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

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

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


                    TK House, Bayside Executive Park, West Bay Street & Blake Road, P.O. Box AP-59213, Nassau,
                                                      Commonwealth of the Bahamas
                                               (Address of principal executive offices)

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

Title of each class                  
                 
     Name of each exchange on which registered
                    


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

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

None

Securities for which there
is a reporting obligation pursuant to Section 15(d) of the Act.

None

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

39,145,219
shares of Common Stock, par value of $0.001 per share.

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

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

# TEEKAY
SHIPPING CORPORATION

# INDEX TO
REPORT ON FORM 20-F

# PART I

Item 3.    Key
Information

Selected Financial Data

Set forth below are
selected consolidated financial and other data of Teekay Shipping Corporation
(Teekay), together with its subsidiaries (the Company),
for the year ended December 31, 2000, the nine month period ended December 31,
1999 and the three years ended March 31, 1999, 1998, 1997, which have been
derived from the Companys Consolidated Financial Statements. The data
below should be read in conjunction with the Consolidated Financial Statements
and the notes thereto and the report of Ernst & Young, independent Chartered
Accountants, with respect to the financial statements for the year ended
December 31, 2000, the nine month period ended December 31, 1999 and the year
ended March 31, 1999, and Managements Discussion and Analysis of
Financial Condition and Results of Operations. The Company changed its
fiscal year end from March 31 to December 31, commencing December 31, 1999, in
order to facilitate comparison of its operating results to those of other
companies in the transportation industry.

`Year Ended    Nine Months Ended    Year Ended      Year Ended    Year Ended
                                          -----------   ------------------   -----------     -----------   ----------
                                           December 31,   December 31,        March 31,      March 31,      March 31,
                                           ---------      -------------       ----------     ----------     ---------
                                             2000               1999              1999           1998           1997
                                              ----              ----              ----           ----           ----
                                            (U.S. dollars in thousands, except per share and per day data and ratios)
Income Statement Data:
Voyage revenues........................    $ 893,226    $    377,882          $  411,922     $  406,036      $382,249
Voyage expenses........................      248,957         129,532              93,511        100,776       102,037
Net voyage revenues....................      644,269         248,350             318,411        305,260       280,212
Income from vessel operations..........      327,675          23,572              85,634        107,640        94,258
Interest expense.......................      (74,540)        (44,996)            (44,797)       (56,269)      (60,810)
Interest income........................       13,021           5,842               6,369          7,897         6,358
Other income (loss)....................        3,864          (4,013)              5,506         11,236         2,824
Net income (loss) before extraordinary
    loss...............................      270,020         (19,595)             52,712         70,504        42,630
Extraordinary loss on bond redemption..         --                --              (7,306)            --            --
Net income (loss)......................      270,020         (19,595)             45,406         70,504        42,630
Per Share Data:
Net income (loss) before extraordinary
    loss...............................    $    7.02    $      (0.54)         $     1.70     $     2.46      $   1.52
Extraordinary loss on bond redemption..         --                --               (0.24)            --            --
Net income (loss)-- basic..............         7.02           (0.54)               1.46           2.46          1.52
Net income (loss)-- diluted............         6.86           (0.54)               1.46           2.44          1.50
Cash earnings-- basic(1)...............         9.67            1.19                4.72           5.78          4.75
Cash dividends declared................         0.86            0.65                0.86           0.86          0.86
Balance Sheet Data (at end of period):
Cash and marketable securities.........    $ 223,123    $    226,381          $  132,256     $  115,254     $ 117,523
Capital stock..........................      452,808         427,937             330,493        261,353       247,637
Total assets...........................    1,974,099       1,982,684           1,452,220      1,460,183     1,372,838
Total debt.............................      797,484       1,085,167             641,719        725,369       699,726
Total stockholders' equity.............    1,098,512         832,067             777,390        689,455       629,815
Number of outstanding shares of common
    stock..............................   39,145,219      38,064,264          31,648,318     28,832,765    28,326,996
Other Financial Data:
EBITDA(2)..............................    $ 449,191    $     89,839          $  186,069     $  209,582     $ 191,632
EBITDA to interest expense(2)(3).......         6.10x           1.96x               3.98x          3.80x         3.22x
Total debt to EBITDA(2)................         1.78           12.08                3.45           3.46          3.65
Total debt to total capitalization.....         42.1%           56.6%               45.2%          51.3%         52.6%
Net debt to capitalization(4)..........         34.3            50.8                39.6           46.9          48.0
Cash earnings(1).......................    $ 372,168    $     43,343          $  146,489     $  165,575     $ 191,632
Capital expenditures:
  Vessel and equipment purchases, gross       43,512         452,584              85,445        197,199        65,104
  Drydocking...........................       11,941           6,598              11,749         18,376        16,559
Fleet Data:
Average number of ships(5) ............           71              65                  47             43            41
Average age of Company's Aframax fleet
  (in years)(6) .......................          8.3             7.4                 8.0            7.6           7.9
TCE per ship per day(5)(7)(8)..........    $  27,138    $     13,462          $   19,576     $   21,373     $  20,356
Vessel operating expenses per ship per
day(8)(9)..............................        4,980           5,621               4,969          4,554         4,922
Operating cash flow per ship per
day(8)(10).............................       18,145           4,731              10,903         12,664        11,819`

1. Cash earnings represents net income (loss) before extraordinary items, foreign
exchange gains (losses), and before depreciation and amortization expense. Cash
earnings is included because it is used by certain investors to measure a
companys financial performance as compared to other companies in the
shipping industry. Cash earnings is not required by U.S. 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 U.S.
generally accepted accounting principles.
2. EBITDA represents net income (loss) before extraordinary items, interest
expense, income tax expense, depreciation and amortization expense, minority
interest, and gains or losses arising from prepayment of debt, foreign exchange
translation and disposal of assets. EBITDA is included because such data is used
by certain investors to measure a companys financial performance. EBITDA
is not required by U.S. 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 U.S. 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 joint venture.
6. Average age of Companys Aframax fleet is the average age, at the end of
the relevant period, of all the Aframax vessels owned, leased or
time-chartered-in by the Company, excluding vessels of a 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. The Companys four
Australian-crewed vessels have been part of the Companys fleet since the
fourth quarter of the year ended March 31, 1998. Vessel operating expenses for
the Australian-crewed vessels are substantially higher than those for the rest
of the Companys fleet on a per ship basis, primarily as a result of higher
crew costs, with correspondingly higher charter rates associated with the
charter arrangements for those vessels. The Companys eight oil/bulk/ore
carriers (O/B/Os) acquired as part of the Companys purchase of
Bona Shipholding Ltd. on June 11, 1999 have been excluded to facilitate
comparison to prior years results and also because the O/B/Os
operating expenses are not comparable with the Companys Aframax fleet.
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 expense amounts 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 U.S. 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 U.S. generally accepted accounting
principles.

## Risk Factors

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

Aframax TCE rates increased
significantly in 2000 due to increased demand for modern tankers arising from
increased oil production and discrimination against older tankers by charterers.
Because many of the factors influencing the supply of and demand for tanker
capacity are unpredictable, the nature, timing and degree of changes in tanker
industry conditions are also unpredictable.

Demand for tanker vessels
in transporting crude oil and petroleum products has been dependent upon world
and regional oil markets. Any decrease in shipments of crude oil in those
markets could have a material adverse effect on the Company.Historically, those markets have been volatile as a result of the many
conditions and events that affect the price, production and transport of oil, as
well as competition from alternative energy sources.

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

The Company obtains
employment for its vessels in highly competitive markets. Competition arises
primarily from other Aframax tanker owners, including major oil companies as
well as independent companies and, to a lesser extent, owners of other size
tankers. The Companys market share is insufficient to enforce any degree
of pricing discipline in the markets in which the Company operates. There can be
no assurance that the Companys competitive position will not erode in the
future. Any new markets that the Company enters could include participants that
have greater financial strength and capital resources than the Company. The Company
may not be successful in entering the shuttle tanker market through its acquisition
of Ugland Nordic Shipping ASA.  See Item 4  Information on the Company  Competition
and Item 4  Information on the Company  Acquisition of Ugland Nordic Shipping ASA.

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

The operation of any
ocean-going vessel carries an inherent risk of catastrophic marine disasters,
property losses, and business interruptions due to a variety of causes. Any such
event may result in loss of revenues or increased costs. There can be no
assurance that all 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. See Item 4
 Information on the Company - Risk of Loss and Insurance.

A principal component of
the Companys strategy is to continue to grow by expanding its business
both in the geographic areas and market segments where it has historically
focused and into new geographic areas, market segments and services. The Company
may not be successful in expanding its operations and any expansion may not be
profitable. The Companys future growth will depend upon a number of
factors, both within and outside of the Companys control, including: the
Companys identification of new markets; acceptance by new customers;
identification and entering into suitable joint venture opportunities;
identification and acquisition on favorable terms of suitable acquisition
candidates; successful integration of any acquired businesses with the
Companys existing operations; continued successful operations of any
acquired businesses, including its acquisition of Ugland Nordic Shipping ASA;
ability to hire and train qualified personnel and ability to obtain required
financing. The failure to effectively identify, purchase, develop and integrate
any acquired business could have a material adverse effect on the Companys
business, financial condition and results of operations. In addition, the
results achieved to date may not be indicative of the Companys ability to
penetrate new markets, many of which may have different competitive conditions
and characteristics than the Companys current markets. See Item 4 
Information on the Company  Acquisition of Ugland Nordic Shipping ASA.

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

The Company operates its
tankers in markets that have historically exhibited seasonal variations in
demand and, therefore, charter rates. This seasonality may result in
quarter-to-quarter volatility in the Companys results of operations.
Tanker markets are typically stronger in the winter months as a result of
increased oil consumption in the northern hemisphere. In addition, unpredictable
weather patterns in the winter months tend to disrupt vessel scheduling. The oil
price volatility resulting from these factors has historically led to increased
oil trading activities. As a result, the Companys revenues have
historically been weaker during its fiscal quarters ended June 30 and September
30, and, conversely, revenues have been stronger in the Companys fiscal
quarters ended December 31 and March 31. See Item 5  Operating and
Financial Review and Prospects - General.

The Company is typically
required to expend substantial sums as progress payments during construction of
a newbuilding, but the Company does not derive any revenue from the vessel until
after its delivery. If the shipyard were unable to complete the contract or if
the Company were unable to obtain financing required to complete payments on any
of its newbuilding orders, the Company could effectively forfeit all or a
portion of the progress payments previously made. The Company, through its
subsidiary Ugland Nordic Shipping ASA, currently has four newbuildings on order
with deliveries scheduled for May 2001, December 2002, March 2003, and September
2003. The Company may in the future order additional newbuildings. See Item 4 
Information on the Company  Acquisition of Ugland Nordic Shipping ASA.

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

While virtually all of the
Companys revenues are earned in U.S. dollars, a portion of the
Companys operating costs are incurred in currencies other than U.S.
dollars. This partial mismatch in operating revenues and expenses could lead to
fluctuations in net income due to changes in the value of the U.S. dollar
relative to other currencies, in particular the Japanese Yen, the Singapore
Dollar, the Canadian Dollar, the British Pound, the Norwegian Kroner and the
Australian Dollar. At December 31, 2000, the majority of the Companys debt
bore interest at floating interest rates. Increases in interest rates would
increase interest payments on this debt, and could have a material adverse
effect on the Companys business, financial condition and results of
operation. In order to partially mitigate this exposure the Company has entered
into interest rate swaps that effectively change the Companys interest
rate exposure on $100.0 million of debt from a floating LIBOR rate to an average
fixed rate of 6.71%. See Item 11  Quantitative and Qualitative Disclosures
About Market Risk.

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

In the absence of exemption
from tax under Section 883 of the United States Internal Revenue Code, the
shipping income derived from the United States sources attributable to the
Companys subsidiaries transportation of cargoes to or from the
United States will be subject to U.S. federal income tax. If the Companys
subsidiaries were subject to such tax the Companys net income and cash
flow would be reduced by the amount of such tax. The tax that would be imposed
would be equal to an effective rate of 2% on U.S. source income. Due to the
absence of interpretive regulations or other applicable authority under the
relevant Internal Revenue Code sections, the Company is unable to confirm with
certainty that its subsidiaries qualify for exemption from taxation under
Section 883.

## Item 4.
Information on the Company

## The Company

The Company is a leading
provider of international crude oil and petroleum product transportation
services through the worlds largest fleet of medium size oil tankers. The
Companys modern fleet of tankers provides transportation services to major
oil companies, oil traders and government agencies world wide.

As of March 1, 2001, the
Companys fleet consisted of 75 vessels: 70 Aframax oil tankers and O/B/Os
(including five vessels time-chartered-in and one vessel owned by a joint
venture), two smaller oil tankers, two Suezmax tankers owned by a joint venture,
and one Very Large Crude Carrier (VLCC). The Companys vessels
are of Bahamian, Norwegian, Australian, Liberian, Panamanian and Marshall
Islands registry. The Companys fleet has a total cargo capacity of
approximately 7.5 million tonnes and its Aframax and O/B/O vessels represent
approximately 11% of the total tonnage of the world Aframax and O/B/O fleet.
This information does not include the vessels controlled through the
Companys acquisition of Ugland Nordic Shipping ASA. See - Acquisition of
Ugland Nordic Shipping ASA.

The Companys Aframax
tanker fleet is one of the most modern fleets in the world, with an average age
of approximately 8.3 years, compared to an average age for the world oil tanker
fleet, including Aframax tankers, of approximately 12.4 years and for the world
Aframax tanker fleet of approximately 13.4 years. The Company has been
recognized by customers and tanker rating services for safety, quality and
service. Given the age profile of the world tanker fleet, increasing emphasis by
customers on quality as a result of stringent environmental regulations, and
heightened concerns about liability for oil pollution, the Company believes that
its modern fleet and its emphasis on quality and safety provide it with a
favorable competitive profile.

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 chartering
staff located in Vancouver, Tokyo, London, Oslo, Houston and Singapore. Each
office serves the Companys clients headquartered in such offices
region. Fleet operations, vessel positions and charter market rates are
monitored around the clock. Management believes that monitoring such information
is critical to making informed bids on competitive brokered business. During the
year ended December 31, 2000, approximately 82% 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 Company pursues an
intensively customer and operations-oriented business strategy, emphasizing
market concentration and service quality to achieve superior operating results.
The Company believes that it has five key competitive strengths: (i) market
concentration in the Indo-Pacific and Atlantic Basin, which facilitates
comprehensive coverage of charterer requirements and provides a base for
efficient operation and a high degree of capacity utilization, (ii) full-service
marine operations capabilities and experienced management in all functions
critical to its operations, which affords a focused marketing effort, tight
quality and cost controls, improved capacity utilization and effective
operations and safety monitoring, (iii) a modern, high-quality fleet that
operates with high fuel efficiency and low maintenance and operating costs and
affords greater acceptance among charterers in an environment of increasingly
stringent operating and safety standards, (iv) a large, uniform-size fleet of
Aframax (75,000 to 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 tanker business will continue to be a key component
of its strategy. In addition, the Company believes that its full-service marine
operations capabilities, reputation for safety and quality and strong customer
orientation provide it with the opportunity to expand its business by providing
additional value-added and innovative services, in many cases to existing
customers. Finally, the Company intends to identify expansion opportunities in
new tanker market segments, geographic areas and services to which the
Companys competitive strengths are well suited, such as the Companys
entry into the Shuttle tanker market through its acquisition of Ugland Nordic
Shipping ASA. The Company may choose to pursue such opportunities through
internal growth, joint ventures or business acquisitions.

The Teekay organization was
founded in 1973 to manage and operate oil tankers. Prior to 1985, the Company
chartered-in most of the tonnage it subsequently provided to its customers. As
the availability of acceptable chartered-in tonnage declined, management began
an expansion of its owned fleet. Since 1985, the Company has significantly
expanded and modernized its owned fleet by taking delivery of 42 new vessels and
acquiring 33 vessels in the second-hand market, as well as disposing of 29 older
tankers over the past nine years. In addition, the Company acquired control of
an additional 26 vessels in its acquisition in 1999 of Bona Shipholding Ltd. and
an additional 18 vessels in its recent acquisition of Ugland Nordic Shipping
ASA, both described below.

Teekay is incorporated
under the laws of the Republic of The Marshall Islands and maintains its
principal executive headquarters at TK House, Bayside Executive Park, West Bay
Street & Blake Road, P.O. Box AP-59213, Nassau, The Bahamas.
Its telephone number at such address is (242) 502-8820. The Companys
principal operating office is located at Suite 1400, One Bentall Centre, 505
Burrard Street, Vancouver, British Columbia, Canada, V7X 1M5. Its telephone
number at such address is (604) 683-3529.

## Acquisition of
Ugland Nordic Shipping ASA

As of March 6, 2001, the
Company had purchased approximately a 56% interest in Ugland Nordic Shipping ASA
(UNS) (9% of which was purchased in 2000) for approximately $117
million cash, or an average price of approximately Norwegian Kroner 134 per
share. UNS controls a modern fleet of 18 Shuttle tankers (including four
newbuildings) (the UNS Fleet) that engage in the transportation of
oil from offshore production platforms to refineries. The UNS Fleet has an
average age of 9.5 years, excluding the four newbuildings, and operates
primarily in the North Sea under fixed-rate long-term contracts. In addition,
UNS owns approximately 17.3% of the publicly traded company Nordic American
Tankers Shipping Ltd. (AMEX: NAT), the owner of three Suezmax tankers on a
long-term contract to BP Shipping. Shares of UNS are listed on the Oslo Stock
Exchange. For the year ended December 31, 2000, UNS earned net voyage revenues
of Norwegian Kroner 817.1 million, or approximately $92.8 million, resulting in
income from vessel operations of Norwegian Kroner 392.6 million, or
approximately $44.6 million. Such U.S. Dollar amounts have been calculated using
the average exchange rate for 2000. The operating results of UNS will be
reflected in the Companys financial statements commencing the effective
date of the acquisition.

As required by Norwegian
law, the Company will launch a mandatory bid for the remaining shares in UNS at
Norwegian Kroner 140 per share (for a total additional cost of approximately
$100 million).

## Acquisition of
Bona Shipholding Ltd.

On June 11, 1999, the
Company acquired Bona Shipholding Ltd. (Bona) for aggregate
consideration (including estimated transaction expenses of $19.0 million) of
$450.3 million, consisting of $39.9 million in cash, $294.0 million of assumed
debt (net of cash acquired of $91.7 million) and the balance of $97.4 million in
shares of the Companys common stock. Bona was the worlds third
largest operator of medium-size tankers, controlling a fleet of vessels
consisting of 15 Aframax tankers, eight O/B/Os and, through a joint venture, 50%
interests in one additional Aframax tanker and two Suezmax tankers. Bona engaged
in the transportation of oil, oil products, and dry bulk commodities, primarily
in the Atlantic region. Through this acquisition, the Company combined
Bonas market strength in the Atlantic region with the Companys
franchise in the Indo-Pacific Basin. Bonas operating results are reflected
in the Companys financial statements commencing the effective date of the
acquisition.

## Competition

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 (75,000 to
115,000 dwt) 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 Very
Large Crude Carriers (200,000 to 320,000 dwt) (VLCCs) rarely compete
directly with Aframax tankers for specific charters; however, because ULCCs and
VLCCs comprise a substantial portion of the total capacity of the market,
movements by such vessels into Suezmax trades and of Suezmax vessels into
Aframax trades would heighten the already intense competition.

The Company competes
principally with other Aframax owners through the global tanker charter market,
comprised of tanker broker companies that represent both charterers and ship
owners in chartering transactions. Within this market, some transactions,
referred to as market cargoes, are offered by charterers through two
or more brokers simultaneously and shown to the widest possible range of owners;
other transactions, referred to as private cargoes, are given by the
charterer to only one broker and shown selectively to a limited number of owners
whose tankers are most likely to be acceptable to the charterer and are in
position to undertake the voyage. 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 20 Aframax vessels, Shell
International Marine, a subsidiary of Royal Dutch/Shell Petroleum Corporation,
with approximately 16 Aframax vessels trading globally (9 of which are on
charter), Ermis Maritime Corp., with approximately 13 Aframax vessels, Tanker
Pacific Management, which controls approximately 13 Aframax vessels, General
Maritime Corporation, with approximately 15 Aframax vessels, and Overseas
Shipholding Group, with approximately 8 Aframax vessels. Management believes
that it has significant competitive advantages in the Aframax tanker market as a
result of the age, quality, type and dimensions of its vessels and its market
share in the Indo-Pacific and Atlantic Basins. Some competitors of the Company,
however, may have greater financial strength and capital resources than the
Company.

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

## Regulation

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

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

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

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

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

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

Under OPA 90, vessel
owners, operators and bareboat (or demise) charterers are
responsible parties and are jointly, severally and strictly liable
(unless the spill results solely from the act or omission of a third party, an
act of God or an act of war) for all containment and clean-up costs and other
damages arising from discharges or threatened discharges of oil from their
vessels. These other damages are defined broadly to include (i) natural
resources damages and the costs of assessment thereof, (ii) real and personal
property damages, (iii) net loss of taxes, royalties, rents, fees and other lost
revenues, (iv) lost profits or impairment of earning capacity due to property or
natural resources damage, (v) net cost of public services necessitated by a
spill response, such as protection from fire, safety or health hazards, and (vi)
loss of subsistence use of natural resources. OPA 90 limits the liability of
responsible parties to the greater of $1,200 per gross ton or $10 million per
tanker that is over 3,000 gross tons (subject to possible adjustment for
inflation). These limits of liability would not apply if the incident was
proximately caused by violation of applicable United States federal safety,
construction or operating regulations or by the responsible partys gross
negligence or willful misconduct, or if the responsible party fails or refuses
to report the incident or to cooperate and assist in connection with the oil
removal activities. The Company currently plans to continue to maintain for each
of its vessels pollution liability coverage in the amount of $1 billion per
incident. A catastrophic spill could exceed the insurance coverage available, in
which event there could materially adversely affect 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. Excluding the vessels
acquired in conjunction with the purchase of UNS, eight of the Companys
non-double-hulled vessels are over 15 years old, and the oldest of these
vessels, the Teekay Foam and Teekay Favour, would not be phased-out under the
double-hull regulations until April 2009 and November 2009, respectively.
Notwithstanding the phase-out period, OPA 90 currently permits existing
single-hull tankers to operate until the year 2015 if their operations within
United States waters are limited to discharging at the Louisiana Off-Shore Oil
Platform, or off-loading by means of lightering activities within authorized
lightering zones more than 60 miles off-shore.

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

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

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

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

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

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

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

Environmental
RegulationProposed IMO Regulations.The IMO, in
conjunction with the European Commission, has proposed a timetable for the
accelerated phasing-out of single-hull oil tankers. Under the proposal, which
will be discussed further by the IMOs Marine Environment Committee in
April 2001, oil tankers delivered in 1973 and which do not comply with
the requirements for protectively located segregated ballast tanks will be
phased out by January 1, 2003.

The sinking of the oil
tanker Erika off the coast of France on December 12, 1999 polluted more than 250
miles of French coastline with heavy oil. Following the spill, the European
Commission adopted a communication on the safety of oil transport by
sea, also named the Erika communication. As a part of this,
the Commission has adopted a proposal for a general ban on single-hull oil
tankers. The timetable for the ban shall be similar to that set by the United
States under OPA in order to prevent oil tankers banned from U.S. waters from
shifting their trades to Europe. The ban plans for a gradual phase-out of
tankers depending on vessel type:

-
Single-hull oil tankers larger than 20,000 dwt without protective ballast tanks
around the cargo tanks. Under current proposals, vessels in this category would
be phased out progressively between January 1, 2003 and January 1, 2007,
depending on their year of delivery.

-
Single-hull oil tankers larger than 20,000 dwt in which the cargo tank area is
partly protected by segregated ballast tanks. Under current proposals, vessels
in this category built before 1987 would be phased out after their
25th year of operation. Vessels built after 1987 would be phased out
between January 1, 2012 and January 1, 2017, depending on their year of delivery.

-
Single-hull oil tankers between 5,000 dwt and 20,000 dwt. Under the current
proposals, vessels in this category built before 1987 would be phased out
between January 1, 2003 and January 1, 2013, depending on their year of delivery.
Vessels built after 1987 would be phased out between January 1, 2013 and January 1, 2017,
depending on thier year of delivery.

Excluding the vessels
acquired in conjunction with the purchase of UNS, the proposed regulations, if
adopted, would not have an impact on the Companys existing fleet until at
least 2012. Even if the most aggressive alternative under consideration by the
IMO for phasing-out single-hull oil tankers is passed in its current form, the
eventual impact on the Companys fleet is not expected to be significant.

## 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 year ended December 31,
2000, the Company derived approximately 59% 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.

## 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. Two customers, both
international oil companies, individually accounted for 13% ($118,306,000) and
12% ($110,241,000) of the Companys consolidated voyage revenues during the
year ended December 31, 2000. During the nine months ended December 31, 1999, a
single customer, also an international oil company, accounted for 13%
($48,140,000) of the Companys consolidated voyage revenues. During the
year ended March 31, 1999, three customers, all international oil companies,
individually accounted for 12% ($51,411,000), 12% ($50,727,000) and 10%
($42,797,000), respectively, of the Companys consolidated voyage revenues.
No other customer accounted for more than 10% of the Companys consolidated
voyage revenues during the fiscal periods presented above.

## Taxation of
the Company

The legal jurisdictions of
the countries in which Teekay and the majority of its subsidiaries are
incorporated do not impose income taxes upon shipping-related activities. The
Companys Australian ship-owning subsidiaries are subject to income taxes.
In addition, some subsidiaries pay taxes in the jurisdictions in which they
operate in connection with the revenue generated from the services provided by
them in that jurisdiction. Management does not consider such taxes to be
material to the Company. The above noted does not include UNS and its
subsidiaries.

## The
Companys Fleet

The following list provides
information with respect to the Companys vessels as at March 1, 2001. The
following list excludes the 18 vessels acquired through the Companys
acquisition of UNS on March 6, 2001. See Item 4 Acquisition of Ugland Nordic
Shipping ASA.

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

Oil/Bulk/Ore Carriers (10)
VICTORIA SPIRIT ...........                 Hyundai               1993           DH            103,200      Bahamian
VANCOUVER SPIRIT ..........                 Hyundai               1992           DH            103,200      Bahamian
TEEKAY FORUM ..............                 Hyundai               1983           DB             78,500      Bahamian
TEEKAY FULMAR..............                 Hyundai               1983           DB             78,500      Bahamian
TEEKAY FOUNTAIN............                 Hyundai               1982           DB             78,500      Norwegian Int'l
                                                                                                            Registry
TEEKAY FORTUNA ***.........                 Hyundai               1982           DB             78,500      Norwegian Int'l
                                                                                                            Registry
TEEKAY FREIGHTER ****......                 Bremer                1982           DB             75,400      Norwegian Int'l
                                                                                                            Registry
TEEKAY FOAM................                 Hyundai               1981           DB             78,500      Bahamian
TEEKAY FAVOUR..............                 Howaldtswerke         1981           DB             82,500      Bahamian
TEEKAY FAIR................                 Bremer                1981           DH             75,500      Norwegian Int'l
                                                                                                            Registry

Other Tankers (5)
MUSASHI SPIRIT (VLCC)......                 Sasebo                1993           SH            280,700      Bahamian
INAGO **...................                 Solisnor              1993           DS            159,800      Liberian
ERATI **...................                 Solisnor              1992           DS            159,700      Liberian
BARRINGTON.................                 Samsung               1989           DH             33,300      Australian
PALMERSTON.................                 Halla                 1990           DB             36,700      Australian
                                                                                          ------------
                                                                                             7,512,800
                                                                                          ============`

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

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

## Classification
and Inspection

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

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

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

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

## Organizational
Structure

The following is a list of the
of Companys significant subsidiaries as at March 1, 2001. The list
excludes UNS and its subsidiaries acquired through the Companys
acquisition of UNS on March 6, 2001. See Item 4 - Acquisition of Ugland Nordic
Shipping ASA.

`State or         Proportion of
                                                                              Jurisdiction of        Ownership
Name of Significant Subsidiary                                                 Incorporation          Interest
------------------------------                                                 -------------          --------

BONA SHIPHOLDING LTD.                                                        BERMUDA                    100%

SINGLE SHIP COMPANIES (2)                                                    AUSTRALIA                  100%

SINGLE SHIP LIMITED LIABILITY COMPANIES (42)                                 MARSHALL ISLANDS           100%

SOPONATA TEEKAY LIMITED                                                      BERMUDA                    50%

TEEKAY CHARTERING LIMITED                                                    MARSHALL ISLANDS           100%

TEEKAY SHIPPING LIMITED                                                      BAHAMAS                    100%`

Item 5.    
Operating and Financial Review and Prospects

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

## General

Teekay is a leading
provider of international crude oil and petroleum product transportation
services to major oil companies, major oil traders and government agencies
worldwide. The Companys fleet consists of 75 vessels (including five
vessels time-chartered-in and three vessels owned by a joint venture) for a
total cargo-carrying capacity of approximately 7.5 million tonnes.

During the year ended
December 31, 2000, approximately 68% of the Companys net voyage revenues
were derived from spot voyages. The balance of the Companys revenue is
generated by two other modes of employment; time charters, whereby vessels are
chartered to customers for a fixed period; and contracts of affreightment
(COAs), whereby the Company carries an agreed quantity of cargo for
a customer over a specified trade route within a given period of time. In the
year ended December 31, 2000, approximately 14% of net voyage revenues were
generated by time charters and COAs priced on a spot market basis. In the
aggregate, approximately 82% of the Companys net voyage revenues during
the year ended December 31, 2000 were derived from spot voyages or time charters
and COAs priced on a spot market basis, with the remaining 18% being derived
from fixed-rate time-charters and COAs. This dependence on the spot market,
which is within industry norms, contributes to the volatility of the
Companys revenues, cash flow from operations, and net income.

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

## Acquisition of
Ugland Nordic Shipping ASA

As of March 6, 2001, the
Company had purchased approximately a 56% interest in Ugland Nordic Shipping ASA
(UNS) (9% of which was purchased in 2000) for approximately $117
million cash, or an average price of approximately Norwegian Kroner 134 per
share. UNS controls a modern fleet of 18 shuttle tankers (including four
newbuildings) (the UNS Fleet) that engage in the transportation of
oil from offshore production platforms to refineries. The UNS Fleet has an
average age of 9.5 years, excluding the four newbuildings, and operates
primarily in the North Sea under fixed rate long-term contracts. In addition,
UNS owns approximately 17.3% of the publicly traded company Nordic American Tankers Shipping
Ltd. (AMEX: NAT), the owner of three Suezmax tankers on a long-term contract to
BP Shipping. Shares of UNS are listed on the Oslo Stock Exchange. For the year
ended December 31, 2000, UNS earned net voyage revenues of Norwegian Kroner
817.1 million, or approximately $92.8 million, resulting in income from vessel
operations of Norwegian Kroner 392.6 million, or approximately $44.6 million.
Such U.S. Dollar amounts have been calculated using the average exchange rate for 2000.
The operating results of UNS will be reflected in the Companys
financial statements commencing the effective date of the acquisition.

As required by Norwegian
law, the Company will launch a mandatory bid for the remaining shares in UNS at
Norwegian Kroner 140 per share (for a total additional cost of approximately
$100 million).

The acquisition of UNS will
be accounted for using the purchase method of accounting as required by
accounting principles generally accepted in the United States.

## Acquisition of
Bona Shipholding Ltd.

On June 11, 1999, the
Company acquired Bona Shipholding Ltd. (Bona) for aggregate
consideration (including estimated transaction expenses of $19.0 million) of
$450.3 million, consisting of $39.9 million in cash, $294.0 million of assumed
debt (net of cash acquired of $91.7 million) and the balance of $97.4 million in
shares of the Companys common stock. Bona was the worlds third
largest operator of medium-size tankers, controlling a fleet of vessels
consisting of fifteen Aframax tankers, eight oil/bulk/ore carriers and, through
a joint venture, 50% interests in one additional Aframax tanker and two Suezmax
tankers. Bona engaged in the transportation of oil, oil products, and dry bulk
commodities, primarily in the Atlantic region. Through this acquisition, the
Company has combined Bonas market strength in the Atlantic region with the
Companys franchise in the Indo-Pacific Basin.

The acquisition of Bona has
been accounted for using the purchase method of accounting. Bonas
operating results are reflected in the Companys financial statements
commencing June 11, 1999.

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

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

## Results of
Operations

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

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

The results for the nine
month period ended December 31, 1999 include the results of Bona commencing June
11, 1999. On an annualized basis, the Companys average fleet size
increased 9.0% in the year ended December 31, 2000 compared to the nine month
period ended December 31, 1999.

Average Aframax TCE rates
increased significantly in 2000, compared to the nine month period ended
December 31, 1999, due to increased demand for modern tankers, arising from
increased oil production and discrimination against older tankers by charterers.
TCE rates are dependent on oil production levels, oil consumption growth, the
number of vessels scrapped, the number of newbuildings delivered and
charterers preference for modern tankers. As a result of the
Companys dependence on the tanker spot market, any fluctuations in Aframax
TCE rates will impact the Companys revenues and earnings.

Net voyage revenues were
$644.3 million in the year ended December 31, 2000, as compared to $248.4
million in the nine month period ended December 31, 1999, representing a 94.6%
increase on an annualized basis from the nine month period ended December 31,
1999. This is mainly the result of a 81.2% increase in the average TCE rate
earned by the Companys fleet, to $25,661 for the year ended December 31,
2000, from $14,165 for the nine month period ended December 31, 1999. As of
December 31, 1999, the Company changed its process of estimating net voyage
revenues from a load port-to-load port basis to a discharge port-to-discharge
port basis, which is consistent with most other shipping companies. This change
in voyage estimate resulted in a one-time increase in net voyage revenues of
$5.7 million for the nine month period ended December 31, 1999.

Vessel operating expenses,
which include crewing, repairs and maintenance, insurance, stores, lubes, and
communication expenses, increased to $125.4 million in the year ended December
31, 2000 from $98.8 million in the nine month period ended December 31, 1999,
representing a 4.8% decrease on an annualized basis.This decrease was
mainly the result of lower per-day operating expenses arising from the
application of the Companys lower cost structure to the Bona fleet. This
decrease was partially offset by the increase in the Companys average
fleet size.

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

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

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

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

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

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

As a result of the
foregoing factors, net income was $270.0 million in the year ended December 31,
2000, compared to a net loss of $19.6 million in the nine month period ended
December 31, 1999. The results for the year ended December 31, 2000 include
losses on the disposition of assets of $1.0 million. There were no extraordinary
items and no asset dispositions in the nine month period ended December 31,
1999.

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

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

Net voyage revenues were
$248.4 million in the nine month period ended December 31, 1999, as compared to
$318.4 million in the year ended March 31, 1999, representing a 4.0% increase on
an annualized basis from the year ended March 31, 1999. This is mainly the
result of an increase in fleet size, partially offset by a 29.8% decrease in the
Companys average TCE rate, to $14,165 for the nine month period ended
December 31, 1999, from $20,185 for the year ended March 31, 1999. Aframax TCE
rates declined during the second half of 1998 and 1999 due to a reduction in
tanker demand, oil production cutbacks and a large number of newbuilding
deliveries. As of December 31, 1999, the Company changed its process of
estimating net voyage revenues from a load port-to-load port basis to a
discharge port-to-discharge port basis, which is consistent with most other
shipping companies. This change in voyage estimate resulted in a one-time
increase in net voyage revenues of $5.7 million for the nine month period ended
December 31, 1999.

Vessel operating expenses
increased to $98.8 million in the nine month period ended December 31, 1999 from
$84.4 million in the year ended March 31, 1999, representing a 56.1% increase on
an annualized basis. This increase was mainly the result of the addition of the
Bona vessels, which had higher operating expenses than the remainder of
Teekays fleet.

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

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

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

Interest expense increased
to $45.0 million in the nine month period ended December 31, 1999 from $44.8
million in the year ended March 31, 1999, representing a 33.9% increase on an
annualized basis. This increase reflects the $386.0 million in additional debt
assumed as part of the Bona acquisition and an increase in interest rates.

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

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

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

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 periods results, the figures in the table below
include or exclude the results from the Companys four Australian crewed
vessels and eight O/B/Os acquired as part of the Bona acquisition as indicated:

`------------------------------------------------------------------- ---------------- ------------------- -------------
                                                                      Year Ended                          Year Ended
                                                                     December 31,    Nine Months Ended    March 31,
                                                                         2000        December 31, 1999       1999
------------------------------------------------------------------- ---------------- ------------------- -------------
International Fleet (excluding ex-Bona O/B/Os
    and Australian crewed vessels):
Average number of ships                                                        59               55                 43
Total calendar ship-days                                                   21,621           15,173             15,612
Revenue generating ship-days (A)                                           20,513           14,301             14,647
Net voyage revenue before commissions (1) (B) (000s)                     $556,672       $  192,522         $  286,735
------------------------------------------------------------------- ---------------- ------------------- -------------
TCE (B/A)                                                                 $27,138      $    13,462         $   19,576
------------------------------------------------------------------- ---------------- ------------------- -------------
Operating results per calendar ship-day:
  Net voyage revenue                                                      $24,997      $    12,310         $   17,950
  Vessel operating expense                                                  4,980            5,621              4,969
  General and administrative expense                                        1,441            1,510              1,465
  Drydocking expense                                                          431              448                613
------------------------------------------------------------------- ---------------- ------------------- -------------

Operating cash flow per calendar ship-day                                 $18,145       $    4,731         $   10,903
------------------------------------------------------------------- ---------------- ------------------- -------------

Australian Crewed Vessels:
   Operating cash flow per calendar ship-day                              $14,347      $    14,643          $   14,509
------------------------------------------------------------------- ---------------- ------------------- -------------

Total Fleet (including ex-Bona O/B/Os and
    Australian crewed vessels):
   Operating cash flow per calendar ship-day                              $16,687       $    5,177          $   11,171
------------------------------------------------------------------- ---------------- ------------------- -------------`

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

# Liquidity and
Capital Resources

The Companys total
liquidity, including cash, marketable securities and undrawn long-term lines of
credit, was $373.1 million as at December 31, 2000, up from $237.4 million as at
December 31, 1999, and $143.3 million as at March 31, 1999. The increase in
liquidity during the year ended December 31, 2000 was primarily the result of an
increase in net cash flow from operating activities due to higher TCE rates. In
the Companys opinion, working capital is sufficient for the Companys
present requirements.

Net cash flow from
operating activities increased to $333.3 million in the year ended December 31,
2000, compared to $51.5 million in the nine month period ended December 31,
1999, and $137.7 million in the year ended March 31, 1999. This primarily
reflects the change in TCE rates during these periods.

The Company applied most of
this increased operating cash flow, for the year ended December 31, 2000, toward
the repayment of debt. Scheduled debt repayments were $63.8 million during the
year ended December 31, 2000, compared to $32.3 million during the nine month
period ended December 31, 1999, and $50.6 million in the year ended March 31,
1999. Debt prepayments during the year ended December 31, 2000 totalled $429.9
million, of which $35.7 million represented the repurchase of the Companys
8.32% First Preferred Ship Mortgage Notes (the 8.32% Notes) and the
balance of $394.2 million was used to reduce the Companys two long-term
Revolving Credit Facilities (the Revolvers). Debt prepayments during
the nine month period ended December 31, 1999 totalled $10.0 million.

As at December 31, 2000,
the Companys total debt was $797.5 million, compared to $1,085.2 million
as at December 31, 1999. The Companys Revolvers provided for borrowings of
up to $565.8 million as at December 31, 2000. The amount available under the
Revolvers reduces semi-annually with final balloon reductions in 2006 and 2008.
The 8.32% Notes are due February 1, 2009 and are subject to a sinking fund,
which will retire $45.0 million principal amount of the 8.32% Notes on each
February 1, commencing 2004. The Companys outstanding term loans reduce in
quarterly or semi-annual payments with varying maturities through 2009. The
aggregate annual long-term debt principal repayments required to be made
subsequent to December 31, 2000 are $72.2 million (2001), $70.0 million (2002),
$112.1 million (2003), $94.1 million (2004), $109.0 million (2005) and $340.1
million thereafter to 2009.

Among other matters, the
long-term debt agreements generally provide for such items as maintenance of
certain vessel market value to loan ratios and minimum consolidated financial
covenants, prepayment privileges (in some cases with penalties), and
restrictions against the incurrence of new investments by the individual
subsidiaries without prior lender consent. The amount of Restricted Payments, as
defined, that the Company can make, including dividends and purchases of its own
capital stock, was limited as of December 31, 2000, to $316.6 million. Certain
of the loan agreements require a minimum level of free cash be maintained. As at
December 31, 2000, this amount was $26.0 million.

The Company manages the
impact of interest rate changes on earnings and cash flows through its interest
rate structure. For the Revolvers, the interest rate structure is based on LIBOR
plus a margin depending on the financial leverage of the Company. Interest
payments on the term loans are based on LIBOR plus a margin. As at December 31,
2000, the interest rate swap agreements effectively change the Companys
interest rate exposure on $100.0 million of debt from a floating LIBOR rate to
an average fixed rate of 6.71%. The interest rate swap agreements expire between
December 2001 and December 2002.

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

The Company is exposed to
market risk from foreign currency fluctuations and changes in interest rates.
The Company uses forward foreign currency contracts and interest rate swaps to
manage these risks, but does not use financial instruments for trading or
speculative purposes. As at December 31, 2000, the Company had $62.1 million in
forward foreign currency contracts, which expire between January 2001 and
December 2003. See Item 11  Quantitative and Qualitative Disclosures About
Market Risk.

Dividends declared during
the year ended December 31, 2000 were $33.0 million, or $0.86 per share.

During the year ended
December 31, 2000, the Company incurred capital expenditures for vessels and
equipment of $43.5 million, consisting mainly of the purchase of a modern
second-hand Aframax tanker and the conversion of an Aframax tanker to a floating
storage and off-take vessel (FSO). Cash expenditures for drydocking
were $11.9 million in the year ended December 31, 2000 compared to $6.6 million
in the nine month period ended December 31, 1999 and $11.7 million in the year
ended March 31, 1999.

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

# FORWARD-LOOKING
STATEMENTS

This Annual Report on Form
20-F for the year ended December 31, 2000 contain 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 and
the market outlook in the near-term; tanker supply and demand; supply and demand
for oil; future capital expenditures; the Companys growth strategy and
measures to implement such strategy; the Companys competitive strengths;
the Companys acquisition of UNS; the Companys ability to continue to
successfully operate UNS and future success of the Company. 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; changes in the offshore production of oil;
the cyclical nature of the tanker industry and its dependence on oil markets;
the supply of tankers available to meet the demand for transportation of
petroleum products; charterers preference for modern tankers; greater than
anticipated levels of tanker newbuilding orders or less than anticipated rates
of tanker scrapping; changes in trading patterns significantly impacting overall
tanker tonnage requirements; changes in typical seasonal variations in tanker
charter rates; the Companys dependence on spot oil voyages; competitive
factors in the markets in which the Company operates; environmental and other
regulation including the imposition of freight taxes and income taxes; 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 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 6.
Directors, Senior Management and Employees

## Directors and
Senior Management

`Name                                               Age    Position
----                                               ---    --------

C. Sean Day                                         51    Director and Chairman of the Board
Bjorn Moller                                        43    Director, President and Chief Executive Officer
Axel Karlshoej                                      60    Director and Chairman Emeritus
Bruce C. Bell                                       53    Director and Corporate Secretary
Dr. Ian D. Blackburne                               55    Director
Morris L. Feder                                     84    Director
Thomas Kuo-Yuen Hsu                                 54    Director
Leif O. Hoegh                                       37    Director
Eileen A. Mercier                                   53    Director
Peter S. Antturi                                    42    VP, Treasurer and Chief Financial Officer
David Glendinning                                   47    SVP, Customer Service & Marine Project Development
Mads T. Meldgaard                                   36    VP, Chartering
Graham Westgarth                                    46    SVP, Marine Operations`

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

C. Sean Day has been
a Director of the Company since September 1998, and has served as the
Companys Chairman of the Board since September 1999. He has also been
Chairman of the Board of Seagin International LLC since April 1999 and was
President and Chief Executive Officer of Navios Corporation from 1989 to 1999.
Navios Corporation is a large bulk shipping company based in Stamford,
Connecticut. Prior to this, Mr. Day held a number of senior management positions
in the shipping and finance industry. He is currently serving as a Director of
Genesee & Wyoming Inc., Kirby Corporation, and Sparkling Springs Water
Group. Mr. Day is also engaged as a consultant to the trust that constitutes the
largest shareholder of the Company. See Item 7 - Related Party Transactions.

Bjorn Mollerbecame a Director and the President and Chief Executive Officer
of the Company in April 1998. Mr. Moller has over 20 years experience in
shipping and has served in senior management positions with the Company for more
than 12 years. He has headed the Companys overall operations since January
1997, following his promotion to the position of Chief Operating Officer. Prior
to this, Mr. Moller headed the Companys global chartering operations and
business development activities.

Axel Karlshoejis President of Nordic Industries, a California general
construction firm with which 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 of the Company since 1989 and Chairman of the Board
from June 1994 to September 1999, and Chairman Emeritus since stepping down as
Chairman.

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

Dr. Ian D.  Blackburne has served as a Director of the Company since  September  2000.  Dr.  Blackburne has over 25
years  experience in petroleum  refining and marketing,  and in March 2000 he retired as Managing  Director and CEO
of Caltex  Australia  Limited,  a large petroleum  refining and marketing  conglomerate  based in Australia.  He is
currently  serving as a Director of CSR  Limited,  Suncorp-Metway  Ltd.,  and of  Airservices  Australia.  In early
2001, Dr. Blackburne was appointed as Director and Chairman of Australian Plantation Timber Limited.

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

Thomas Kuo-Yuen Hsuhas served as a Director of the Company since June 1993. He 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 eight vessels, ranging in size from 20,000 dwt to 280,000
dwt. He has been a Committee Director of the Britannia Steam Ship Insurance
Association Limited since 1988.

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

Eileen A. Mercier has served as a Director of the Company since  December  2000.  Ms.  Mercier has over 30 years of
experience in a wide variety of financial and strategic  planning  positions,  including  Senior Vice President and
Chief  Financial  Officer for  Abitibi-Price  Inc. from 1990 to 1995.  Since then she has been  President of Finvoy
Management  Inc., a management  consulting  firm  specializing  in financial  strategy,  mergers and  acquisitions,
restructuring  and  corporate  governance  issues.  She also  currently  serves as a director  for CGI Group  Inc.,
Quebecor World Inc., Reko International Group Inc., and Winpak Ltd.

Peter S. Antturijoined 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.

Captain David
Glendinningjoined the Chartering Department of the
Companys London office in January 1987. Since then, he has worked in a
number of senior positions within the organization, including Vice President,
Commercial Operations, Vice President, Marine and Commercial Operations. Since
February 1999 he has served as Senior Vice President, Customer 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.

Mads T. Meldgaardjoined the Companys Chartering Department in January 1986
and served in the European and Singapore offices until December 1991, when he
was appointed Chartering Manager in the Vancouver office. In January 1994, he
was promoted to the position of General Manager, Chartering, and then to
Managing Director (Singapore) in September 1995. In July 1998, Mr. Meldgaard
became Vice President, Chartering based in Vancouver.

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

## Compensation
of Directors and Senior Management

The aggregate compensation
paid to the Companys five executive officers listed above (the
Executive Officers) was $2,324,667 for the year ended December 31,
2000, a portion of which was attributable to payments made pursuant to bonus
plans of the Company, which consider both Company and individual performance for
a given period. For the year ended December 31, 2000, the Company also
contributed an aggregate of $209,198 to provide pension and similar benefits for
the Executive Officers. During the year ended December 31, 2000, the Company
granted an aggregate of 119,500 options, with an exercise price of $23.563 per
share, to the Executive Officers under the Companys 1995 Stock Option
Plan. The options expire March 6, 2010, ten years after the date of the grant.

During the year ended
December 31, 2000, the eight non-employee Directors of the Company received, in
the aggregate, approximately $120,000 for their services as Directors plus
reimbursement of their out-of-pocket expenses. During that same period, the
Company granted an aggregate of 70,000 options, with an exercise price of
$23.563 per share, to the non-employee Directors under the Companys 1995
Stock Option Plan. The options expire March 6, 2010, ten years after the date of
the grant.

## Options to
Purchase Securities From Registrant or Subsidiaries

Teekays 1995 Stock
Option Plan (the Plan) entitles certain eligible officers, employees
(including senior sea staff) and Directors of the Company to receive options to
acquire Common Stock of Teekay. As of March 16, 2001, a total of 4,672,349
shares of Common Stock are reserved for issuance under the Plan. As of such
date, options to purchase a total of 3,420,447 shares of Common Stock were
outstanding, with options to purchase a total of 1,213,672 shares then
exercisable and with the Directors and the Executive Officers holding options to
purchase a total of 1,189,975 shares, of which 598,625 were exercisable. The
outstanding options under the Plan are exercisable at prices ranging from
$16.875 to $40.190 per share, with a weighted average exercise price of $26.417
per share, and expire between July 19, 2005 and March 15, 2011, ten years after
the date of each grant.

## Board Practices

The Board of Directors
consists of nine members. The Board of Directors is divided into three classes,
with members of each class elected to hold office for a term of three years in
accordance with the classification indicated below or until his or her successor
is elected and qualifies. Directors Morris L. Feder, Leif O. Höegh, and
Eileen A. Mercier have terms expiring in 2001 and have been nominated by the
Board of Directors for re-election at the 2001 Annual Meeting of shareholders.
Directors Thomas Kuo-Yuen Hsu, Axel Karlshoej, and Bjorn Moller have terms
expiring in 2002. Directors Bruce C. Bell, C. Sean Day, and Dr. Ian D.
Blackburne have terms expiring in 2003.

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

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

## Crewing and
Staff

As at December 31, 2000,
the Company employed approximately 2,700 seagoing staff for 67 ships worldwide,
and approximately 300 shore-based personnel in offices located around the world.
This remains unchanged from December 31, 1999 and is an increase from 1,940
seagoing staff and 200 shore-based personnel as at March 31, 1999.

The Company regards
attracting and retaining, motivated seagoing personnel as a top priority.
Through its global manning organization comprising of offices in Glasgow,
Latvia, Manila, Mumbai, Oslo, and Sydney, the Company offers seafarers a quality
lifestyle with highly attractive continuous employment packages based on
self-relieving schedules, competitive salary, and comprehensive benefits,
including a Stock Option Plan. The Company also provides excellent opportunities
for personal and career development, which relates to the Company philosophy of
promoting from within.

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 Company is also 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s
commitment to training is seen as fundamental to the development of the highest
caliber of Seafarers for its marine operations. The Companys Cadet
Training approach is designed to balance academic learning with hands-on
training at sea. The Company has relationships with training institutions in
Canada, Croatia, India, Latvia, Norway, Philippines, Turkey, and the UK. After
receiving formal instruction at one of these institutions, the Cadets
training continues on board a Teekay vessel. The Company also has a Career
Development Plan (CDP) which was devised to ensure a continuous flow of
promotable officers, trained on Company vessels, and familiarized with the
Companys Operational standards, systems and policies.

The Company is committed to
the inextricably linked issues of training and safe ship operation.

## Share Ownership

The following table sets
forth certain information regarding ownership, as of March 16, 2001, of
Teekays common stock, par value of $0.001 per share (the Common
Stock) by the Directors and Executive Officers as a group. Information for
certain holders is based on information delivered to the Company.

`Identity of Person or Group                                                     Shares Owned       Percent of Class
---------------------------                                                     ------------       ----------------
All Directors and Executive Officers (13 persons) (1) (2)..................            625,275           1.59%`

## Item 7. Major
Shareholders and Related Party Transactions

## Major
Shareholders

`Identity of Person or Group                                                     Shares Owned       Percent of Class
---------------------------                                                     ------------       ----------------
Cirrus Trust and JTK Trust (1).............................................        17,315,690           43.97%
Fidelity Management & Research.............................................         3,778,740            9.59%
Neuberger Berman LLC.......................................................         3,351,250            8.51%`

## Related Party
Transactions

Approximately 43.97% of the
issued and outstanding shares of Common Stock is owned by Cirrus Trust and JTK
Trust (the Trusts), which are under the common supervision of Axel
Karlshoej and Thomas Kuo-Yuen Hsu, Directors of the Company, Shigeru Matsui,
President of Matsui & Company, a Tokyo based ship brokerage firm, and Arthur
F. Coady, Chairman of Oceanic Bank and Trust, an affiliate of the Trusts. Bruce
C. Bell, a Director and the Corporate Secretary of the Company, is the Managing
Director of Oceanic Bank and Trust.

In April 1993, Teekay
acquired all of the issued and outstanding shares of common stock of Palm
Shipping Inc. (now known as Teekay Chartering Limited) 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.

## Item 8.
Financial Information

## Consolidated
Financial Statements and Notes

See Item 18 below.

## Legal
Proceedings

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

## Dividend Policy

Commencing with the fiscal
quarter ended September 30, 1995, the Company has declared and paid quarterly
cash dividends in the amount of $0.215 per share on its Common Stock. Subject to
financial results and declaration by the Board of Directors, the Company
currently intends to continue to declare and pay a regular quarterly dividend in
such amount per share on its Common Stock. Pursuant to the Companys
dividend reinvestment program, holders of Common Stock are permitted to choose,
in lieu of receiving cash dividends, to reinvest any dividends in additional
shares of Common Stock at then prevailing market prices, but without brokerage
commissions or service charges.

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

## Significant
Changes

As of March 6, 2001, the
Company had purchased approximately a 56% interest in Ugland Nordic Shipping ASA
(UNS) (9% of which was purchased in 2000) for approximately $117
million cash, or an average price of approximately Norwegian Kroner 134 per
share. UNS controls a modern fleet of 18 Shuttle tankers (including four
newbuildings) that engage in the transportation of oil from offshore production
platforms to refineries. Shares of UNS are listed on the Oslo Stock Exchange.

As required by Norwegian
law, the Company will launch a mandatory bid for the remaining shares in UNS at
Norwegian Kroner 140 per share (for a total additional cost of approximately
$100 million).

The acquisition of UNS will
be accounted for using the purchase method of accounting as required by
accounting principles generally accepted in the United States.

## Item 9. The
Offer and Listing

The Companys Common
Stock is traded on The New York Stock Exchange under the symbol TK.
The following table sets forth the high and low closing sales prices for the
Common Stock on The New York Stock Exchange for each of the periods indicated.

`Years Ended:                                                          High             Low
          ------------                                                          ----             ---
            March 31, 1997..................................................$   34.2500    $    25.0000
            March 31, 1998..................................................    37.8750         27.8750
            March 31, 1999..................................................    30.8750         14.2500
            Nine months ended December 31, 1999.............................    18.9375         13.7500
            December 31, 2000...............................................    50.8750         15.3125

          Quarters Ended:                                                       High             Low
          ---------------                                                       ----             ---
            March 31, 1999..................................................$   18.8750    $    14.2500
            June 30, 1999...................................................    18.6250         15.1250
            September 30, 1999..............................................    18.9375         15.1875
            December 31, 1999...............................................    16.1250         13.7500
            March 31, 2000..................................................    27.5625         15.3125
            June 30, 2000...................................................    34.2500         24.0000
            September 30, 2000..............................................    50.8750         32.5000
            December 31, 2000...............................................    47.5000         31.9375

          Months Ended:                                                         High             Low
          -------------                                                         ----             ---
            September 2000..................................................$   50.8750   $     42.5000
            October 2000....................................................    47.5000         37.0000
            November 2000...................................................    39.9375         31.9375
            December 2000...................................................    38.2500         32.1250
            January 2001....................................................    39.0625         33.2500
            February 2001...................................................    43.0100         35.4500`

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 10.
Additional Information

## Memorandum and
Articles of Association

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

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

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

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

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

## Material
Contracts

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

1. Indenture,  dated  January 29, 1996, for U.S. $225,000,000 8.32% First Preferred
Ship Mortgage Notes due 2008, Teekay Shipping  Corporation  as Issuer;  United States Trust
Company of New York as Trustee;  VSSI Oceans Inc., VSSI Atlantic Inc., VSSI Appian
Inc., Senang  Spirit Inc., Exuma Spirit Inc., Nassau Spirit Inc., and Andros Spirit Inc. as Guarantors.
2. 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.
3. 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.
4. 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.
5. Amended and Restated  Reimbursement  Agreement  dated April 16, 1998 (amended
May 1999) relating to a US  $74,000,000  Credit
facility made available by RABO Australia  Limited to Barrington  (Australia) Pty Limited,  Palmerston  (Australia)
Pty Limited,  VSSI Australia  Limited,  VSSI  Transport  Inc. and Alliance  Chartering Pty Limited and Nedship Bank
(America) N.V. as Guarantor.
6. Amended and Restated Guarantee dated April 16, 1998 made by Teekay Shipping Corporation in favor of
Nedship Bank (America) N.V. relating to the U.S. $74,000,000 facility granted by RABO Australia Limited and
guaranteed by Nedship Bank (America) N.V.
7. Agreement, dated March 26, 1999, for the amalgamation of Northwest Maritime Inc., a 100% owned subsidiary
of Teekay Shipping Corporation, and Bona Shipholding Ltd.
8. Amendment and Restatement Agreement, dated June 11, 1999, relating to a US
$500,000,000 Revolving Loan Agreement made available to Bona Shipholding Ltd. by
Chase Manhattan plc, Citibank International plc and various other banks.

## Exchange Controls
and Other Limitations Affecting Security Holders

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

The Company is not aware of
any limitations on the right of non-resident or foreign owners to hold or vote
securities of the Company imposed by the laws of the Republic of the Marshall
Islands or the Companys articles of incorporation and bylaws.

## Taxation

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

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

## Documents on
Display

Documents concerning the Company
that are referred to herein may be inspected at its principal executive
headquarters at TK House, Bayside Executive Park, West Bay Street & Blake
Road, P.O. Box AP-59213, Nassau, The Bahamas. Those documents
electronically filed via the Electronic Data Gathering, Analysis, and Retrieval
(EDGAR) system may also be obtained from the Securities and Exchange
Commissions (SEC) website at www.sec.gov or from SEC public
reference rooms, including the SECs public reference room at Judiciary
Plaza, 450 Fifth Street, Washington, D.C. 20549, or at Seven World Trade Center,
13th floor, New York, New York 10048, or at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Further information on the
operation of the public reference rooms may be obtained by calling the SEC at
1-800-SEC-0330. Copies of documents can be requested from the SEC public
reference rooms for a copying fee.

## Item 11.
Quantitative and Qualitative Disclosures About Market Risk

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

## Foreign
Exchange Rate Risk

The international tanker
industrys functional currency is the U.S. dollar. Virtually all of the
Companys revenues and most of its operating costs are in U.S. dollars. The
Company incurs certain operating expenses, drydocking, and overhead costs in
foreign currencies, the most significant of which are Japanese Yen, Singapore
Dollars, Canadian Dollars, Australian Dollars, British Pound and Norwegian
Kroner. During the year ended December 31, 2000, approximately 20.0% of vessel
and voyage costs, overhead and drydock expenditures were denominated in these
currencies. However, the Company has the ability to shift its purchase of goods
and services from one country to another and, thus, from one currency to
another, on relatively short notice.

The Company enters into
forward contracts as a hedge against changes in certain foreign exchange rates.
As at December 31, 2000, the Company had $62.1 million in foreign exchange
forward contracts that mature as follows: ($34.4 million  2001), ($25.9
million  2002), and ($1.8 million  2003). Market value gains and
losses are deferred and recognized during the period in which the hedged
transaction is recorded in the accounts.

## Interest Rate
Risk

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

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

As at December 31, 2000,
the Company was committed to a series of interest rate swap agreements whereby
$100.0 million of the Companys floating rate debt was swapped with fixed
rate obligations having an average remaining term of 1.5 years, expiring between
December 2001 and December 2002. These arrangements effectively change the
Companys interest rate exposure on $100.0 million of debt from a floating
LIBOR rate to an average fixed rate of 6.71%.

`Contract                Carrying Amount                  Fair
(in USD 000's)                                 Amount             Asset           Liability            Value
----------------------------------------- ------------------ ---------------- ------------------ ------------------
December 31, 2000
-----------------
FX Forward Contracts                       $       62,125      $       -         $         -       $       2,252
Interest Rate Swap Agreements                     100,000              -                   -              (1,297)
Debt                                              797,484              -              797,484            789,913

December 31, 1999
-----------------
FX Forward Contracts                       $        4,448     $        -         $         -       $         (20)
Interest Rate Swap Agreements                     200,000              -                   -               4,488
Debt                                            1,085,167              -            1,085,167          1,060,417
----------------------------------------- ------------------ ---------------- ------------------ ------------------`

`Page
                                                                                                            ----

Independent Auditor's Report................................................................................F-1
Consolidated Financial Statements
Consolidated Statements of Income...........................................................................F-2
Consolidated Balance Sheets.................................................................................F-3
Consolidated Statements of Cash Flows.......................................................................F-4
Consolidated Statements of Changes in Stockholders' Equity..................................................F-5
Notes to the Consolidated Financial Statements..............................................................F-6
Schedule A to the Consolidated Financial Statements.........................................................F-18`

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

## Item 19.
Exhibits

`^1.1  Amended and Restated Articles of Incorporation of Teekay Shipping Corporation.
              ^1.2  Articles of Amendment of Articles of Incorporation of Teekay Shipping Corporation.
              ^1.3  Amended and Restated Bylaws of Teekay Shipping Corporation.
             **2.1  Registration Rights Agreement among Teekay Shipping Corporation, Tradewinds Trust Co. Ltd., as Trustee
                    for the Cirrus Trust, and Worldwide Trust Services Ltd., as Trustee for the JTK
                    Trust.
             **2.2  Specimen of Teekay Shipping Corporation Common Stock Certificate.
             ##2.3  Indenture dated January 29, 1996 among Teekay Shipping Corporation, VSSI Oceans Inc., VSSI Atlantic Inc.,
                    VSSI Appian Inc., Senang Spirit Inc., Exuma Spirit Inc., Nassau Spirit Inc., Andros
                    Spirit Inc. and United States Trust Company of New York, as Trustee.
             ##2.4  Specimen of Teekay Shipping Corporation's 8.32% First Preferred Ship Mortgage Notes Due 2008.
           ##++2.5  Bahamian Statutory Ship Mortgage dated January 29, 1996 by Nassau Spirit
                    Inc. to United States Trust Company of New York.
           ##++2.6  Deed of Covenants dated January 29, 1996 by Nassau Spirit Inc. to United
                    States Trust Company of New York.
              #2.7  First Preferred Ship Mortgage dated January 29, 1996 by VSSI Oceans Inc.
                    to United States Trust Company of New York, as Trustee.
           ##++2.8  Assignment of Time Charter dated January 29, 1996 by Nassau Spirit Inc.
                    to United States Trust Company of New York, as Trustee.
           ##++2.9  Assignment of Insurance dated January 29, 1996 by Nassau Spirit Inc. to
                    United States Trust Company of New York, as Trustee.
            ##2.10  Pledge Agreement and Irrevocable Proxy dated January 29, 1996 by Teekay Shipping Corporation
                    in favor of United States Trust Company of New York, as Trustee.
          ##++2.11  Guarantee dated January 29, 1996 by Nassau Spirit Inc. in favor of
                    United States Trust Company of New York, as Trustee.
          ##++2.12  Assignment of Freights and Hires dated January 29, 1996 by Nassau Spirit
                    Inc. to United States Trust Company of New York, as Trustee.
          ##++2.13  Cash Collateral Account Agreement dated January 29, 1996 between Nassau
                    Spirit Inc. and United States Trust Company of New York, as Trustee.
            ##2.14  Investment Account Agreement dated January 29, 1996 between Teekay Shipping Corporation and
                    United States Trust Company of New York, as Trustee.
             **4.1  1995 Stock Option Plan.
             ^^4.2  Amendment to 1995 Stock Option Plan.
               4.3  Amended 1995 Stock Option Plan.
             **4.4  Form of Indemnification Agreement between Teekay Shipping Corporation and each of its
                    officers and directors.
              +4.5  Charter Party, as amended, dated September 21, 1989 between Palm
                    Shipping Inc. and BP Shipping Limited.
              #4.6  Time Charter, as amended, dated July 3, 1995 between VSSI Oceans Inc.
                    and Palm Shipping Inc.
              #4.7  Time Charter, as amended, dated January 4, 1994 between VSSI Atlantic
                    Inc. and Palm Shipping Inc.
              #4.8  Time Charter, as amended, dated February 1, 1992 between VSSI Appian
                    Inc. and Palm Shipping Inc.
              #4.9  Time Charter, as amended, dated December 1, 1993 between Senang Spirit
                    Inc. and Palm Shipping Inc.
             #4.10  Time Charter, as amended, dated August 1, 1992 between Exuma Spirit Inc.
                    and Palm Shipping Inc.
             #4.11  Time Charter, as amended, dated May 1, 1992 between Nassau Spirit Inc.
                    and Palm Shipping Inc.
             #4.12  Time Charter, as amended, dated November 1, 1992 between Andros Spirit
                    Inc. and Palm Shipping Inc.
           #++4.13  Management Agreement, as amended, dated June 1, 1992 between Teekay
                    Shipping Limited and Nassau Spirit Inc.
             @4.14  Agreement, dated October 3, 1996, for a U.S. $90,000,000 Term Loan
                    Facility to be made available to certain subsidiaries of Teekay Shipping
                    Corporation by Christiania Bank og Kreditkasse, acting through its New
                    York Branch, The Bank of Nova Scotia, and Banque Indosuez.
             @4.15  Agreement, dated October 18, 1996, for a U.S. $120,000,000 Term Loan
                    Facility to be made available to certain subsidiaries of Teekay Shipping
                    Corporation by Den Norske Bank ASA, Nederlandse Scheepshypothesbank
                    N.V., The Bank of New York, and Midland Bank plc.
            @@4.16  Agreement, dated January 26, 1998, for a U.S. $200,000,000 Reducing
                    Revolving Credit Facility to be made available to certain wholly-owned
                    subsidiaries of Teekay Shipping Corporation by Den Norske Bank ASA,
                    Christiania Bank og Kreditkasse ASA, New York Branch, and the Bank
                    of Nova Scotia.
           @@@4.17  Agreement, dated March 26, 1999, for the amalgamation of Northwest
                    Maritime Inc., a 100% owned subsidiary of Teekay Shipping Corporation,
                    and Bona Shipholding Ltd.
           ^  4.18  Agreement, dated April 16, 1998, for a U.S. $30,000,000 Term Loan Facility
                    to be made available to VSSI Australia Limited by Rabo Australia Limited.
           ^  4.19  Agreement, dated December 18, 1997, for a U.S. $44,000,000 Term Loan
                    Facility to be made available to Barrington (Australia) Pty Limited and
                    Palmerston (Australia) Pty Limited by Rabo Australia Limited.
           ^  4.20  Amended and Restated Reimbursement Agreement, dated April 16, 1998,
                    Among Barrington (Australia) Pty Limited, Palmerston (Australia) Pty Limited,
                    VSSI Australia Limited, VSSI Transport Inc. and Alliance Chartering Pty
                    Limited and Nedship Bank (America) N.V., The Bank of New York and
                    Landesbank Schleswig-Holstein.
           ^  4.21  Amendment No. 1, dated May 1999, to Amended and Restated Reimbursment Agreement
                    dated April 16, 1998 among Barrington (Australia) Pty Limited, Palmerston
                    (Australia) Pty Limited, VSSI Australia Limited, VSSI Transport
                    Inc. and Alliance Chartering Pty Limited and Nedship Bank (America) N.V.,
                    The Bank of New York and Landesbank Schleswig-Holstein.
           ^  4.22  Amended and Restated Agreement, date June 11, 1999, for a $500,000,000
                    Revolving Loan between Bona Shipholding Ltd., Chase Manhattan plc,
                    Citibank International plc and various other banks.
           ^  4.23  Amendment and Restatement Agreement, dated June 11, 1999, relating to a U.S.
                    $500,000,000 Revolving Loan Agreement between Bona Shipholding Ltd.,
                    Chase Manhattan plc, Citibank International plc and various other banks.
          ^^^ 4.24  Rights agreement, dated as of September 8, 2000, between Teekay Shipping Corporation
                    and The Bank of New York, as Rights Agent.
              4.25  Reimbursement Agreement, dated January 1, 2000, between Fleet Management Inc. and
                    Teekay Shipping Corporation.
               8.1  List of Significant Subsidiaries`

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

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

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

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

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

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

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

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

^   Previously  filed as an exhibit to the Company's  Annual  Report on Form 20-F (File  No.1-12874),
    filed with the SEC on March 30, 2000, and hereby incorporated by reference to such Annual Report.

^^  Previously  filed as an exhibit to the Company's Form 6-K (File  No.1-12874),  filed with the SEC
    on May 2, 2000, and hereby incorporated by reference to such Annual Report.

^^^ Previously  filed as an exhibit to the Company's Form 8-A (File  No.1-12874),  filed with the SEC
    on September 11, 2000, and hereby incorporated by reference to such Annual Report.`

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

We have audited the
accompanying consolidated balance sheets of Teekay Shipping Corporation and
subsidiaries as of December 31, 2000 and 1999, and the related consolidated
statements of income, changes in stockholders equity and cash flows for
the year ended December 31, 2000, the nine month period ended December 31, 1999
and the year ended March 31, 1999. Our audits also included the financial
schedule listed in the Index: Item 18. These financial statements and
schedule are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements and schedule based on
our audits.

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

In our opinion, the
financial statements referred to above present fairly, in all material respects,
the consolidated financial position of Teekay Shipping Corporation and
subsidiaries as at December 31, 2000 and 1999, and the consolidated results of
their operations and their cash flows for the year ended December 31, 2000, the
nine month period ended December 31, 1999 and the year 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.

`Year Ended     Nine Months Ended
                                                                         December 31,       December 31,        Year Ended
                                                                             2000               1999          March 31, 1999
                                                                              $                  $                  $
                                                                      --------------- --------------------- ---------------
NET VOYAGE REVENUES
Voyage revenues                                                             893,226            377,882             411,922
Voyage expenses                                                             248,957            129,532              93,511
----------------------------------------------------------------------- --------------- --------------------- --------------
Net voyage revenues                                                         644,269            248,350             318,411
----------------------------------------------------------------------- --------------- --------------------- --------------
OPERATING EXPENSES
Vessel operating expenses                                                   125,415             98,780              84,397
Time charter hire expense                                                    53,547             30,681              29,666
Depreciation and amortization                                               100,153             68,299              93,712
General and administrative                                                   37,479             27,018              25,002
----------------------------------------------------------------------- --------------- --------------------- --------------
                                                                            316,594            224,778             232,777
----------------------------------------------------------------------- --------------- --------------------- --------------
INCOME FROM VESSEL OPERATIONS                                               327,675             23,572              85,634
----------------------------------------------------------------------- --------------- --------------------- --------------
OTHER ITEMS
Interest expense                                                            (74,540)           (44,996)            (44,797)
Interest income                                                              13,021              5,842               6,369
Other income (loss) (note 11)                                                 3,864             (4,013)              5,506
----------------------------------------------------------------------- --------------- --------------------- --------------
                                                                            (57,655)           (43,167)            (32,922)
----------------------------------------------------------------------- --------------- --------------------- --------------
Net income (loss) before extraordinary loss                                 270,020            (19,595)             52,712
Extraordinary loss on bond redemption (note 6)                                    -               -                 (7,306)
----------------------------------------------------------------------- --------------- --------------------- --------------
Net income (loss)                                                           270,020            (19,595)             45,406
----------------------------------------------------------------------- --------------- --------------------- --------------
Basic Earnings per Common Share (note 9)

o Net income (loss) before extraordinary loss                                  7.02              (0.54)               1.70

o Net income (loss)                                                            7.02              (0.54)               1.46

Diluted Earnings per Common Share (note 9)

o Net income (loss) before extraordinary loss                                  6.86              (0.54)               1.70

o Net income (loss)                                                            6.86              (0.54)               1.46
----------------------------------------------------------------------- --------------- --------------------- --------------`

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

`As at             As at
                                                                                           December 31,     December 31,
                                                                                               2000             1999
                                                                                                $                 $
                                                                                        ----------------- ----------------
ASSETS
Current
Cash and cash equivalents                                                                       181,300           220,327
Marketable securities (note 4)                                                                    8,081              -
Accounts receivable                                                                              80,158            30,753
Prepaid expenses and other assets                                                                25,956            29,579
---------------------------------------------------------------------------------------- ----------------- ----------------
Total current assets                                                                            295,495           280,659
---------------------------------------------------------------------------------------- ----------------- ----------------
Marketable securities (note 4)                                                                   33,742             6,054

Vessels and equipment (notes 1 and 6)
At cost, less accumulated depreciation of $680,756
    (December 31, 1999 -  $624,727)                                                           1,607,716         1,663,517
Investment in joint venture                                                                      20,474            19,402
Other assets                                                                                     16,672            13,052
---------------------------------------------------------------------------------------- ----------------- ----------------
                                                                                              1,974,099         1,982,684
---------------------------------------------------------------------------------------- ----------------- ----------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable                                                                                 22,084            20,431
Accrued liabilities (note 5)                                                                     44,081            39,515
Current portion of long-term debt (note 6)                                                       72,170            66,557
---------------------------------------------------------------------------------------- ----------------- ----------------
Total current liabilities                                                                       138,335           126,503
---------------------------------------------------------------------------------------- ----------------- ----------------
Long-term debt (note 6)                                                                         725,314         1,018,610
Other long-term liabilities                                                                       7,368             3,400
---------------------------------------------------------------------------------------- ----------------- ----------------
Total liabilities                                                                               871,017         1,148,513
---------------------------------------------------------------------------------------- ----------------- ----------------
Minority interest                                                                                 4,570             2,104Stockholders' equity
Capital stock (note 9)                                                                          452,808           427,937
Retained earnings                                                                               641,149           404,130
Accumulated other comprehensive income                                                            4,555              -
---------------------------------------------------------------------------------------- ----------------- ----------------
Total stockholders' equity                                                                    1,098,512           832,067
---------------------------------------------------------------------------------------- ----------------- ----------------
                                                                                              1,974,099         1,982,684
---------------------------------------------------------------------------------------- ----------------- ----------------`

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

`Year Ended      Nine Months Ended     Year Ended
                                                                          December 31,        December 31,        March 31,
                                                                              2000                1999              1999
                                                                                $                  $                  $
                                                                         ---------------- --------------------- --------------
Cash and cash equivalents provided by (used for)

OPERATING ACTIVITIES
Net income (loss)                                                              270,020           (19,595)          45,406
Non-cash items:
Depreciation and amortization                                                  100,153            68,299           93,712
Loss (gain) on disposition of assets                                             1,004               -             (7,117)
Loss on bond redemption                                                            -                 -              7,306
Equity income (net of dividends received: December 31, 2000 - $8,474;
  December 31, 1999 - $Nil)                                                     (1,072)             (721)             -
Future income taxes                                                                999             1,500            1,900
Other - net                                                                     (1,173)            1,134            1,218
Change in non-cash working capital items related to
  operating activities (note 12)                                               (36,676)              896           (4,717)
------------------------------------------------------------------------ ---------------- --------------------- --------------
Net cash flow from operating activities                                        333,255            51,513          137,708
------------------------------------------------------------------------ ---------------- --------------------- --------------

FINANCING ACTIVITIES
Proceeds from long-term debt                                                   206,000           100,000          230,000
Scheduled repayments of long-term debt                                         (63,757)          (32,252)         (50,577)
Prepayments of long-term debt                                                 (429,926)          (10,000)        (268,034)
Net proceeds from issuance of Common Stock                                      24,843               -             68,751
Cash dividends paid                                                            (32,973)          (23,150)         (26,222)
Other                                                                            2,970               -               (690)
------------------------------------------------------------------------ ---------------- --------------------- --------------
Net cash flow from financing activities                                       (292,843)           34,598          (46,772)
------------------------------------------------------------------------ ---------------- --------------------- --------------

INVESTING ACTIVITIES
Expenditures for vessels and equipment                                         (43,512)          (23,313)         (85,445)
Expenditures for drydocking                                                    (11,941)           (6,598)         (11,749)
Proceeds from disposition of assets                                              9,713              -              23,435
Net cash acquired through purchase of
  Bona Shipholding Ltd. (note 3)                                                  -               51,774             -
Acquisition costs related to purchase of
  Bona Shipholding Ltd. (note 3)                                                (2,685)          (13,806)            -
Proceeds on sale of available-for-sale securities                                 -               13,724           13,305
Purchases of available-for-sale securities                                     (31,014)           (6,000)            -
------------------------------------------------------------------------ ---------------- --------------------- --------------
Net cash flow from investing activities                                        (79,439)           15,781          (60,454)
------------------------------------------------------------------------ ---------------- --------------------- --------------
Increase (decrease) in cash and cash equivalents                               (39,027)           101,892          30,482
Cash and cash equivalents, beginning of the period                             220,327            118,435          87,953
------------------------------------------------------------------------ ---------------- --------------------- --------------

Cash and cash equivalents, end of the period                                   181,300            220,327         118,435
------------------------------------------------------------------------ ---------------- --------------------- --------------`

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

`Accumulated
                                              Thousands                             Other       Compre-
                                                 of                                Compre-      hensive          Total
                                               Common     Common    Retained       hensive      Income       Stockholders'
                                               Shares      Stock    Earnings       Income        (Loss)         Equity
                                                 #           $          $            $             $              $
-------------------------------------------- ------------ ---------- ---------- --------------- ------------- ----------------
Balance as at March 31, 1998                   28,833      261,353    428,102           -                       689,455
-------------------------------------------- ------------ ---------- ---------- --------------- ------------- ----------------

Net income                                                             45,406                     45,406         45,406
Other comprehensive income                                                                             -
                                                                                                -------------
Comprehensive income                                                                              45,406
                                                                                                -------------

Dividends declared                                                   (26,611)                                   (26,611)
June 15, 1998 share offering
  (2,800,000 shares at $24.7275 per share of
  common stock net of share issue costs)
  (note 9)                                      2,800       68,700                                               68,700
Reinvested dividends                               13          389                                                  389
Exercise of stock options                           2           51                                                   51
-------------------------------------------- ------------ ---------- ---------- --------------- ------------- ----------------
Balance as at March 31, 1999                   31,648      330,493   446,897            -                       777,390
-------------------------------------------- ------------ ---------- ---------- --------------- ------------- ----------------

Net income (loss)                                                    (19,595)                    (19,595)       (19,595)
Other comprehensive income                                                                             -
                                                                                                -------------
Comprehensive income (loss)                                                                      (19,595)
                                                                                                -------------
Dividends declared                                                   (23,172)                                   (23,172)
June 11, 1999 common stock issued on
 acquisition of Bona Shipholding Ltd. (note 3)  6,415       97,422                                               97,422
Reinvested dividends                                1           22                                                   22
-------------------------------------------- ------------ ---------- ---------- --------------- ------------- ----------------
Balance as at December 31, 1999                38,064      427,937   404,130            -                       832,067
-------------------------------------------- ------------ ---------- ---------- --------------- ------------- ----------------

Net income                                                           270,020                     270,020        270,020
Other comprehensive income:
   Unrealized gain on available-for-sale
   securities (note 4)                                                                4,555        4,555          4,555
                                                                                                -------------
Comprehensive income                                                                             274,575
                                                                                                -------------
Dividends declared                                                   (33,001)                                   (33,001)
Reinvested dividends                                1           28                                                   28
Exercise of stock options                       1,080       24,843                                               24,843
-------------------------------------------- ------------ ---------- ---------- --------------- ------------- ----------------
Balance as at December 31, 2000                 39,145    452,808    641,149          4,555                   1,098,512
-------------------------------------------- ------------ ---------- ---------- --------------- ------------- ----------------`

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

1. Summary of Significant Accounting Policies

Basis of presentation

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

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



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


    The  consolidated   financial   statements  are  stated  in  U.S.  dollars  because  the  Company  operates  in
    international shipping markets which utilize the U.S. dollar as the functional currency.
Change in fiscal year end
The
Company changed its fiscal year end from March 31 to December 31, effective
December 31, 1999. The following is a summary of selected financial information
for the comparative twelve month periods ended December 31, 2000, 1999 and 1998.

`Twelve Months Ended     Twelve Months Ended     Twelve Months Ended
                                                   December 31,             December 31,            December 31,
                                                       2000                     1999                    1998
                                                     (audited)              (unaudited)             (unaudited)
                                                         $                       $                       $
                                              ------------------------ ----------------------- -----------------------
RESULTS OF OPERATIONS
Net voyage revenues                                      644,269               318,348                 327,016
Income from vessel operations                            327,675                34,189                 103,660
Net income (loss) before extraordinary loss              270,020               (17,723)                 66,451
Net income (loss)                                        270,020               (17,723)                 59,145
Net income (loss) before extraordinary
loss per common share
- basic                                                     7.02                 (0.50)                   2.19
- diluted                                                   6.86                 (0.50)                   2.19
Net income (loss) per common share
- basic                                                     7.02                 (0.50)                   1.95
- diluted                                                   6.86                 (0.50)                   1.95

CASH FLOWS
Net cash flow from operating activities                  333,255                71,633                 151,779
Net cash flow from financing activities                 (292,843)               76,948                 (74,407)
Net cash flow from investing activities                  (79,439)                5,613                (127,372)`

1. Business OperationsThe
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.Two
customers, both international oil companies, individually accounted for 13%
($118,306,000) and 12% ($110,241,000) of the companys consolidated voyage
revenues during the year ended December 31, 2000. During the nine months ended
December 31, 1999, a single customer, also an international oil company,
accounted for 13% ($48,140,000) of the Companys consolidated voyage
revenues. During the year ended March 31, 1999, three customers, all
international oil companies, individually accounted for 12% ($51,411,000), 12%
($50,727,000) and 10% ($42,797,000), respectively, of the Companys
consolidated voyage revenues. No other customer accounted for more than 10% of
the Companys consolidated voyage revenues during the fiscal periods
presented herein.
2. Acquisition of Bona Shipholding Ltd.On
June 11, 1999, Teekay purchased Bona Shipholding Ltd. (Bona) for
aggregate consideration (including estimated transaction expenses of $19.0
million) of $450.3 million, consisting of $39.9 million in cash, $294.0 million
of assumed debt (net of cash acquired of $91.7 million) and the balance of $97.4
million in shares of Teekays Common Stock. Bonas operating results
are reflected in these financial statements commencing the effective date of the
acquisition.

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

`Pro Forma
                                                                              Nine Months Ended        Year Ended
                                                                                 December 31,          March 31,
                                                                                     1999                 1999
                                                                                 (unaudited)          (unaudited)
                                                                                      $                    $
--------------------------------------------------------------------------- ----------------------- -----------------
Net voyage revenues                                                               272,469                463,696
Income from vessel operations                                                      26,127                132,122
Net income (loss) before extraordinary loss                                       (22,482)                86,505
Net income (loss)                                                                 (22,482)                79,199
Net income (loss) before extraordinary loss per common share
- basic and diluted                                                                 (0.59)                  2.31
Net income (loss) per common share
- basic and diluted                                                                 (0.59)                  2.11
--------------------------------------------------------------------------- ----------------------- -----------------`

1. Investments in Marketable Securities

`Gross           Gross         Approximate
                                                                       Unrealized     Unrealized        Market and
                                                          Cost           Gains          Losses       Carrying Values
                                                            $              $               $                $
                                                      -------------- --------------- -------------- -------------------
December 31, 2000
Available-for-sale equity securities...............        17,032          4,577               -            21,609
Available-for-sale debt securities.................        20,236              8             (30)           20,214
                                                      -------------- --------------- -------------- -------------------
                                                           37,268          4,585             (30)           41,823
                                                      ============== =============== ============== ===================
December 31, 1999
Available-for-sale debt securities.................         6,051              6              (3)            6,054
                                                      ============== =============== ============== ===================`

`Approximate
                                                                                                        Market and
                                                                                         Cost        Carrying Values
                                                                                           $                $
                                                                                     -------------- -------------------
December 31, 2000
Less than one year ................................................................        8,081          8,081
Due after one year through five years .............................................       12,155         12,133
                                                                                     -------------- -------------------
                                                                                          20,236         20,214
                                                                                     ============== ===================
December 31, 1999
Less than one year ................................................................            -              -
Due after one year through five years..............................................        6,051          6,054
                                                                                     -------------- -------------------
                                                                                           6,051          6,054
                                                                                     ============== ===================`

1. Accrued Liabilities

`December 31,      December 31,
                                                                                         2000              1999
                                                                                           $                 $
                                                                                    ---------------- ------------------

Voyage and vessel..................................................................        26,461         12,469
Interest...........................................................................         9,444         12,619
Payroll and benefits...............................................................         8,176         14,427
                                                                                    ---------------- ------------------
                                                                                           44,081         39,515
                                                                                    ================ ==================`

1. Long-Term Debt

`December 31,      December 31,
                                                                                         2000              1999
                                                                                           $                 $
                                                                                    ---------------- ------------------

Revolving Credit Facilities........................................................       415,800        634,000
First Preferred Ship Mortgage Notes (8.32%)
  U.S. dollar debt due through 2008................................................       189,274        225,000
Term Loans U.S. dollar debt due through 2009 ......................................       192,410        226,167
                                                                                    ---------------- ------------------
                                                                                          797,484      1,085,167
Less current portion...............................................................        72,170         66,557
                                                                                    ---------------- ------------------
                                                                                          725,314      1,018,610
                                                                                    ================ ==================`

The Company has two
long-term Revolving Credit Facilities (the Revolvers) available,
which, as at December 31, 2000, provided for borrowings of up to $565.8 million.
Interest payments are based on LIBOR (December 31, 2000: 6.4%; December 31,
1999: 6.0%) plus a margin depending on the financial leverage of the Company; at
December 31, 2000, the margins ranged between 0.50% and 0.85% (December 31,
1999: between 0.60% and 0.90%). The amount available under the Revolvers reduces
semi-annually with final balloon reductions in 2006 and 2008. The Revolvers are
collateralized by first priority mortgages granted on thirty-four of the
Companys vessels, together with certain other related collateral, and a
guarantee from the Company for all amounts outstanding under the Revolvers.

The 8.32% First Preferred
Ship Mortgage Notes due February 1, 2008 (the 8.32% Notes) are
collateralized by first preferred mortgages on seven of the Companys
Aframax tankers, together with certain other related collateral, and are
guaranteed by seven subsidiaries of Teekay that own the mortgaged vessels (the
8.32% Notes Guarantor Subsidiaries) to a maximum of 95% of the fair
value of their net assets. As at December 31, 2000, the fair value of these net
assets approximated $231.5 million. The 8.32% Notes are also subject to a
sinking fund, which will retire $45.0 million principal amount of the 8.32%
Notes on each February 1, commencing 2004. During June 2000, the Company
repurchased a principal amount of $35.7 million of the 8.32% Notes outstanding.

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

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 Company has several
term loans outstanding, which, as at December 31, 2000, totalled $192.4 million.
Interest payments are based on LIBOR plus a margin. At December 31, 2000, the
margins ranged between 0.55% and 1.25%. The term loans reduce in quarterly or
semi-annual payments with varying maturities through 2009. All term loans of the
Company are collateralized by first preferred mortgages on the vessels to which
the loans relate, together with certain other collateral, and guarantees from
Teekay.

As
at December 31, 2000, the Company was committed to a series of interest rate
swap agreements whereby $100.0 million of the Companys floating rate debt
was swapped with fixed rate obligations having an average remaining term of 1.5
years, expiring between December 2001 and December 2002. These arrangements
effectively change the Companys interest rate exposure on $100.0 million
of debt from a floating LIBOR rate to an average fixed rate of 6.71%. The
Company is exposed to credit loss in the event of non-performance by the counter
parties to the interest rate swap agreements; however, the Company does not
anticipate non-performance by any of the counter parties.

Among other matters, the
long-term debt agreements generally provide for such items as maintenance of
certain vessel market value to loan ratios and minimum consolidated financial
covenants, prepayment privileges (in some cases with penalties), and
restrictions against the incurrence of additional debt and new investments by
the individual subsidiaries without prior lender consent. The amount of
Restricted Payments, as defined, that the Company can make, including dividends
and purchases of its own capital stock, is limited as of December 31, 2000, to
$316.6 million. Certain of the loan agreements require a minimum level of free
cash be maintained. As at December 31, 2000, this amount was $26.0 million.

The aggregate annual
long-term debt principal repayments required to be made for the five fiscal
years subsequent to December 31, 2000 are $72,170,000 (2001), $70,017,000
(2002), $112,131,000 (2003), $94,052,000 (2004), and $109,025,000 (2005).

1. LeasesCharters-outTime
charters to third parties of the Companys vessels are accounted for as
operating leases. The minimum future revenues to be received on time charters
currently in place are $82,791,000 (2001), $71,993,000 (2002), $53,199,000
(2003), $42,634,000 (2004), $39,035,000 (2005), and $93,028,000 thereafter.
The
minimum future revenues should not be construed to reflect total charter hire
revenues for any of the years.Charters-inMinimum
commitments under vessel operating leases are $32,576,000 (2001), $15,632,000
(2002), $11,755,000 (2003), $6,771,000 (2004) and $1,665,000 (2005).
2. 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.

`December 31, 2000                December 31, 1999
                                                     --------------------------------- -------------------------------
                                                        Carrying           Fair           Carrying          Fair
                                                         Amount           Value            Amount          Value
                                                           $                $                $               $
                                                     --------------- ----------------- --------------- ---------------

Cash, cash equivalents and marketable
  securities.........................................      223,123         223,123          226,381        226,381
Long-term debt ......................................      797,484         789,913        1,085,167      1,060,417
Interest rate swap agreements (note 6) ..............         -             (1,297)            -             4,488
Foreign currency contracts (note 10) ................         -              2,252             -               (20)`

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

1. Capital StockThe authorized capital
stock of the Company at December 31, 2000 is 25,000,000 shares of Preferred
Stock with a par value of $1 per share and 725,000,000 shares of Common Stock
with a par value of $0.001 per share. At December 31, 2000 the Company had
39,145,219 shares of Common Stock and no shares of Preferred Stock issued and
outstanding.

The Companys
shareholders approved amendments 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 in September 1998, and 2,350,000 shares in March 2000. As of
December 31, 2000, the Company had reserved 4,911,622 shares of Common Stock for
issuance upon exercise of options granted pursuant to the Plan. During the year
ended December 31, 2000, the nine month period ended December 31, 1999 and the
year ended March 31, 1999, the Company granted options under the Plan to acquire
up to 889,500, 1,463,500, and 573,000 shares of Common Stock (the
Grants), respectively, to certain eligible officers, employees
(including senior sea staff), and directors of the Company. The options have a
10-year term and had initially vested equally over four years from the date of
grant. Effective September 8, 2000, the Company amended the Plan which reduced
the vesting period for all subsequent stock option grants from four years to
three years. In addition, the Company also accelerated the vesting period for
the existing grants by one year. The impact of the accelerated vesting for the
existing grants on compensation expense was not material for the year ended
December 31, 2000.

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

`December 31, 2000          December 31, 1999             March 31, 1999
                                       -------------------------- --------------------------- ---------------------------
                                                                                                           Weighted-
                                       Options   Weighted-Average  Options   Weighted-Average  Options      Average
                                       (000's)   Exercise Price    (000's)   Exercise Price    (000's)   Exercise Price
                                          #             $             #             $             #             $
                                       --------- ---------------- ---------- ---------------- ---------- ----------------
Outstanding-beginning of period          3,099         22.14       1,729       26.46            1,161           26.66
Granted................................    889         23.56       1,464       17.11              573           26.05
Exercised.............................. (1,080)        23.00          -          -                 (2)          21.50
Forfeited..............................    (48)        22.77         (94)      21.12               (3)          30.44
                                       ---------                  ----------                  ----------
Outstanding-end of period..............  2,860         22.25       3,099       22.14            1,729           26.46
                                       =========                  ==========                  ==========
Exercisable at end of period ..........  1,453         23.54       1,019       25.35              731           24.08
                                       =========                  ==========                  ==========
Weighted-average fair value
  of options granted during
  the period (per option) .............                 6.62                    3.88                             5.93`

`Year Ended         Nine Months Ended       Year Ended
                                                         December 31,          December 31,           March 31,
                                                             2000                  1999                 1999
                                                              $                      $                    $
                                                          --------------------- ---------------------- ------------------
Net income (loss):
As reported...............................................   270,020              (19,595)                45,406
Pro forma.................................................   264,449              (21,828)                43,715

Basic earnings (loss) per common share:
As reported...............................................      7.02               (0.54)                   1.46
Pro forma.................................................      6.87               (0.60)                   1.41

Diluted earnings (loss) per common share:
As reported...............................................      6.86               (0.54)                   1.46
Pro forma.................................................      6.72               (0.60)                   1.41`

Basic earnings per share is
based upon the following weighted average number of common shares outstanding:
38,468,158 shares for the year ended December 31, 2000; 36,384,191 shares for
the nine month period ended December 31, 1999; and 31,063,357 shares for the
year ended March 31, 1999. Diluted earnings per share, which gives effect to the
aforementioned stock options, is based upon the following weighted average
number of common shares outstanding: 39,368,253 shares for the year ended
December 31, 2000; 36,405,089 shares for the nine month period ended December
31, 1999; and 31,063,357 shares for the year ended March 31, 1999.

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 6.6% for the year ended December 31, 2000; 5.8% for the nine month
period ended December 31, 1999; and 5.4% for the year ended March 31, 1999,
respectively; dividend yield of 3.0%; expected volatility of 30% for the year
ended December 31, 2000 and 25% for the nine months ended December 31, 1999 and
the year ended March 31, 1999; and expected lives of 5 years.

1. Commitments and Contingencies

The Company has guaranteed
50% of the outstanding mortgage debt in the joint venture company,
Soponata-Teekay Limited, totalling $26.2 million as at December 31, 2000.

The Company has guaranteed
its share of committed, uncalled capital in certain limited partnerships
totalling $1.8 million as at December 31, 2000.

As at December 31, 2000,
the Company was committed to foreign exchange contracts with maturities ranging
from one month to three years for the forward purchase of approximately Japanese
Yen 62.0 million, Singapore Dollars 13.9 million, Norwegian Kroner 132.0
million, Euros 5.9 million and Canadian Dollars 52.8 million for U.S. Dollars,
at an average rate of Japanese Yen 111.72 per U.S. Dollar, Singapore Dollar 1.72
per U.S. dollar, Norwegian Kroner 9.54 per U.S. Dollar, Euros 1.09 per U.S.
Dollar and Canadian Dollars 1.54 per U.S. dollar, respectively, for the purpose
of hedging accounts payable, accrued liabilities and certain general and
administrative and operating expenses.
2. Other Income (Loss)

`Year Ended     Nine Months Ended       Year Ended
                                                                December 31,       December 31,         March 31,
                                                                    2000               1999                1999
                                                                     $                  $                   $
                                                               --------------- --------------------- -----------------
Gain (loss) on disposition of assets..........................      (1,004)                 -                 7,117
Equity income from joint venture .............................       9,546                  721                -
Future income taxes ..........................................        (999)              (1,500)             (1,900)
Miscellaneous.................................................      (3,679)              (3,234)                289
                                                               --------------- --------------------- -----------------
                                                                     3,864               (4,013)              5,506
                                                               =============== ===================== =================`

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

`Year Ended     Nine Months Ended       Year Ended
                                                                December 31,       December 31,         March 31,
                                                                    2000               1999                1999
                                                                     $                  $                   $
                                                               --------------- --------------------- -----------------
Accounts receivable............................................      (49,405)            (5,462)             1,332
Prepaid expenses and other assets..............................        3,443                307             (2,409)
Accounts payable...............................................        2,613             (6,571)            (4,238)
Accrued liabilities............................................        6,673             12,622                598
                                                               --------------- --------------------- -----------------
                                                                     (36,676)               896             (4,717)
                                                               =============== ===================== =================`

1. Subsequent Event

As of March 6, 2001,  the Company had  purchased a 56% interest in Ugland  Nordic  Shipping  ASA (UNS),  (9% of
which was purchased in 2000), for  approximately  $117 million cash, or an average price of  approximately  NOK 134
per share. UNS controls a modern fleet of eighteen  shuttle tankers  (including four  newbuildings)  that engage in
the transportation of oil from offshore  production  platforms to refineries.  Shares of UNS are listed on the Oslo
Stock Exchange.

The Company will promptly  launch a mandatory  bid for the remaining  shares in UNS at NOK 140 per share (for a
total cost of approximately $100 million) as required by Norwegian law.

The  acquisition  of UNS will be  accounted  for using  the  purchase  method  of  accounting  as  required  by
accounting principles generally accepted in the United States.

SCHEDULE A

`Year Ended December 31, 2000
                                          ----------------- -------------- ---------------- --------------- ----------------
                                                             8.32% Notes                                        Teekay
                                               Teekay         Guarantor     Non-Guarantor                   Shipping Corp.
                                           Shipping Corp.   Subsidiaries    Subsidiaries     Eliminations   & Subsidiaries
                                                 $                $               $               $                $
                                          ----------------- -------------- ---------------- --------------- ----------------
Net voyage revenues                                   -          35,137         776,291         (167,159)        644,269
Operating expenses                                  420          25,202         433,578         (142,606)        316,594
                                          ----------------- -------------- ---------------- --------------- ----------------
  (Loss) income from vessel operations             (420)          9,935         342,713          (24,553)        327,675



Net interest (expense) income                   (17,373)             46         (44,192)               -         (61,519)
Equity in net income of subsidiaries            287,127               -               -         (287,127)              -
Other income                                        686               -           3,178                -           3,864
                                          ----------------- -------------- ---------------- --------------- ----------------
Net income                                      270,020           9,981         301,699         (311,680)        270,020
Retained earnings (deficit), beginning
of the year                                     404,130         (28,950)        369,370         (340,420)        404,130
Dividends declared                              (33,001)              -               -                -         (33,001)
                                          ----------------- -------------- ---------------- --------------- ----------------
Retained earnings (deficit),  end of
the year                                        641,149         (18,969)        671,069         (652,100)        641,149
                                          ================= ============== ================ =============== ================


                                                                 Nine Months Ended December 31, 1999
                                           ---------------- -------------- ---------------- --------------- ----------------
                                                             8.32% Notes                                        Teekay
                                               Teekay         Guarantor     Non-Guarantor                   Shipping Corp.
                                           Shipping Corp.   Subsidiaries    Subsidiaries     Eliminations   & Subsidiaries
                                                  $               $               $               $                $
                                           ---------------- -------------- ---------------- --------------- ----------------

Net voyage revenues                                  -           28,589           349,222       (129,461)        248,350
Operating expenses                                 493           24,056           310,304       (110,075)        224,778
                                           ---------------- -------------- ---------------- --------------- ----------------
     (Loss) income from vessel operations         (493)           4,533            38,918        (19,386)         23,572


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

                                                                       Year Ended March 31, 1999

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

Net interest (expense) income                   (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
                                           ================ ============== ================= ============== =================`

__________

(See Note 6)

SCHEDULE A
                                   TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

                                   CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
                                          (in thousands of U.S. dollars)Year Ended December 31, 2000
                                          ----------------- -------------- ---------------- --------------- ----------------
                                                             8.32% Notes                                        Teekay
                                               Teekay         Guarantor     Non-Guarantor                   Shipping Corp.
                                           Shipping Corp.   Subsidiaries    Subsidiaries     Eliminations   & Subsidiaries
                                                 $                $               $               $                $
                                          ----------------- -------------- ---------------- --------------- ----------------
Net income                                      270,020           9,981         301,699         (311,680)        270,020
Other comprehensive income
     Unrealized gain on
     available-for-sale securities                    -               -           4,555                -           4,555
                                          ----------------- -------------- ---------------- --------------- ----------------
Comprehensive income                            270,020           9,981         306,254         (311,680)        274,575
                                          ================= ============== ================ =============== ================
Nine Months Ended December 31, 1999
                                          ----------------- -------------- ---------------- --------------- ----------------
                                                             8.32% Notes                                        Teekay
                                               Teekay         Guarantor     Non-Guarantor                   Shipping Corp.
                                           Shipping Corp.   Subsidiaries    Subsidiaries     Eliminations   & Subsidiaries
                                                 $                $               $               $                $
                                          ----------------- -------------- ---------------- --------------- ----------------
Net (loss) income                               (19,595)          4,620          10,084          (14,704)        (19,595)
Other comprehensive income                            -               -               -                -               -
                                          ----------------- -------------- ---------------- --------------- ----------------
Comprehensive (loss) income                     (19,595)          4,620          10,084          (14,704)        (19,595)
                                          ================= ============== ================ =============== ================
Year Ended March 31, 1999
                                          ----------------- -------------- ---------------- --------------- ----------------
                                                             8.32% Notes                                        Teekay
                                               Teekay         Guarantor     Non-Guarantor                   Shipping Corp.
                                           Shipping Corp.   Subsidiaries    Subsidiaries     Eliminations   & Subsidiaries
                                                 $                $               $               $                $
                                          ----------------- -------------- ---------------- --------------- ----------------
Net income                                       45,406             754         100,375         (101,129)         45,406
Other comprehensive income                            -               -               -                -               -
                                          ----------------- -------------- ---------------- --------------- ----------------
Comprehensive income                             45,406             754         100,375         (101,129)         45,406
                                          ================= ============== ================ =============== ================
__________

(See Note 6)







SCHEDULE A
                                        TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

                                             CONDENSED BALANCE SHEETS
                                          (in thousands of U.S. dollars)As at December 31, 2000
                                         ----------------------------------------------------------------------------------
                                                            8.32% Notes                                        Teekay
                                              Teekay         Guarantor    Non-Guarantor                    Shipping Corp.
                                          Shipping Corp.    Subsidiaries   Subsidiaries     Eliminations   & Subsidiaries
                                                 $               $              $                $                $
                                          ------------------ ------------ ----------------- --------------- ----------------

     ASSETS
Cash and cash equivalents                            294            -           181,006              -           181,300
Other current assets                                  45          725           209,425        (96,000)          114,195
                                         ------------------ ------------ ----------------- --------------- ----------------
     Total current assets                            339          725           390,431        (96,000)          295,495
Vessels and equipment (net)                            -      281,377         1,326,339              -         1,607,716
Advances due from subsidiaries                    58,068            -                 -        (58,068)                -
Other assets (principally marketable
     securities and
     investments in subsidiaries)              1,229,756            -            50,414     (1,229,756)           50,414
Investment in joint venture                            -            -            20,474              -            20,474
                                         ------------------ ------------ ----------------- --------------- ----------------
                                               1,288,163      282,102         1,787,658     (1,383,824)        1,974,099
                                         ================== ============ ================= =============== ================
     LIABILITIES & STOCKHOLDERS'
     EQUITY
Current liabilities                                4,932        1,371           228,032        (96,000)          138,335
Long-term debt                                   189,274            -           543,408              -           732,682
Due to (from) affiliates                               -      (69,630)          193,315       (123,685)                -
                                         ------------------ ------------ ----------------- --------------- ----------------
     Total liabilities                           194,206      (68,259)          964,755       (219,685)          871,017
                                         ------------------ ------------ ----------------- --------------- ----------------
Minority Interest                                      -            -             4,570              -             4,570
Stockholders' Equity
Capital stock                                    452,808           23             5,943         (5,966)          452,808
Contributed capital                                    -      369,307           136,766       (506,073)                -
Retained earnings (deficit)                      641,149      (18,969)          671,069       (652,100)          641,149
Accumulated other comprehensive income                 -            -             4,555              -             4,555
                                         ------------------ ------------ ----------------- --------------- ----------------
     Total stockholders' equity                1,093,957      350,361           818,333     (1,164,139)        1,098,512
                                         ------------------ ------------ ----------------- --------------- ----------------
                                               1,288,163      282,102         1,787,658     (1,383,824)        1,974,099
                                         ================== ============ ================= =============== ================
As at December 31, 1999
                                         ----------------------------------------------------------------------------------
                                                             8.32% Notes                                        Teekay
                                               Teekay         Guarantor     Non-Guarantor                   Shipping Corp.
                                          Shipping Corp.    Subsidiaries   Subsidiaries     Eliminations   & Subsidiaries
                                                 $               $               $               $                $
                                         ------------------ ------------- ---------------- --------------- ----------------
     ASSETS
Cash and cash equivalents                         210             39,652       180,465                           220,327                                                                  -
Other current assets                               42                582       162,084         (102,376)          60,332
                                         ------------------ ------------- ---------------- --------------- ----------------
     Total current assets                         252             40,234       342,549         (102,376)         280,659
Vessels and equipment (net)                         -            294,800     1,368,717                -        1,663,517
Advances due from subsidiaries                121,415                  -             -         (121,415)               -
Other assets (principally marketable
     securities and
     investments in subsidiaries)             943,389                  -        19,111         (943,394)          19,106
Investment in joint venture                         -                  -        19,402                -           19,402
                                         ------------------ ------------- ---------------- --------------- ----------------
                                            1,065,056            335,034     1,749,779       (1,167,185)       1,982,684
                                         ================== ============= ================ =============== ================
     LIABILITIES & STOCKHOLDERS'
     EQUITY
Current liabilities                             7,989                991       227,331         (109,808)         126,503
Long-term debt                                225,000                  -       797,010                -        1,022,010
Due to (from) affiliates                            -             (6,337)      211,255         (204,918)               -
                                         ------------------ ------------- ---------------- --------------- ----------------
     Total liabilities                        232,989             (5,346)    1,235,596         (314,726)       1,148,513
                                         ------------------ ------------- ---------------- --------------- ----------------
Minority Interest                                   -                  -         2,104                -            2,104
Stockholders' Equity
Capital stock                                 427,937                 23         5,943           (5,966)         427,937
Contributed capital                                 -            369,307       136,766         (506,073)               -
Retained earnings (deficit)                   404,130            (28,950)      369,370         (340,420)         404,130
Accumulated other comprehensive income              -                  -             -                -                -
                                         ------------------ ------------- ---------------- --------------- ----------------
     Total stockholders' equity               832,067            340,380       512,079         (852,459)         832,067
                                         ------------------ ------------- ---------------- --------------- ----------------
                                            1,065,056            335,034     1,749,779         (1,167,185)     1,982,684
                                         ================== ============= ================ =============== ================
 ______________
 (See Note 6)


SCHEDULE A
                                   TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

                                        CONDENSED STATEMENTS OF CASH FLOWS
                                          (in thousands of U.S. dollars)Year Ended December 31, 2000
                                                 --------------------------------------------------------------------------------
                                                                 8.32% Notes                                         Teekay
                                                     Teekay       Guarantor     Non-Guarantor                    Shipping Corp.
                                                 Shipping Corp.  Subsidiaries    Subsidiaries    Eliminations   & Subsidiaries
                                                       $              $               $                $               $
                                                 --------------- ------------- ----------------- -------------- -----------------
Cash and cash equivalents provided by (used for)
OPERATING ACTIVITIES
                                                 --------------- ------------- ----------------- -------------- -----------------
     Net cash flow from operating activities           (19,407)      25,048          327,614                          333,255
                                                 --------------- ------------- ----------------- -------------- -----------------

FINANCING ACTIVITIES
Proceeds from long-term debt                                 -            -          206,000                          206,000
Repayments of long-term debt                                 -            -          (63,757)                         (63,757)
Prepayments of long-term debt                          (35,726)           -         (394,200)                        (429,926)
Other                                                   55,217      (63,293)           2,916                           (5,160)
                                                 --------------- ------------- ----------------- -------------- -----------------
     Net cash flow from financing activities            19,491      (63,293)        (249,041)                        (292,843)
                                                 --------------- ------------- ----------------- -------------- -----------------

INVESTING ACTIVITIES
Expenditures for vessels and equipment                       -       (1,407)         (54,046)                         (55,453)
Proceeds from disposition of assets                          -            -            9,713                            9,713
Acquisition costs related to purchase of  Bona
Shipholding Ltd.                                             -            -           (2,685)                          (2,685)
Other                                                        -            -          (31,014)                         (31,014)
                                                 --------------- ------------- ----------------- -------------- -----------------
     Net cash flow from investing activities                 -       (1,407)         (78,032)                         (79,439)
                                                 --------------- ------------- ----------------- -------------- -----------------
Increase (decrease) in cash and cash equivalents            84      (39,652)             541                          (39,027)
Cash and cash equivalents, beginning of the
year                                                       210       39,652          180,465                          220,327
                                                 --------------- ------------- ----------------- -------------- -----------------
Cash and cash equivalents, end of the year                 294            -          181,006                          181,300
                                                 =============== ============= ================= ============== =================
Nine Months Ended December 31, 1999
                                                 --------------------------------------------------------------------------------
                                                                 8.32% Notes                                         Teekay
                                                     Teekay       Guarantor     Non-Guarantor                    Shipping Corp.
                                                 Shipping Corp.  Subsidiaries    Subsidiaries    Eliminations   & Subsidiaries
                                                       $              $               $                $               $
                                                 --------------- ------------- ----------------- -------------- -----------------
Cash and cash equivalents provided by (used for)
OPERATING ACTIVITIES
                                                 --------------- ------------- ----------------- -------------- -----------------
     Net cash flow from operating activities           (9,844)        16,674          44,683                           51,513
                                                 --------------- ------------- ----------------- -------------- -----------------

FINANCING ACTIVITIES
Proceeds from long-term debt                                -              -         100,000                          100,000
Prepayments of long-term debt                               -              -         (10,000)                         (10,000)
Repayments of long-term debt                                -              -         (32,252)                         (32,252)
Other                                                  49,933        (10,327)        (62,756)                         (23,150)
                                                 --------------- ------------- ----------------- -------------- -----------------
     Net cash flow from financing activities           49,933        (10,327)         (5,008)                          34,598
                                                 --------------- ------------- ----------------- -------------- -----------------

INVESTING ACTIVITIES
Expenditures for vessels and equipment                      -             (8)        (29,903)                         (29,911)
Net cash flow from purchase of Bona
Shipholding Ltd.
      (net of cash acquired of $91,658)               (39,884)             -               -                          (39,884)
Other                                                       -              -          85,576                           85,576
                                                 --------------- ------------- ----------------- -------------- -----------------
     Net cash flow from investing activities          (39,884)            (8)         55,673                           15,781
                                                 --------------- ------------- ----------------- -------------- -----------------
Increase (decrease) in cash and cash
equivalents                                               205          6,339          95,348                          101,892
Cash and cash equivalents, beginning of the
period                                                      5         33,313          85,117                          118,435
                                                 --------------- ------------- ----------------- -------------- -----------------
Cash and cash equivalents, end of the period              210         39,652         180,465                          220,327
                                                 =============== ============= ================= ============== =================
Year Ended March 31, 1999
                                                ---------------------------------------------------------------------------------
                                                                 8.32% Notes                                         Teekay
                                                    Teekay        Guarantor     Non-Guarantor                    Shipping Corp.
                                                Shipping Corp.   Subsidiaries    Subsidiaries    Eliminations   & Subsidiaries
                                                       $              $               $                $               $
                                                ---------------- ------------- ----------------- -------------- -----------------
Cash and cash equivalents provided by (used for)
OPERATING ACTIVITIES
                                                ---------------- ------------- ----------------- -------------- -----------------
     Net cash flow from operating activities        (24,829)          21,261        141,276                          137,708
                                                ---------------- ------------- ----------------- -------------- -----------------

FINANCING ACTIVITIES
Proceeds from long-term debt                              -             -           230,000                          230,000
Prepayments of long-term debt                      (108,034)            -          (160,000)                        (268,034)
Repayments of long-term debt                        (20,645)            -           (29,932)                         (50,577)
Net proceeds from issuance of Common Stock           68,751             -              -                              68,751
Other                                                84,740            3,252       (114,904)                         (26,912)
                                                ---------------- ------------- ----------------- -------------- -----------------
     Net cash flow from financing activities         24,812            3,252        (74,836)                         (46,772)
                                                ---------------- ------------- ----------------- -------------- -----------------
INVESTING ACTIVITIES
Expenditures for vessels and equipment                    -           (1,887)       (95,307)                         (97,194)
Other                                                     -             -            36,740                           36,740
                                                ---------------- ------------- ----------------- -------------- -----------------
     Net cash flow from investing activities              -           (1,887)       (58,567)                         (60,454)
                                                ---------------- ------------- ----------------- -------------- -----------------
Increase (decrease) in cash and cash
equivalents                                             (17)          22,626          7,873                           30,482
Cash and cash equivalents, beginning of the
year                                                     22           10,687         77,244                           87,953
                                                ---------------- ------------- ----------------- -------------- -----------------
Cash and cash equivalents, end of  the year               5           33,313         85,117                          118,435
                                                ================ ============= ================= ============== =================
__________

 (See Note 6)