   |  | 1,398,200 |       
|                                                                                    |                                                                                               |              |        |        |  |          |         |               |  |               |         |               |  |  |        |        |   |  |         |        |   |  |           |       

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

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 accounting principles generally accepted in the
United States 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 12 month periods ended
December 31, 2001, 2000 and 1999.

|                                        |  |               |          |               |  |               |          |   |  |  |         |  
|--------------------------------------- |  | ------------- | -------- | ------------- |  | ------------- | -------- | - |  |  | ------- | -
|                                        |  | Twelve Months |          | Twelve Months |  | Twelve Months
|                                        |  | Ended         |          | Ended         |  | Ended        
|                                        |  | December 31,  |          | December 31,  |  | December 31, 
|                                        |  | 2001          |          | 2000          |  | 1999         
|                                        |  |               |          |               |  |              
|                                        |  |               |          |               |  | (unaudited)  
|                                        |  | $             |          | $             |  | $            
|RESULTS OF OPERATIONS                   |  |               |          |               |  |               |          |   |  |  |         |  
|Net voyage revenues                     |  |               | 789,494  |               |  |               | 644,269  |   |  |  | 318,348 |  
|Income from vessel operations           |  |               | 383,463  |               |  |               | 327,675  |   |  |  | 34,189  |  
|Net income (loss)                       |  |               | 336,518  |               |  |               | 270,020  |   |  |  | (17,723 | )
|Net income (loss) per common share      |  |               |          |               |  |               |          |   |  |  |         |  
| basic                                 |  |               | 8.48     |               |  |               | 7.02     |   |  |  | (0.50   | )
| diluted                               |  |               | 8.31     |               |  |               | 6.86     |   |  |  | (0.50   | )
|CASH FLOWS                              |  |               |          |               |  |               |          |   |  |  |         |  
|Net cash flow from operating activities |  |               | 520,150  |               |  |               | 333,255  |   |  |  | 71,633  |  
|Net cash flow from financing activities |  |               | (170,888 | )             |  |               | (292,843 | ) |  |  | 76,948  |  
|Net cash flow from investing activities |  |               | (355,612 | )             |  |               | (79,439  | ) |  |  | 5,613   |  

F-6



---



##### 



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)


Operating revenues and
expenses

Voyage revenues and expenses are recognized on
the percentage of completion method of accounting. Effective
December 31, 1999 the Company 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 a one-time 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, and communications.

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
component of other comprehensive income.

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.

Interest costs capitalized to vessels and
equipment for the years ended December 31, 2001 and 2000,
and for the nine month period ended December 31, 1999
aggregated $2,531,000, $Nil, and $1,710,000, 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. Amortization
of drydocking expenditures for the years ended December 31,
2001 and 2000, and the nine month period ended December 31,
1999 aggregated $14,214,000, $9,208,000, and $6,275,000,
respectively.

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)


Investment in joint ventures

The Company has a 50% participating interest in
three joint venture companies each of which owns a shuttle
tanker. The joint ventures are accounted for using the equity
method whereby the investment is carried at the Companys
original cost plus its proportionate share of undistributed
earnings.

During 2001, another joint venture in which the
Company owns a 50% interest sold its three vessels.

Investment in the Panamax O/B/O
Pool

All oil/bulk/ore carriers (O/B/O)
owned by the Company are operated through a Panamax O/B/O 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.

Loan costs

Loan costs, including fees, commissions and legal
expenses, which are presented as other assets 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.

Derivative instruments

Derivative instruments are recorded as assets or
liabilities, measured at fair value. Derivatives that are not
hedges are adjusted to fair value through income. If the
derivative is a hedge, depending upon the nature of the hedge,
changes in the fair value of the derivatives are either offset
against the fair value of assets, liabilities or firm
commitments through income, or recognized in other comprehensive
income until the hedged item is recognized in income. The
ineffective portion of a derivatives change in fair value
is immediately recognized into income (see Note 13).

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 years ended
December 31, 2001 and 2000, and the nine month period ended
December 31, 1999 totalled $54,764,000, $77,073,000, and
$63,086,000, 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 shipowning subsidiaries and Norwegian
subsidiary Ugland Nordic Shipping ASA (UNS) are
subject to income taxes. UNS income taxes are deferred until
payment of dividends (see Note 12). Included in other
long-term liabilities are deferred income taxes of
$36.3 million at December 31, 2001 and
$4.2 million at December 31, 2000. The Company
accounts for such taxes using the liability method pursuant to
Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes.

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)


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 10).

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.

Goodwill

Goodwill acquired as a result of the acquisition
of UNS (see Note 3) is amortized over 20 years using
the straight-line method. Management periodically reviews
goodwill for permanent diminution in value. As at
December 31, 2001, goodwill is net of accumulated
amortization of $3.5 million.

Recent accounting
pronouncements

In July 2001, the FASB issued Statement of
Financial Accounting Standards No. 142
(SFAS 142), Goodwill and Other Intangible
Assets, which establishes new standards for accounting for
goodwill and other intangible assets. SFAS 142 requires
that goodwill and indefinite lived intangible assets no longer
be amortized but reviewed annually for impairment, or more
frequently if impairment indicators arise. This statement is
effective for existing goodwill beginning with fiscal years
starting after December 15, 2001. Based upon the
Companys goodwill balance at December 31, 2001, the
Company estimates that adoption of SFAS 142 will result in
an annual increase in net income of approximately
$4.5 million, by no longer amortizing goodwill.

In August 2001, the FASB issued Statement of
Financial Accounting Standards No. 144,
(SFAS 144), Accounting for the Impairment
or Disposal of Long-Lived Assets, which addresses
financial accounting and reporting for the impairment or
disposal of long-lived assets and supersedes SFAS 121,
Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of , and the
accounting and reporting provisions of Accounting Principles
Board (APB) Opinion No. 30, Reporting the Results of
Operations for a disposal of a segment of a business. SFAS
144 is effective for fiscal years beginning after
December 15, 2001, with earlier application encouraged. The
Company does not anticipate that the adoption of SFAS 144 will
have a significant impact on the Companys consolidated
financial position or results of operations.

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)


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% ($130,818,000) of the companys
consolidated voyage revenues during the year ended
December 31, 2001. Two customers, both international oil
companies, individually accounted for 13% ($118,306,000) and 12%
($110,241,000) of the companys consolidated voyage
revenues during the year ended December 31, 2000. During
the nine months ended December 31, 1999, a single customer,
also an international oil company, accounted for 13%
($48,140,000) of the Companys consolidated voyage
revenues. No other customer accounted for more than 10% of the
Companys consolidated voyage revenues during the fiscal
periods presented herein.

3.   Acquisition of Ugland
Nordic Shipping ASA

As of May 28, 2001, Teekay had purchased
100% of the issued and outstanding shares of UNS (9% of which
was purchased in fiscal 2000 and the remaining 91% was purchased
in fiscal 2001), for $222.8 million cash, including
estimated transaction expenses of approximately $7 million,
or at an average price of Norwegian Kroner 136 per share. UNS
controls a modern fleet of 18 shuttle tankers (including three
newbuildings on order) that engage in the transportation of oil
from offshore production platforms to onshore storage and
refinery facilities.

The acquisition of UNS has been accounted for
using the purchase method of accounting, based upon estimates of
fair value. UNS operating results are reflected in these
financial statements commencing March 6, 2001, the date
Teekay acquired control. Equity income related to the
Companys nine percent interest in UNS up to
December 31, 2000 has been credited as an adjustment to
retained earnings. Teekays interest in UNS for the period
from January 1, 2001 to March 5, 2001 has been
included in equity income for the corresponding period.

The following table shows comparative summarized
consolidated pro forma financial information for the years ended
December 31, 2001 and 2000 and gives effect to the
acquisition of 100% of the outstanding shares in UNS as if it
had taken place January 1, 2000:

|                            |  |              |         |              |  |  |         | 
|--------------------------- |  | ------------ | ------- | ------------ |  |  | ------- | 
|                            |  |             
|                            |  | Pro Forma   
|                            |  |             
|                            |  | Year Ended   |         | Year Ended  
|                            |  | December 31, |         | December 31,
|                            |  | 2001         |         | 2000        
|                            |  |              |         |             
|                            |  | (unaudited)  |         | (unaudited) 
|                            |  | $            |         | $           
|Net voyage revenues         |  |              | 805,754 |              |  |  | 713,350 | 
|Net income                  |  |              | 336,514 |              |  |  | 265,554 | 
|Net income per common share |  |              |         |              |  |  |         | 
| basic                     |  |              | 8.47    |              |  |  | 6.90    | 
| diluted                   |  |              | 8.31    |              |  |  | 6.75    | 

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)


4.    Acquisition of Bona
Shipholding Ltd.

On June 11, 1999, Teekay purchased Bona
Shipholding Ltd. (Bona) for aggregate consideration
(including 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 summarized condensed
pro forma financial information for the nine month period ended
December 31, 1999 and gives effect to the acquisition as if
it had taken place April 1, 1999:

|                              |  |                   |         |  
|----------------------------- |  | ----------------- | ------- | -
|                              |  | Pro Forma        
|                              |  | Nine Months Ended
|                              |  | December 31,     
|                              |  | 1999             
|                              |  |                  
|                              |  | (unaudited)      
|                              |  | $                
|Net voyage revenues           |  |                   | 272,469 |  
|Income from vessel operations |  |                   | 26,127  |  
|Net loss                      |  |                   | (22,482 | )
|Net loss per common share     |  |                   |         |  
| basic and diluted           |  |                   | (0.59   | )

5.   Investments in Marketable
Securities

|                                     |  |      |        |            |  |            |       |                 |  |  |        |   |  |  |        | 
|------------------------------------ |  | ---- | ------ | ---------- |  | ---------- | ----- | --------------- |  |  | ------ | - |  |  | ------ | 
|                                     |  |      |        | Gross      |  | Gross      |       | Approximate    
|                                     |  |      |        | Unrealized |  | Unrealized |       | Market and     
|                                     |  | Cost |        | Gains      |  | Losses     |       | Carrying Values
|                                     |  |      |        |            |  |            |       |                
|                                     |  | $    |        | $          |  | $          |       | $              
|December 31, 2001                    |  |      |        |            |  |            |       |                 |  |  |        |   |  |  |        | 
|Available-for-sale equity securities |  |      | 24,500 |            |  |            |      |                 |  |  | (8,474 | ) |  |  | 16,026 | 
|Available-for-sale debt securities   |  |      | 5,028  |            |  |            |      |                 |  |  |       |   |  |  | 5,028  | 
|                                     |  |      |        |            |  |            |       |                 |  |  |        |   |  |  |        | 
|                                     |  |      | 29,528 |            |  |            |      |                 |  |  | (8,474 | ) |  |  | 21,054 | 
|                                     |  |      |        |            |  |            |       |                 |  |  |        |   |  |  |        | 
|December 31, 2000                    |  |      |        |            |  |            |       |                 |  |  |        |   |  |  |        | 
|Available-for-sale equity securities |  |      | 17,032 |            |  |            | 4,577 |                 |  |  |       |   |  |  | 21,609 | 
|Available-for-sale debt securities   |  |      | 20,236 |            |  |            | 8     |                 |  |  | (30    | ) |  |  | 20,214 | 
|                                     |  |      |        |            |  |            |       |                 |  |  |        |   |  |  |        | 
|                                     |  |      | 37,268 |            |  |            | 4,585 |                 |  |  | (30    | ) |  |  | 41,823 | 
|                                     |  |      |        |            |  |            |       |                 |  |  |        |   |  |  |        | 

The cost and approximate market value of
available-for-sale debt securities by contractual maturity, as
at December 31, 2001 and December 31, 2000, are shown
as follows:

|                                      |  |      |        |                 |  |  |        | 
|------------------------------------- |  | ---- | ------ | --------------- |  |  | ------ | 
|                                      |  |      |        | Approximate    
|                                      |  |      |        | Market and     
|                                      |  | Cost |        | Carrying Values
|                                      |  |      |        |                
|                                      |  | $    |        | $              
|December 31, 2001                     |  |      |        |                 |  |  |        | 
|Less than one year                    |  |      | 5,028  |                 |  |  | 5,028  | 
|Due after one year through five years |  |      |       |                 |  |  |       | 
|                                      |  |      |        |                 |  |  |        | 
|                                      |  |      | 5,028  |                 |  |  | 5,028  | 
|                                      |  |      |        |                 |  |  |        | 
|December 31, 2000                     |  |      |        |                 |  |  |        | 
|Less than one year                    |  |      | 8,081  |                 |  |  | 8,081  | 
|Due after one year through five years |  |      | 12,155 |                 |  |  | 12,133 | 
|                                      |  |      |        |                 |  |  |        | 
|                                      |  |      | 20,236 |                 |  |  | 20,214 | 
|                                      |  |      |        |                 |  |  |        | 

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)


6.   Accrued
Liabilities

|                     |  |              |        |              |  |  |        | 
|-------------------- |  | ------------ | ------ | ------------ |  |  | ------ | 
|                     |  | December 31, |        | December 31,
|                     |  | 2001         |        | 2000        
|                     |  |              |        |             
|                     |  | $            |        | $           
|Voyage and vessel    |  |              | 16,450 |              |  |  | 26,461 | 
|Interest             |  |              | 24,180 |              |  |  | 9,444  | 
|Payroll and benefits |  |              | 10,381 |              |  |  | 8,176  | 
|                     |  |              |        |              |  |  |        | 
|                     |  |              | 51,011 |              |  |  | 44,081 | 
|                     |  |              |        |              |  |  |        | 

7.   Long-Term Debt

|                                                              |  |              |         |              |  |  |         | 
|------------------------------------------------------------- |  | ------------ | ------- | ------------ |  |  | ------- | 
|                                                              |  | December 31, |         | December 31,
|                                                              |  | 2001         |         | 2000        
|                                                              |  |              |         |             
|                                                              |  | $            |         | $           
|Revolving Credit Facilities                                   |  |              |        |              |  |  | 415,800 | 
|First Preferred Ship Mortgage Notes (8.32%)
	due through 2008 |  |              | 167,229 |              |  |  | 189,274 | 
|Term Loans due through 2010                                   |  |              | 416,239 |              |  |  | 192,410 | 
|Senior Notes (8.875%) due July 15, 2011                       |  |              | 352,234 |              |  |  |        | 
|                                                              |  |              |         |              |  |  |         | 
|                                                              |  |              | 935,702 |              |  |  | 797,484 | 
|Less current portion                                          |  |              | 51,830  |              |  |  | 72,170  | 
|                                                              |  |              |         |              |  |  |         | 
|                                                              |  |              | 883,872 |              |  |  | 725,314 | 
|                                                              |  |              |         |              |  |  |         | 

The Company has two long-term Revolving Credit
Facilities (the Revolvers) available, which, as at
December 31, 2001, provided for borrowings of up to
$508.2 million. Interest payments are based on LIBOR
(December 31, 2001: 1.9%; December 31, 2000: 6.4%)
plus a margin depending on the financial leverage of the
Company; at December 31, 2001, the margins ranged between
0.50% and 0.75% (December 31, 2000: between 0.50% and
0.85%). 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 31 of the Companys vessels, together with
certain other related collateral, and a guarantee from Teekay
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, 2001, the
fair value of these net assets approximated $175.4 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. During June 2001, the
Company repurchased a principal amount of $22.0 million of
the 8.32% Notes outstanding.

Upon the 8.32% Notes achieving Investment Grade
Status (as defined in the Indenture) 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 (as defined in the Indenture) 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.

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)


Condensed financial information regarding the
Company, the 8.32% Notes Guarantor Subsidiaries, and
non-guarantor subsidiaries of the Company is set out in
Schedule A of these consolidated financial statements.

The Company has several term loans outstanding,
which, as at December 31, 2001, totalled
$416.2 million. Interest payments are based on LIBOR plus a
margin. At December 31, 2001, the margins ranged between
0.50% and 1.45% (December 31, 2000: between 0.55% and
1.25%). The term loans reduce in quarterly or semi-annual
payments with varying maturities through 2010. 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. UNS terms loans
totalling $309.0 million are not guaranteed by Teekay. One
term loan required a retention deposit of $7.8 million as
at December 31, 2001.

The 8.875% Senior Notes due July 15, 2011
(the 8.875% Notes) rank equally in right of payment
with all of the Companys existing and future senior
unsecured debt and senior to the Companys existing and
future subordinated debt. The 8.875% Notes are not guaranteed by
any of Teekays subsidiaries and effectively rank behind
all existing and future secured debt of Teekay and other
liabilities, secured and unsecured, of its subsidiaries.

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 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, 2001,
to $448.0 million. Certain of the loan agreements require a
minimum level of free cash be maintained. As at
December 31, 2001, this amount was $75.0 million.

The aggregate annual long-term debt principal
repayments required to be made for the five fiscal years
subsequent to December 31, 2001 are $51,830,000 (2002),
$63,605,000 (2003), $84,868,000 (2004), $109,786,000 (2005), and
$128,524,000 (2006).

8.   Leases

Charters-out

Time charters and bareboat 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 and bareboat charters currently in place are
$161,345,000 (2002), $137,705,000 (2003), $136,258,000 (2004),
$111,074,000 (2005), $100,712,000 (2006), and $595,046,000
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 $28,463,000 (2002), $24,303,000 (2003), $10,848,000 (2004),
$1,961,000 (2005) and $Nil (2006).

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)


9.   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:

|                                                                       |                               |                   |          |                   |   |          |          |            |   |  |          |   |  |  |          |        |  
|---------------------------------------------------------------------- | ----------------------------- | ----------------- | -------- | ----------------- | - | -------- | -------- | ---------- | - |  | -------- | - |  |  | -------- | ------ | -
|                                                                       |                               |                   |          |                  
|                                                                       |                               | December 31, 2001 |          | December 31, 2000
|                                                                       |                               |                   |          |                  
|                                                                       |                               | Carrying          |          |                   |   | Carrying |          |           
|                                                                       |                               | Amount            |          | Fair Value        |   | Amount   |          | Fair Value
|                                                                       |                               |                   |          |                   |   |          |          |           
|                                                                       |                               | $                 |          | $                 |   | $        |          | $         
|Cash and cash equivalents, marketable securities,
	and restricted cash |                               |                   | 203,837  |                   |   |          | 203,837  |            |   |  | 223,123  |   |  |  | 223,123  |       
|Long-term debt                                                         |                               |                   | (935,702 | )                 |   |          | (952,055 | )          |   |  | (797,484 | ) |  |  | (789,913 | )     
|Derivative instruments (note 13)                                       |                               |                   |          |                   |   |          |          |            |   |  |          |   |  |  |          |       
|                                                                       | Interest rate swap agreements |                   |          | (2,429            | ) |          |          | (2,429     | ) |  |          |  |  |  |          | (1,297 | )
|                                                                       | Foreign currency contracts    |                   |          | (343              | ) |          |          | (343       | ) |  |          |  |  |  |          | 2,252  |  
|                                                                       | Bunker fuel swap contracts    |                   |          | (328              | ) |          |          | (328       | ) |  |          |  |  |  |          |       |  
|                                                                       | Written freight call option   |                   |          | (857              | ) |          |          | (857       | ) |  |          |  |  |  |          |       |  

The Company transacts all of its derivative
instruments with investment grade rated financial institutions
and requires no collateral from these institutions.

10. Capital Stock

The authorized capital stock of Teekay at
December 31, 2001 is 25,000,000 shares of Preferred Stock,
with a par value of $1 per share and 725,000,000 shares of
Common Stock, with a par value of $0.001 per share. As at
December 31, 2001, Teekay had 39,550,326 shares of Common
Stock and no shares of Preferred Stock issued and outstanding.

On September 19, 2001, Teekay announced that
its Board of Directors had authorized the repurchase of up to
2,000,000 shares of its Common Stock in the open market. As at
December 31, 2001, Teekay had repurchased 512,800 shares of
Common Stock at an average price of $27.617 per share.

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)


As of December 31, 2001, the Company had
reserved 3,993,933 shares of Common Stock for issuance upon
exercise of options granted pursuant to the Companys 1995
Stock Option Plan (the Plan). During the years ended
December 31, 2001 and 2000, and the nine month period ended
December 31, 1999, the Company granted options under the
Plan to acquire up to 863,200, 889,500, and 1,463,500 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
had initially vested equally over four years from the date of
grant. Effective September 8, 2000, the Company amended the
Plan which reduced the vesting period for all subsequent stock
option grants from four years to three years. In addition, the
Company also accelerated the vesting period for the existing
grants by one year. The impact of the accelerated vesting for
the existing grants on compensation expense was not material for
the years ended December 31, 2001 and 2000.

A summary of the Companys stock option
activity, and related information for the years ended
December 31, 2001 and 2000, and the nine month period ended
December 31, 1999 is as follows:

|                                                                               |  |                   |       |                   |  |                   |       |           |  |         |        |           |  |  |       |  |  |  |       |   |  |  |       | 
|------------------------------------------------------------------------------ |  | ----------------- | ----- | ----------------- |  | ----------------- | ----- | --------- |  | ------- | ------ | --------- |  |  | ----- |  |  |  | ----- | - |  |  | ----- | 
|                                                                               |  |                   |       |                   |  |                  
|                                                                               |  | December 31, 2001 |       | December 31, 2000 |  | December 31, 1999
|                                                                               |  |                   |       |                   |  |                  
|                                                                               |  |                   |       | Weighted-         |  |                   |       | Weighted- |  |         |        | Weighted-
|                                                                               |  |                   |       | Average           |  |                   |       | Average   |  |         |        | Average  
|                                                                               |  | Options           |       | Exercise          |  | Options           |       | Exercise  |  | Options |        | Exercise 
|                                                                               |  | (000s)           |       | Price             |  | (000s)           |       | Price     |  | (000s) |        | Price    
|                                                                               |  |                   |       |                   |  |                   |       |           |  |         |        |          
|                                                                               |  | #                 |       | $                 |  | #                 |       | $         |  | #       |        | $        
|Outstanding-beginning of period                                                |  |                   | 2,860 |                   |  |                   | 22.25 |           |  |         | 3,099  |           |  |  | 22.14 |  |  |  | 1,729 |   |  |  | 26.46 | 
|Granted                                                                        |  |                   | 863   |                   |  |                   | 41.19 |           |  |         | 889    |           |  |  | 23.56 |  |  |  | 1,464 |   |  |  | 17.11 | 
|Exercised                                                                      |  |                   | (917  | )                 |  |                   | 22.44 |           |  |         | (1,080 | )         |  |  | 23.00 |  |  |  |      |   |  |  |      | 
|Forfeited                                                                      |  |                   | (66   | )                 |  |                   | 26.86 |           |  |         | (48    | )         |  |  | 22.77 |  |  |  | (94   | ) |  |  | 21.12 | 
|                                                                               |  |                   |       |                   |  |                   |       |           |  |         |        |           |  |  |       |  |  |  |       |   |  |  |       | 
|Outstanding-end of period                                                      |  |                   | 2,740 |                   |  |                   | 28.04 |           |  |         | 2,860  |           |  |  | 22.25 |  |  |  | 3,099 |   |  |  | 22.14 | 
|                                                                               |  |                   |       |                   |  |                   |       |           |  |         |        |           |  |  |       |  |  |  |       |   |  |  |       | 
|Exercisable at end of period                                                   |  |                   | 1,164 |                   |  |                   | 22.99 |           |  |         | 1,453  |           |  |  | 23.54 |  |  |  | 1,019 |   |  |  | 25.35 | 
|                                                                               |  |                   |       |                   |  |                   |       |           |  |         |        |           |  |  |       |  |  |  |       |   |  |  |       | 
|Weighted-average fair value of options granted
	during the period (per option) |  |                   |       |                   |  |                   | 10.19 |           |  |         |        |           |  |  | 6.62  |  |  |  |       |   |  |  | 3.88  | 

Exercise prices for the options outstanding as of
December 31, 2001 ranged from $16.88 per share to $41.19
per share. These options have a weighted-average remaining
contractual life of 7.78 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.

F-15



---



##### 



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)


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 years ended December 31, 2001
and 2000, and the nine month period ended December 31, 1999
would have been stated at the pro forma amounts as follows:

|                                          |  |              |         |              |  |              |         |  |  |  |         |  
|----------------------------------------- |  | ------------ | ------- | ------------ |  | ------------ | ------- |  |  |  | ------- | -
|                                          |  |              |         |              |  | Nine Months 
|                                          |  | Year Ended   |         | Year Ended   |  | Ended       
|                                          |  | December 31, |         | December 31, |  | December 31,
|                                          |  | 2001         |         | 2000         |  | 1999        
|                                          |  |              |         |              |  |             
|                                          |  | $            |         | $            |  | $           
|Net income (loss):                        |  |              |         |              |  |              |         |  |  |  |         |  
|As reported                               |  |              | 336,518 |              |  |              | 270,020 |  |  |  | (19,595 | )
|Pro forma                                 |  |              | 330,052 |              |  |              | 264,449 |  |  |  | (21,828 | )
|Basic earnings (loss) per common
	share:  |  |              |         |              |  |              |         |  |  |  |         |  
|As reported                               |  |              | 8.48    |              |  |              | 7.02    |  |  |  | (0.54   | )
|Pro forma                                 |  |              | 8.31    |              |  |              | 6.87    |  |  |  | (0.60   | )
|Diluted earnings (loss) per
	commonshare: |  |              |         |              |  |              |         |  |  |  |         |  
|As reported                               |  |              | 8.31    |              |  |              | 6.86    |  |  |  | (0.54   | )
|Pro forma                                 |  |              | 8.15    |              |  |              | 6.72    |  |  |  | (0.60   | )

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 4.5% for the year ended December 31, 2001; 6.6% for the
year ended December 31, 2000; and 5.8% for the nine month
period ended December 31, 1999, respectively; dividend
yield of 3.0%; expected volatility of 30% for the years ended
December 31, 2001 and 2000 and 25% for the nine months
ended December 31, 1999; and expected lives of
five years.

Basic earnings per share is based upon the
following weighted-average number of common shares outstanding:
39,706,799 shares for the year ended December 31,
2001; 38,468,158 shares for the year ended
December 31, 2000; and 36,384,191 shares for the nine
month period ended December 31, 1999. Diluted earnings per
share, which gives effect to the aforementioned stock options,
is based upon the following weighted-average number of common
shares outstanding: 40,488,222 shares for the year ended
December 31, 2001; 39,368,253 shares for the year
ended December 31, 2000; and 36,405,089 shares for the
nine month period ended December 31, 1999.

11. Related Party Transactions

As at December 31, 2001 Cirrus Trust and JTK
Trust (the Trusts) owned, indirectly through
wholly owned subsidiaries, 41.2% of the Companys
outstanding Common Stock. Several of the Companys
directors are responsible for the supervision of the Trusts or
subsidiaries wholly owned by the Trusts.

Payments made by the Company to the Trusts or
companies related through common ownership in respect of port
agent services, legal and administration fees, shared office
costs and consulting fees for the years ended December 31,
2001 and 2000 and the nine month period ended
December 31, 1999 totalled $1,499,700, $1,638,300, and
$510,200, respectively.

F-16



---



##### 



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)


12. Other Income (Loss)

|                                                      |  |              |        |              |  |              |        |   |  |  |        |  
|----------------------------------------------------- |  | ------------ | ------ | ------------ |  | ------------ | ------ | - |  |  | ------ | -
|                                                      |  |              |        |              |  | Nine Months 
|                                                      |  | Year Ended   |        | Year Ended   |  | Ended       
|                                                      |  | December 31, |        | December 31, |  | December 31,
|                                                      |  | 2001         |        | 2000         |  | 1999        
|                                                      |  |              |        |              |  |             
|                                                      |  | $            |        | $            |  | $           
|Loss on disposition of vessels and equipment          |  |              |       |              |  |              | (1,004 | ) |  |  |       |  
|Gain on disposition of available-for-sale
	securities |  |              | 758    |              |  |              |       |   |  |  |       |  
|Equity income from joint ventures                     |  |              | 17,324 |              |  |              | 9,546  |   |  |  | 721    |  
|Future income taxes                                   |  |              | (6,963 | )            |  |              | (999   | ) |  |  | (1,500 | )
|Miscellaneous                                         |  |              | (1,011 | )            |  |              | (3,679 | ) |  |  | (3,234 | )
|                                                      |  |              |        |              |  |              |        |   |  |  |        |  
|                                                      |  |              | 10,108 |              |  |              | 3,864  |   |  |  | (4,013 | )
|                                                      |  |              |        |              |  |              |        |   |  |  |        |  

13. Derivative Instruments and Hedging
Activities

In June 1998, the Financial Accounting Standards
Board (FASB) issued Statement of Financial
Accounting Standards No. 133 (SFAS 133),
Accounting for Derivative Instruments and Hedging
Activities, which establishes new standards for recording
derivatives in interim and annual financial statements
(see Note 1). SFAS 133, as amended by Statements
of Financial Accounting Standards No. 137 and No. 138,
is effective for fiscal years beginning after June 15, 2000.

The Company adopted SFAS 133 on
January 1, 2001. The Company recognized the fair value of
its derivatives as assets of $2.2 million and liabilities
of $1.3 million on its consolidated balance sheet as of
January 1, 2001. These amounts were recorded as a
cumulative effect of an accounting change as an adjustment to
stockholders equity through other comprehensive income.
There was no impact on net income. In addition, a deferred gain
of $3.2 million on unwound interest rate swap agreements
presented as other long-term liabilities at December 31,
2000, was reclassified to accumulated other comprehensive income
and will be recognized into earnings over the hedged term of the
debt.

The Company only uses derivatives for hedging
purposes. The following summarizes the Companys risk
strategies with respect to market risk from foreign currency
fluctuations, changes in interest rates, bunker fuel prices and
tanker freight rates and the effect of these strategies on the
Companys financial statements.

The Company hedges portions of its forecasted
expenditures denominated in foreign currencies with forward
contracts and a portion of its bunker fuel expenditures with
bunker fuel swap contracts. As at December 31, 2001, the
Company was committed to foreign exchange contracts for the
forward purchase of approximately Japanese Yen
100.0 million, Singapore Dollars 3.9 million,
Norwegian Kroner 75.0 million, Canadian Dollars
80.4 million and Euros 3.9 million for
U.S. Dollars, at an average rate of Japanese Yen
127.04 per U.S. Dollar, Singapore Dollar
1.81 per U.S. Dollar, Norwegian Kroner
9.49 per U.S. Dollar, Canadian Dollar
1.57 per U.S. Dollar and Euros 0.92 per
U.S. Dollar, respectively. As at December 31, 2001,
the Company was committed to bunker fuel swap contracts
totalling 42,000 metric tonnes with a weighted-average price of
$113.54 per tonne, which expire between January 2002 and
May 2004.

F-17



---



##### 



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)


As at December 31, 2001, the Company was
committed to a series of interest rate swap agreements whereby
$85.0 million of the Companys floating rate debt was
swapped with fixed rate obligations having a weighted average
remaining term of 1.1 years, expiring between May 2002 and
May 2004. These agreements effectively change the Companys
interest rate exposure on $85.0 million of debt from a
floating LIBOR rate to a weighted average fixed rate of 6.40%.
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.

The Company hedges certain of its voyage revenues
through the use of tanker freight rate derivatives. As at
December 31, 2001, the Company had sold a 12-month written
freight call option for $0.9 million which could require
payments to the counterparty if monthly average freight rates
exceed a specified amount.

During the year ended December 31, 2001, the
Company recognized a net loss of $0.1 million relating to
the ineffective portion of its interest rate swap agreements and
foreign currency forward contracts. The ineffective portion of
these derivative instruments is presented as interest expense
and other income (loss), respectively.

As at December 31, 2001, the Company
estimates, based on current foreign exchange rates, bunker fuel
prices and interest rates, that it will reclassify approximately
$0.6 million of net loss on derivative instruments from
accumulated other comprehensive income to earnings during the
next 12 months due to actual voyage, vessel operating,
drydocking and general and administrative expenditures and the
payment of interest expense associated with the floating-rate
debt.

14. Commitments and
Contingencies

As at December 31, 2001, the Company was
committed to the construction of three shuttle, three Suezmax
and two Aframax tankers scheduled for delivery between December
2002 and December 2003, at a total cost of approximately
$410.8 million. As of December 31, 2001, there have
been payments made towards these commitments of
$112.8 million and long-term financing arrangements exist
for $61.5 million of the unpaid cost of these vessels. It
is the Companys intention to finance the remaining unpaid
amount of $236.5 million through either debt borrowing or
surplus cash balances, or a combination thereof. As of
December 31, 2001, the remaining payments required to be
made under these newbuilding contracts are as follows:
$56.2 million in 2002 and $241.8 million in 2003.

Teekay and certain subsidiaries of Teekay have
guaranteed their share of the outstanding mortgage debt in three
50%-owned joint venture companies. As of December 31, 2001,
Teekay and these subsidiaries have guaranteed $87.8 million
of such debt, or 50% of the total $175.6 million in
outstanding mortgage debt of the joint venture companies. These
joint venture companies own three shuttle tankers.

F-18



---



##### 



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)


15. Change in Non-Cash Working Capital
Items Related to Operating Activities

|                                  |  |              |        |              |  |              |         |   |  |  |        |  
|--------------------------------- |  | ------------ | ------ | ------------ |  | ------------ | ------- | - |  |  | ------ | -
|                                  |  |              |        |              |  | Nine Months 
|                                  |  | Year Ended   |        | Year Ended   |  | Ended       
|                                  |  | December 31, |        | December 31, |  | December 31,
|                                  |  | 2001         |        | 2000         |  | 1999        
|                                  |  |              |        |              |  |             
|                                  |  | $            |        | $            |  | $           
|Accounts receivable               |  |              | 23,993 |              |  |              | (49,405 | ) |  |  | (5,462 | )
|Prepaid expenses and other assets |  |              | 5,152  |              |  |              | 3,443   |   |  |  | 307    |  
|Accounts payable                  |  |              | 666    |              |  |              | 2,613   |   |  |  | (6,571 | )
|Accrued liabilities               |  |              | (1,614 | )            |  |              | 6,673   |   |  |  | 12,622 |  
|                                  |  |              |        |              |  |              |         |   |  |  |        |  
|                                  |  |              | 28,197 |              |  |              | (36,676 | ) |  |  | 896    |  
|                                  |  |              |        |              |  |              |         |   |  |  |        |  

F-19



---



##### 



SCHEDULE A

TEEKAY SHIPPING CORPORATION AND
SUBSIDIARIES

CONDENSED STATEMENTS OF INCOME AND RETAINED
EARNINGS

(in thousands of U.S. dollars)


|                                                   |                                      |                              |         |              |   |               |         |              |  |                |           |         |  |  |            |   |  |  |         |         | 
|-------------------------------------------------- | ------------------------------------ | ---------------------------- | ------- | ------------ | - | ------------- | ------- | ------------ |  | -------------- | --------- | ------- |  |  | ---------- | - |  |  | ------- | ------- | 
|                                                   |                                      |                             
|                                                   |                                      | Year Ended December 31, 2001
|                                                   |                                      |                             
|                                                   |                                      |                              |         | 8.32% Notes  |   |               |         | Teekay      
|                                                   |                                      | Teekay                       |         | Guarantor    |   | Non-Guarantor |         |              |  | Shipping Corp.
|                                                   |                                      | Shipping Corp.               |         | Subsidiaries |   | Subsidiaries  |         | Eliminations |  | & Subsidiaries
|                                                   |                                      |                              |         |              |   |               |         |              |  |               
|                                                   |                                      | $                            |         | $            |   | $             |         | $            |  | $             
|Net voyage revenues                                |                                      |                              |        |              |   |               | 34,688  |              |  |                | 899,218   |         |  |  | (144,412   | ) |  |  | 789,494 |        
|Operating expenses                                 |                                      |                              | 10,809  |              |   |               | 32,660  |              |  |                | 506,974   |         |  |  | (144,412   | ) |  |  | 406,031 |        
|                                                   |                                      |                              |         |              |   |               |         |              |  |                |           |         |  |  |            |   |  |  |         |        
|                                                   | (Loss) income from vessel operations |                              |         | (10,809      | ) |               |         | 2,028        |  |                |           | 392,244 |  |  |            |  |  |  |         | 383,463 | 
|Net interest (expense) income                      |                                      |                              | (22,548 | )            |   |               |        |              |  |                | (34,505   | )       |  |  |           |   |  |  | (57,053 | )      
|Equity in net income of subsidiaries               |                                      |                              | 369,023 |              |   |               |        |              |  |                |          |         |  |  | (369,023   | ) |  |  |        |        
|Other income                                       |                                      |                              | 852     |              |   |               | 1,663   |              |  |                | 7,593     |         |  |  |           |   |  |  | 10,108  |        
|                                                   |                                      |                              |         |              |   |               |         |              |  |                |           |         |  |  |            |   |  |  |         |        
|Net income                                         |                                      |                              | 336,518 |              |   |               | 3,691   |              |  |                | 365,332   |         |  |  | (369,023   | ) |  |  | 336,518 |        
|Retained earnings (deficit), beginning of the year |                                      |                              | 641,149 |              |   |               | (18,969 | )            |  |                | 671,069   |         |  |  | (652,100   | ) |  |  | 641,149 |        
|Adjustment for equity income on step acquisition   |                                      |                              | 198     |              |   |               |        |              |  |                |          |         |  |  |           |   |  |  | 198     |        
|Dividends declared                                 |                                      |                              | (34,102 | )            |   |               |        |              |  |                |          |         |  |  |           |   |  |  | (34,102 | )      
|Repurchase of Common Stock                         |                                      |                              | (8,103  | )            |   |               |        |              |  |                |          |         |  |  |           |   |  |  | (8,103  | )      
|                                                   |                                      |                              |         |              |   |               |         |              |  |                |           |         |  |  |            |   |  |  |         |        
|Retained earnings (deficit), end of the
	year      |                                      |                              | 935,660 |              |   |               | (15,278 | )            |  |                | 1,036,401 |         |  |  | (1,021,123 | ) |  |  | 935,660 |        
|                                                   |                                      |                              |         |              |   |               |         |              |  |                |           |         |  |  |            |   |  |  |         |        

|                                                   |                                      |                              |         |              |   |               |         |              |  |                |         |         |  |  |          |         |   |  |         |         | 
|-------------------------------------------------- | ------------------------------------ | ---------------------------- | ------- | ------------ | - | ------------- | ------- | ------------ |  | -------------- | ------- | ------- |  |  | -------- | ------- | - |  | ------- | ------- | 
|                                                   |                                      |                             
|                                                   |                                      | Year Ended December 31, 2000
|                                                   |                                      |                             
|                                                   |                                      |                              |         | 8.32% Notes  |   |               |         | Teekay      
|                                                   |                                      | Teekay                       |         | Guarantor    |   | Non-Guarantor |         |              |  | Shipping Corp.
|                                                   |                                      | Shipping Corp.               |         | Subsidiaries |   | Subsidiaries  |         | Eliminations |  | & Subsidiaries
|                                                   |                                      |                              |         |              |   |               |         |              |  |               
|                                                   |                                      | $                            |         | $            |   | $             |         | $            |  | $             
|Net voyage revenues                                |                                      |                              |        |              |   |               | 35,137  |              |  |                | 776,291 |         |  |  | (167,159 | )       |   |  | 644,269 |        
|Operating expenses                                 |                                      |                              | 420     |              |   |               | 25,202  |              |  |                | 433,578 |         |  |  | (142,606 | )       |   |  | 316,594 |        
|                                                   |                                      |                              |         |              |   |               |         |              |  |                |         |         |  |  |          |         |   |  |         |        
|                                                   | (Loss) income from vessel operations |                              |         | (420         | ) |               |         | 9,935        |  |                |         | 342,713 |  |  |          | (24,553 | ) |  |         | 327,675 | 
|Net interest (expense) income                      |                                      |                              | (17,373 | )            |   |               | 46      |              |  |                | (44,192 | )       |  |  |         |         |   |  | (61,519 | )      
|Equity in net income of subsidiaries               |                                      |                              | 287,127 |              |   |               |        |              |  |                |        |         |  |  | (287,127 | )       |   |  |        |        
|Other income                                       |                                      |                              | 686     |              |   |               |        |              |  |                | 3,178   |         |  |  |         |         |   |  | 3,864   |        
|                                                   |                                      |                              |         |              |   |               |         |              |  |                |         |         |  |  |          |         |   |  |         |        
|Net income                                         |                                      |                              | 270,020 |              |   |               | 9,981   |              |  |                | 301,699 |         |  |  | (311,680 | )       |   |  | 270,020 |        
|Retained earnings (deficit), beginning of the year |                                      |                              | 404,130 |              |   |               | (28,950 | )            |  |                | 369,370 |         |  |  | (340,420 | )       |   |  | 404,130 |        
|Dividends declared                                 |                                      |                              | (33,001 | )            |   |               |        |              |  |                |        |         |  |  |         |         |   |  | (33,001 | )      
|                                                   |                                      |                              |         |              |   |               |         |              |  |                |         |         |  |  |          |         |   |  |         |        
|Retained earnings (deficit), end of the
	year      |                                      |                              | 641,149 |              |   |               | (18,969 | )            |  |                | 671,069 |         |  |  | (652,100 | )       |   |  | 641,149 |        
|                                                   |                                      |                              |         |              |   |               |         |              |  |                |         |         |  |  |          |         |   |  |         |        

|                                                      |                                      |                                     |         |              |   |               |         |              |  |                |         |        |  |  |          |         |   |  |         |        | 
|----------------------------------------------------- | ------------------------------------ | ----------------------------------- | ------- | ------------ | - | ------------- | ------- | ------------ |  | -------------- | ------- | ------ |  |  | -------- | ------- | - |  | ------- | ------ | 
|                                                      |                                      |                                    
|                                                      |                                      | Nine Months Ended December 31, 1999
|                                                      |                                      |                                    
|                                                      |                                      |                                     |         | 8.32% Notes  |   |               |         | Teekay      
|                                                      |                                      | Teekay                              |         | Guarantor    |   | Non-Guarantor |         |              |  | Shipping Corp.
|                                                      |                                      | Shipping Corp.                      |         | Subsidiaries |   | Subsidiaries  |         | Eliminations |  | & Subsidiaries
|                                                      |                                      |                                     |         |              |   |               |         |              |  |               
|                                                      |                                      | $                                   |         | $            |   | $             |         | $            |  | $             
|Net voyage revenues                                   |                                      |                                     |        |              |   |               | 28,589  |              |  |                | 349,222 |        |  |  | (129,461 | )       |   |  | 248,350 |       
|Operating expenses                                    |                                      |                                     | 493     |              |   |               | 24,056  |              |  |                | 310,304 |        |  |  | (110,075 | )       |   |  | 224,778 |       
|                                                      |                                      |                                     |         |              |   |               |         |              |  |                |         |        |  |  |          |         |   |  |         |       
|                                                      | (Loss) income from vessel operations |                                     |         | (493         | ) |               |         | 4,533        |  |                |         | 38,918 |  |  |          | (19,386 | ) |  |         | 23,572 | 
|Net interest (expense) income                         |                                      |                                     | (14,420 | )            |   |               | 87      |              |  |                | (24,821 | )      |  |  |         |         |   |  | (39,154 | )     
|Equity in net (loss) income of subsidiaries           |                                      |                                     | (4,682  | )            |   |               |        |              |  |                |        |        |  |  | 4,682    |         |   |  |        |       
|Other (loss) income                                   |                                      |                                     |        |              |   |               |        |              |  |                | (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 |       
|                                                      |                                      |                                     |         |              |   |               |         |              |  |                |         |        |  |  |          |         |   |  |         |       




(See Note 7)

F-20



---



##### 



SCHEDULE A

TEEKAY SHIPPING CORPORATION AND
SUBSIDIARIES

CONDENSED STATEMENTS OF COMPREHENSIVE
INCOME

(in thousands of U.S. dollars)


|                           |                                                                                               |                              |         |              |  |               |       |              |  |                |         |        |   |  |          |   |  |  |         |        |  
|-------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------- | ------- | ------------ |  | ------------- | ----- | ------------ |  | -------------- | ------- | ------ | - |  | -------- | - |  |  | ------- | ------ | -
|                           |                                                                                               |                             
|                           |                                                                                               | Year Ended December 31, 2001
|                           |                                                                                               |                             
|                           |                                                                                               |                              |         | 8.32% Notes  |  |               |       | Teekay      
|                           |                                                                                               | Teekay                       |         | Guarantor    |  | Non-Guarantor |       |              |  | Shipping Corp.
|                           |                                                                                               | Shipping Corp.               |         | Subsidiaries |  | Subsidiaries  |       | Eliminations |  | & Subsidiaries
|                           |                                                                                               |                              |         |              |  |               |       |              |  |               
|                           |                                                                                               | $                            |         | $            |  | $             |       | $            |  | $             
|Net income                 |                                                                                               |                              | 336,518 |              |  |               | 3,691 |              |  |                | 365,332 |        |   |  | (369,023 | ) |  |  | 336,518 |       
|Other comprehensive income |                                                                                               |                              |         |              |  |               |       |              |  |                |         |        |   |  |          |   |  |  |         |       
|                           | Unrealized loss on available-for-sale securities                                              |                              |         |             |  |               |       |             |  |                |         | (6,636 | ) |  |          |  |  |  |         | (6,636 | )
|                           | Reclassification adjustment for gain on
	available-for-sale securities included in net income |                              |         |             |  |               |       |             |  |                |         | (3,627 | ) |  |          |  |  |  |         | (3,627 | )
|                           | Cumulative effect of accounting change                                                        |                              |         |             |  |               |       |             |  |                |         | 4,155  |   |  |          |  |  |  |         | 4,155  |  
|                           | Unrealized loss on derivative instruments                                                     |                              |         |             |  |               |       |             |  |                |         | (2,274 | ) |  |          |  |  |  |         | (2,274 | )
|                           | Reclassification adjustment for gain on
	derivative instruments                               |                              |         |             |  |               |       |             |  |                |         | (974   | ) |  |          |  |  |  |         | (974   | )
|                           |                                                                                               |                              |         |              |  |               |       |              |  |                |         |        |   |  |          |   |  |  |         |       
|Comprehensive income       |                                                                                               |                              | 336,518 |              |  |               | 3,691 |              |  |                | 355,976 |        |   |  | (369,023 | ) |  |  | 327,162 |       
|                           |                                                                                               |                              |         |              |  |               |       |              |  |                |         |        |   |  |          |   |  |  |         |       

|                           |                                                  |                              |         |              |  |               |       |              |  |                |         |       |  |  |          |   |  |  |         |       | 
|-------------------------- | ------------------------------------------------ | ---------------------------- | ------- | ------------ |  | ------------- | ----- | ------------ |  | -------------- | ------- | ----- |  |  | -------- | - |  |  | ------- | ----- | 
|                           |                                                  |                             
|                           |                                                  | Year Ended December 31, 2000
|                           |                                                  |                             
|                           |                                                  |                              |         | 8.32% Notes  |  |               |       | Teekay      
|                           |                                                  | Teekay                       |         | Guarantor    |  | Non-Guarantor |       |              |  | Shipping Corp.
|                           |                                                  | Shipping Corp.               |         | Subsidiaries |  | Subsidiaries  |       | Eliminations |  | & Subsidiaries
|                           |                                                  |                              |         |              |  |               |       |              |  |               
|                           |                                                  | $                            |         | $            |  | $             |       | $            |  | $             
|Net income                 |                                                  |                              | 270,020 |              |  |               | 9,981 |              |  |                | 301,699 |       |  |  | (311,680 | ) |  |  | 270,020 |      
|Other comprehensive income |                                                  |                              |         |              |  |               |       |              |  |                |         |       |  |  |          |   |  |  |         |      
|                           | Unrealized gain on available-for-sale securities |                              |         |             |  |               |       |             |  |                |         | 4,555 |  |  |          |  |  |  |         | 4,555 | 
|                           |                                                  |                              |         |              |  |               |       |              |  |                |         |       |  |  |          |   |  |  |         |      
|Comprehensive income       |                                                  |                              | 270,020 |              |  |               | 9,981 |              |  |                | 306,254 |       |  |  | (311,680 | ) |  |  | 274,575 |      
|                           |                                                  |                              |         |              |  |               |       |              |  |                |         |       |  |  |          |   |  |  |         |      

|                            |  |                                     |         |              |  |               |       |              |  |                |        |  |  |  |         |   |  |  |         |  
|--------------------------- |  | ----------------------------------- | ------- | ------------ |  | ------------- | ----- | ------------ |  | -------------- | ------ |  |  |  | ------- | - |  |  | ------- | -
|                            |  |                                    
|                            |  | Nine Months Ended December 31, 1999
|                            |  |                                    
|                            |  |                                     |         | 8.32% Notes  |  |               |       | Teekay      
|                            |  | Teekay                              |         | Guarantor    |  | Non-Guarantor |       |              |  | Shipping Corp.
|                            |  | Shipping Corp.                      |         | Subsidiaries |  | Subsidiaries  |       | Eliminations |  | & Subsidiaries
|                            |  |                                     |         |              |  |               |       |              |  |               
|                            |  | $                                   |         | $            |  | $             |       | $            |  | $             
|Net (loss) income           |  |                                     | (19,595 | )            |  |               | 4,620 |              |  |                | 10,084 |  |  |  | (14,704 | ) |  |  | (19,595 | )
|Other comprehensive income  |  |                                     |        |              |  |               |      |              |  |                |       |  |  |  |        |   |  |  |        |  
|                            |  |                                     |         |              |  |               |       |              |  |                |        |  |  |  |         |   |  |  |         |  
|Comprehensive (loss) income |  |                                     | (19,595 | )            |  |               | 4,620 |              |  |                | 10,084 |  |  |  | (14,704 | ) |  |  | (19,595 | )
|                            |  |                                     |         |              |  |               |       |              |  |                |        |  |  |  |         |   |  |  |         |  




(See Note 7)

F-21



---



##### 



SCHEDULE A

TEEKAY SHIPPING CORPORATION AND
SUBSIDIARIES

CONDENSED BALANCE SHEETS

(in thousands of U.S. dollars)


|                                                                                  |                            |                         |           |              |  |               |         |              |   |                |           |           |  |  |            |            |   |  |           |           | 
|--------------------------------------------------------------------------------- | -------------------------- | ----------------------- | --------- | ------------ |  | ------------- | ------- | ------------ | - | -------------- | --------- | --------- |  |  | ---------- | ---------- | - |  | --------- | --------- | 
|                                                                                  |                            |                        
|                                                                                  |                            | As at December 31, 2001
|                                                                                  |                            |                        
|                                                                                  |                            |                         |           | 8.32% Notes  |  |               |         | Teekay      
|                                                                                  |                            | Teekay                  |           | Guarantor    |  | Non-Guarantor |         |              |   | Shipping Corp.
|                                                                                  |                            | Shipping Corp.          |           | Subsidiaries |  | Subsidiaries  |         | Eliminations |   | & Subsidiaries
|                                                                                  |                            |                         |           |              |  |               |         |              |   |               
|                                                                                  |                            | $                       |           | $            |  | $             |         | $            |   | $             
|ASSETS                                                                            |                            |                         |           |              |  |               |         |              |   |                |           |           |  |  |            |            |   |  |           |          
|Cash and cash equivalents                                                         |                            |                         |          |              |  |               |        |              |   |                | 174,950   |           |  |  |           |            |   |  | 174,950   |          
|Other current assets                                                              |                            |                         | 1,101     |              |  |               | 472     |              |   |                | 186,946   |           |  |  | (96,000    | )          |   |  | 92,519    |          
|                                                                                  |                            |                         |           |              |  |               |         |              |   |                |           |           |  |  |            |            |   |  |           |          
|                                                                                  | Total current assets       |                         |           | 1,101        |  |               |         | 472          |   |                |           | 361,896   |  |  |            | (96,000    | ) |  |           | 267,469   | 
|Vessels and equipment (net)                                                       |                            |                         |          |              |  |               | 264,768 |              |   |                | 1,778,330 |           |  |  |           |            |   |  | 2,043,098 |          
|Advances due from subsidiaries                                                    |                            |                         | 346,430   |              |  |               |        |              |   |                |          |           |  |  | (346,430   | )          |   |  |          |          
|Other assets (principally marketable securities
	and investments in subsidiaries) |                            |                         | 1,599,746 |              |  |               |        |              |   |                | 42,783    |           |  |  | (1,599,746 | )          |   |  | 42,783    |          
|Investment in joint ventures                                                      |                            |                         |          |              |  |               |        |              |   |                | 27,352    |           |  |  |           |            |   |  | 27,352    |          
|Goodwill                                                                          |                            |                         |          |              |  |               |        |              |   |                | 87,079    |           |  |  |           |            |   |  | 87,079    |          
|                                                                                  |                            |                         |           |              |  |               |         |              |   |                |           |           |  |  |            |            |   |  |           |          
|                                                                                  |                            |                         | 1,947,277 |              |  |               | 265,240 |              |   |                | 2,297,440 |           |  |  | (2,042,176 | )          |   |  | 2,467,781 |          
|                                                                                  |                            |                         |           |              |  |               |         |              |   |                |           |           |  |  |            |            |   |  |           |          
|LIABILITIES & STOCKHOLDERS
	EQUITY                                               |                            |                         |           |              |  |               |         |              |   |                |           |           |  |  |            |           
|Current liabilities                                                               |                            |                         | 24,813    |              |  |               | 1,319   |              |   |                | 197,193   |           |  |  | (96,000    | )          |   |  | 127,325   |          
|Long-term debt                                                                    |                            |                         | 519,463   |              |  |               |        |              |   |                | 403,816   |           |  |  |           |            |   |  | 923,279   |          
|Due to (from) affiliates                                                          |                            |                         |          |              |  |               | (90,131 | )            |   |                | 503,145   |           |  |  | (413,014   | )          |   |  |          |          
|                                                                                  |                            |                         |           |              |  |               |         |              |   |                |           |           |  |  |            |            |   |  |           |          
|                                                                                  | Total liabilities          |                         |           | 544,276      |  |               |         | (88,812      | ) |                |           | 1,104,154 |  |  |            | (509,014   | ) |  |           | 1,050,604 | 
|                                                                                  |                            |                         |           |              |  |               |         |              |   |                |           |           |  |  |            |            |   |  |           |          
|Minority Interest                                                                 |                            |                         |          |              |  |               |        |              |   |                | 18,977    |           |  |  |           |            |   |  | 18,977    |          
|Stockholders Equity                                                              |                            |                         |           |              |  |               |         |              |   |                |           |           |  |  |            |            |   |  |           |          
|Capital stock                                                                     |                            |                         | 467,341   |              |  |               | 23      |              |   |                | 5,943     |           |  |  | (5,966     | )          |   |  | 467,341   |          
|Contributed capital                                                               |                            |                         |          |              |  |               | 369,307 |              |   |                | 136,766   |           |  |  | (506,073   | )          |   |  |          |          
|Retained earnings (deficit)                                                       |                            |                         | 935,660   |              |  |               | (15,278 | )            |   |                | 1,036,401 |           |  |  | (1,021,123 | )          |   |  | 935,660   |          
|Accumulated other comprehensive loss                                              |                            |                         |          |              |  |               |        |              |   |                | (4,801    | )         |  |  |           |            |   |  | (4,801    | )        
|                                                                                  |                            |                         |           |              |  |               |         |              |   |                |           |           |  |  |            |            |   |  |           |          
|                                                                                  | Total stockholders equity |                         |           | 1,403,001    |  |               |         | 354,052      |   |                |           | 1,174,309 |  |  |            | (1,533,162 | ) |  |           | 1,398,200 | 
|                                                                                  |                            |                         |           |              |  |               |         |              |   |                |           |           |  |  |            |            |   |  |           |          
|                                                                                  |                            |                         | 1,947,277 |              |  |               | 265,240 |              |   |                | 2,297,440 |           |  |  | (2,042,176 | )          |   |  | 2,467,781 |          
|                                                                                  |                            |                         |           |              |  |               |         |              |   |                |           |           |  |  |            |            |   |  |           |          

|                                                                                  |                            |                         |           |              |  |               |         |              |   |                |           |         |  |  |            |            |   |  |           |           | 
|--------------------------------------------------------------------------------- | -------------------------- | ----------------------- | --------- | ------------ |  | ------------- | ------- | ------------ | - | -------------- | --------- | ------- |  |  | ---------- | ---------- | - |  | --------- | --------- | 
|                                                                                  |                            |                        
|                                                                                  |                            | As at December 31, 2000
|                                                                                  |                            |                        
|                                                                                  |                            |                         |           | 8.32% Notes  |  |               |         | Teekay      
|                                                                                  |                            | Teekay                  |           | Guarantor    |  | Non-Guarantor |         |              |   | Shipping Corp.
|                                                                                  |                            | Shipping Corp.          |           | Subsidiaries |  | Subsidiaries  |         | Eliminations |   | & Subsidiaries
|                                                                                  |                            |                         |           |              |  |               |         |              |   |               
|                                                                                  |                            | $                       |           | $            |  | $             |         | $            |   | $             
|ASSETS                                                                            |                            |                         |           |              |  |               |         |              |   |                |           |         |  |  |            |            |   |  |           |          
|Cash and cash equivalents                                                         |                            |                         | 294       |              |  |               |        |              |   |                | 181,006   |         |  |  |           |            |   |  | 181,300   |          
|Other current assets                                                              |                            |                         | 45        |              |  |               | 725     |              |   |                | 209,425   |         |  |  | (96,000    | )          |   |  | 114,195   |          
|                                                                                  |                            |                         |           |              |  |               |         |              |   |                |           |         |  |  |            |            |   |  |           |          
|                                                                                  | Total current assets       |                         |           | 339          |  |               |         | 725          |   |                |           | 390,431 |  |  |            | (96,000    | ) |  |           | 295,495   | 
|Vessels and equipment (net)                                                       |                            |                         |          |              |  |               | 281,377 |              |   |                | 1,326,339 |         |  |  |           |            |   |  | 1,607,716 |          
|Advances due from subsidiaries                                                    |                            |                         | 58,068    |              |  |               |        |              |   |                |          |         |  |  | (58,068    | )          |   |  |          |          
|Other assets (principally marketable securities
	and investments in subsidiaries) |                            |                         | 1,229,756 |              |  |               |        |              |   |                | 50,414    |         |  |  | (1,229,756 | )          |   |  | 50,414    |          
|Investment in joint venture                                                       |                            |                         |          |              |  |               |        |              |   |                | 20,474    |         |  |  |           |            |   |  | 20,474    |          
|                                                                                  |                            |                         |           |              |  |               |         |              |   |                |           |         |  |  |            |            |   |  |           |          
|                                                                                  |                            |                         | 1,288,163 |              |  |               | 282,102 |              |   |                | 1,787,658 |         |  |  | (1,383,824 | )          |   |  | 1,974,099 |          
|                                                                                  |                            |                         |           |              |  |               |         |              |   |                |           |         |  |  |            |            |   |  |           |          
|LIABILITIES & STOCKHOLDERS
	EQUITY                                               |                            |                         |           |              |  |               |         |              |   |                |           |         |  |  |            |           
|Current liabilities                                                               |                            |                         | 4,932     |              |  |               | 1,371   |              |   |                | 228,032   |         |  |  | (96,000    | )          |   |  | 138,335   |          
|Long-term debt                                                                    |                            |                         | 189,274   |              |  |               |        |              |   |                | 543,408   |         |  |  |           |            |   |  | 732,682   |          
|Due to (from) affiliates                                                          |                            |                         |          |              |  |               | (69,630 | )            |   |                | 193,315   |         |  |  | (123,685   | )          |   |  |          |          
|                                                                                  |                            |                         |           |              |  |               |         |              |   |                |           |         |  |  |            |            |   |  |           |          
|                                                                                  | Total liabilities          |                         |           | 194,206      |  |               |         | (68,259      | ) |                |           | 964,755 |  |  |            | (219,685   | ) |  |           | 871,017   | 
|                                                                                  |                            |                         |           |              |  |               |         |              |   |                |           |         |  |  |            |            |   |  |           |          
|Minority Interest                                                                 |                            |                         |          |              |  |               |        |              |   |                | 4,570     |         |  |  |           |            |   |  | 4,570     |          
|Stockholders Equity                                                              |                            |                         |           |              |  |               |         |              |   |                |           |         |  |  |            |            |   |  |           |          
|Capital stock                                                                     |                            |                         | 452,808   |              |  |               | 23      |              |   |                | 5,943     |         |  |  | (5,966     | )          |   |  | 452,808   |          
|Contributed capital                                                               |                            |                         |          |              |  |               | 369,307 |              |   |                | 136,766   |         |  |  | (506,073   | )          |   |  |          |          
|Retained earnings (deficit)                                                       |                            |                         | 641,149   |              |  |               | (18,969 | )            |   |                | 671,069   |         |  |  | (652,100   | )          |   |  | 641,149   |          
|Accumulated other comprehensive income                                            |                            |                         |          |              |  |               |        |              |   |                | 4,555     |         |  |  |           |            |   |  | 4,555     |          
|                                                                                  |                            |                         |           |              |  |               |         |              |   |                |           |         |  |  |            |            |   |  |           |          
|                                                                                  | Total stockholders equity |                         |           | 1,093,957    |  |               |         | 350,361      |   |                |           | 818,333 |  |  |            | (1,164,139 | ) |  |           | 1,098,512 | 
|                                                                                  |                            |                         |           |              |  |               |         |              |   |                |           |         |  |  |            |            |   |  |           |          
|                                                                                  |                            |                         | 1,288,163 |              |  |               | 282,102 |              |   |                | 1,787,658 |         |  |  | (1,383,824 | )          |   |  | 1,974,099 |          
|                                                                                  |                            |                         |           |              |  |               |         |              |   |                |           |         |  |  |            |            |   |  |           |          




(See Note 7)

F-22



---



##### 



SCHEDULE A

TEEKAY SHIPPING CORPORATION AND
SUBSIDIARIES

CONDENSED STATEMENTS OF CASH FLOWS

(in thousands of U.S. dollars)


|                                                            |                                         |                              |          |              |   |               |         |              |   |                |          |          |   |  |   |   |  |  |          |          |  
|----------------------------------------------------------- | --------------------------------------- | ---------------------------- | -------- | ------------ | - | ------------- | ------- | ------------ | - | -------------- | -------- | -------- | - |  | - | - |  |  | -------- | -------- | -
|                                                            |                                         |                             
|                                                            |                                         | Year Ended December 31, 2001
|                                                            |                                         |                             
|                                                            |                                         |                              |          | 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 |                              |          | (7,458       | ) |               |         | 21,446       |   |                |          | 506,162  |   |  |   |  |  |  |          | 520,150  |  
|                                                            |                                         |                              |          |              |   |               |         |              |   |                |          |          |   |  |   |   |  |  |          |         
|FINANCING ACTIVITIES                                        |                                         |                              |          |              |   |               |         |              |   |                |          |          |   |  |   |   |  |  |          |         
|Net proceeds from long-term debt                            |                                         |                              | 345,045  |              |   |               |        |              |   |                | 343,336  |          |   |  |  |   |  |  | 688,381  |         
|Scheduled repayments of long-term debt                      |                                         |                              |         |              |   |               |        |              |   |                | (72,026  | )        |   |  |  |   |  |  | (72,026  | )       
|Prepayments of long-term debt                               |                                         |                              | (22,045  | )            |   |               |        |              |   |                | (729,693 | )        |   |  |  |   |  |  | (751,738 | )       
|Other                                                       |                                         |                              | (316,034 | )            |   |               | (20,502 | )            |   |                | 301,031  |          |   |  |  |   |  |  | (35,505  | )       
|                                                            |                                         |                              |          |              |   |               |         |              |   |                |          |          |   |  |   |   |  |  |          |         
|                                                            | Net cash flow from financing activities |                              |          | 6,966        |   |               |         | (20,502      | ) |                |          | (157,352 | ) |  |   |  |  |  |          | (170,888 | )
|                                                            |                                         |                              |          |              |   |               |         |              |   |                |          |          |   |  |   |   |  |  |          |         
|INVESTING ACTIVITIES                                        |                                         |                              |          |              |   |               |         |              |   |                |          |          |   |  |   |   |  |  |          |         
|Expenditures for vessels and equipment                      |                                         |                              |         |              |   |               | (945    | )            |   |                | (204,102 | )        |   |  |  |   |  |  | (205,047 | )       
|Expenditure for the purchase of Ugland Nordic
	Shipping ASA |                                         |                              | 198      |              |   |               |        |              |   |                | (176,651 | )        |   |  |  |   |  |  | (176,453 | )       
|Other                                                       |                                         |                              |         |              |   |               | 1       |              |   |                | 25,887   |          |   |  |  |   |  |  | 25,888   |         
|                                                            |                                         |                              |          |              |   |               |         |              |   |                |          |          |   |  |   |   |  |  |          |         
|                                                            | Net cash flow from investing activities |                              |          | 198          |   |               |         | (944         | ) |                |          | (354,866 | ) |  |   |  |  |  |          | (355,612 | )
|                                                            |                                         |                              |          |              |   |               |         |              |   |                |          |          |   |  |   |   |  |  |          |         
|Decrease in cash and cash
	equivalents                      |                                         |                              | (294     | )            |   |               |        |              |   |                | (6,056   | )        |   |  |  |   |  |  | (6,350   | )       
|Cash and cash equivalents, beginning of the period          |                                         |                              | 294      |              |   |               |        |              |   |                | 181,006  |          |   |  |  |   |  |  | 181,300  |         
|                                                            |                                         |                              |          |              |   |               |         |              |   |                |          |          |   |  |   |   |  |  |          |         
|Cash and cash equivalents, end of the
	year                 |                                         |                              |         |              |   |               |        |              |   |                | 174,950  |          |   |  |  |   |  |  | 174,950  |         
|                                                            |                                         |                              |          |              |   |               |         |              |   |                |          |          |   |  |   |   |  |  |          |         

|                                                                |                                         |                              |         |              |   |               |         |              |   |                |          |          |   |  |   |   |  |  |          |          |  
|--------------------------------------------------------------- | --------------------------------------- | ---------------------------- | ------- | ------------ | - | ------------- | ------- | ------------ | - | -------------- | -------- | -------- | - |  | - | - |  |  | -------- | -------- | -
|                                                                |                                         |                             
|                                                                |                                         | Year Ended December 31, 2000
|                                                                |                                         |                             
|                                                                |                                         |                              |         | 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 |                              |         | (19,407      | ) |               |         | 25,048       |   |                |          | 327,614  |   |  |   |  |  |  |          | 333,255  |  
|                                                                |                                         |                              |         |              |   |               |         |              |   |                |          |          |   |  |   |   |  |  |          |         
|FINANCING ACTIVITIES                                            |                                         |                              |         |              |   |               |         |              |   |                |          |          |   |  |   |   |  |  |          |         
|Net proceeds from long-term debt                                |                                         |                              |        |              |   |               |        |              |   |                | 206,000  |          |   |  |  |   |  |  | 206,000  |         
|Scheduled repayments of long-term debt                          |                                         |                              |        |              |   |               |        |              |   |                | (63,757  | )        |   |  |  |   |  |  | (63,757  | )       
|Prepayments of long-term debt                                   |                                         |                              | (35,726 | )            |   |               |        |              |   |                | (394,200 | )        |   |  |  |   |  |  | (429,926 | )       
|Other                                                           |                                         |                              | 55,217  |              |   |               | (63,293 | )            |   |                | 2,916    |          |   |  |  |   |  |  | (5,160   | )       
|                                                                |                                         |                              |         |              |   |               |         |              |   |                |          |          |   |  |   |   |  |  |          |         
|                                                                | Net cash flow from financing activities |                              |         | 19,491       |   |               |         | (63,293      | ) |                |          | (249,041 | ) |  |   |  |  |  |          | (292,843 | )
|                                                                |                                         |                              |         |              |   |               |         |              |   |                |          |          |   |  |   |   |  |  |          |         
|INVESTING ACTIVITIES                                            |                                         |                              |         |              |   |               |         |              |   |                |          |          |   |  |   |   |  |  |          |         
|Expenditures for vessels and equipment                          |                                         |                              |        |              |   |               | (1,407  | )            |   |                | (54,046  | )        |   |  |  |   |  |  | (55,453  | )       
|Proceeds from disposition of assets                             |                                         |                              |        |              |   |               |        |              |   |                | 9,713    |          |   |  |  |   |  |  | 9,713    |         
|Acquisition costs related to purchase of Bona
	Shipholding Ltd. |                                         |                              |        |              |   |               |        |              |   |                | (2,685   | )        |   |  |  |   |  |  | (2,685   | )       
|Other                                                           |                                         |                              |        |              |   |               |        |              |   |                | (31,014  | )        |   |  |  |   |  |  | (31,014  | )       
|                                                                |                                         |                              |         |              |   |               |         |              |   |                |          |          |   |  |   |   |  |  |          |         
|                                                                | Net cash flow from investing activities |                              |         |             |   |               |         | (1,407       | ) |                |          | (78,032  | ) |  |   |  |  |  |          | (79,439  | )
|                                                                |                                         |                              |         |              |   |               |         |              |   |                |          |          |   |  |   |   |  |  |          |         
|Increase (decrease) in cash and cash
	equivalents               |                                         |                              | 84      |              |   |               | (39,652 | )            |   |                | 541      |          |   |  |  |   |  |  | (39,027  | )       
|Cash and cash equivalents, beginning of the year                |                                         |                              | 210     |              |   |               | 39,652  |              |   |                | 180,465  |          |   |  |  |   |  |  | 220,327  |         
|                                                                |                                         |                              |         |              |   |               |         |              |   |                |          |          |   |  |   |   |  |  |          |         
|Cash and cash equivalents, end of the
	year                     |                                         |                              | 294     |              |   |               |        |              |   |                | 181,006  |          |   |  |  |   |  |  | 181,300  |         
|                                                                |                                         |                              |         |              |   |               |         |              |   |                |          |          |   |  |   |   |  |  |          |         

|                                                                                        |                                         |                                     |         |              |   |               |         |              |   |                |         |        |   |  |   |   |  |  |         |        | 
|--------------------------------------------------------------------------------------- | --------------------------------------- | ----------------------------------- | ------- | ------------ | - | ------------- | ------- | ------------ | - | -------------- | ------- | ------ | - |  | - | - |  |  | ------- | ------ | 
|                                                                                        |                                         |                                    
|                                                                                        |                                         | Nine Months Ended December 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 |                                     |         | (9,844       | ) |               |         | 16,674       |   |                |         | 44,683 |   |  |   |  |  |  |         | 51,513 | 
|                                                                                        |                                         |                                     |         |              |   |               |         |              |   |                |         |        |   |  |   |   |  |  |         |       
|FINANCING ACTIVITIES                                                                    |                                         |                                     |         |              |   |               |         |              |   |                |         |        |   |  |   |   |  |  |         |       
|Net proceeds from long-term debt                                                        |                                         |                                     |        |              |   |               |        |              |   |                | 100,000 |        |   |  |  |   |  |  | 100,000 |       
|Scheduled repayments of long-term debt                                                  |                                         |                                     |        |              |   |               |        |              |   |                | (32,252 | )      |   |  |  |   |  |  | (32,252 | )     
|Prepayments of long-term debt                                                           |                                         |                                     |        |              |   |               |        |              |   |                | (10,000 | )      |   |  |  |   |  |  | (10,000 | )     
|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 (decrease) 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 |       
|                                                                                        |                                         |                                     |         |              |   |               |         |              |   |                |         |        |   |  |   |   |  |  |         |       




(See Note 7)

F-23