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

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

                                                        OR

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

For the fiscal year ended ....................... March 31, 1999 .............

                                                        OR

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

For the transition period from ........................ to ...................
Commission file number 1-12874

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

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

                               Republic of Liberia
                 (Jurisdiction of incorporation or organization)
              4th Floor, Euro Canadian Centre, Marlborough Street &
                    Navy Lion Road, P.O. Box SS-6293, Nassau,
                           Commonwealth of the Bahamas
                    (Address of principal executive offices)

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

                               Title of each class
                      Common Stock, no par value per share
               8.32% First Preferred Ship Mortgage Notes due 2008


                   Name of each exchange on which registered
                             New York Stock Exchange
                             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.

    31,648,318 shares of Common Stock, no par value.

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

Yes [X]  No [ ]

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

Item 17 [ ]  Item 18 [X]



                                            TEEKAY SHIPPING CORPORATION
                                           INDEX TO REPORT ON FORM 20-F

  PART I                                                               Page

  Item 1.    Description of Business..........................           3
  Item 2.    Description of Property..........................          10
  Item 3.    Legal Proceedings................................          12
  Item 4.    Control of Registrant...........................           12
  Item 5.    Nature of Trading Market.....................              12
  Item 6.    Exchange Controls and Other Limitations
             Affecting Security Holders.......................          13
  Item 7.    Taxation.........................................          13
  Item 8.    Selected Financial Data..........................          14
  Item 9.    Management's Discussion and Analysis of Financial
             Condition and Results of Operations..............          16
  Item 10.   Directors and Officers of the Registrant.........          24
  Item 11.   Executive Compensation...........................          26
  Item 12.   Options to Purchase Securities From Registrant or
             Subsidiaries.....................................          26
  Item 13.   Interest of Management in Certain Transactions...          27

PART II.

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

PART III.

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

PART IV.

  Item 17.   Financial Statements.............................    Not applicable
  Item 18.   Financial Statements.............................          28
  Item 19.   Financial Statements and Exhibits................          28
Signature    .................................................          32



                                     PART I

Item 1. Description of Business

The Company

     Teekay Shipping Corporation ("Teekay"), together with its subsidiaries (the
"Company"),  is a leading  provider  of  international  crude oil and  petroleum
product transportation services through the world's largest fleet of medium size
oil  tankers.  The  Company's  modern fleet of tankers  provides  transportation
services  to  major  oil  companies,   oil  traders  and  government   agencies,
principally in the region  spanning from the Red Sea to the U.S. West Coast (the
"Indo-Pacific Basin").

     The  Company's  fleet  consists of 50  vessels:  46 Aframax oil tankers and
oil/bulk/ore  carriers ("O/B/Os")  (including two newbuildings on order and five
vessels time-chartered-in),  three smaller oil tankers, and one Very Large Crude
Carrier  ("VLCC").  The  Company's  vessels  are all of  Liberian,  Singaporean,
Australian,  Bahamian or Marshall  Islands  registry.  The Company's fleet has a
total cargo capacity of approximately 5.0 million tonnes and its Aframax vessels
represent  approximately  7.8% of the total tonnage of the world Aframax  fleet.
The two  newbuilding  Aframax  tankers are  scheduled  for  delivery in July and
September 1999.

     The Company's fleet is one of the most modern fleets in the world,  with an
average age of approximately 8.0 years, compared to an average age for the world
oil tanker fleet,  including Aframax tankers of approximately 14.0 years and for
the world Aframax tanker fleet of approximately 12.3 years. The Company has been
recognized by customers and rating services for safety, quality and service. For
example, in each of the last nine years, Tanker Advisory Center, Inc. (New York)
has rated the Company's fleet a "meritorious tanker fleet," a designation which,
in the latest publication  (January 1999), placed it in the top 8% of all fleets
containing  five or more  tankers.  Given the age  profile  of the world  tanker
fleet,  increasing  emphasis by  customers  on quality as a result of  stringent
environmental  regulations,  and  heightened  concerns  about  liability for oil
pollution,  the  Company  believes  that its modern  fleet and its  emphasis  on
quality and safety provide it with a favorable competitive profile.

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

     The Company has a worldwide  chartering staff located in Vancouver,  Tokyo,
London and Singapore.  Each office serves the Company's clients headquartered in
such office's  region.  Fleet  operations,  vessel  positions and charter market
rates are monitored around the clock.  Management  believes that monitoring such
information  is  critical  to  making  informed  bids  on  competitive  brokered
business.  During  fiscal 1999,  approximately  70% of the  Company's net voyage
revenues  were  derived  from spot  voyages or time  charters  and  contracts of
affreightment priced on a spot market basis.

     The Teekay  organization  was  founded in 1973 to manage  and  operate  oil
tankers.  Prior to 1985,  the Company  chartered-in  most of the tonnage that it
subsequently  provided to its transportation  customers.  As the availability of
acceptable  chartered-in tonnage declined,  management began an expansion of its
owned fleet.  Since 1985, the Company has significantly  expanded and modernized
its owned fleet by taking delivery of 40 new vessels and acquiring 32 vessels in
the second-hand  market,  as well as disposing of 27 older tankers over the past
seven years.

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

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

Acquisition of Bona Shipholding Ltd.

     On March 26, 1999, the Company entered into an amalgamation  agreement (the
"Amalgamation Agreement") with Bona Shipholding Ltd. ("Bona") under which Teekay
will acquire Bona for a combination of cash and shares. Bona owns and operates a
fleet of 26 Aframax oil tankers and O/B/Os engaged in transportation of oil, oil
products, and dry bulk commodities,  primarily in the Atlantic region. Shares of
Bona Common Stock ("Bona Shares") are listed on the Oslo Stock Exchange.

     For the year ended  December 31, 1998,  Bona earned net voyage  revenues of
$148.9 million  resulting in income from vessel  operations of $32.3 million and
net income of $16.6  million.  As of December  31,  1998,  Bona's  shareholders'
equity was $254.9 million,  total assets were $623.5 million, and total debt was
$356.0  million.  In December  1998,  Bona entered into a $500.0  million credit
facility,  syndicated among a group of 15 leading international  shipping banks.
The loan has a two-year  drawdown  period and will be repaid over an  eight-year
period thereafter.

     As the global oil industry is undergoing  consolidation,  tanker  companies
are serving fewer but significantly  larger customers who require their shipping
partners to provide  more  flexible  and cost  competitive  services on a global
basis. The proposed  transaction will create a combined entity which operates 81
vessels and which will be able to offer a global service to oil  companies,  oil
traders,   and  government  agencies  by  combining  Teekay's  position  in  the
Indo-Pacific  basin with Bona's Atlantic  presence.  The combined entity will be
the  largest  operator in the Aframax  segment and will be  approximately  three
times larger than its nearest  competitor in that segment.  Management  believes
that the  combined  entity will  benefit  from  economies of scale and that cost
savings  can be  realized  through  a  reduction  in  combined  overhead  costs,
increased purchasing power, and other operational efficiencies.

     Under the terms of the Amalgamation Agreement,  Teekay will purchase all of
the  outstanding  Bona Shares (18.9 million shares) for total  consideration  of
approximately  $137.0  million.  Bona  shareholders  have the  right to elect to
receive for each Bona Share either  $7.00 cash or 0.485 shares of Teekay  Common
Stock ("Teekay Shares").  Under the terms of the Amalgamation Agreement,  70% of
Bona Shareholders elected to receive  consideration in the form of Teekay Shares
(totalling 6.4 million Teekay Shares) and the remaining Bona  Shareholders  will
receive cash consideration  totalling  approximately $39.9 million.  Teekay will
also assume Bona's debt of  approximately  $314.0  million net of cash acquired.
The transaction is expected to be completed by mid-June 1999.


Competition

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

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

     Other large  operators of Aframax tonnage include Neptune Orient Lines Ltd.
(owned partially by the Singapore  government),  with  approximately 25 vessels,
Shell  International   Marine,  a  subsidiary  of  Royal  Dutch/Shell  Petroleum
Corporation, with approximately 22 vessels, trading globally (15 of which are on
charter),  and Tanker Pacific  Management which controls 15 vessels.  Management
believes that it has  significant  competitive  advantages in the Aframax tanker
market as a result of the age,  quality,  type and dimensions of its vessels and
its market share in the  Indo-Pacific  Basin.  Some  competitors of the Company,
however,  may have greater  financial  strength and capital  resources  than the
Company.

     As part of its growth  strategy,  the  Company  will  continue  to consider
strategic   opportunities,   including  business   acquisitions,   such  as  the
acquisition of Bona. To the extent the Company  enters new  geographic  areas or
tanker market segments,  there can be no assurance that the Company will be able
to compete  successfully  therein.  New markets may involve  competitive factors
which differ from those of the Aframax market segment in the Indo-Pacific  Basin
and may include  participants  which have greater financial strength and capital
resources  than  the  Company.  Teekay  may not be able to  integrate  the  Bona
acquisition  or compete in the Atlantic  market  successfully  subsequent to the
completion of the amalgamation.

Regulation

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

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

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

     Under the current regulations,  the vessels of the Company's existing fleet
will be able to operate for substantially all of their respective economic lives
before  being  required  to have  double-hulls.  Although  two of the  Company's
vessels are 15 years or older,  the oldest of such  vessels is only 19 years old
and,  therefore,  the IMO  requirements  currently in effect regarding 25 and 30
year-old  tankers will not affect the Company's  fleet in the near future.  Bona
owns ten  vessels  which are 15 years or older,  the oldest of which is 18 years
old. However,  compliance with the new regulations  regarding inspections of all
vessels may adversely affect the Company's operations. The Company cannot at the
present time evaluate the  likelihood or magnitude of any such adverse effect on
the  Company's  operations  due to  uncertainty  of  interpretation  of the  IMO
regulations.

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

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

     Under  OPA  90,  vessel  owners,   operators  and  bareboat  (or  "demise")
charterers  are  "responsible  parties" and are jointly,  severally and strictly
liable  (unless  the spill  results  solely  from the act or omission of a third
party,  an act of God or an act of war) for all  containment  and clean-up costs
and other damages arising from  discharges or threatened  discharges of oil from
their  vessels.  These other damages are defined  broadly to include (i) natural
resources  damages and the costs of assessment  thereof,  (ii) real and personal
property damages, (iii) net loss of taxes, royalties, rents, fees and other lost
revenues, (iv) lost profits or impairment of earning capacity due to property or
natural  resources  damage,  (v) net cost of public  services  necessitated by a
spill response, such as protection from fire, safety or health hazards, and (vi)
loss of  subsistence  use of natural  resources.  OPA 90 limits the liability of
responsible  parties to the  greater of $1,200 per gross ton or $10  million per
tanker  that is over 3,000  gross  tons  (subject  to  possible  adjustment  for
inflation).  These  limits of  liability  would not  apply if the  incident  was
proximately  caused by violation of  applicable  United States  federal  safety,
construction  or  operating  regulations  or by the  responsible  party's  gross
negligence or willful  misconduct,  or if the responsible party fails or refuses
to report the incident or to  cooperate  and assist in  connection  with the oil
removal activities. The Company currently plans to continue to maintain for each
of its vessels  pollution  liability  coverage in the amount of $700 million per
incident. A catastrophic spill could exceed the insurance coverage available, in
which event there could be a material adverse effect on the Company.

     Under OPA 90, with certain limited exceptions, all newly built or converted
tankers operating in United States waters must be built with  double-hulls,  and
existing  vessels which do not comply with the double-hull  requirement  must be
phased  out over a  25-year  period  (1990-2015)  based  on  size,  age and hull
construction.  Only two of the Company's  vessels are over 15 years old, and the
oldest  of  such  vessels,  the  single-hulled  Mendana  Spirit,  would  not  be
phased-out   under  the   double-hull   regulations   until   January  1,  2003.
Notwithstanding   the  phase-out  period,  OPA  90  currently  permits  existing
single-hull  tankers to operate until the year 2015 if their  operations  within
United States waters are limited to discharging  at the Louisiana  Off-Shore Oil
Platform,  or off-loading by means of lightering  activities  within  authorized
lightering zones more than 60 miles off-shore.

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

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

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

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

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

     Environmental  Regulation-Other  Environmental  Initiatives.  The  European
Union is considering  legislation  that will affect the operation of tankers and
the  liability of owners for oil  pollution.  It is  impossible  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.  Approximately one-quarter
of the countries that have ratified the CLC have increased the liability  limits
through a 1992 Protocol to the CLC. The liability  limits in the countries  that
have  ratified  this  Protocol  are  currently  approximately  $4.0 million plus
approximately $566.0 per gross registered tonne above 5,000 gross tonnes with an
approximate  maximum of $80.5  million,  with the exact amount tied to a unit of
account  which varies  according to a basket of  currencies.  The right to limit
liability  is  forfeited  under the CLC where the spill is caused by the owner's
actual fault or privity and, under the 1992 Protocol,  where the spill is caused
by the owner's  intentional or reckless conduct.  Vessels trading to contracting
states must provide evidence of insurance  covering the limited liability of the
owner. In jurisdictions where the CLC has not been adopted,  various legislative
schemes or common law govern,  and  liability is imposed  either on the basis of
fault or in a manner similar to the CLC.

Risk of Loss and Insurance

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

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

Operations Outside the United States

     The operations of the Company are primarily conducted outside of the United
States and, therefore,  may be affected by currency fluctuations and by changing
economic,  political and  governmental  conditions  in the  countries  where the
Company is engaged in business or where its vessels are  registered.  During the
fiscal year ended March 31, 1999, the Company derived  approximately  85% of its
total  revenues from its  operations  in the  Indo-Pacific  Basin.  In the past,
political  conflicts in such regions,  particularly  in the Arabian  Gulf,  have
included  attacks on tankers,  mining of waterways  and other efforts to disrupt
shipping in the area. Vessels trading in such regions have also been subject to,
in limited instances,  acts of terrorism and piracy. Future hostilities or other
political  instability  in the region could affect the Company's  trade patterns
and adversely affect the Company's operations and performance.

Crewing and Staff

     The Company employs  approximately  340 captains,  chief  engineers,  chief
officers and first engineers,  approximately  1,600 additional  personnel at sea
and approximately 200 personnel ashore.

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

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

Customers

     Customers of the Company  include major oil  companies,  major oil traders,
large oil consumers and petroleum product producers,  government  agencies,  and
various other entities  dependent upon the tanker  transportation  trade.  Three
customers,  all  international  oil  companies,  individually  accounted for 12%
($51,411,000),  12% ($50,727,000),  and 10% ($42,797,000),  respectively, of the
Company's  consolidated  voyage  revenues  during  fiscal 1999. No more than one
customer  accounted  for more  than  10% of the  Company's  consolidated  voyage
revenues  during fiscal 1998 or fiscal 1997.  The revenues from these  customers
accounted  for  14%   ($56,357,000)  and  13%  ($48,696,000)  of  the  Company's
consolidated voyage revenues in fiscal 1998 and fiscal 1997, respectively.

Taxation of the Company

     The legal  jurisdictions  of the  countries  in which the  Company  and the
majority of its  subsidiaries  are  incorporated do not impose income taxes upon
shipping-related activities.





Item 2. Description of Property

The Company's Fleet

The  following list provides information  with respect to the Company's  vessels
as at May 31, 1999.

<TABLE>
<CAPTION>


                                                               Year
                                          Series/Yard          Built           Type           Dwt-MT              Flag
Aframax Tankers (44)
<S>                                        <C>                  <C>            <C>            <C>
HAMANE SPIRIT..............                Onomichi             1997            DH            105,300            Bahamian
POUL SPIRIT................                Onomichi             1995            DH            105,300            Liberian
TORBEN SPIRIT..............                Onomichi             1994            DH             98,600            Bahamian
SAMAR SPIRIT...............                Onomichi             1992            DH             98,600            Bahamian
LEYTE SPIRIT...............                Onomichi             1992            DH             98,600            Bahamian
LUZON SPIRIT...............                Onomichi             1992            DH             98,600            Bahamian
MAYON SPIRIT...............                Onomichi             1992            DH             98,600            Bahamian
TEEKAY SPIRIT..............                Onomichi             1991            SH            100,200            Bahamian
PALMSTAR LOTUS.............                Onomichi             1991            SH            100,200            Bahamian
PALMSTAR THISTLE...........                Onomichi             1991            SH            100,200            Bahamian
PALMSTAR ROSE..............                Onomichi             1990            SH            100,200            Bahamian
PALMSTAR POPPY.............                Onomichi             1990            SH            100,200            Bahamian
ONOZO SPIRIT...............                Onomichi             1990            SH            100,200            Bahamian
PALMSTAR CHERRY............                Onomichi             1990            SH            100,200            Bahamian
PALMSTAR ORCHID............                Onomichi             1989            SH            100,200            Bahamian
VICTORIA SPIRIT (OBO)......                Hyundai              1993            DH            103,200            Bahamian
VANCOUVER SPIRIT (OBO) ....                Hyundai              1992            DH            103,200            Bahamian
SHILLA SPIRIT..............                Hyundai              1990            SH            106,700            Liberian
ULSAN SPIRIT...............                Hyundai              1990            SH            106,700            Liberian
NAMSAN SPIRIT..............                Hyundai              1988            SH            106,700            Liberian
PACIFIC SPIRIT.............                Hyundai              1988            SH            106,700            Liberian
PIONEER SPIRIT.............                Hyundai              1988            SH            106,700            Liberian
DAMPIER SPIRIT (FSO).......                Hyundai              1988            SH            106,700            Liberian
NASSAU SPIRIT..............                Imabari              1998            DH            107,000            Bahamian
SENANG SPIRIT..............                Imabari              1994            DH             95,700            Bahamian
SEBAROK SPIRIT.............                Imabari              1993            DH             95,700            Liberian
SEAFALCON*.................                Imabari              1991            SH             97,100            Marshall Islands
SELETAR SPIRIT.............                Imabari              1988            DS             97,300            Bahamian
SERAYA SPIRIT..............                Imabari              1992            DS             97,300            Bahamian
SENTOSA SPIRIT.............                Imabari              1989            DS             97,300            Liberian
ALLIANCE SPIRIT............                Imabari              1989            DS             97,300            Bahamian
SEMAKAU SPIRIT.............                Imabari              1988            DS             97,300            Liberian
SINGAPORE SPIRIT...........                Imabari              1988            DS             97,300            Liberian
SUDONG SPIRIT..............                Imabari              1987            DS             97,300            Liberian
KYUSHU SPIRIT..............                Mitsubishi           1991            DS             95,600            Bahamian
KOYAGI SPIRIT..............                Mitsubishi           1989            SH             96,000            Liberian
SEABRIDGE*.................                Namura               1996            DH            105,200            Liberian
SEAMASTER*.................                Namura               1990            SH            101,000            Liberian
TORRES SPIRIT..............                Namura               1990            SH             96,000            Bahamian
HAKUYOU MARU*..............                Namura               1987            SH             93,000            Singaporean
MENDANA SPIRIT.............                Namura               1980            SH             81,700            Bahamian
MAGELLAN SPIRIT............                Hitachi              1985            DS             95,000            Liberian
COOK SPIRIT................                Hashima              1987            DS             91,500            Bahamian
SILVER PARADISE*...........                Samsung              1998            DH            105,200            Panamanian

Other Tankers (4)
MUSASHI SPIRIT (VLCC)......                Sasebo               1993            SH            280,700            Bahamian
SCOTLAND...................                Mitsubishi           1982            DS             40,800            Bahamian
BARRINGTON.................                Samsung              1989            DH             33,300            Australian
PALMERSTON.................                Halla                1990            DB             36,700            Australian
                                                                                            4,780,100
Aframax Newbuildings (2)
KANATA SPIRIT** .................          Samsung              1999            DH            113,000            Bahamian
KAREELA SPIRIT** .................         Samsung              1999            DH            113,000            Bahamian

                                                                                            5,006,100

-------------------------------------- ------------------ ---------------- ------------- ----------------- -------------------
DH   Double-hull tanker                         FSO  Floating storage and off-loading vessel   VLCC Very Large Crude Carrier
DS   Double-sided tanker                        OBO Oil/Bulk/Ore carrier                       *Time-chartered-in
DB Double-bottom  tanker                         SH Single-hull  tanker                        **Scheduled for delivery in
                                                                                                 July & Sept. 1999

</TABLE>


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

     The Company has  disposed of several  vessels as part of its ongoing  fleet
modernization  program. The Company sold two of its older Aframax tankers during
the fiscal  year ended  March 31,  1999,  and added four newer  Aframax  tankers
(including three time-chartered-in vessels) to its fleet during the same period.
As a result, the Company's average fleet size increased by two vessels, or 8.9%,
in fiscal 1999  compared to fiscal 1998,  following  an earlier  increase of two
vessels, 4.9%, in fiscal 1998 compared to fiscal 1997. The Company currently has
two double-hull  newbuildings on order,  with deliveries  scheduled for July and
September 1999.

     See Note 5 of the  Consolidated  Financial  Statements for information with
respect to major encumbrances against vessels of the Company.

Classification and Inspection

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

     In  addition  to the  classification  inspections,  many  of the  Company's
customers,  including the major oil companies,  regularly  inspect the Company's
vessels as a precondition to chartering voyages on such vessels.  In each of the
last nine years, Tanker Advisory Center, Inc. (New York) has rated the Company's
fleet  a  "meritorious  tanker  fleet,"  a  designation  which,  in  the  latest
publication  (January  1999),  placed it in the top 8% of all fleets  containing
five or more tankers.  Management  believes that the Company's  well-maintained,
high  quality  tonnage  should  provide it with a  competitive  advantage in the
current environment of increasing regulation and customer emphasis on quality of
service.

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

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


Item 3. Legal Proceedings

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

Item 4. Control of Registrant

Principal Shareholders

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

     (b) The following table sets forth certain information  regarding ownership
of Teekay's  common stock,  no par value (the "Common  Stock"),  as of March 31,
1999 by (i) each owner of 10% or more of the Common  Stock and (ii) all officers
and directors of Teekay as a group:



<TABLE>
<CAPTION>
                                                                                      Number of        Percentage of
Identity of Person or Group                                                         Shares Owned        Class Owned
<S>                                                                                 <C>                   <C>
Cirrus Trust...............................................................          14,427,397            45.6%
Alliance Capital Management................................................           4,139,330            13.1%
All officers and directors as a group (21 persons).........................               *                  *
</TABLE>
__________

* Less than one percent of outstanding shares.

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

Item 5. Nature of Trading Market

     Since July 1995, the Company's Common Stock has been traded on The New York
Stock Exchange  under the symbol "TK".  The following  table sets forth the high
and low closing sales prices for the Common Stock on The New York Stock Exchange
for each of the fiscal quarters indicated.

<TABLE>
<CAPTION>


                                                                                High             Low
            <S>                                                             <C>             <C>
            Fiscal 1997
              First quarter.................................................$.....28        $     25
              Second quarter......................................................30 5/8          26 1/2
              Third quarter.......................................................33 1/8          28 7/8
              Fourth quarter......................................................34 1/4          26 1/2
            Fiscal 1998
              First quarter.................................................$.....34 5/8    $     28
              Second quarter......................................................36              30 15/16
              Third quarter.......................................................37 7/8          30 3/8
              Fourth quarter......................................................33 9/16         27 7/8
            Fiscal 1999
              First quarter.................................................$     30 7/8    $     22 9/16
              Second quarter......................................................25 1/8          18 7/16
              Third quarter.......................................................18 7/16         15 15/16
              Fourth quarter......................................................18 7/8          14 1/4
</TABLE>

     Approximately 27% of all outstanding  shares at March 31, 1999 were held in
the United States.

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

Item 6. Exchange Controls and Other Limitations Affecting Security Holders

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

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

Item 7. Taxation

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

Item 8. Selected Financial Data

     Set forth below are selected  consolidated  financial and other data of the
Company for the five fiscal years ended March 31, 1999,  which have been derived
from the Company's Consolidated  Financial Statements.  The data below should be
read in conjunction  with the  Consolidated  Financial  Statements and the notes
thereto and the report of Ernst & Young LLP, independent Chartered  Accountants,
with respect to the  financial  statements  for the fiscal years ended March 31,
1999,  1998,  and 1997 and  "Management's  Discussion  and Analysis of Financial
Condition and Results of Operations."


<TABLE>
<CAPTION>
                                                                     Years Ended March 31,
                                          -----------------------------------------------------------------------------
                                               1999            1998           1997           1996           1995
                                          -----------------------------------------------------------------------------
                                                  (U.S. dollars in thousands, except per share and per day data and ratios)
<S>                                      <C>                <C>            <C>            <C>            <C>
Income Statement Data:
Voyage revenues........................   $    411,922      $  406,036     $  382,249     $  336,320     $  319,966
Voyage expenses........................         93,511         100,776        102,037         90,575         84,957
Net voyage revenues....................        318,411         305,260        280,212        245,745        235,009
Income from vessel operations..........         85,634         107,640         94,258         76,279         52,816
Interest expense.......................        (44,797)        (56,269)       (60,810)       (62,910)       (66,304)
Interest income........................          6,369           7,897          6,358          6,471          5,904
Other income...........................          5,506          11,236          2,824          9,230         12,839
Net income before cumulative effect of
 change in accounting policy and
 extraordinary items...................         52,712          70,504         42,630         29,070          5,255
Cumulative effect of change in
accounting for marketable securities...              -               -              -              -          1,113
Extraordinary loss on bond redemption..         (7,306)              -              -              -              -
Net income.............................         45,406          70,504         42,630         29,070          6,368
Per Share Data:
Net income before cumulative effect of
 change in accounting policy and
 extraordinary items...................   $       1.70     $      2.46    $      1.52    $      1.17    $      0.29
Cumulative effect of change in
 accounting for marketable securities..              -               -              -              -           0.06
Extraordinary loss on bond redemption..          (0.24)              -              -              -              -
Net income
  - basic..............................           1.46            2.46           1.52           1.17           0.35
  - diluted............................           1.46            2.44           1.50           1.17           0.35
Cash earnings - basic(1)...............           4.72            5.78           4.75           4.51           5.48
Cash dividends declared................           0.86            0.86           0.86           0.48             -
Balance Sheet Data (at end of period):
Cash and marketable securities.........       $132,256      $  115,254     $  117,523     $  101,780     $   85,739
Total assets...........................      1,452,220       1,460,183      1,372,838      1,355,301      1,306,474
Total debt.............................        641,719         725,369        699,726        725,842        842,874
Total stockholders' equity.............        777,390         689,455        629,815        599,395        439,066
Other Financial Data:
EBITDA(2)..............................       $186,069      $  209,582     $  191,632     $  166,233     $  146,756
EBITDA to interest expense(2)(3).......           3.98x           3.80x          3.22x          2.69x          2.28x
Total debt to EBITDA(2)................           3.45            3.46           3.65           4.37           5.74
Total debt to total capitalization.....           45.2%           51.3%          52.6%          54.8%          65.7%
Net debt to capitalization(4)..........           39.6            46.9           48.0           51.0           63.3
Cash earnings(1).......................        146,489         165,575        133,554        112,107         98,716
Capital expenditures:
  Vessel purchases, gross..............         85,445         197,199         65,104        123,843          7,465
  Drydocking (accrual basis)...........          7,213          12,409         23,124         11,641         11,917
Fleet Data:
Average number of ships(5).............             47              43             41             39             42
Average age of Company's Aframax fleet
(in years)(6)..........................            8.0             7.6            7.9            6.8            7.3
TCE per ship per day(5)(7)(8)..........   $     19,576      $   21,373     $   20,356     $   18,438     $   16,552
Vessel operating expenses per ship per
  day(8)(9)............................          4,969           4,554          4,922          4,787          4,748
Operating cash flow per ship per
  day(8)(10)...........................         10,903          12,664         11,819         10,613          8,944

</TABLE>

(Footnotes on following page)

(Footnotes for previous page)


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

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

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

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

(5)  Includes vessels time-chartered-in,  but excludes vessels of a former joint
     venture.

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

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

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

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

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

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

General

     The Company is a leading provider of international  crude oil and petroleum
product  transportation  services  to  major  oil  companies,  oil  traders  and
government agencies, principally in the region from the Red Sea to the U.S. West
Coast. The Company's current  operating fleet consists of 50 vessels,  including
46 Aframax oil tankers and O/B/O carriers  (including two  newbuildings on order
and five vessels  time-chartered-in),  three smaller oil tankers,  and one VLCC,
for a total cargo-carrying capacity of approximately 5.0 million tonnes. The two
newbuilding  Aframax  tankers are  scheduled  for delivery in July and September
1999, respectively.

     During fiscal 1999,  approximately  58% of the Company's net voyage revenue
was derived from spot voyages. The balance of the Company's revenue is generated
primarily 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 specified  period of time. In fiscal 1999,
12% of net voyage  revenues was  generated by time charters and COAs priced on a
spot market  basis.  In the  aggregate,  approximately  70% of the Company's net
voyage revenue during fiscal 1999 was derived from spot voyages or time charters
and COAs priced on a spot market  basis,  with the  remaining  30% 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.  Additionally,  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 which tend to
disrupt vessel scheduling.

     In December  1997,  the  Company  acquired  two  vessels and related  shore
support  services from an Australian  affiliate of Caltex  Petroleum.  These two
tankers,  together with one of the Company's existing Aframax tankers, have been
time  chartered  to the  Caltex  affiliate  in  connection  with  the  Company's
provision of Caltex's oil transportation  requirements formerly provided by that
affiliate.  The Company has converted one of its existing  vessels to a floating
storage and off-loading vessel, which is sharing crews with the vessels employed
in the Caltex  arrangement  (together  with the other three vessels  involved in
this arrangement,  the "Australian Vessels").  Vessel operating expenses for the
Australian  Vessels  are  substantially  higher  than  those for the rest of the
Company's fleet, primarily as a result of higher costs associated with employing
an  Australian  crew.  The  time-charter  rates for the  Australian  Vessels are
correspondingly  higher to compensate for these increased  costs.  During fiscal
1999, the Australian  Vessels earned net voyage revenues and an average TCE rate
of $38.2  million and  $26,329,  respectively,  and  incurred  vessel  operating
expenses  of  $14.9  million,  or  $10,173  on a per  ship  per  day  basis.  In
comparison,  during  fiscal  1998,  the  Australian  Vessels  earned  net voyage
revenues and an average TCE rate of $8.4 million and $25,347,  respectively, and
incurred vessel operating expenses of $3.2 million, or $10,276 on a per ship per
day basis.  The results of the Australian  Vessels are included in the Company's
Consolidated Financial Statements included herein.

Acquisition of Bona Shipholding Ltd.

     On March 26, 1999, the Company entered into an amalgamation  agreement (the
"Amalgamation Agreement") with Bona Shipholding Ltd. ("Bona") under which Teekay
will acquire Bona for a combination of cash and shares. Bona owns and operates a
fleet of 26 Aframax oil tankers and O/B/Os engaged in transportation of oil, oil
products, and dry bulk commodities,  primarily in the Atlantic region. Shares of
Bona Common Stock ("Bona Shares") are listed on the Oslo Stock Exchange.

     For the year ended  December 31, 1998,  Bona earned net voyage  revenues of
$148.9 million  resulting in income from vessel  operations of $32.3 million and
net income of $16.6  million.  As at December  31,  1998,  Bona's  shareholder's
equity was $254.9 million,  total assets were $623.5 million, and total debt was
$356.0  million.  In December  1998,  Bona entered into a $500.0  million credit
facility,  syndicated among a group of 15 leading international  shipping banks.
The loan has a two-year  drawdown  period and will be repaid over an  eight-year
period thereafter.

     As the global oil industry is undergoing  consolidation,  tanker  companies
are serving fewer but significantly  larger customers who require their shipping
partners to provide  more  flexible  and cost  competitive  services on a global
basis. The proposed  transaction will create a combined entity which operates 81
vessels and which will be able to offer a global service to oil  companies,  oil
traders,   and  government  agencies  by  combining  Teekay's  position  in  the
Indo-Pacific  basin with Bona's Atlantic  presence.  The combined entity will be
the  largest  operator in the Aframax  segment and will be  approximately  three
times larger than its nearest  competitor in that segment.  Management  believes
that the  combined  entity will  benefit  from  economies of scale and that cost
savings  can be  realized  through  a  reduction  in  combined  overhead  costs,
increased purchasing power, and other operational efficiencies.

     Under the terms of the Amalgamation Agreement,  Teekay will purchase all of
the  outstanding  Bona Shares (18.9 million shares) for total  consideration  of
approximately  $137.0  million.  Bona  shareholders  have the  right to elect to
receive for each Bona Share either  $7.00 cash or 0.485 shares of Teekay  Common
Stock ("Teekay Shares").  Under the terms of the Amalgamation Agreement,  70% of
Bona Shareholders elected to receive  consideration in the form of Teekay Shares
(totalling 6.4 million Teekay Shares) and the remaining Bona  Shareholders  will
receive cash consideration  totalling  approximately $39.9 million.  Teekay will
also assume Bona's debt of  approximately  $314.0  million net of cash acquired.
The transaction is expected to be completed by mid-June 1999.

     The  acquisition of Bona will be accounted for using the purchase method of
accounting at closing.  It is not anticipated  that this transaction will result
in the recording of any goodwill.

Results of Operations

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

Fiscal 1999 vs. Fiscal 1998

     Aframax TCE rates on the  Gulf-East  routes  declined  in October  1998 and
remained  at this lower  level for the balance of fiscal 1999 due to an increase
in tanker supply in conjunction with stable tanker demand. In the near-term, the
Company  believes  that TCE rates  will  remain  weak as a result of low  tanker
demand  growth,  oil  production  cutbacks,  and the large number of newbuilding
tankers that are expected to be delivered over the next nine months. As a result
of the Company's  dependence  on the tanker spot market,  any decline in Aframax
TCE rates will reduce the Company's revenues and earnings.

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

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

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

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

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

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

     Income from vessel  operations  decreased  20.4% to $85.6 million in fiscal
1999 from  $107.6  million in fiscal  1998,  due  largely to the  decline in TCE
rates.

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

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

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

Fiscal 1998 vs. Fiscal 1997

     Operating  results  for  fiscal  1998  compared  to those for  fiscal  1997
reflected  the  improvement  in average TCE rates  experienced  by the Company's
fleet during that period,  as well as the increase in the size of the  Company's
fleet.  The  Company's  average  fleet size  increased by two vessels or 4.9% in
fiscal 1998 compared to fiscal 1997.

     Net voyage  revenues  increased  8.9% to $305.3 million in fiscal 1998 from
$280.2  million in fiscal 1997,  reflecting a combination  of improvement in TCE
rates and an increase in the Company's  fleet size.  The  Company's  average TCE
rate in fiscal 1998,  excluding the Australian  Vessels,  was up 5.0% to $21,373
from $21,356 in fiscal 1997, in part due to lower bunker fuel prices.

     In spite of the increase in fleet size, vessel operating expenses decreased
2.9% to $70.5  million  in  fiscal  1998 from  $72.6  million  in  fiscal  1997,
primarily  as a result of a  reduction  in  insurance  premiums  as well as more
favorable  foreign  exchange  rates  between the U.S.  Dollar and certain  Asian
currencies,  particularly  the  Japanese Yen and the Korean Won, for spare parts
and supplies purchased during the latter half of fiscal 1998.

     Time-charter  hire expense was $10.6  million in fiscal 1998,  up from $3.5
million in fiscal  1997,  as a result of two  vessels  time-chartered-in  by the
Company  during  fiscal 1998 as  compared  to only one vessel  time-chartered-in
during part of fiscal 1997.

     Depreciation and amortization expense increased by 4.6% to $94.9 million in
fiscal 1998 from $90.7  million in fiscal  1997,  as a result of the increase in
the average size of the Company's  owned fleet,  an increase in the average cost
base of the fleet  resulting from the replacement of some of the Company's older
vessels  with  newer  vessels,  and an  increase  in  the  number  of  scheduled
drydockings.  Depreciation  and amortization  expense  included  amortization of
drydocking  costs of $11.7  million and $10.9  million in fiscal  years 1998 and
1997, respectively.

     General and  administrative  expenses rose 12.1% to $21.5 million in fiscal
1998 from $19.2  million in fiscal  1997,  primarily  as a result of the cost of
compliance with increasingly stringent tanker industry regulations, increases in
senior  management  compensation,  and the start-up cost and additional  ongoing
personnel and facility costs associated with expanding the Company's  Australian
office in December 1997.

     Income from vessel  operations  increased 14.2% to $107.6 million in fiscal
1998 from $94.3 million in fiscal 1997, due to improved TCE rates and relatively
stable costs.

     Interest  expense  decreased  by 7.4% to $56.3  million in fiscal 1998 from
$60.8 million in fiscal 1997,  reflecting the reduction in the Company's average
debt balance and a lower  average  interest  rate on debt  borrowings.  Interest
income of $7.9 million in fiscal 1998 and $6.4  million in fiscal 1997,  largely
reflected  increasing  cash  balances,  offset in fiscal 1997 by lower  interest
rates.

     Other income of $11.2 million in fiscal 1998  consisted  primarily of $14.4
million in gains on the sale of three vessels,  offset partially by $3.5 million
in losses  related to the  prepayment  of debt.  Other income of $2.8 million in
fiscal 1997 consisted primarily of gains on the sale of vessels.

     As a result of the  foregoing  factors,  the Company's net income was $70.5
million in fiscal 1998, which included $14.4 million in gains on asset sales. In
comparison,  the Company's  net income was $42.6  million in fiscal 1997,  which
included $2.7 million in gains on assets sales.

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


<TABLE>


------------------------------------------------------------------------- --------------------------------------------
                                                                                       Year Ended March 31,
                                                                               1999           1998            1997
------------------------------------------------------------------------- -------------- --------------- -------------
<S>                                                                         <C>            <C>              <C>
International Fleet:
Average number of ships                                                              43             42             41
Total calendar ship-days                                                         15,612         15,341         14,937
------------------------------------------------------------------------- -------------- --------------- -------------
Revenue generating ship-days (A)                                                 14,647         14,229         14,071
------------------------------------------------------------------------- -------------- --------------- -------------
Net voyage revenue before commissions (B) (000s)                            $   286,735    $   304,115     $  286,429
------------------------------------------------------------------------- -------------- --------------- -------------
TCE (B/A)                                                                   $    19,576    $    21,373     $   20,356
------------------------------------------------------------------------- -------------- --------------- -------------
Operating results per calendar ship-day:
  Net voyage revenue                                                            $17,950    $    19,358     $   18,760
  Vessel operating expense                                                        4,969          4,554          4,922
  General and administrative expense                                              1,465          1,375          1,286
  Drydocking expense                                                                613            765            733
 ------------------------------------------------------------------------- -------------- --------------- -------------

Operating cash flow per calendar ship-day                                   $    10,903    $    12,664     $   11,819
------------------------------------------------------------------------- -------------- --------------- -------------

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

Total Fleet:
   Operating cash flow per calendar ship-day                                $    11,171     $   12,682     $   11,819
------------------------------------------------------------------------- -------------- --------------- -------------
</TABLE>

Liquidity and Capital Resources

     The Company's total liquidity,  including cash,  marketable  securities and
undrawn long-term lines of credit, was $143.3 million as at March 31, 1999, down
from $186.3  million as at March 31,  1998,  and $258.6  million as at March 31,
1997.  The decrease in liquidity  during fiscal 1999 was primarily the result of
the use of cash  balances to redeem the  Company's 9 5/8% Notes in August  1998,
progress payments on the Company's two  newbuildings,  and the purchase of a new
vessel which was paid for using existing cash balances and borrowings  under the
Company's revolving credit facility (the "Revolver"). The decrease was offset in
part by proceeds  from the  Company's  public  offering of Common  Stock in June
1998, cash flow from operations,  and proceeds from the disposition of two older
vessels. The Company received net proceeds of approximately $69.0 million in the
public  offering  to redeem the  outstanding  balance of the 9 5/8%  Notes.  The
redemption  resulted  in the  release  of  mortgages  on the six  vessels  which
collateralized the 9 5/8% Notes,  increasing the number of unencumbered  vessels
in the Company's fleet to thirteen as of March 31, 1999.

     Net cash flow from  operating  activities  decreased  to $137.7  million in
fiscal 1999,  compared to $161.1  million in fiscal 1998,  and $139.2 million in
fiscal  1997.  This  primarily  reflects  the change in TCE rates  during  these
periods.

     Scheduled debt repayments  were $50.6 million during fiscal 1999,  compared
to $33.9 million in fiscal 1998 and $16.0  million in fiscal 1997.  The increase
in fiscal 1999 was mainly a result of a $25.0  million  sinking  fund payment on
the 9 5/8% Notes in July 1998.  In addition to scheduled  debt  repayments,  the
Company  prepaid  long-term  debt of $268.0  million in fiscal  1999,  primarily
representing the repurchase of the 9 5/8% Notes and prepayments of the Revolver.

     Dividends  declared  during  fiscal 1999 were $26.6  million,  or $0.86 per
share, of which $26.2 million was paid in cash and the remainder was paid in the
form of shares of Common Stock issued under the Company's dividend  reinvestment
plan.

     Two vessels  were sold in fiscal  1999,  resulting in net proceeds of $23.4
million  compared to net proceeds of $33.9  million in fiscal 1998 from the sale
of three vessels.  In fiscal 1997,  the Company sold its only 50%-owned  vessel,
resulting  in net  proceeds of $6.4  million  which the Company  received in the
early part of fiscal 1998.

     During fiscal 1999, the Company incurred  capital  expenditures for vessels
and equipment of $85.4 million,  consisting  mainly of payments made towards the
two newbuilding  double-hull  Aframax tankers scheduled for delivery in July and
September of 1999,  costs related to the  conversion of a tanker into a floating
storage  and  off-loading  vessel,  and the  purchase of a  second-hand  Aframax
tanker. The Company intends to pay for the remaining cost of approximately $15.6
million  for the two  newbuilding  vessels  by  using  existing  cash  balances,
borrowings under the Revolver,  or other debt financing.  Cash  expenditures for
drydocking were $11.7 million in fiscal 1999 compared to $18.4 million in fiscal
1998 and $16.6 million in fiscal 1997. The previous two fiscal years reflected a
larger than usual number of scheduled drydockings.

     To finance the  acquisition  of Bona,  the Company will use  existing  cash
balances to fund the cash  portion of the total  purchase  price  (approximately
$39.9  million) and will issue shares of Common Stock for the remaining  portion
(approximately 6.4 million Teekay Shares). Teekay will also assume approximately
$314.0  million of Bona's debt net of cash  acquired.  As at March 31, 1999, the
Company's net debt to capitalization was 39.6%. After the completion of the Bona
acquisition,  the combined entity's net debt to capitalization  will increase to
approximately 50%. (See "Acquisition of Bona Shipholding Ltd.")

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

Market Rate Risks

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

Interest Rate Risk

     The  Company  invests  its  cash and  marketable  securities  in  financial
instruments  with  maturities of less than three months within the parameters of
its investment  policy and  guidelines.  The majority of instruments pay a fixed
rate of return which are subject to fluctuations in market values due to changes
in market interest rates.

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

Foreign Exchange Rate Risk

     The international tanker industry's functional currency is the U.S. dollar.
Virtually all of the Company's  revenues and most of its operating  costs are in
U.S. dollars.  The Company incurs certain operating  expenses,  drydocking,  and
overhead costs in foreign currencies, the most significant of which are Japanese
Yen, Singapore dollars,  Canadian dollars, and Australian dollars. During fiscal
1999,  approximately  15% of vessel  and  voyage  costs,  overhead  and  drydock
expenditures were denominated in these currencies.  However, the Company has the
ability to shift its purchase of goods and services  from one country to another
and, thus, from one currency to another, on relatively short notice.

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

<TABLE>
<CAPTION>

                                           Contract              Carrying Amount                 Fair
(in USD 000's)                              Amount            Asset          Liability          Value
--------------------------------------- ---------------- ----------------- --------------- -----------------
<S>                                     <C>              <C>              <C>              <C>
1999
FX Forward Contracts                    $         2,905  $                 $               $            (22)
Debt                                            641,719                           641,719           637,219

1998
FX Forward Contracts                    $        10,225  $                 $               $            339
Interest Rate Swap Agreements
  - net receivable (payable) position           150,000                                                 176
Debt                                            725,369                           725,369           737,785
--------------------------------------- ---------------- ----------------- --------------- -----------------

</TABLE>


Year 2000 Compliance

     The Company relies on computer systems,  software,  databases,  third party
electronic data  interchange  interfaces and embedded  processors to operate its
business.  Some of these  applications may be unable to appropriately  interpret
the calendar year 2000 and certain other dates and some level of modification or
replacement of such applications or embedded systems will be necessary.

     The Company has been actively engaged in systematically addressing the Year
2000 problem since December 1997. A Year 2000 Compliance Task Force comprised of
employees  from a broad cross  section of the Company has been  charged with the
task of ensuring that the Company achieves Year 2000 compliance.  The Task force
includes full-time  dedicated Year 2000 staff. The Company expects to be largely
Year 2000  compliant  by the summer of this year,  and to achieve full Year 2000
compliance by mid-November of this year.

The Company's Year 2000 compliance project has been divided into several phases.

1.   First,  the  Company  completed  a business  and safety  risk  analysis  to
     prioritize  the  efforts of the Year 2000 Task  Force.  Those  areas of the
     Company's  operations  that posed the greatest safety risk or were the most
     important to the survival and  continuity of the business were assigned the
     highest priority.

2.   Second,   a  full   inventory  of  all   computer   hardware  and  software
     applications,  and all systems which utilize "embedded chips",  both on the
     ships and in the Company's offices, has been completed.  Embedded chips are
     used, for example, in navigation systems, communication systems, safety and
     detection systems, and electrical and electro-mechanical control systems on
     the Company's vessels.

3.   Third, a comprehensive audit and test program of information technology and
     non-information  technology systems,  such as embedded chips, was developed
     and is being deployed to ensure seamless operation through all of the dates
     which have been identified as potentially problematic.  These dates include
     August 22, 1999, September 9, 1999, January 1, 2000, and February 29, 2000.
     Extensive safe testing has been  conducted on vessels and off-line  testing
     will  continue  later  in  1999  during  scheduled  drydockings.   We  have
     requested, and in many cases have received, Certificates of Compliance from
     the  manufacturers  of the equipment  identified in the inventory  phase as
     possibly containing date sensitive functions.  In addition, the Company has
     completed a "Year 2000 Readiness  Survey" with its top customers,  lenders,
     suppliers and other  organizations  with which it conducts  business.  This
     survey has confirmed  that our key business  partners are aware of the Year
     2000 issue and are  actively  working  toward  Year 2000  compliance.  This
     "investigation phase" is virtually complete at this time.

4.   Fourth, the Company is currently  undertaking  remedial action with respect
     to all non-compliant systems and items. Remedial action includes modifying,
     repairing  or  replacing  systems  or items  which  are of high  safety  or
     business  criticality,  or a  "work  around"  strategy  for  less  critical
     systems.  Testing is occurring  concurrently with the remedial action.  The
     Company has completed the majority of this work; however, the Company's two
     Australian-flagged  product  tankers must be drydocked to have the remedial
     work done.  The second vessel may not be completed  until mid November 1999
     due to drydock availability.

5.   The final phase consists of preparing  contingency plans,  vessel placement
     strategies,  and business continuity plans. These plans have been developed
     and distributed. Final revisions of contingency plans are anticipated to be
     distributed by the fall of 1999 which include roll-over  procedures.  These
     plans have been developed and refined in consultation with our key business
     partners.  Drills are scheduled for the third and fourth quarter of 1999 to
     ensure  that  sea  and  shore   staff  are   competent   with   contingency
     instructions.

     Although the Company  expects to be Year 2000 compliant in a timely manner,
no assurance  can be given that all of the  Company's  systems will be Year 2000
compliant or that its customers,  lenders,  suppliers or the other organizations
with which it conducts  business  will  become  fully Year 2000  compliant  in a
timely  manner.  If the Company  does not achieve  full  compliance  in a timely
manner or complete its Year 2000 project within its current cost  estimates,  or
if one or  more of its key  customers,  bankers,  lenders,  suppliers  or  other
organizations  with  which it does  business  fails to  become  fully  Year 2000
compliant, the Company's business, financial condition and results of operations
could be  adversely  affected.  There are also risks  inherent in the  Company's
operations  arising from the potential  failure of systems and equipment  aboard
other vessels  sharing  navigable  waters with the Company's  vessels as well as
problems  which  could  arise  from  the  malfunction  or  failure  of port  and
shore-based infrastructure systems.

     The Company  estimates  that it will cost $2.0 million to achieve Year 2000
compliance.  The majority of these costs will either be recovered  directly from
customers of the Company pursuant to contractual arrangements currently in place
or  represent  ongoing  equipment  upgrades  which  would  have been  undertaken
regardless of the Year 2000 issues.  Based on the findings of the Year 2000 Task
Force to date, the Company does not expect Year 2000 compliance  costs to have a
material adverse effect on the Company.

FORWARD-LOOKING STATEMENTS

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


Item 10. Directors and Officers of the Registrant

Management

     The directors,  executive officers and senior management of the Company are
listed below:
<TABLE>
<CAPTION>

Name                                               Age    Position
<S>                                                 <C>   <C>
Karlshoej, Axel                                     58    Director and Chairman of the Board
Moller, Bjorn                                       41    Director, President and Chief Executive Officer
Coady, Arthur F.                                    65    Director and EVP
Day, Sean                                           49    Director
Dingman, Michael D.                                 67    Director
Feder, Morris L.                                    82    Director
Hsu, Steve G. K.                                    65    Director
Hsu, Thomas Kuo-Yuen                                52    Director
Hoegh, Leif O.                                      35    Director

Adams, John                                         43    Managing Director (Glasgow)
Alsleben, Veronica A. E.                            48    Managing Director (London)
Antturi, Peter S.                                   40    VP, Treasurer and Chief Financial Officer (Vancouver)
Bendy, Paul                                         45    Managing Director (Australia)
Blair, Esther E.                                    44    Secretary (Nassau)
Chad, Greg                                          47    VP, Corporate Services (Vancouver)
Glendinning, David                                  45    SVP, Customer Service & Marine Project Development (Vancouver)
Lok, Vincent C.                                     31    Controller (Vancouver)
Meldgaard, Mads T.                                  34    VP, Chartering (Vancouver)
Murphy, Justin                                      38    Managing Director (Singapore)
Nagao, Yoshio                                       52    Managing Director (Tokyo)
Spothelfer, Pascal                                  38    SVP, Strategic Development (Vancouver)
Westgarth, Graham                                   44    VP, Marine Operations (Vancouver)
__________
</TABLE>



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


     John Adams  joined the  Company in April 1998 as  Managing  Director of the
newly  established  Glasgow Office,  where Mr. Adams heads the Company's crewing
and crew training activities. Prior to joining Teekay, Mr. Adams served for nine
years as  Managing  Director  of Teekay  Norbulk,  a joint  venture  between the
Company and Norbulk  Agencies.  Mr.  Adams has over 23 years  experience  in the
crewing and ship management business.

     Veronica A. E.  Alsleben has been employed in ship  chartering  since 1973.
She  joined the  Company  in 1989 as  chartering  manager  and was  subsequently
promoted to her current position as Managing Director (London). Prior to joining
the Company,  Ms. Alsleben served as Vice President of a chartering office of an
international tanker company in New York City for five years.

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

     Paul Bendy joined the Company in December 1997 as Managing  Director of the
Australia  office  in  connection  with the  acquisition  by the  Company  of an
Australian affiliate of Caltex Petroleum.  From 1993 to December 1997, Mr. Bendy
held a variety  of senior  management  positions  within  the  Caltex  Petroleum
organization,  including in shipping operations  management.  Prior to 1993, Mr.
Bendy served for 13 years as a Marine Engineer for Caltex.

     Esther E. Blair joined the Company in June 1988. In 1991, she was appointed
to the position of Secretary.

     Greg Chad joined the Company in August 1991 as Manager,  Personnel.  He was
promoted in June 1993 to  Director,  Personnel  and in March 1995 to his current
position of Vice President,  Corporate  Services.  Mr. Chad has held a number of
senior  human  resources  and  administration  roles in the  transportation  and
communication industries since 1976.

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

     Sean Day is the President & Chief Executive Officer of Navios  Corporation,
a position he has held since 1989.  Navios  Corporation is a large bulk shipping
company based in Stamford, Connecticut. Prior to this he held a number of senior
management  positions in the shipping and finance industry.  Mr. Day was born in
South  Africa  and  educated  at the  South  African  Merchant  Marine  Academy,
University of Capetown (BbusSc) and Oxford University (MA,  Jurisprudence).  Mr.
Day is also on the boards of various other companies.

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

     Morris L. Feder is  President  of  Worldwide  Cargo Inc.,  a New York based
chartering firm. Mr. Feder has been employed in the shipping  industry in excess
of 49 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 the
Board of Directors of such company.  He has served as a Director of Teekay since
June  1993.  Mr.  Feder is a member  of the  American  Bureau of  Shipping,  the
Connecticut  Maritime  Association and the Association of Shipbrokers and Agents
USA Inc., as well as being a member of the Board of Directors of American Marine
Advisors, Inc.

     Captain David Glendinning joined the Chartering Department of the Company's
London office in January  1987.  Since then, he has worked in a number of senior
positions  within  the  organization,   including  Vice  President,   Commercial
Operations,  Vice President,  Marine and Commercial  Operations and is currently
the Senior Vice  President,  Customer  Service 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.

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

     Thomas  Kuo-Yuen Hsu has served 27 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 nine vessels,  ranging in size from 30,000
dwt to 280,000 dwt. He has been a Committee Director of the Britannia Steam Ship
Insurance  Association  Limited since 1988,  and a Lloyd's  Underwriting  Member
since 1983. He has served as a Director of Teekay since June 1993.

     Axel  Karlshoej  is President of Nordic  Industries,  a California  general
construction firm with whom he has served for the past 26 years. He is the older
brother of the late J.  Torben  Karlshoej,  the founder of the  Company.  He has
served as a Director and Chairman of the Board of Teekay since June 1993.

     Vincent C. Lok joined the Company in June 1993 as a  financial  analyst and
was promoted to the position of Assistant  Controller  in July 1995,  and to his
current  position of Controller  in October 1997.  Prior to joining the Company,
Mr.  Lok  worked  in  the  audit  practice  of  Deloitte  &  Touche,   Chartered
Accountants, for four years.

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

     Bjorn Moller succeeded  Captain James Hood as President and Chief Executive
Officer in April 1998.  Mr. Moller has over 21 years  experience in shipping and
has served in senior  management  positions  with the  Company  for more than 11
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.

     Justin  Murphy  joined the  Company in  October  1990 and has held  various
positions in the Company's operations and chartering departments.  Mr. Murphy is
currently the Managing  Director of the  Company's  Singapore  office.  Prior to
this,  Mr Murphy  served as  General  Manager  of  Business  Development  at the
Company's  Vancouver  office until August 1998.  Mr. Murphy has been employed in
the  chartering  business for the past 21 years and is a Member of the Institute
of Chartered Shipbrokers (MICS).

     Yoshio  Nagao has been  employed in the  shipping  industry for the past 32
years and is  qualified  as a Chief  Engineer.  He joined the Company from Sanko
Steamship Co. Ltd., a Japanese ship owning  company,  where he served as Manager
of their Technical Department. Mr. Nagao has served as Managing Director (Tokyo)
since joining the Company in 1985.

     Pascal  Spothelfer  joined  Teekay  as  Senior  Vice-President,   Strategic
Development in November 1998. From 1994 to 1998, Mr.  Spothelfer served as Chief
Operating  Officer and later  President and Chief  Executive  Officer of Novatel
Inc., a Calgary based high-tech company.  Prior to that, he was with Jenoptik AG
in Germany as Vice-President Business Development,  and from 1990 to 1992 worked
as a consultant for the Boston Consulting Group in Munich.  Mr. Spothelfer holds
a PhD in Law from the  University of Basel  (Switzerland)  and a MBA from INSEAD
(France).

     Captain Graham  Westgarth joined Teekay in February 1999 as Vice President,
Marine Operations  bringing 27 years of shipping  industry  experience with him.
Eighteen  of those  years  were  spent at sea,  including  5 years in a  command
position. He joined Teekay from Maersk Company (UK) where he joined as Master in
1987 before being promoted to General Manager in 1994.

Item 11. Executive Compensation

     The aggregate  annual  compensation  paid to the 15 executive  officers and
senior  managers listed above was $2,798,182 for fiscal 1999, a portion of which
was attributable to payments made pursuant to bonus plans of the Company,  which
consider both Company and individual performance for a given period.  Currently,
the non-employee  directors of Teekay receive,  in the aggregate,  approximately
$120,000 for their services and reimbursement of their out-of-pocket expenses in
each fiscal year during which they are directors of Teekay.  In fiscal 1999, the
Company  contributed  an  aggregate  amount of $189,089  to provide  pension and
similar benefits for the 15 executive officers and senior managers listed above.

Item 12. Options to Purchase Securities From Registrant or Subsidiaries

     Teekay's  1995 Stock Option Plan (the  "Plan")  entitles  certain  eligible
officers,  employees  (including senior sea staff), and directors of the Company
to receive  options to acquire  Common  Stock of Teekay.  As of June 10, 1999, a
total of 3,641,750  shares of Common Stock had been reserved for issuance  under
the Plan.  As of such date,  options to purchase a total of 2,612,866  shares of
Common  Stock were  outstanding,  with  options  to  purchase a total of 731,460
shares then exercisable and with the directors and the 15 executive officers and
senior  managers  listed  above  holding  options to purchase a total of 878,500
shares,  of  which  166,875  are  exercisable.   The  outstanding   options  are
exercisable at prices  ranging from $16.88 to $33.50 per share,  with a weighted
average exercise price of $23.22 per share, and expire between July 19, 2005 and
June 1, 2009, ten years after the date of grant.

Item 13. Interest of Management in Certain Transactions

     As of March 31, 1999,  Cirrus Trust and JTK Trust owned,  in the aggregate,
approximately 55% of the Company's  outstanding  Common Stock. The activities of
Cirrus Trust and JTK Trust are under the common  supervision  of Messrs.  Coady,
Karlshoej and Thomas Hsu, directors of Teekay, and Mr. Shigeru Matsui, President
of Matsui & Company,  a Tokyo based ship brokerage  firm. The  beneficiaries  of
such trusts include charitable institutions and affiliated trusts.

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





                                    PART II

Item 14. Description of Securities to be Registered

    Not applicable.

                                    PART III

Item 15. Defaults Upon Senior Securities

    Not applicable.

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

    Not applicable.

                                     PART IV

Item 17. Financial Statements

    Not applicable.

Item 18. Financial Statements

    See item 19(a) below.

Item 19. Financial Statements and Exhibits

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

                                                                            Page

Report of Independent Public Accountants....................................F-1
Consolidated Financial Statements

  Consolidated Statements of Income and Retained Earnings...................F-2

Consolidated Balance Sheets.................................................F-3
  Consolidated Statements of Cash Flows.....................................F-4
  Notes to the Consolidated Financial Statements............................F-5
  Schedule A to the Consolidated Financial Statements.......................F-13

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

(b) The following exhibits are filed as part of this Annual Report:
<TABLE>
<S>               <C>

     *2.1         Articles of Incorporation of Teekay, with all amendments thereto.
    **2.2         Bylaws of Teekay, with all amendments thereto.
     +2.3         Indenture dated as of July 15, 1993 among Teekay, VSSI Sun Inc., Diamond
                  Spirit Inc., VSSI Deepsea Inc., VSSI Bulkers Inc., VSSI Star Inc., VSSI
                  Ulsan Inc. and United States Trust Company of New York, as Trustee.
     +2.4         Registration Rights Agreement dated July 15, 1993 among Teekay, VSSI Sun
                  Inc., Diamond Spirit Inc., VSSI Deepsea Inc., VSSI Bulkers Inc., VSSI
                  Star Inc., VSSI Ulsan Inc., and Morgan Stanley & Co. Incorporated, as Placement Agent.
     +2.5         Specimen of Teekay's 9 5/8% First Preferred Ship Mortgage Note due 2003.
   +++2.6         First Preferred Ship Mortgage dated July 15, 1993 by VSSI Sun Inc. to
                  United States Trust Company of New York, as Trustee.
   +++2.7         Assignment of Time Charter dated as of July 15, 1993 from VSSI Sun Inc.
                  to United States Trust Company of New York, as Trustee.
   +++2.8         Assignment of Insurance dated July 15, 1993 from VSSI Sun Inc. to United
                  States Trust Company of New York, as Trustee.
     +2.9         Pledge Agreement and Irrevocable Proxy dated July 15, 1993 made by
                  Teekay in favor of United States Trust Company of New York, as Trustee.
  +++2.10         Guarantee dated as of July 15, 1993 by VSSI Sun Inc. in favor of United
                  States Trust Company of New York, as Trustee.
  +++2.11         Assignment of Freights and Hires dated July 15, 1993 from VSSI Sun Inc.
                  to United States Trust Company of New York, as Trustee.
  +++2.12         Cash Collateral Account Agreement dated July 15, 1993 between VSSI Sun
                  Inc. and United States Trust Company of New York, as Trustee.
    +2.13         Investment Account Agreement dated July 15, 1993 between Teekay and
                  United States Trust Company of New York, as Trustee.
    +2.14         Assumption Agreement dated August 13, 1993 between United States Trust
                  Company of New York, as Trustee, and Sebarok Spirit Inc.
    +2.15         Pledge Agreement and Irrevocable Proxy dated August 13, 1993 made by
                  Teekay in favor of United States Trust Company of New York, as Trustee.
   **2.16         Registration Rights Agreement among Teekay, Tradewinds Trust Co. Ltd.,
                  as Trustee for the Cirrus Trust, and Worldwide Trust Services Ltd., as
                  Trustee for the JTK Trust.
   **2.17         Specimen of Teekay Common Stock Certificate.
  .##2.18         Indenture dated January 29, 1996 among Teekay, VSSI Oceans Inc., VSSI
                  Atlantic Inc., VSSI Appian Inc., Senang Spirit Inc., Exuma Spirit Inc.,
                  Nassau Spirit Inc., Andros Spirit Inc. and United States Trust Company
                  of New York, as Trustee.
   ##2.19         Specimen of Teekay's 8.32% First Preferred Ship Mortgage Notes Due 2008.
 ##++2.20         Bahamian Statutory Ship Mortgage dated January 29, 1996 by Nassau Spirit
                  Inc. to United States Trust Company of New York.
 ##++2.21         Deed of Covenants dated January 29, 1996 by Nassau Spirit Inc. to United
                  States Trust Company of New York.
   ##2.22         First Preferred Ship Mortgage dated January 29, 1996 by VSSI Oceans Inc.
                  to United States Trust Company of New York, as Trustee.
 ##++2.23         Assignment of Time Charter dated January 29, 1996 by Nassau Spirit Inc.
                  to United States Trust Company of New York, as Trustee.
 ##++2.24         Assignment of Insurance dated January 29, 1996 by Nassau Spirit Inc. to
                  United States Trust Company of New York, as Trustee.
   ##2.25         Pledge Agreement and Irrevocable Proxy dated January 29, 1996 by Teekay
                  in favor of United States Trust Company of New York, as Trustee.
 ##++2.26         Guarantee dated January 29, 1996 by Nassau Spirit Inc. in favor of
                  United States Trust Company of New York, as Trustee.
 ##++2.27         Assignment of Freights and Hires dated January 29, 1996 by Nassau Spirit
                  Inc. to United States Trust Company of New York, as Trustee.
 ##++2.28         Cash Collateral Account Agreement dated January 29, 1996 between Nassau
                  Spirit Inc. and United States Trust Company of New York, as Trustee.
   ##2.29         Investment Account Agreement dated January 29, 1996 between Teekay and
                  United States Trust Company of New York, as Trustee.
   **2.30         1995 Stock Option Plan.
   **2.31         Form of Indemnification Agreement between Teekay and each of its
                  officers and directors.
   **2.32         Reducing Revolving Credit Facility Agreement dated June 6, 1995 between
                  Chiba Spirit Inc., VSSI Sun Inc., VSSI Gemini Inc., VSSI Carriers Inc.,
                  Mendana Spirit Inc., Musashi Spirit Inc., VSSI Condor Inc., Palm Monarch
                  Inc., VSSI Drake Inc., VSSI Tokyo Inc., VSSI Marine Inc., Tasman Spirit
                  Inc., Vancouver Spirit Inc. and Elcano Spirit Inc. and Den norske Bank
                  AS, Christiania Bank og Kreditkasse, acting through its New York Branch,
                  and Nederlandse Scheepshypotheskbank N.V.
    +2.33         Charter Party, as amended, dated September 21, 1989 between Palm
                  Shipping Inc. and BP Shipping Limited.
    +2.34         Time Charter, as amended, dated August 14, 1986 between VSSI Sun Inc.
                  and Palm Shipping Inc.
    +2.35         Time Charter, as amended, dated April 1, 1989 between Diamond Spirit
                  Inc. and Palm Shipping Inc.
    +2.36         Time Charter, as amended, dated August 14, 1986 between VSSI Deepsea
                  Inc. and Palm Shipping Inc.
    +2.37         Time Charter, as amended, dated August 14, 1986 between VSSI Bulkers
                  Inc. and Palm Shipping Inc.
    +2.38         Time Charter, as amended, dated August 14, 1986 between VSSI Star Inc.
                  and Palm Shipping Inc.
    +2.39         Time Charter, as amended, dated January 15, 1990 between VSSI Ulsan Inc.
                  and Palm Shipping Inc.
   +2.40          Time Charter, as amended, dated June 1, 1993 between Sebarok Spirit Inc.
                  and Palm Shipping Inc.
   #2.41          Time Charter, as amended, dated July 3, 1995 between VSSI Oceans Inc.
                  and Palm Shipping Inc.
   #2.42          Time Charter, as amended, dated January 4, 1994 between VSSI Atlantic
                  Inc. and Palm Shipping Inc.
   #2.43          Time Charter, as amended, dated February 1, 1992 between VSSI Appian
                  Inc. and Palm Shipping Inc.
   #2.44          Time Charter, as amended, dated December 1, 1993 between Senang Spirit
                  Inc. and Palm Shipping Inc.
   #2.45          Time Charter, as amended, dated August 1, 1992 between Exuma Spirit Inc.
                  and Palm Shipping Inc.
   #2.46          Time Charter, as amended, dated May 1, 1992 between Nassau Spirit Inc.
                  and Palm Shipping Inc.
   #2.47          Time Charter, as amended, dated November 1, 1992 between Andros Spirit
                  Inc. and Palm Shipping Inc.
 #++2.48          Management Agreement, as amended, dated June 1, 1992 between Teekay
                  Shipping Limited and Nassau Spirit Inc.
   @2.49          Amendment No. 1, dated October 7, 1996, to Reducing Revolving Credit
                  Facility Agreement dated June 5, 1995 between Chiba Spirit Inc., VSSI
                  Sun Inc., VSSI Gemini Inc., VSSI Carriers Inc., Mendana Spirit Inc.,
                  Musashi Spirit Inc., VSSI Condor Inc., Palm Monarch Inc., VSSI Drake
                  Inc., VSSI Tokyo Inc., VSSI Marine Inc., Tasman Spirit Inc., Vancouver
                  Spirit Inc. and Elcano Spirit Inc. and Den norske Bank AS, Christiania
                  Bank og Kreditkasse, acting through its New York Branch, and Nederlandse
                  Scheepshypotheskbank N.V.
   @2.50          Agreement, dated October 3, 1996, for a U.S. $90,000,000 Term Loan
                  Facility to be made available to certain subsidiaries of Teekay Shipping
                  Corporation by Christiania Bank og Kreditkasse, acting through its New
                  York Branch, The Bank of Nova Scotia, and Banque Indosuez.
   @2.51          Agreement, dated October 18, 1996, for a U.S. $120,000,000 Term Loan
                  Facility to be made available to certain subsidiaries of Teekay Shipping
                  Corporation by Den Norske Bank ASA, Nederlandse Scheepshypothesbank
                  N.V., The Bank of New York, and Midland Bank PLC.
  @@2.52          Agreement, dated January 26, 1998, for a U.S. $200,000,000 Reducing
                  Revolving Credit Facility to be made available to certain wholly-owned
                  subsidiaries of Teekay Shipping Corporation by Den Norske Bank ASA,
                  Christiania Bank Og Kreditkasse ASA, New York Branch, and the Bank of
                  Nova Scotia.
    2.53          Agreement, dated March 26, 1999, for the amalgamation of Northwest Maritime
                  Inc., a 100% owned subsidiary of Teekay Shipping Corporation, and
                  Bona Shipholding Ltd.


</TABLE>

_________
*    Previously filed as an exhibit to the Company's  Registration  Statement on
     Form S-8, filed with the Securities and Exchange  Commission (the "SEC") on
     October 27, 1995, and hereby incorporated by reference to such Registration
     Statement.

**   Previously filed as an exhibit to the Company's  Registration  Statement on
     Form F-1 (Registration No. 33-7573-4), filed with the SEC on July 14, 1995,
     and hereby incorporated by reference to such Registration Statement.

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

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

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

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

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




                                   SIGNATURES

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

                                                     TEEKAY SHIPPING CORPORATION

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


Dated: June 10, 1999
--------------------------------------------------------------------------------

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

<PAGE> F-1


                                                          AUDITORS' REPORT

To the Shareholders of
TEEKAY SHIPPING CORPORATION

     We have  audited the  accompanying  consolidated  balance  sheets of Teekay
Shipping  Corporation  and  subsidiaries  as of March 31, 1999 and 1998, and the
related  consolidated  statements of income and retained earnings and cash flows
for each of the three years in the period ended March 31, 1999.  Our audits also
included  the  financial  schedule  listed  in the  Index:  Item 19  (a).  These
financial  statements  and  schedule  are the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements and schedule based on our audits.

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

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material respects, the consolidated financial position of
Teekay Shipping  Corporation and subsidiaries as at March 31, 1999 and 1998, and
the  consolidated  results of their  operations and their cash flows for each of
the  three  years in the  period  ended  March  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.

Nassau, Bahamas,                                               /s/ ERNST & YOUNG
May 12, 1999                                               Chartered Accountants

<PAGE>F-2


                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

             CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS

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


<TABLE>
<CAPTION>

                                                                                      Years Ended March 31,
                                                                        -----------------------------------------------
                                                                               1999             1998           1997
                                                                        ---------------- --------------- --------------
<S>                                                                        <C>                 <C>         <C>
NET VOYAGE REVENUES
Voyage revenues                                                            $     411,922    $     406,036  $     382,249
Voyage expenses                                                                   93,511          100,776        102,037
------------------------------------------------------------------------- ---------------- --------------- --------------

Net voyage revenues                                                              318,411          305,260        280,212
------------------------------------------------------------------------- ---------------- --------------- --------------

OPERATING EXPENSES
Vessel operating expenses                                                         84,397           70,510         72,586
Time charter hire expense                                                         29,666           10,627          3,461
Depreciation and amortization                                                     93,712           94,941         90,698
General and administrative                                                        25,002           21,542         19,209
------------------------------------------------------------------------- ---------------- --------------- --------------

                                                                                 232,777          197,620        185,954
------------------------------------------------------------------------- ---------------- --------------- --------------

INCOME FROM VESSEL OPERATIONS                                                     85,634          107,640         94,258
------------------------------------------------------------------------- ---------------- --------------- --------------
OTHER ITEMS
Interest expense                                                                 (44,797)         (56,269)       (60,810)
Interest income                                                                    6,369            7,897          6,358
Other income (note 10)                                                             5,506           11,236          2,824

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

                                                                                 (32,922)         (37,136)       (51,628)
------------------------------------------------------------------------- ---------------- --------------- --------------

Net income before extraordinary loss                                              52,712           70,504         42,630
Extraordinary loss on bond redemption (note 5)                                    (7,306)
------------------------------------------------------------------------- ---------------- --------------- --------------

Net income                                                                        45,406           70,504         42,630
Retained earnings, beginning of the year                                         428,102          382,178        363,690
------------------------------------------------------------------------- ---------------- --------------- --------------

                                                                                 473,508          452,682        406,320
Dividends declared                                                               (26,611)         (24,580)       (24,142)
------------------------------------------------------------------------- ---------------- --------------- --------------

Retained earnings, end of the year                                          $    446,897   $      428,102    $   382,178
------------------------------------------------------------------------- ---------------- --------------- --------------

Basic Earnings per Common Share (notes 1 and 8)
 Net income before extraordinary loss                                       $       1.70   $         2.46    $      1.52
 Net income                                                                 $       1.46   $         2.46    $      1.52

Diluted Earnings per Common Share (notes 1 and 8)
 Net income before extraordinary loss                                       $       1.70   $         2.44    $      1.50
 Net income                                                                 $       1.46   $         2.44    $      1.50

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

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

</TABLE>

<PAGE>F-3


                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                         (in thousands of U.S. dollars)


<TABLE>
<CAPTION>

                                                                                                As at March 31,
                                                                                       ----------------------------------

                                                                                             1999               1998
                                                                                       ----------------- ----------------
<S>                                                                                   <C>                <C>
ASSETS
Current
Cash and cash equivalents                                                              $      118,435    $       87,953
Marketable securities (note 3)                                                                  8,771            13,448
Accounts receivable                                                                            22,995            24,327
Prepaid expenses and other assets                                                              16,195            13,786
-------------------------------------------------------------------------------------- ----------------- ----------------

Total current assets                                                                          166,396           139,514
-------------------------------------------------------------------------------------- ----------------- ----------------

Marketable securities (note 3)                                                                  5,050            13,853

Vessels and equipment (notes 1, 5 and 9)
At cost, less accumulated depreciation of $557,946
    (1998 -  $500,779)                                                                      1,218,916         1,297,883
Advances on newbuilding contracts                                                              55,623
-------------------------------------------------------------------------------------- ----------------- ----------------

Total vessels and equipment                                                                 1,274,539         1,297,883
-------------------------------------------------------------------------------------- ----------------- ----------------

Other assets                                                                                    6,235             8,933
-------------------------------------------------------------------------------------- ----------------- ----------------

                                                                                       $    1,452,220    $    1,460,183
-------------------------------------------------------------------------------------- ----------------- ----------------


LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable                                                                       $       11,926    $       16,164
Accrued liabilities (note 4)                                                                   21,185            29,195
Current portion of long-term debt (note 5)                                                     39,058            52,932
-------------------------------------------------------------------------------------- ----------------- ----------------

Total current liabilities                                                                      72,169            98,291
-------------------------------------------------------------------------------------- ----------------- ----------------

Long-term debt (note 5)                                                                       602,661           672,437
-------------------------------------------------------------------------------------- ----------------- ----------------

Total liabilities                                                                             674,830           770,728
-------------------------------------------------------------------------------------- ----------------- ----------------

Stockholders' equity
Capital stock (note 8)                                                                        330,493           261,353
Retained earnings                                                                             446,897           428,102
-------------------------------------------------------------------------------------- ----------------- ----------------

Total stockholders' equity                                                                    777,390           689,455
-------------------------------------------------------------------------------------- ----------------- ----------------

                                                                                       $    1,452,220    $    1,460,183
-------------------------------------------------------------------------------------- ----------------- ----------------

Commitments and contingencies (notes 6 and 9)

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

</TABLE>

<PAGE>F-4

                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                         (in thousands of U.S. dollars)


<TABLE>
<CAPTION>

                                                                                      Years Ended March 31,
                                                                        ---------------------------------------------------

                                                                               1999             1998             1997
                                                                        ----------------- ---------------- ----------------
<S>                                                                       <C>             <C>            <C>
Cash and cash equivalents provided by (used for)

OPERATING ACTIVITIES
Net income                                                                 $     45,406   $      70,504    $     42,630
Add (deduct) charges to operations not requiring a
  payment of cash and cash equivalents:
Depreciation and amortization                                                    93,712          94,941          90,698
Gain on disposition of assets                                                    (7,117)        (14,392)
Loss on bond redemption                                                           7,306           2,175
Equity income (net of dividend received: March 31,
  1997-$282)                                                                                        (45)         (2,414)
Other-net                                                                         1,218           2,735           2,785
Change in non-cash working capital items related to
  operating activities (note 11)                                                 (2,817)          5,201           5,459
----------------------------------------------------------------------- ----------------- ---------------- ----------------

Net cash flow from operating activities                                         137,708         161,119         139,158
----------------------------------------------------------------------- ----------------- ---------------- ----------------

FINANCING ACTIVITIES
Proceeds from long-term debt                                                    230,000         208,600         240,000
Scheduled repayments of long-term debt                                          (50,577)        (33,876)        (16,038)
Prepayments of long-term debt                                                  (268,034)       (150,655)       (250,078)
Net proceeds from issuance of Common Stock                                       68,751           5,126           1,283
Cash dividends paid                                                             (26,222)        (15,990)        (13,493)
Capitalized loan costs                                                             (690)           (994)         (1,130)
------------------------------------------------------------------------ ----------------- ---------------- ----------------

Net cash flow from financing activities                                         (46,772)         12,211         (39,456)
----------------------------------------------------------------------- ----------------- ---------------- ----------------
INVESTING ACTIVITIES
Expenditures for vessels and equipment                                          (85,445)       (197,199)        (65,104)
Expenditures for drydocking                                                     (11,749)        (18,376)        (16,559)
Proceeds from disposition of assets                                              23,435          33,863
Net cash flow from investment                                                                     6,380          (2,296)
Proceeds on sale of available-for-sale securities                                13,305          14,854
Purchases of available-for-sale securities                                                      (42,154)
Other                                                                                              (268)
----------------------------------------------------------------------- ----------------- ---------------- ----------------

Net cash flow from investing activities                                         (60,454)       (202,900)        (83,959)
----------------------------------------------------------------------- ----------------- ---------------- ----------------

Increase (decrease) in cash and cash equivalents                                 30,482         (29,570)         15,743
Cash and cash equivalents, beginning of the year                                 87,953         117,523         101,780
----------------------------------------------------------------------- ----------------- ---------------- ----------------

Cash and cash equivalents, end of the year                               $      118,435        $ 87,953    $    117,523
----------------------------------------------------------------------- ----------------- ---------------- ----------------

The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>

<PAGE>F-5


                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(all tabular amounts stated in thousands of U.S. dollars, other than share or
per share data)

1.  Summary of Significant Accounting Policies

    Basis of presentation

     The  consolidated  financial  statements  are 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  Liberia,  and its  wholly  owned or  controlled  subsidiaries  (the
"Company"). Significant intercompany items and transactions have been eliminated
upon consolidation.

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

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

    Reporting currency

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

    Investment

     The Company's 50% interest in Viking  Consolidated  Shipping Corp. ("VCSC")
was carried at the Company's  original cost plus its proportionate  share of the
undistributed  net income. On March 12, 1997, VCSC sold its one remaining vessel
and it is not anticipated that the operating  companies of VCSC will have active
operations in the near future.  The disposal of this vessel and the related gain
on sale has been reflected in these consolidated  financial statements (see Note
10 - Other Income).

    Operating revenues and expenses

     Voyage revenues and expenses are recognized on the percentage of completion
method of  accounting.  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 and lubes, and miscellaneous expenses including 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
separate component of stockholders' equity.

    Vessels and equipment

     All  pre-delivery  costs incurred during the  construction of newbuildings,
including  interest costs,  and supervision and technical costs are capitalized.
The   acquisition   cost   and   all  costs  incurred  to  restore  used  vessel



<PAGE>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)

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
March 31, 1999, 1998 and 1997  aggregated  $3,018,000,  $283,000,  and $232,000,
respectively.

     Expenditures  incurred during drydocking are capitalized and amortized on a
straight-line basis over the period until the next anticipated drydocking.  When
significant  drydocking  expenditures  recur prior to the expiry of this period,
the remaining balance of the original drydocking is expensed in the month of the
subsequent  drydocking.  Drydocking expenses amortized for the years ended March
31, 1999, 1998 and 1997 aggregated  $8,583,000,  $11,737,000,  and  $10,941,000,
respectively.

     Vessels  acquired  pursuant  to  bareboat  hire  purchase   agreements  are
capitalized as capital  leases and are amortized over the estimated  useful life
of the acquired vessel.

    Other assets

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

    Interest rate swap agreements

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

    Forward contracts

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

    Cash flows

     Cash  interest  paid during the years ended March 31,  1999,  1998 and 1997
totaled $48,527,000, $55,141,000, and $57,400,000, respectively.

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

    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.

    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

<PAGE>F-7


                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Cont'd)

(all tabular amounts stated in thousands of U.S. dollars, other than share or
per share data)

     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
8-Capital Stock).

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.

     Three customers,  all international oil companies,  individually  accounted
for 12% ($51,411,000), 12% ($50,727,000),  and 10% ($42,797,000),  respectively,
of the Company's  consolidated  voyage revenues during fiscal 1999. No more than
one  customer  accounted  for  over  10% of the  Company's  consolidated  voyage
revenues  during fiscal 1998 or fiscal 1997.  The revenues from these  customers
accounted  for  14%   ($56,357,000)  and  13%  ($48,696,000)  of  the  Company's
consolidated voyage revenues in fiscal 1998 and fiscal 1997, respectively.

3.    Investments in Marketable Securities

<TABLE>
<CAPTION>

                                                                             Gross           Gross         Approximate
                                                                           Unrealized      Unrealized       Market and
                                                               Cost          Gains           Losses       Carrying Value
                                                                 $              $               $                $
                                                           -------------- --------------- --------------- -----------------

<S>                                                       <C>              <C>            <C>            <C>
March 31, 1999
Available-for-sale securities......................       13,865                           (44)            13,821
March 31, 1998
Available for sale securities......................       27,304            13             (16)            27,301
</TABLE>


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

Less than one year....................................................................    13,456          13,448
Due after one year through five years.................................................    13,848          13,853
                                                                                        --------       ---------
                                                                                          27,304          27,301
                                                                                        ========       =========

4.    Accrued Liabilities

                                                                                               March 31,
                                                                                    ---------------- ----------------
                                                                                         1999             1998
                                                                                    ---------------- ----------------
Voyage and vessel..................................................................... $   8,768       $   15,925
Interest..............................................................................     7,552            9,272
Payroll and benefits..................................................................     4,865            3,998
                                                                                       ---------       ----------
                                                                                       $  21,185       $   29,195
                                                                                       =========       ==========
</TABLE>

<PAGE>F-8


                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Cont'd)

(all tabular amounts stated in thousands of U.S. dollars, other than share or
per share data)

5.  Long-Term Debt

<TABLE>
<CAPTION>
                                                                                               March 31,
                                                                                    ---------------------------------

                                                                                         1999             1998
                                                                                    ---------------- ----------------
<S>                                                                                      <C>            <C>
Revolving Credit Facility............................................................... $ 169,000      $  129,000
First Preferred Ship Mortgage Notes (8.32%)
  U.S. dollar debt due through 2008.....................................................   225,000         225,000
First Preferred Ship Mortgage Notes (9 5/8%)
  U.S. dollar debt due through 2003.....................................................                   123,718
Floating rate (1999: LIBOR + 0.50% to 1%; 1998: LIBOR + 0.55% to
  1%) U.S. dollar debt due through 2009.................................................   247,719         247,651
                                                                                         ---------       ---------
                                                                                           641,719         725,369
Less current portion....................................................................    39,058          52,932
                                                                                         ---------        --------
                                                                                         $ 602,661        $672,437
                                                                                         =========        ========

</TABLE>


     The Company has a long-term  Revolving  Credit  Facility  (the  "Revolver")
available  which, as at March 31, 1999,  provided for borrowings of up to $180.0
million.  Interest payments are based on LIBOR (March 31, 1999: 5.00%; March 31,
1998:  5.71%) plus a margin depending on the financial  leverage of the Company;
at March 31,  1999,  the margin  was + 0.50%.  The  amount  available  under the
Revolver reduces by $10.0 million  semi-annually  with a final balloon reduction
in January 2006.  The Revolver is  collateralized  by first  priority  mortgages
granted on eight of the Company's  Aframax tankers,  together with certain other
related collateral, and a guarantee from the Company for all amounts outstanding
under the Revolver.

     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 March 31,  1999,  the fair value of these net assets
approximated $179.0 million. The 8.32% Notes are also subject to a sinking fund,
which will  retire  $45.0  million  principal  amount of the 8.32% Notes on each
February 1, commencing 2004.

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

     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.

     In August 1998, the Company  redeemed the remaining  $98.7 million of the 9
5/8% First  Preferred Ship Mortgage Notes (the "9 5/8% Notes") which resulted in
an extraordinary loss of $7.3 million, or 24 cents per share, for the year ended
March 31,  1999.  The  redemption  of the 9 5/8% Notes was  financed by a public
offering of Common Stock in June 1998 (see Note 8 - Capital  Stock) and existing
cash balances.

     All floating rate loans are collateralized by first preferred  mortgages on
the vessels to which the loans relate,  together with certain other  collateral,
and guarantees from Teekay.

     Among other matters,  the long-term debt agreements  generally  provide for
such items as  maintenance  of certain  vessel  market  value to loan ratios and
minimum consolidated  financial covenants,  prepayment privileges (in some cases
with penalties),  and restrictions against the incurrence of additional debt and
new investments by the individual subsidiaries without prior lender consent. The
amount of Restricted Payments,  as defined, that the Company can make, including
dividends  and  purchases of its own capital  stock,  is limited as of March 31,
1999, to $138.8 million.


<PAGE>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)

     The aggregate  annual  long-term debt principal  repayments  required to be
made for the five  fiscal  yearssubsequent  to March  31,  1999 are  $39,058,000
(fiscal 2000), $50,191,000 (fiscal 2001), $50,332,000 (fiscal 2002), $52,481,000
(fiscal 2003), and $139,597,000 (fiscal 2004).

6.  Leases

    Charters-out

     Time charters to third  parties of the Company's  vessels are accounted for
as operating leases. The minimum future revenues to be received on time charters
currently in place are  $38,638,000  (fiscal 2000),  $38,533,000  (fiscal 2001),
$38,533,000 (fiscal 2002), $38,533,000 (fiscal 2003), $38,638,000 (fiscal 2004),
and $157,645,000 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 $23,358,000  (fiscal
2000), $11,848,000 (fiscal 2001), and $1,294,000 (fiscal 2002).

7.  Fair Value of Financial Instruments

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

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

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

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

<TABLE>
<CAPTION>

                                                             March 31, 1999                    March 31, 1998
                                                   ----------------------------------- -------------------------------
                                                       Carrying            Fair           Carrying          Fair
                                                        Amount            Value            Amount          Value
                                                   ----------------- ----------------- --------------- ---------------
<S>                                                  <C>              <C>               <C>              <C>
Cash, cash equivalents and marketable
  securities................................       $      132,256     $     132,256     $     115,254    $    115,254
Long-term debt..............................              641,719           637,219           725,369         737,785
Interest rate swap agreements - net
  receivable (payable) position.............                                                                     (176)
Foreign currency contracts..................                                    (22)                              339

</TABLE>

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


<PAGE>F-10


                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Cont'd)

(all tabular amounts stated in thousands of U.S. dollars, other than share or
per share data)

8.  Capital Stock

<TABLE>
<CAPTION>

                                                             Common         Thousands
                                                              Stock         of shares
                                                         ---------------- --------------
<S>                                                     <C>                   <C>
Issued and outstanding
Balance March 31, 1996..................                 $     235,705         27,904
Reinvested Dividends....................                        10,649            364
Exercise of Stock Options...............                         1,283             60
                                                          ------------    -----------
Balance March 31, 1997..................                       247,637         28,328
Reinvested Dividends....................                         8,590            273
Exercise of Stock Options...............                         5,126            232
                                                          ------------    -----------
Balance March 31, 1998..................                       261,353         28,833
June 15, 1998 Share Offering
   2,800,000 shares at $24.7275 per share of Common
  Stock (net of share issue costs) .....                        68,700          2,800
Reinvested Dividends....................                           389             13
Exercise of Stock Options...............                            51              2
                                                          ------------    -----------

Balance March 31, 1999..................                  $    330,493         31,648
                                                          ============    ===========
</TABLE>

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

     In September 1998, the Company's  shareholders approved an amendment to the
Company's  1995 Stock  Option Plan (the "Plan") to increase the number of shares
of Common Stock  reserved and  available  for future grants of options under the
Plan by an additional  1,800,000  shares.  As of March 31, 1999, the Company had
reserved  3,641,750 shares of Common Stock for issuance upon exercise of options
granted pursuant to the Plan.

     During fiscal 1999,  1998 and 1997, the Company  granted  options under the
Plan to acquire up to 573,000,  359,750 and 343,250  shares of Common Stock (the
"Grants"),  respectively,  to certain eligible  officers,  employees  (including
senior sea staff), and directors of the Company. The options have a 10-year term
and vest equally over four years from the date of grant.

     A summary of the Company's stock option activity,  and related  information
for the three years ended March 31, 1999 follows:

<TABLE>
<CAPTION>

                                                1999                        1998                         1997
                                     --------------------------- ---------------------------- ---------------------------
                                     Options  Weighted-Average   Options   Weighted-Average   Options  Weighted-Average
                                     (000's)   Exercise Price     (000s)    Exercise Price    (000s)    Exercise Price
                                     -------- ------------------ --------- ------------------ -------- ------------------
<S>                                 <C>          <C>              <C>        <C>              <C>        <C>
Outstanding-beginning of year         1,161      $     26.66        1,056    $     23.40         779     $   21.50
Granted........................         573            26.05          360          33.50         343         27.38
Exercised......................          (2)           21.50         (232)         22.02         (60)        21.50
Forfeited......................          (3)           30.44          (23)         30.39          (6)        24.00
                                     -------      -----------      -------    ----------      -------    ---------
Outstanding-end of year........       1,729      $     26.46        1,161    $     26.66       1,056     $   23.40
                                     =======      ===========      =======    ===========    ========    =========

Exercisable at end of year....          731      $     24.08          565    $     22.14         519     $   21.50
                                     =======      ===========      =======    ===========    ========    =========

Weighted-average fair value
  of options granted during
  the year (per option).......                   $      5.93                 $      8.13                 $    6.72
                                                 ===========                 ============                =========
</TABLE>
     Exercise  prices for the  options  outstanding  as of March 31, 1999 ranged
from  $21.50  to  $33.50.  These  options  have  a  weighted-average   remaining
contractual life of 8.0 years.


<PAGE>F-11


                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Cont'd)

     (all tabular amounts stated in thousands of U.S. dollars,  other than share
or per share data)

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

     Had the Company  recognized  compensation  costs for the Grants  consistent
with the methods  recommended by SFAS 123 (see Note 1-Accounting for Stock-Based
Compensation),  the Company's net income and earnings per share for those fiscal
years would have been stated at the pro forma amounts as follows:

<TABLE>
<CAPTION>

                                                                             Year Ended March 31,
                                                        ---------------------------------------------------------------

                                                                1999                  1998                 1997
                                                        --------------------- --------------------- -------------------
<S>                                                         <C>                 <C>                 <C>
Net income:
As reported.............................................. $      45,406          $     70,504        $      42,630
Pro forma................................................        43,715                69,090               40,679

Basic earnings per common share:
As reported..............................................          1.46                  2.46                 1.52
Pro forma................................................          1.41                  2.41                 1.45

Diluted earnings per common share:
As reported..............................................          1.46                  2.44                 1.50
Pro forma................................................          1.41                  2.39                 1.44
</TABLE>

     Basic  earnings  per share is based  upon the  following  weighted  average
number  of  common  shares  outstanding:  31,063,000  shares  for  fiscal  1999;
28,655,000  shares for  fiscal  1998;  and  28,138,000  shares for fiscal  1997.
Diluted  earnings  per share,  which gives  effect to the  aforementioned  stock
options,  is based upon the following  weighted  average number of common shares
outstanding:  31,063,000  shares for fiscal 1999;  28,870,000  shares for fiscal
1998; and 28,339,000 shares for fiscal 1997.

     The fair  values of the Grants were  estimated  on the dates of grant using
the Black-Scholes option-pricing model with the following assumptions: risk-free
average interest rates of 5.40%,  6.29%, and 6.44% for fiscal 1999,  fiscal 1998
and fiscal 1997,  respectively;  dividend yield of 3.0%;  expected volatility of
25%; and expected lives of 5 years.

9. Commitments and Contingencies

     On March 26, 1999, the Company entered into an amalgamation  agreement (the
"Amalgamation Agreement") with Bona Shipholding Ltd. ("Bona") under which Teekay
will acquire Bona for a combination of cash and shares. Bona owns and operates a
fleet  of  26  Aframax  oil  tankers  and   oil/bulk/ore   carriers  engaged  in
transportation of oil, oil products, and dry bulk commodities,  primarily in the
Atlantic region. Bona's Common Stock ("Bona Shares") is listed on the Oslo Stock
Exchange.

     Under  the terms of the  Amalgamation  Agreement,  Teekay  has  offered  to
purchase  all of the  outstanding  Bona  Shares  (18,923,774  shares)  for total
consideration of approximately $136.0 million.  Bona shareholders have the right
to elect to receive  for each Bona Share  either  $7.00 cash or 0.485  shares of
Teekay Common Stock ("Teekay  Shares"),  provided that the number of Bona Shares
to be exchanged for Teekay Shares is greater than 9,461,887  shares but does not
exceed 13,246,641  shares  (representing 50 percent and 70 percent of the number
of issued and  outstanding  Bona Shares),  respectively.  Immediately  after the
completion  of the  amalgamation,  Teekay's  capital  stock will  increase by an
amount  ranging from $69.7 million  (4,589,016  Teekay  Shares) to $97.6 million
(6,424,621  Teekay  Shares),  based  on the  minimum  (50%)  and  maximum  (70%)
percentage of Bona  shareholders who may elect to receive Teekay Shares.  Teekay
will also  assume  Bona's  debt of  approximately  $314.0  million,  net of cash
acquired.

     The  acquisition of Bona will be accounted for using the purchase method of
accounting at closing.  It is not anticipated  that this transaction will result
in the recording of any goodwill.


<PAGE>F-12


                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Cont'd)

     (all tabular amounts stated in thousands of U.S. dollars,  other than share
or per share data)

     The acquisition is subject to approval by Bona shareholders  requiring a 75
percent  affirmative  vote in a  shareholder  meeting.  It is expected  that the
transaction will be completed by mid-June 1999.

     As at March 31,  1999,  the  Company  was  committed  to  foreign  exchange
contracts for the forward purchase of approximately Japanese Yen 100 million and
Singapore dollars 3.5 million for U.S.  dollars,  at an average rate of Japanese
Yen  119.8  per  U.S.  dollar  and  Singapore   dollar  1.69  per  U.S.  dollar,
respectively,   for  the  purpose  of  hedging   accounts  payable  and  accrued
liabilities.

     As at March 31, 1999, the Company was committed to the  construction of two
newbuilding  Aframax  vessels for an aggregate  contract price of  approximately
$71.2 million, scheduled for delivery in July and September of 1999. As at March
31, 1999,  there had been payments made towards this commitment of approximately
$55.6 million.

10. Other Income

<TABLE>
<CAPTION>

                                                                                Year Ended March 31,
                                                                ------------------------------------------------------

                                                                       1999              1998              1997
                                                                ------------------- ---------------- -----------------
<S>                                                              <C>                  <C>                <C>
Gain on disposition of assets.............................       $       7,117        $      14,392       $
Equity in results of 50% owned company....................                                       45            2,696
Write off of loan costs due to refinancing................                                   (1,308)
Loss on extinguishment of debt............................                                   (2,175)
Income taxes - deferred ..................................              (1,900)
Miscellaneous - net.......................................                 289                  282              128
                                                                 -------------        -------------      -----------

                                                                 $       5,506        $      11,236     $      2,824
                                                                 =============        =============      ===========
</TABLE>
     For the year  ended  March 31,  1997,  equity in  results  of the 50% owned
company included a $2,732,000 gain on a vessel sale.



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

<TABLE>
<CAPTION>

                                                                                 Year Ended March 31,
                                                                 -----------------------------------------------------

                                                                       1999              1998              1997
                                                                 ------------------ ---------------- -----------------
<S>                                                                <C>                  <C>            <C>
Accounts receivable.......................................         $      1,332          $    2,484    $   (1,873)
Prepaid expenses and other assets.........................               (2,409)                880           665
Accounts payable..........................................               (4,238)              5,814         4,554
Accrued liabilities.......................................                2,498              (3,977)        2,113
                                                                   -------------         -----------   ----------
                                                                   $     (2,817)         $    5,201    $    5,459
                                                                   =============         ===========   ==========
</TABLE>

<PAGE>F-13

                                                                      SCHEDULE A
                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

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

<TABLE>
<CAPTION>
                                                                   Year ended March 31, 1999
                                        --------------- --------------- ---------------- --------------- ----------------
                                                         8.32% Notes                                         Teekay
                                            Teekay        Guarantor      Non-Guarantor                   Shipping Corp.
                                        Shipping Corp.   Subsidiaries     Subsidiaries     Eliminations  & Subsidiaries
                                        --------------- --------------- ---------------- --------------- ----------------
<S>                                      <C>            <C>             <C>              <C>             <C>
Net voyage revenues                      $              $    37,820     $      461,394   $  (180,803)    $    318,411
Operating expenses                               356         37,214            376,010      (180,803)         232,777
                                        --------------- --------------- ---------------- --------------- ----------------
Income (loss) from vessel operations            (356)           606             85,384                         85,634
Net interest income (expense)                (22,857)           148            (15,719)                       (38,428)
Equity in net income of  subsidiaries         75,698                                         (75,698)
Other income                                     227                            30,710       (25,431)           5,506
                                        --------------- --------------- ---------------- --------------- ----------------
Net income before extraordinary loss          52,712            754            100,375      (101,129)          52,712
Extraordinary loss on bond redemption         (7,306)                                                          (7,306)
                                        --------------- --------------- ---------------- --------------- ----------------
Net Income                                    45,406            754            100,375      (101,129)          45,406
Retained earnings (deficit),
  beginning of the year                      428,102        (34,324)           258,911      (224,587)         428,102
Dividends declared                           (26,611)                                                         (26,611)
                                        -------------   ------------    --------------   ------------    ----------------
Retained earnings (deficit),
  end of the year                       $    446,897    $   (33,570)    $      359,286   $  (325,716)    $    446,897
                                        =============   ============    ==============   ============    ================
</TABLE>
<TABLE>
<CAPTION>
                                                                   Year ended March 31, 1998
                                        ---------------------------------------------------------------------------------
                                                          8.32% Notes                                         Teekay
                                            Teekay        Guarantor      Non-Guarantor                   Shipping Corp.
                                        Shipping Corp.   Subsidiaries    Subsidiaries     Eliminations   & Subsidiaries
                                        --------------- --------------- ---------------- --------------- ----------------

<S>                                     <C>              <C>              <C>            <C>               <C>
Net voyage revenues                     $                $  36,443        $ 495,650      $  (226,833)      $  305,260
Operating expenses                              362         34,344          389,747         (226,833)         197,620
                                        --------------- --------------- ---------------- --------------- ---------------
Income (loss) from vessel  operations          (362)         2,099          105,903                           107,640
Net interest income (expense)               (33,011)           391          (15,752)                          (48,372)
Equity in net income of  subsidiaries       105,936                                         (105,891)              45
Other income (loss)                          (2,059)                         29,179          (15,929)          11,191
                                        --------------- --------------- ---------------- --------------- ---------------
Net income                                   70,504          2,490          119,330         (121,820)          70,504
Retained earnings (deficit)
  Beginning of the year                     382,178        (18,124)         155,181         (137,057)         382,178
Dividends declared                          (24,580)       (18,690)         (15,600)          34,290          (24,580)
                                        --------------- --------------- ---------------- --------------- ---------------
Retained earnings (deficit),
   End of the year                        $ 428,102      $ (34,324)       $ 258,911       $ (224,587)      $  428,102
                                        ============     ==========       ==========      ===========      =============
</TABLE>
<TABLE>
<CAPTION>
                                                                   Year ended March 31, 1997
                                       ---------------- --------------- ---------------- --------------- ----------------
                                                          8.32% Notes                                         Teekay
                                            Teekay        Guarantor       Non-Guarantor                    Shipping Corp.
                                        Shipping Corp.   Subsidiaries      Subsidiaries     Eliminations   & Subsidiaries
                                       ---------------- --------------- ---------------- --------------- ----------------
<S>                                     <C>              <C>             <C>              <C>              <C>
Net voyage revenues                     $                $  35,960        $  441,769      $  (197,517)     $  280,212
Operating expenses                              494         34,254           348,723         (197,517)        185,954
                                       ---------------- --------------- ---------------- --------------- ----------------
Income (loss) from vessel operations           (494)         1,706            93,046                           94,258
Net interest income (expense)               (34,420)           210           (20,242)                         (54,452)
Equity in net income of subsidiaries         77,352                                           (74,656)          2,696
Other income                                    192                           12,707          (12,771)            128
                                       ---------------- --------------- ---------------- --------------- ----------------
Net income                                   42,630          1,916            85,511          (87,427)         42,630
Retained earnings (deficit),
  beginning of the year                     363,690         (1,245)           84,070          (82,825)        363,690
Dividends declared                          (24,142)       (18,795)          (14,400)          33,195         (24,142)
                                       -------------- --------------- ---------------- --------------- ------------------
Retained earnings (deficit),
   end of the year                       $  382,178      $ (18,124)       $  155,181      $  (137,057)     $  382,178
                                       ================ =============== ================ =============== ================
__________
(See Note 5)
</TABLE>

<PAGE>F-14
                                                                      SCHEDULE A
                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

                            CONDENSED BALANCE SHEETS
                         (in thousands of U.S. dollars)
<TABLE>
<CAPTION>

                                                                     As at March 31, 1999
                                       ----------------------------------------------------------------------------------
                                                        8.32% Notes                                         Teekay
                                            Teekay        Guarantor     Non-Guarantor                    Shipping Corp.
                                        Shipping Corp.   Subsidiaries    Subsidiaries     Eliminations   & Subsidiaries
                                       ----------------- ------------- ----------------- --------------- ----------------
<S>                                    <C>               <C>           <C>              <C>             <C>
ASSETS
Cash and cash equivalents              $          5      $     33,313  $     85,117      $               $     118,435
Other current assets                             28               768       142,414           (95,249)          47,961
                                       ----------------- ------------- ----------------- --------------- ----------------
  Total current assets                           33            34,081       227,531           (95,249)         166,396
Vessels and equipment (net)                                   306,764       967,775                          1,274,539
Advances due from subsidiaries              213,498                                          (213,498)
Other assets (principally marketable
securities, and investments in
subsidiaries)                               792,084                          11,290          (792,089)          11,285
                                       ----------------- ------------- ----------------- --------------- ----------------
                                       $  1,005,615      $    340,845  $  1,206,596      $ (1,100,836)   $   1,452,220
                                       ================= ============= ================= =============== ================

LIABILITIES & STOCKHOLDERS'  EQUITY
Current liabilities                    $      3,225      $      1,095  $    163,844      $    (95,995)   $      72,169
Long-term debt                              225,000                         377,661                            602,661
Due to (from) affiliates                                        3,990       163,096          (167,086)
                                       ----------------- ------------- ----------------- --------------- ----------------
Total liabilities                           228,225             5,085       704,601          (263,081)         674,830
                                       ----------------- ------------- ----------------- --------------- ----------------
STOCKHOLDERS' EQUITY
Capital stock                               330,493                23         5,943            (5,966)         330,493
Contributed capital                                           369,307       136,766          (506,073)
Retained earnings (deficit)                 446,897           (33,570)      359,286          (325,716)         446,897
                                       ----------------- ------------- ----------------- --------------- ----------------
Total stockholders' equity                  777,390           335,760       501,995          (837,755)         777,390
                                       ----------------- ------------- ----------------- --------------- ----------------
                                       $  1,005,615      $    340,845  $  1,206,596      $   (1,100,836) $   1,452,220
                                       ================= ============= ================= =============== ================
</TABLE>
<TABLE>
<CAPTION>
                                                                      As at March 31, 1998
                                       ----------------------------------------------------------------------------------
                                                         8.32% Notes                                         Teekay
                                            Teekay        Guarantor     Non-Guarantor                    Shipping Corp.
                                        Shipping Corp.   Subsidiaries    Subsidiaries     Eliminations   & Subsidiaries
                                       ------------------ ------------ ----------------- --------------- ----------------
<S>                                     <C>                 <C>         <C>               <C>            <C>
ASSETS
Cash and cash equivalents               $          22       $  10,687   $     77,244      $               $    87,953
Other current assets                               13             722        165,716         (114,890)         51,561
                                       ------------------ ------------ ----------------- --------------- ----------------
  Total current assets                             35          11,409        242,960         (114,890)        139,514
Vessels and equipment (net)                                   327,460        970,423                        1,297,883
Advances due from subsidiaries                324,460                                        (324,460)
Other assets (principally
marketable  securities, and
investments in subsidiaries).                 719,369                         22,791         (719,374)         22,786
                                       ------------------ ------------ ----------------- --------------- ----------------
                                       $    1,043,864       $ 338,869   $  1,236,174      $(1,158,724)    $ 1,460,183
                                       ================== ============ ================= =============== ================

LIABILITIES & STOCKHOLDERS'  EQUITY
Current liabilities                    $        5,691       $   3,126   $    186,953      $   (97,479)    $    98,291
Long-term debt                                348,718                        323,719                          672,437
Due to (from) affiliates                                          737        323,882         (324,619)
                                       ------------------ ------------ ----------------- --------------- ----------------
  Total liabilities                           354,409           3,863        834,554         (422,098)        770,728
                                       ------------------ ------------ ----------------- --------------- ----------------
STOCKHOLDERS' EQUITY
Capital stock                                 261,353              23          5,943           (5,966)        261,353
Contributed capital                                           369,307        136,766         (506,073)
Retained earnings (deficit)                   428,102         (34,324)       258,911         (224,587)        428,102
                                       ------------------ ------------ ----------------- --------------- ----------------
  Total stockholders' equity                  689,455         335,006        401,620         (736,626)        689,455
                                       ------------------ ------------ ----------------- --------------- ----------------
                                        $   1,043,864       $ 338,869   $  1,236,174      $(1,158,724)    $ 1,460,183
                                       ================== ============ ================= =============== ================
</TABLE>
__________
(See Note 5)

<PAGE>F-15

                                                                      SCHEDULE A

                  TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

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



<TABLE>
<CAPTION>
                                                                    Year Ended March 31, 1999
                                         --------------- -------------- ---------------- --------------- ----------------
                                                           8.32% Notes                                       Teekay
                                             Teekay         Guarantor    Non-Guarantor                   Shipping Corp.
                                         Shipping Corp.   Subsidiaries   Subsidiaries     Eliminations   & Subsidiaries
                                         --------------- -------------- ---------------- --------------- ----------------
<S>                                      <C>             <C>              <C>             <C>            <C>
Cash and cash equivalents provided by
(used for)
OPERATING ACTIVITIES
Net cash flow from operating activities  $    (24,829)   $    21,261      $   141,276                    $     137,708
                                         --------------- -------------- ---------------- --------------- ----------------
FINANCING ACTIVITIES
Proceeds from long-term debt                                                  230,000                          230,000
Prepayments of long-term debt                (108,034)                       (160,000)                        (268,034)
Repayments of long-term debt                  (20,645)                        (29,932)                         (50,577)
Net proceeds from issuance of Common
Stock                                          68,751                                                           68,751
Other                                          84,740          3,252         (114,904)                         (26,912)
                                         --------------- -------------- ---------------- --------------- ----------------
Net cash flow from financing activities        24,812          3,252          (74,836)                         (46,772)
                                         --------------- -------------- ---------------- --------------- ----------------
INVESTING ACTIVITIES
Expenditures for vessels and equipment                        (1,887)         (95,307)                         (97,194)
Other                                                                          36,740                           36,740
                                         --------------- -------------- ---------------- --------------- ----------------
Net cash flow from investing activities                       (1,887)         (58,567)                         (60,454)
                                         --------------- -------------- ---------------- --------------- ----------------
Increase (decrease) in cash and cash
equivalents                                       (17)        22,626            7,873                           30,482
Cash and cash equivalents, beginning
of the year                                        22         10,687           77,244                           87,953
                                         --------------- -------------- ---------------- --------------- ----------------
Cash and cash equivalents, end of the
year                                     $          5    $    33,313      $    85,117                    $     118,435
                                         =============== ============== ================ =============== ================
</TABLE>

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

<PAGE>F-15A
<TABLE>
<CAPTION>
                                                                    Year Ended March 31, 1997
                                         --------------- -------------- ---------------- --------------- ----------------
                                                           8.32% Notes                                       Teekay
                                             Teekay         Guarantor    Non-Guarantor                   Shipping Corp.
                                         Shipping Corp.   Subsidiaries   Subsidiaries     Eliminations   & Subsidiaries
                                         --------------- -------------- ---------------- --------------- ----------------
<S>                                        <C>             <C>            <C>                            <C>
Cash and cash equivalents provided by
(used for)
OPERATING ACTIVITIES
Net cash flow from operating activities    $  (30,553)     $   23,161     $   146,550                      $   139,158
                                         --------------- -------------- ---------------- --------------- ----------------
FINANCING ACTIVITIES
Proceeds from long-term debt                                                 240,000                          240,000
Prepayments of long-term debt                                               (250,078)                        (250,078)
Repayments of long-term debt                                                 (16,038)                         (16,038)
Net proceeds from issuance of Common
Stock                                          1,283                                                            1,283
Other                                         29,003         (18,780)        (24,846)                         (14,623)
                                         --------------- -------------- ---------------- --------------- ----------------
Net cash flow from financing activities       30,286         (18,780)        (50,962)                         (39,456)
                                         --------------- -------------- ---------------- --------------- ----------------
INVESTING ACTIVITIES
Expenditures for vessels and equipment                          (859)        (80,804)                         (81,663)
Other                                            272                          (2,568)                          (2,296)
                                         --------------- -------------- ---------------- --------------- ----------------
Net cash flow from investing activities          272            (859)        (83,372)                         (83,959)
                                         --------------- -------------- ---------------- --------------- ----------------
Increase in cash and cash equivalents              4           3,522          12,216                           15,743
Cash and cash equivalents, beginning
of the year                                       28           5,210          96,543                          101,780
                                         --------------- -------------- ---------------- --------------- ----------------
Cash and cash equivalents, end of the
year                                       $      32      $    8,732     $   108,759                      $   117,523
                                         =============== ============== ================ =============== ================

</TABLE>
_________
 (See Note 5)