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<SEC-DOCUMENT>0000911971-02-000016.txt : 20021114
<SEC-HEADER>0000911971-02-000016.hdr.sgml : 20021114
<ACCEPTANCE-DATETIME>20021114144745
ACCESSION NUMBER:		0000911971-02-000016
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20020930
FILED AS OF DATE:		20021114

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			TEEKAY SHIPPING CORP
		CENTRAL INDEX KEY:			0000911971
		STANDARD INDUSTRIAL CLASSIFICATION:	DEEP SEA FOREIGN TRANSPORTATION OF FREIGHT [4412]
		IRS NUMBER:				000000000
		STATE OF INCORPORATION:			C5
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		6-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-12874
		FILM NUMBER:		02824498

	BUSINESS ADDRESS:	
		STREET 1:		TK HOUSE, BAYSIDE EXECUTIVE PARK
		STREET 2:		WEST BAY ST & BLAKE RD, PO BOX AP-59213
		CITY:			NASSAU BAHAMAS
		STATE:			C5
		ZIP:			00000
		BUSINESS PHONE:		8093228020

	MAIL ADDRESS:	
		STREET 1:		1 BENTALL CENTRE,STE 1400,505 BURRARD ST
		STREET 2:		VANCOUVER, BRITISH COLUMBIA
		CITY:			CANADA V7X 1M5
		STATE:			A6
		ZIP:			00000

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	VIKING STAR SHIPPING INC
		DATE OF NAME CHANGE:	19930914
</SEC-HEADER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>form6k_093002.htm
<DESCRIPTION>FORM 6-K 09/30/02
<TEXT>
<HTML>
<HEAD>
<TITLE>TEEKAY SHIPPING CORPORATION</TITLE>
</HEAD>
<BODY>
<H1 ALIGN=CENTER>
<FONT FACE="Times New Roman, Times, Serif" SIZE=5>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</FONT></H1>

<H1 ALIGN=CENTER>
<FONT FACE="Times New Roman, Times, Serif" SIZE=3><u><B>WASHINGTON, D.C. 20549</B></u>
</FONT>
</H1>

<BR>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=4>FORM 6-K</FONT></H1>

<P ALIGN=CENTER>Report of Foreign Private Issuer</P>
<P ALIGN=CENTER>Pursuant to Rule 13a-16 or 15d-16 of<BR>
the Securities Exchange Act of 1934</P>

<hr width=15% size=1 noshade>

                                   <P ALIGN=CENTER>For the quarterly period ended <u>September 30, 2002</u><BR>
<BR>
                                            <FONT SIZE=4><B>TEEKAY SHIPPING CORPORATION</B></FONT><BR>
                              (Exact name of Registrant as specified in its charter)<BR>
<BR>
                                                     TK House<BR>
                                              Bayside Executive Park<BR>
                                           West Bay Street &amp; Blake Road<BR>
                                        P.O. Box AP-59213, Nassau, Bahamas<BR>
                                      (Address of principal executive office)<BR></P>

<hr width=15% size=1 noshade>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.]</P>

<P ALIGN=CENTER>Form 20-F&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;X&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Form 40- F&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Indicate by check mark whether the registrant by furnishing the information contained in this Form is
also thereby furnishing the information to the Commission pursuant to Rule
12g3-2(b) under the Securities Exchange Act of 1934.]</P>

<P ALIGN=CENTER>Yes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;X&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule
12g3-2(b):82-<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>]</P>
<BR>
<BR>
<BR>
<BR>
<BR>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES</FONT></H1>

<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
REPORT ON FORM 6-K FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002</FONT></H1>


<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<U>INDEX</U></FONT></H1>

<PRE>
PART I:  FINANCIAL INFORMATION                                                                                <u>PAGE</u>

Item 1.  Financial Statements

                Independent Accountant's Report........................................................         3

                Consolidated Statements of Income
                       for the three months and nine months ended September 30, 2002 and 2001.........          4

                Consolidated Balance Sheets
                       September 30, 2002 and December 31, 2001........................................         5

                Consolidated Statements of Cash Flows
                       for the nine months ended September 30, 2002 and 2001...........................         6

                Notes to Consolidated Financial Statements.............................................         7

                Schedule A to the Consolidated Financial Statements....................................        11


Item 2.  Management's Discussion and Analysis of Financial Condition
                  and Results of Operations............................................................        15

Item 3.  Quantitative and Qualitative Disclosures about Market Risk....................................        19

PART II: OTHER INFORMATION.............................................................................        20

SIGNATURES.............................................................................................        21
</PRE>
<BR>
<BR>
<BR>
<BR>
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3><b>
INDEPENDENT ACCOUNTANT&#146;S REVIEW REPORT ON INTERIM<BR>
FINANCIAL STATEMENTS</b></font></p>
<BR><BR>
<p>To the Shareholders and Board of Directors of<BR>
<b>Teekay Shipping Corporation</b></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>We have reviewed the  accompanying  consolidated  balance sheet of Teekay Shipping  Corporation and subsidiaries as
of September 30, 2002,  the related  consolidated  statements of income for the three and  nine-month  periods ended
September 30, 2002 and 2001,  and the  consolidated  statements of cash flows for the  nine-month  periods ended September 30, 2002
and 2001. Our review also included  Schedule A listed in Index Item 1. These financial  statements and schedule are
the responsibility of the Company&#146;s management.</font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>We were  furnished  with the report of other  accountants  on their  review of the  interim  information  of Ugland
Nordic  Shipping AS, a wholly-owned  subsidiary,  for the three months ended September 30, 2001 and the period from
acquisition  March 9, 2001 to September 30, 2001 whose net voyage  revenues for the period from  acquisition  March
9, 2001 to September 30, 2001  constituted 14 percent and 9 percent,  respectively,  of the consolidated net voyage
revenues.</font></P>

<p><FONT FACE="Times New Roman, Times, Serif" SIZE=3>We conducted our reviews in accordance  with standards  established by the American  Institute of Certified  Public
Accountants.  A review of interim financial  information consists principally of applying analytical  procedures to
financial  data,  and making  inquiries  of  persons  responsible  for  financial  and  accounting  matters.  It is
substantially  less in scope than an audit conducted in accordance with auditing  standards  generally  accepted in
the  United  States,  which  will be  performed  for the full year with the  objective  of  expressing  an  opinion
regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.</font></p>

<p><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Based on our reviews  and the report of other  accountants,  we are not aware of any  material  modifications  that
should be made to the accompanying  consolidated  financial  statements and schedule  referred to above for them to
be in conformity with accounting principles generally accepted in the United States.</font></p>

<p><FONT FACE="Times New Roman, Times, Serif" SIZE=3>We have previously  audited,  in accordance with auditing  standards  generally  accepted in the United States, the
consolidated  balance  sheet of Teekay  Shipping  Corporation  and  subsidiaries  as of December 31, 2001,  and the
related  consolidated  statements  of  income,  changes  in  stockholders&#146;  equity and cash flows for the year then
ended,  not presented  herein,  and in our report dated  February 8, 2002, we expressed an  unqualified  opinion on
those consolidated  financial statements.  We did not audit the financial statements of Ugland Nordic Shipping AS,
a wholly owned subsidiary,  which statements reflect total assets and net voyage revenues  constituting 21 per cent
and 10 per cent,  respectively of the related  consolidated totals. Those statements were audited by other auditors
whose report has been  furnished to us, and our opinion,  insofar as it relates to the amounts  included for Ugland
Nordic  Shipping ASA, is based solely on the report of other  auditors.  In our opinion,  the information set forth
in the accompanying  consolidated  balance sheet and related schedule as of December 31, 2001, is fairly stated, in
all  material  respects,  in relation to the  consolidated  balance  sheet and  schedule  from which they have been
derived.</font></p>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR>
        <TD WIDTH=45%>Vancouver, Canada,<BR>
        October 25, 2002</TD>
        <TD WIDTH=55%>/s/ ERNST &amp; YOUNG LLP<BR>
        Chartered Accountants</TD>
</TR>
</TABLE>

<BR>
<BR>
<BR>
<BR>
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3><b>
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES<BR>
<BR>
CONSOLIDATED STATEMENTS OF INCOME<BR>
(in thousands of U.S. dollars, except per share amounts)<BR>
</b></font></P><BR>
<BR>
<BR>
<PRE>
<B>                                                    Three Months Ended September 30,     Nine Months Ended September 30,
                                                         2002               2001             2002               2001
                                                           $                 $                 $                  $
                                                   ================== ================= ================ ==================
                                                               (unaudited)                         (unaudited)
NET VOYAGE REVENUES</B>
Voyage revenues                                          184,927          241,976             560,492          825,910
Voyage expenses                                           62,166           63,680             171,764          188,637
- -------------------------------------------------- ------------------ ----------------- ---------------- ------------------

Net voyage revenues                                      122,761          178,296             388,728          637,273
- -------------------------------------------------- ------------------ ----------------- ---------------- ------------------

<B>OPERATING EXPENSES</B>
Vessel operating expenses                                 44,365           40,251             127,415          113,404
Time-charter hire expense                                 11,430           17,948              37,640           51,477
Depreciation and amortization                             37,295           35,852             110,136           99,473
General and administrative                                14,330           12,973              42,824           35,572
- -------------------------------------------------- ------------------ ----------------- ---------------- ------------------
                                                         107,420          107,024             318,015          299,926
- -------------------------------------------------- ------------------ ----------------- ---------------- ------------------

<B>Income from vessel operations</B>                             15,341           71,272              70,713          337,347
- -------------------------------------------------- ------------------ ----------------- ---------------- ------------------

<B>OTHER ITEMS</B>
Interest expense                                         (14,675)         (18,078)            (43,854)         (50,944)
Interest income                                              898            2,215               2,691            7,867
Other (loss) income <I>(note 8)</I>                                (921)           8,983              (9,265)          11,051
- -------------------------------------------------- ------------------ ----------------- ---------------- ------------------
                                                         (14,698)          (6,880)            (50,428)         (32,026)
- -------------------------------------------------- ------------------ ----------------- ---------------- ------------------

<B>Net income</B>                                                   643           64,392              20,285          305,321
================================================== ================== ================= ================ ==================

<B>Earnings per common share</B>
     - Basic                                                0.02              1.61               0.51             7.69
     - Diluted                                              0.02              1.58               0.50             7.53
<B>Weighted average number of common shares</B>
     - Basic                                          39,667,088        40,047,343         39,618,246       39,697,974
     - Diluted                                        40,229,966        40,831,071         40,259,815       40,569,756
================================================== ================== ================= ================ ==================
</PRE><p><font size=2><i>The accompanying notes are an integral part of the consolidated financial statements.</i></font></p>
<BR>
<BR>
<BR>
<BR>
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3><b>
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES<BR>
<BR>
CONSOLIDATED BALANCE SHEETS<BR>
(in thousands of U.S. dollars)<BR></b>
</font></P>
<BR>
<PRE>
<B>
                                                                                        As at            As at
                                                                                    September 30,     December 31,
                                                                                        2002              2001
                                                                                          $                $
                                                                                   ---------------- -----------------
                                                                                     (unaudited)
     ASSETS</B>
     <B>Current</B>
     Cash and cash equivalents <I>(note 5)</I>                                                   161,505          174,950
     Marketable securities                                                                      -            5,028
     Restricted cash                                                                        3,141            7,833
     Accounts receivable                                                                   60,623           57,519
     Advances to joint venture partner <I>(note 11)</I>                                           26,000                -
     Prepaid expenses and other assets                                                     25,953           22,139
     ----------------------------------------------------------------------------- ---------------- -----------------

     <B>Total current assets</B>                                                                 277,222          267,469
     ----------------------------------------------------------------------------- ---------------- -----------------
     Marketable securities &#150; non-current                                                   10,729           16,026

     <B>Vessels and equipment</B> <I>(note 5)</I>
     At cost, less accumulated depreciation of $903,311
         (December 31, 2001 -  $801,985)                                                1,902,493        1,925,844
     Advances on newbuilding contracts <I>(note 7)</I>                                           152,160          117,254
     ============================================================================= ================ =================

     <B>Total vessels and equipment</B>                                                        2,054,653        2,043,098
     ----------------------------------------------------------------------------- ---------------- -----------------
     Restricted cash &#150; non-current <I>(note 5)</I>                                                 4,605                -
     Investment in joint ventures                                                          55,222           27,352
     Other assets                                                                          26,213           26,757
     Goodwill <I>(note 4)</I>                                                                     89,189           87,079
     ----------------------------------------------------------------------------- ---------------- -----------------
                                                                                        2,517,833        2,467,781
     ============================================================================= ================ =================


     <B>LIABILITIES AND STOCKHOLDERS' EQUITY
     Current</B>
     Accounts payable                                                                      20,567           24,484
     Accrued liabilities                                                                   65,937           51,011
     Current portion of long-term debt <I>(note 5)</I>                                            55,165           51,830
     ----------------------------------------------------------------------------- ---------------- -----------------

     <B>Total current liabilities</B>                                                            141,669          127,325
     ----------------------------------------------------------------------------- ---------------- -----------------
     Long-term debt <I>(note 5)</I>                                                              916,575          883,872
     Other long-term liabilities                                                           45,298           39,407
     ----------------------------------------------------------------------------- ---------------- -----------------

     <B>Total liabilities</B>                                                                  1,103,542        1,050,604
     ----------------------------------------------------------------------------- ---------------- -----------------

     <B>Minority interest</B>                                                                     20,042           18,977

     <B>Stockholders' equity</B>
     Capital stock <I>(note 6)</I>                                                               470,299          467,341
     Retained earnings                                                                    929,426          935,660
     Accumulated other comprehensive loss                                                  (5,476)          (4,801)
     ----------------------------------------------------------------------------- ---------------- -----------------

     <B>Total stockholders' equity</B>                                                         1,394,249        1,398,200
     ----------------------------------------------------------------------------- ---------------- -----------------

                                                                                        2,517,833        2,467,781
     ============================================================================= ================ =================
</PRE><p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commitments and contingencies (note 7)</font></p>
<p><font size=2><i>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accompanying notes are an integral part of the consolidated financial statements.</i></font></p>
<BR>
<BR>
<BR>
<BR>
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3><b>
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES<BR>
<BR>
CONSOLIDATED STATEMENTS OF CASH FLOWS<BR>
(in thousands of U.S. dollars)<BR></b>
</font></P>
<BR>
<PRE>
<B>                                                                                  Nine Months Ended September 30,
                                                                                    2002                    2001
                                                                                     $                       $</B>
                                                                           ======================= =======================
                                                                                            <B>(unaudited)</B>
Cash and cash equivalents provided by (used for)

<B>OPERATING ACTIVITIES</B>
Net income                                                                          20,285                 305,321
Non-cash items:
     Depreciation and amortization                                                 110,136                  99,473
     Loss (gain) on disposition of available-for-sale securities                     1,130                  (1,944)
     Equity income (net of dividends received:
        September 30, 2002 &#150; $1,748;                                                (1,304)                 17,222
        September 30, 2001 - $33,514)
     Future income taxes                                                             9,701                   6,813
     Other &#150; net                                                                     1,229                  (2,515)
Change in non-cash working capital items related to
   operating activities                                                             (4,010)                  3,712
- -------------------------------------------------------------------------- ----------------------- -----------------------

<B>Net cash flow from operating activities</B>                                            137,167                 428,082
- -------------------------------------------------------------------------- ----------------------- -----------------------

<B>FINANCING ACTIVITIES</B>
Proceeds from long-term debt                                                        78,890                 528,327
Scheduled repayments of long-term debt                                             (34,676)                (53,628)
Prepayments of long-term debt                                                       (8,000)               (596,641)
Decrease in restricted cash                                                             87                       -
Proceeds from issuance of Common Stock                                               3,532                  20,535
Repurchase of Common Stock                                                          (1,546)                 (2,769)
Cash dividends paid                                                                (25,547)                (25,503)
- -------------------------------------------------------------------------- ----------------------- -----------------------

<B>Net cash flow from financing activities</B>                                             12,740                (129,679)
- -------------------------------------------------------------------------- ----------------------- -----------------------

<B>INVESTING ACTIVITIES</B>
Expenditures for vessels and equipment                                             (93,115)               (167,071)
Expenditures for drydocking                                                        (23,027)                (14,450)
Expenditure for purchase of Ugland Nordic Shipping AS (net of cash
    acquired of $26,605)                                                                 -                (176,453)
Acquisition costs related to purchase of Ugland Nordic Shipping AS                       -                  (4,538)
Investment in joint venture and advance to joint venture partner                   (52,000)                      -
Proceeds from disposition of available-for-sale securities                           6,675                  16,618
Other                                                                               (1,885)                    (20)
- -------------------------------------------------------------------------- ----------------------- -----------------------

<B>Net cash flow from investing activities</B>                                           (163,352)               (345,914)
- -------------------------------------------------------------------------- ----------------------- -----------------------

<B>Decrease in cash and cash equivalents</B>                                              (13,445)                (47,511)
Cash and cash equivalents, beginning of the period                                 174,950                 181,300
- -------------------------------------------------------------------------- ----------------------- -----------------------

<B>Cash and cash equivalents, end of the period</B>                                       161,505                 133,789
========================================================================== ======================= =======================
</PRE><p><font size=2><i>The accompanying notes are an integral part of the consolidated financial statements.</i></font></p>
<BR>
<BR>
<BR>
<BR>
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
                                    <b>TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES<BR>
<BR>
                                   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS<BR>
                    (all tabular amounts stated in thousands of U.S. dollars, except share data)<BR>
                      (Information as at September 30, 2002 and for the Three and Nine-Month Periods<BR>
                                     Ended September 30, 2002 and 2001 is unaudited)</b></font></P>
<BR>
<BR>
<P><b>1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basis of Presentation</b></P>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>The accompanying  unaudited  interim  consolidated  financial  statements have been prepared in accordance
         with accounting  principles  generally  accepted in the United States and the rules and regulations of the
         Securities  and  Exchange   Commission.   They  include  the  accounts  of  Teekay  Shipping   Corporation
         (&#147;Teekay&#148;),  which is incorporated under the laws of the Republic of the Marshall Islands,  and its wholly
         owned  or  controlled   subsidiaries  (the &#147;Company&#148;).   Certain  information  and  footnote  disclosures
         required by generally accepted  accounting  principles for complete annual financial  statements have been
         omitted and,  therefore,  it is suggested that these interim  financial  statements be read in conjunction
         with the Company&#146;s  audited  financial  statements for the year ended December 31, 2001. In the opinion of
         management,  these statements  reflect all adjustments  (consisting  only of normal  recurring  accruals),
         necessary to present fairly, in all material  respects,  the Company&#146;s  consolidated  financial  position,
         results of operations,  and cash flows for the interim  periods  presented.  The results of operations for
         the three and nine-month  periods ended September 30, 2002 are not  necessarily  indicative of those for a
         full fiscal year.</P>
</TD>
</TR>
</TABLE>
<BR>
<P><b>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisition of Ugland Nordic Shipping AS</b></P>

         <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>As of May 28,  2001,  Teekay had  purchased  100% of the issued and  outstanding  shares of Ugland  Nordic
         Shipping  AS  (&#147;UNS&#148;)  (9% of which  was  purchased  in  fiscal  2000 and the  remaining  91% of which was
         purchased  in fiscal  2001),  for  $222.8  million  cash,  including  estimated  transaction  expenses  of
         approximately  $7  million.   UNS  controls  a  modern  fleet  of  18  shuttle  tankers  (including  three
         newbuildings  on order) that engage in the  transportation  of oil from offshore  production  platforms to
         onshore storage and refinery facilities.</P>
</TD>
</TR>
</TABLE>
<BR>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%>
<p>
         The  acquisition  of UNS has been  accounted  for using the  purchase  method of  accounting,  based  upon
         estimates of fair value.  The  operating  results of UNS are  reflected in Teekay&#146;s  financial  statements
         commencing March 6, 2001, the date Teekay acquired a majority  interest in UNS.  Teekay&#146;s  interest in UNS
         for the  period  from  January  1,  2001 to March 5,  2001 has been  included  in  equity  income  for the
         corresponding period.</p>

</TD>
</TR>
</TABLE>
<BR>
<P><b>3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash Flows</b></P>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>
         Cash  interest  paid  during  the  nine-month   periods  ended   September  30,  2002  and  2001  totaled
         approximately $59.6 million and $50.4 million, respectively.
</TD>
</TR>
</TABLE>
<BR>
<P><b>4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Goodwill</b></P>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>
         In July 2001,  the FASB  issued  Statement  of  Financial  Accounting  Standards  No.  142  (&#147;SFAS  142&#148;),
         &#147;Goodwill and Other Intangible  Assets&#148;,  which  establishes new standards for accounting for goodwill and
         other  intangible  assets.  SFAS 142 requires  that goodwill and  indefinite  lived  intangible  assets no
         longer be  amortized  but  reviewed  for  impairment  during  the first  six  months of 2002 and  annually
         thereafter,  or more frequently if impairment  indicators  arise. This statement is effective for existing
         goodwill  beginning  with fiscal years  starting  after  December 15, 2001.  During the  six-month  period
         ended June 30, 2002, the Company  completed its transitional  impairment  testing required by SFAS 142 and
         has determined that goodwill is not impaired.  Based upon the Company&#145;s  goodwill  balance at December 31,
         2001, the Company  estimates that adoption of SFAS 142 will result in an annual  increase in net income of
         approximately  $4.5 million,  by no longer amortizing  goodwill.  Had goodwill not been amortized prior to
         2002,  net income would have been $65.5  million or $1.64 per share ($1.60 per share - diluted) and $307.7
         million  or $7.75 per share  ($7.58  per share -  diluted)  for the  three and  nine-month  periods  ended
         September 30, 2001.</P>
</TD>
</TR>
</TABLE>
<BR>
<BR>
<BR>
<BR>
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b>                                    TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES<BR>
<BR>
                                   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS<BR>
                    (all tabular amounts stated in thousands of U.S. dollars, except share data)<BR>
                      (Information as at September 30, 2002 and for the Three and Nine-Month Periods<BR>
                                     Ended September 30, 2002 and 2001 is unaudited)</b></font></P>
<BR>
<P><b>5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long-Term Debt</b></P>
<BR>
<PRE>                                                                                <B>September 30,       December 31,
                                                                                    2002                2001
                                                                                      $                   $</B>
                                                                             -------------------- ------------------
         Revolving Credit Facilities.........................................       50,000                    -
         First Preferred Ship Mortgage Notes (8.32%) due through 2008........      167,229              167,229
         Term Loans due through 2010 ........................................      402,453              416,239
         Senior Notes (8.875%) due July 15, 2011 ............................      352,058              352,234
                                                                             -------------------- ------------------
                                                                                   971,740              935,702
         Less current portion................................................       55,165               51,830
                                                                             -------------------- ------------------
                                                                                   916,575              883,872
                                                                             ==================== ==================
</PRE>
<BR>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>
         The Company has two long-term  Revolving  Credit  Facilities  (the  &#147;Revolvers&#148;)  available,  which, as at
         September  30,  2002,  provided  for  borrowings  of up to $469.4  million,  of which  $419.4  million was
         undrawn.  The Revolvers are  collateralized  by first  priority  mortgages  granted on 33 of the Company&#146;s
         vessels,  together  with certain  other related  collateral,  and a guarantee  from Teekay for all amounts
         outstanding under the Revolvers.</P>
</TD>
</TR>
</TABLE>
<BR>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>
         The  8.32%  First   Preferred   Ship  Mortgage  Notes  due  February  1,  2008  (the  &#147;8.32%  Notes&#148;)  are
         collateralized  by first  preferred  mortgages on seven of the Company&#146;s  Aframax  tankers,  together with
         certain  other  related  collateral,  and are  guaranteed  by seven  subsidiaries  of Teekay  that own the
         mortgaged  vessels (the &#147;8.32%  Notes  Guarantor  Subsidiaries&#148;)  to a maximum of 95% of the fair value of
         their net  assets.  As at  September  30,  2002,  the fair value of these net assets  approximated  $157.0
         million.  The 8.32% Notes are also subject to a sinking fund,  which will retire $45.0  million  principal
         amount of the 8.32% Notes on each February 1, commencing 2004.</P>
</TD>
</TR>
</TABLE>
<BR>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>
         Condensed  financial   information  regarding  Teekay,  the  8.32%  Notes  Guarantor   Subsidiaries,   and
         non-guarantor  subsidiaries  of  Teekay  is  set  out  in  Schedule  A  of  these  consolidated  financial
         statements.</P>
</TD>
</TR>
</TABLE>
<BR>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>
         The  Company has several  term loans  outstanding,  which,  as at  September  30,  2002,  totaled  $402.5
         million.  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.  All term loans,  other than UNS term
         loans totaling $309.4  million,  are guaranteed by Teekay.  One term loan required a retention  deposit of
         $4.6 million as at September 30, 2002.</P>
</TD>
</TR>
</TABLE>
<BR>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>
         Pursuant to certain long-term debt agreements,  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
         September 30, 2002, to $433.1 million.  Certain loan agreements  require that a minimum level of free cash
         be maintained. As at September 30, 2002, this amount was $75.0 million.</P>
</TD>
</TR>
</TABLE>
<BR>
<P><b>6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capital Stock</b></P>
<BR>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>
         The  authorized  capital stock of Teekay at September 30, 2002 was 25,000,000  shares of Preferred  Stock,
         with a par value of $1 per share, and 725,000,000  shares of Common Stock,  with a par value of $0.001 per
         share. As at September 30, 2002,  Teekay had 39,659,460  shares of Common Stock and no shares of Preferred
         Stock issued and outstanding.</P>
</TD>
</TR>
</TABLE>
<BR>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>
         As at September 30, 2002,  3,836,043  shares of Common Stock were reserved and available for issuance upon
         exercise of options  granted or to be granted  pursuant to its 1995 Stock Option Plan. As at September 30,
         2002,  options to purchase a total of  3,535,539  shares of  Teekay&#146;s  Common  Stock were  outstanding,  of
         which  1,676,063  options were then  exercisable at prices ranging from $16.875 to $41.190 per share and a
         weighted  average  exercise price of $25.374 per share.  The remaining  outstanding  options have exercise
         prices  ranging from  $16.875 to $41.190 per share and a weighted  average  exercise  price of $31.367 per
         share.  All outstanding  options expire between July 19, 2005 and March 11, 2012, ten years after the date
         of each respective grant.</P>
</TD>
</TR>
</TABLE>
<BR>
<BR>
<BR>
<BR>
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b>                                    TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES<BR>
<BR>
                                   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS<BR>
                    (all tabular amounts stated in thousands of U.S. dollars, except share data)<BR>
                      (Information as at September 30, 2002 and for the Three and Nine-Month Periods<BR>
                                     Ended September 30, 2002 and 2001 is unaudited)</b></font></P>
<BR>
<P><b>7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commitments and Contingencies</b></P>
<BR>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>
         As at September 30, 2002, the Company was committed to the  construction  of three shuttle,  three Suezmax
         and six Aframax  tankers  scheduled for delivery  between  December 2002 and October 2004, at a total cost
         of  approximately  $545.1 million,  excluding  capitalized  interest.  As of September 30, 2002,  payments
         made towards these  commitments  totaled $141.8  million and long-term  financing  arrangements  exist for
         $32.6  million  of the  unpaid  cost of these  vessels.  It is the  Company&#146;s  intention  to  finance  the
         remaining  unpaid amount of $370.7 million  through  either debt borrowing or surplus cash balances,  or a
         combination  thereof.  As of September 30, 2002,  the remaining  payments  required to be made under these
         newbuilding  contracts are as follows:  $41.8 million in 2002,  $234.6  million in 2003 and $126.9 million
         in 2004.  With the  exception  of the four Aframax  tankers  scheduled  for  delivery in 2004,  all of the
         vessels will be subject to long-term  charter  contracts upon  delivery.  These charter  contracts  expire
         between 2009 and 2015.</P>
</TD>
</TR>
</TABLE>
<BR>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>
         Teekay and certain  subsidiaries  of Teekay have guaranteed  their share of the outstanding  mortgage debt
         in three 50%-owned joint venture  companies.  As of September 30, 2002, Teekay and these subsidiaries have
         guaranteed  $84.4 million of such debt, or 50% of the total $168.8  million in  outstanding  mortgage debt
         of the joint venture companies. These joint venture companies own three shuttle tankers.</P>
</TD>
</TR>
</TABLE>
<BR>
<P><b>8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other (Loss) Income</b></P>
<BR>
<PRE>
                                                                        <B>Three Months Ended         Nine Months Ended
                                                                      September     September    September    September
                                                                         30,           30,          30,          30,
                                                                         2002         2001         2002         2001
                                                                          $             $            $            $</B>
                                                                     ------------- ------------ ------------ ------------
         (Loss) gain on disposition of available-for-sale
                securities...........................................         -             -      (1,130)       1,944
         Equity income from joint ventures...........................       765        10,898       3,052       16,292
         Future income taxes.........................................    (2,710)       (3,723)     (9,701)      (6,813)
         Miscellaneous...............................................     1,024         1,808      (1,486)        (372)
                                                                     ------------- ------------ ------------ ------------
                                                                           (921)        8,983      (9,265)      11,051
                                                                     ============= ============ ============ ============
</PRE>
<BR>

<P><b>9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Comprehensive Income</b></P>
<BR>
<PRE>
                                                                        <B>Three Months Ended         Nine Months Ended
                                                                      September     September    September    September
                                                                         30,           30,          30,          30,
                                                                         2002         2001         2002         2001
                                                                          $             $            $            $
                                                                     ------------- ------------ ------------ ------------</B>
         Net income..................................................      643        64,392       20,285      305,321
         Other comprehensive income:
            Unrealized loss on available-for-sale securities.........   (2,184)       (2,199)      (2,328)      (5,764)
            Reclassification adjustment for loss (gain) on
               available-for-sale securities included in net income..        -             -          737       (4,427)
            Cumulative effect of accounting change...................        -             -            -        4,155
            Unrealized (loss) gain on derivative instruments.........     (896)         (292)       2,562       (3,009)
            Reclassification adjustment for gain on derivative          (1,146)         (315)      (1,646)        (972)
               instruments                                           ------------- ------------ ------------ ------------
         Comprehensive (loss) income.................................   (3,583)       61,586       19,610      295,304
                                                                     ============= ============ ============ ============
</PRE>
<BR>
<BR>
<BR>
<BR>
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b>                                    TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES<BR>
<BR>
                                   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS<BR>
                    (all tabular amounts stated in thousands of U.S. dollars, except share data)<BR>
                      (Information as at September 30, 2002 and for the Three and Nine-Month Periods<BR>
                                     Ended September 30, 2002 and 2001 is unaudited)</b></font></P>
<BR>
<P><b>10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Derivative Instruments and Hedging Activities</b></P>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>
                  The Company uses  derivatives  only for hedging  purposes.  The following  summarizes  the Company&#146;s  risk
         strategies  with respect to market risk from foreign  currency  fluctuations,  changes in interest  rates,
         bunker  fuel  prices  and  tanker  freight  rates and the  effect  of these  strategies  on the  Company&#146;s
         financial statements.<BR>
<BR>
         The  Company  hedges  portions of its  forecasted  expenditures  denominated  in foreign  currencies  with
         forward  contracts and a portion of its bunker fuel  expenditures  with bunker fuel swap contracts.  As at
         September 30, 2002, the Company was committed to foreign  exchange  contracts for the forward  purchase of
         approximately Norwegian Kroner 58.4 million,  Canadian Dollars 51.6 million, Euros 2.4 million,  Singapore
         Dollars 4.9 million,  and Australian  Dollars 0.1 million for U.S. Dollars at an average rate of Norwegian
         Kroner 7.96 per U.S. Dollar,  Canadian Dollar 1.59 per U.S. Dollar, Euros 0.93 per U.S. Dollar,  Singapore
         Dollars 1.78 per U.S.  Dollar and  Australian  Dollars  1.85 per U.S.  Dollar,  respectively.  The foreign
         exchange  forward  contracts  mature as follows:  $16.8  million in 2002 and $28.1  million in 2003. As at
         September  30,  2002,  the Company was  committed to bunker fuel swap  contracts  totaling  31,500  metric
         tonnes,  with a  weighted-average  price of $112.06 per tonne. These swap contracts expire between October
         2002 and May 2004.<BR>
<BR>
         As at September  30,  2002,  the Company was  committed to interest  rate swap  agreements  whereby  $70.0
         million of the  Company&#146;s  floating  rate debt was swapped with fixed rate  obligations  having a weighted
         average remaining term of six months.  These agreements,  which expire between December 2002 and May 2004,
         effectively  change the Company&#146;s  interest  rate exposure on $70.0 million of debt from a floating  LIBOR
         rate to a weighted  average  fixed rate of 6.48%.  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.<BR>
<BR>
         The Company hedges certain of its voyage  revenues  through the use of a written  freight call option.  As
         at September 30, 2002,  the Company had a written  freight call option  outstanding  with a remaining term
         of three  months,  which could  require  payments to the  counterparty  if monthly  average  freight rates
         exceed a specified amount.
</P>
</TD>
</TR>
</TABLE>

<P><b>11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advance to Joint Venture Partner</b></P>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>
         During September 2002, the Company, through a 50%-owned joint venture,  purchased a 2001-built Suezmax
         tanker for $52.0 million.  The Company  also made a  short-term  advance of $26.0  million to the joint  venture
         partner for the partner&#146;s 50% share of the vessel purchase  price.  The advance is secured and is interest
         bearing at 4% per annum.</P>
</TD>
</TR>
</TABLE>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>

<P ALIGN=RIGHT><b>SCHEDULE A</b></P><BR>

<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b>                                    TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES<BR>
<BR>
                                 CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS<BR>
                                           (in thousands of U.S. dollars)<BR>
                                                     (unaudited)</b></font></P><BR>
<BR>
<BR>
<PRE>
<B>                                                               Three Months Ended September 30, 2002
                                           -------------------------------------------------------------------------------
                                                             8.32% Notes                                      Teekay
                                           Teekay Shipping    Guarantor    Non-Guarantor                  Shipping Corp.
                                                Corp.       Subsidiaries   Subsidiaries    Eliminations   &amp; Subsidiaries
                                                  $               $              $              $               $
                                           -------------------------------------------------------------------------------</B>

Net voyage revenues                                   -         9,260          149,480       (35,979)         122,761
Operating expenses                                3,442         9,031          130,926       (35,979)         107,420
                                           -------------------------------------------------------------------------------
   (Loss) income from vessel operations          (3,442)          229           18,554             -           15,341
Net interest expense                            (10,623)            -           (3,154)            -          (13,777)
Equity in net income of subsidiaries             15,566             -                -       (15,566)               -
Other loss                                         (858)            -              (63)            -             (921)
                                           -------------------------------------------------------------------------------
<B>Net income</B>                                          643           229           15,337       (15,566)             643
Retained earnings (deficit), beginning of
the period                                      938,285       (13,008)       1,078,472    (1,065,464)         938,285
Dividends declared                               (8,535)            -                -             -           (8,535)
Repurchase of Common Stock                         (967)            -                -             -             (967)
                                           -------------------------------------------------------------------------------
<B>Retained earnings (deficit), end of the
period</B>                                          929,426       (12,779)       1,093,809    (1,081,030)         929,426
                                           ===============================================================================





<B>                                                               Three Months Ended September 30, 2001
                                           -------------------------------------------------------------------------------
                                                             8.32% Notes                                      Teekay
                                           Teekay Shipping    Guarantor    Non-Guarantor                  Shipping Corp.
                                                Corp.       Subsidiaries   Subsidiaries    Eliminations   &amp; Subsidiaries
                                                  $               $              $              $               $
                                           -------------------------------------------------------------------------------</B>

Net voyage revenues                                   -         8,514          202,510       (32,728)         178,296
Operating expenses                                2,810         7,637          129,305       (32,728)         107,024
                                           -------------------------------------------------------------------------------
   (Loss) income from vessel operations          (2,810)          877           73,205              -          71,272
Net interest expense                             (8,357)            -           (7,506)             -         (15,863)
Equity in net income of subsidiaries             75,900             -                -       (75,900)               -
Other (loss) income                                (341)            -            9,324              -           8,983
                                           -------------------------------------------------------------------------------
<B>Net income</B>                                       64,392           877           75,023       (75,900)          64,392
Retained earnings (deficit), beginning of
the period                                      865,378       (16,699)         919,787      (903,088)         865,378
Dividends declared                               (8,611)            -                -              -          (8,611)
Repurchase of Common Stock                       (1,661)            -                -              -          (1,661)
                                           -------------------------------------------------------------------------------
<B>Retained earnings (deficit), end of the
period</B>                                          919,498       (15,822)         994,810      (978,988)         919,498
                                           ===============================================================================
</PRE>
<FONT FACE="Times New Roman, Times, Serif" SIZE=2>
____________<BR>
(See Note 5)</font>
<BR>
<BR>
<BR>
<BR>
<BR>


<P ALIGN=RIGHT><b>SCHEDULE A</b></P>
<BR>

<P ALIGN=CENTER>
<b>                                    TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES<BR>
<BR>
                                 CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS<BR>
                                           (in thousands of U.S. dollars)<BR>
                                                     (unaudited)</b></P>
<BR>
<BR>
<BR>
<PRE><B>                                                                Nine Months Ended September 30, 2002
                                           -------------------------------------------------------------------------------
                                                             8.32% Notes                                      Teekay
                                           Teekay Shipping    Guarantor    Non-Guarantor                  Shipping Corp.
                                                Corp.       Subsidiaries   Subsidiaries    Eliminations   &amp; Subsidiaries
                                                  $               $              $              $               $
                                           -------------------------------------------------------------------------------</B>

Net voyage revenues                                   -        27,237          467,263      (105,772)         388,728
Operating expenses                                9,276        24,738          389,773      (105,772)         318,015
                                           -------------------------------------------------------------------------------
   (Loss) income from vessel operations          (9,276)        2,499           77,490             -           70,713
Net interest expense                            (31,441)            -           (9,722)            -          (41,163)
Equity in net income of subsidiaries             59,907             -                -       (59,907)               -
Other income (loss)                               1,095             -          (10,360)            -           (9,265)
                                           -------------------------------------------------------------------------------
<B>Net income</B>                                       20,285         2,499           57,408       (59,907)          20,285
Retained earnings (deficit), beginning of
the period                                      935,660       (15,278)       1,036,401    (1,021,123)         935,660
Dividends declared                              (25,552)            -                -             -          (25,552)
Repurchase of Common Stock                         (967)            -                -             -             (967)
                                           -------------------------------------------------------------------------------
<B>Retained earnings (deficit), end of the
period</B>                                          929,426       (12,779)       1,093,809    (1,081,030)         929,426
                                           ===============================================================================





<B>                                                                Nine Months Ended September 30, 2001
                                           -------------------------------------------------------------------------------
                                                             8.32% Notes                                      Teekay
                                           Teekay Shipping    Guarantor    Non-Guarantor                  Shipping Corp.
                                                Corp.       Subsidiaries   Subsidiaries    Eliminations   &amp; Subsidiaries
                                                  $               $              $              $               $
                                           -------------------------------------------------------------------------------</B>
Net voyage revenues                                 -          26,174        722,814         (111,715)        637,273
Operating expenses                              8,298          24,690        378,653         (111,715)        299,926
                                           -------------------------------------------------------------------------------
   (Loss) income from vessel operations        (8,298)          1,484        344,161                -         337,347
Net interest expense                          (14,320)              -        (28,757)               -         (43,077)
Equity in net income of subsidiaries          326,888               -              -         (326,888)              -
Other income                                    1,051           1,663          8,337                -          11,051
                                           -------------------------------------------------------------------------------
<B>Net income</B>                                    305,321           3,147        323,741         (326,888)        305,321
Retained earnings (deficit), beginning of
the period                                    641,149         (18,969)       671,069         (652,100)        641,149
Adjustment for equity income on step
acquisition                                       198               -              -                -             198
Dividends declared                            (25,509)              -              -                -         (25,509)
Repurchase of Common Stock                     (1,661)              -              -                -          (1,661)
                                           -------------------------------------------------------------------------------
<B>Retained earnings (deficit), end of the
period</B>                                        919,498         (15,822)       994,810         (978,988)        919,498
                                           ===============================================================================

</PRE>
<FONT FACE="Times New Roman, Times, Serif" SIZE=2>
____________<BR>
(See Note 5)</font>
<BR>
<BR>
<BR>
<BR>
<BR>


<P ALIGN=RIGHT><b>SCHEDULE A</b></P>
<BR>

<P ALIGN=CENTER>
<b>                                    TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES<BR>
<BR>
                                              CONDENSED BALANCE SHEETS<BR>
                                           (in thousands of U.S. dollars)<BR>
                                                     (unaudited)</b></P>
<BR>
<BR>
<BR>
<PRE>
                                                                      As at September 30, 2002
                                          ---------------------------------------------------------------------------------
                                                            8.32% Notes                                        Teekay
                                          Teekay Shipping    Guarantor    Non-Guarantor                    Shipping Corp.
                                               Corp.       Subsidiaries    Subsidiaries    Eliminations    &amp; Subsidiaries
                                                 $               $              $                $               $
                                          ---------------------------------------------------------------------------------
<B>ASSETS</B>
Cash and cash equivalents                            -               -         161,505               -           161,505
Other current assets                             1,180             287         210,250         (96,000)          115,717
                                          ---------------------------------------------------------------------------------
     Total current assets                        1,180             287         371,755         (96,000)          277,222
Vessels and equipment (net)                          -         256,648       1,798,005               -         2,054,653
Advances due from subsidiaries                 279,906               -               -        (279,906)                -
Other assets (principally marketable
securities                                   1,650,214               -          41,547      (1,650,214)           41,547
     and investments in subsidiaries)
Investment in joint ventures                         -               -          55,222               -            55,222
Goodwill                                             -               -          89,189               -            89,189
                                          ---------------------------------------------------------------------------------
                                             1,931,300         256,935       2,355,718      (2,026,120)        2,517,833
                                          =================================================================================
<B>LIABILITIES &amp; STOCKHOLDERS&#146;
EQUITY</B>
Current liabilities                             12,288           2,308         223,073         (96,000)          141,669
Long-term debt                                 519,287               -         442,586               -           961,873
Due to (from) affiliates                             -        (101,924)        438,975        (337,051)                -
                                          ---------------------------------------------------------------------------------
     Total liabilities                         531,575         (99,616)      1,104,634        (433,051)        1,103,542
                                          ---------------------------------------------------------------------------------
Minority Interest                                    -               -          20,042               -            20,042
Stockholders&#146; Equity
Capital stock                                  470,299              23           5,943          (5,966)          470,299
Contributed capital                                  -         369,307         136,766        (506,073)                -
Retained earnings (deficit)                    929,426         (12,779)      1,093,809      (1,081,030)          929,426
Accumulated other comprehensive loss                 -               -          (5,476)              -            (5,476)
                                          ---------------------------------------------------------------------------------
     Total stockholders&#146; equity              1,399,725         356,551       1,231,042      (1,593,069)        1,394,249
                                          ---------------------------------------------------------------------------------
                                             1,931,300         256,935       2,355,718      (2,026,120)        2,517,833
                                          =================================================================================

                                                                      As at December 31, 2001
                                         ----------------------------------------------------------------------------------
                                                            8.32% Notes                                        Teekay
                                              Teekay         Guarantor    Non-Guarantor                    Shipping Corp.
                                          Shipping Corp.    Subsidiaries   Subsidiaries     Eliminations   &amp; Subsidiaries
                                                 $               $              $                $                $
                                         ------------------ ------------ ----------------- --------------- ----------------
<B>ASSETS</B>
Cash and cash equivalents                              -            -           174,950              -           174,950
Other current assets                               1,101          472           186,946        (96,000)           92,519
                                         ------------------ ------------ ----------------- --------------- ----------------
     Total current assets                          1,101          472           361,896        (96,000)          267,469
Vessels and equipment (net)                            -      264,768         1,778,330              -         2,043,098
Advances due from subsidiaries                   346,430            -                 -       (346,430)                -
Other assets (principally marketable
     securities and
     investments in subsidiaries)              1,599,746            -            42,783     (1,599,746)           42,783
Investment in joint ventures                           -            -            27,352              -            27,352
Goodwill                                               -            -            87,079              -            87,079
                                         ------------------ ------------ ----------------- --------------- ----------------
                                               1,947,277      265,240         2,297,440     (2,042,176)        2,467,781
                                         ================== ============ ================= =============== ================
<B>LIABILITIES &amp; STOCKHOLDERS'
EQUITY</B>
Current liabilities                               24,813        1,319           197,193        (96,000)          127,325
Long-term debt                                   519,463            -           403,816              -           923,279
Due to (from) affiliates                               -      (90,131)          503,145       (413,014)                -
                                         ------------------ ------------ ----------------- --------------- ----------------
     Total liabilities                           544,276      (88,812)        1,104,154       (509,014)        1,050,604
                                         ------------------ ------------ ----------------- --------------- ----------------
Minority Interest                                      -            -            18,977              -            18,977
Stockholders&#146; Equity
Capital stock                                    467,341           23             5,943         (5,966)          467,341
Contributed capital                                    -      369,307           136,766       (506,073)                -
Retained earnings (deficit)                      935,660      (15,278)        1,036,401     (1,021,123)          935,660
Accumulated other comprehensive loss                   -            -            (4,801)             -            (4,801)
                                         ------------------ ------------ ----------------- --------------- ----------------
     Total stockholders' equity                1,403,001      354,052         1,174,309     (1,533,162)        1,398,200
                                         ------------------ ------------ ----------------- --------------- ----------------
                                               1,947,277      265,240         2,297,440     (2,042,176)        2,467,781
                                         ================== ============ ================= =============== ================

</PRE>
<FONT FACE="Times New Roman, Times, Serif" SIZE=2>
____________<BR>
(See Note 5)</font>
<BR>
<BR>
<BR>
<BR>
<BR>


<P ALIGN=RIGHT><b>SCHEDULE A</b></P>
<BR>

<P ALIGN=CENTER>
<b>                                    TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES<BR>
<BR>
                                            CONDENSED STATEMENTS OF CASH FLOWS<BR>
                                           (in thousands of U.S. dollars)<BR>
                                                     (unaudited)</b></P>
<BR>
<BR>
<BR>
<PRE><B>                                                                       Nine Months Ended September 30, 2002
                                                     -------------- --------------- ------------- ------------ ---------------
                                                        Teekay       8.32% Notes                                   Teekay
                                                       Shipping       Guarantor     Non-Guarantor                Shipping Corp.
                                                         Corp.       Subsidiaries   Subsidiaries  Eliminations   &amp; Subsidiaries
                                                           $              $              $             $               $
</B>                                                     -------------- --------------- ------------- ------------ ---------------
Cash and cash equivalents provided by (used for)
<B>OPERATING ACTIVITIES</B>
                                                     -------------- --------------- ------------- ------------ ---------------
     Net cash flow from operating activities            (68,951)        15,661         190,457           -        137,167
                                                     -------------- --------------- ------------- ------------ ---------------
<B>FINANCING ACTIVITIES</B>
Proceeds from long-term debt                                  -              -          78,890           -         78,890
Scheduled repayments of long-term debt                        -              -         (34,676)          -        (34,676)
Prepayments of long-term debt                                 -              -          (8,000)          -         (8,000)
Other                                                    68,951        (11,792)        (80,633)          -        (23,474)
                                                     -------------- --------------- ------------- ------------ ---------------
     Net cash flow from financing activities             68,951        (11,792)        (44,419)          -         12,740
                                                     -------------- --------------- ------------- ------------ ---------------

<B>INVESTING ACTIVITIES</B>
Expenditures for vessels and equipment                        -         (3,869)       (112,273)          -       (116,142)
Other                                                         -              -         (47,210)          -        (47,210)
                                                     -------------- --------------- ------------- ------------ ---------------
     Net cash flow from investing activities                  -         (3,869)       (159,483)          -       (163,352)
                                                     -------------- --------------- ------------- ------------ ---------------
<B>Decrease in cash and cash equivalents</B>                         -              -         (13,445)          -        (13,445)
Cash and cash equivalents, beginning of the period            -              -         174,950           -        174,950
                                                     -------------- --------------- ------------- ------------ ---------------
<B>Cash and cash equivalents, end of the period</B>                  -              -         161,505           -        161,505
                                                     ============== =============== ============= ============ ===============





<B>                                                                     Nine Months Ended September 30, 2001
                                                 ---------------- --------------- -------------- ------------ ----------------
                                                                   8.32% Notes                                    Teekay
                                                     Teekay         Guarantor     Non-Guarantor               Shipping Corp.
                                                 Shipping Corp.    Subsidiaries   Subsidiaries   Eliminations &amp; Subsidiaries
                                                        $               $               $             $              $
                                                 ---------------- --------------- -------------- ------------ ----------------
</B>Cash and cash equivalents provided by (used for)
<B>OPERATING ACTIVITIES</B>
                                                 ---------------- --------------- -------------- ------------ ----------------
     Net cash flow from operating activities         (7,738)          16,436         419,384          -          428,082
                                                 ---------------- --------------- -------------- ------------ ----------------
<B>FINANCING ACTIVITIES</B>
Net proceeds from long-term debt                    244,621                -         283,706           -         528,327
Scheduled repayments of long-term debt                    -                -         (53,628)          -         (53,628)
Prepayments of long-term debt                       (22,045)               -        (574,596)          -        (596,641)
Other                                              (215,330)         (15,912)        223,505           -          (7,737)
                                                 ---------------- --------------- -------------- ------------ ----------------
     Net cash flow from financing activities          7,246          (15,912)       (121,013)          -        (129,679)
                                                 ---------------- --------------- -------------- ------------ ----------------

<B>INVESTING ACTIVITIES</B>
Expenditures for vessels and equipment                    -             (525)       (180,996)          -        (181,521)
Expenditure for the purchase of Ugland
     Nordic Shipping AS                                 198                -        (176,651)          -        (176,453)
Other                                                     -                1          12,059           -          12,060
                                                 ---------------- --------------- -------------- ------------ ----------------
     Net cash flow from investing activities            198             (524)       (345,588)          -        (345,914)
                                                 ---------------- --------------- -------------- ------------ ----------------
<B>Decrease in cash and cash equivalents</B>                  (294)               -         (47,217)          -         (47,511)
Cash and cash equivalents, beginning of the
period                                                  294                -         181,006           -         181,300
                                                 ---------------- --------------- -------------- ------------ ----------------
<B>Cash and cash equivalents, end of the period</B>              -                -         133,789           -         133,789
                                                 ================ =============== ============== ============ ================

</PRE>
<FONT FACE="Times New Roman, Times, Serif" SIZE=2>
____________<BR>
(See Note 5)</font>
<BR>
<BR>
<BR>
<BR>
<BR>
<P ALIGN=CENTER><b>                                    TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES<BR>
                                                   SEPTEMBER 30, 2002<BR>
                                          PART I &#150; FINANCIAL INFORMATION<BR></b></P>

<P><b>ITEM 2 &#150;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</b></P>

<P><b>RESULTS OF OPERATIONS</b></P>

<P><b>General</b></P>
<p>
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.  As at September 30, 2002, the Company&#146;s fleet
consisted  of 101 vessels  (including  twelve  newbuildings  on order,  five  vessels  time-chartered-in,  and four
vessels owned by joint ventures),  for a total  cargo-carrying  capacity of approximately  10.4 million  deadweight
tonnes.<BR>
<BR>
During the nine months ended  September  30,  2002,  approximately  44% of the  Company&#146;s  net voyage  revenues was
derived from spot  voyages.  The balance of the  Company&#146;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
(&#147;COAs&#148;),  whereby the Company  carries an agreed  quantity  of cargo for a customer  over a specified  trade route
within a given  period of time.  In the nine months  ended  September  30,  2002,  approximately  20% of net voyage
revenues was generated by  time-charters  and COAs priced on a spot market basis.  In the aggregate,  approximately
64% of the  Company&#146;s  net voyage  revenues  during the nine months ended  September 30, 2002 was derived from spot
voyages or  time-charters  and COAs  priced on a spot market  basis,  with the  remaining  36% 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&#146;s revenues, cash flow from operations, and net income.<BR>
<BR>
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.<BR>
<BR>
<B>Acquisition of Ugland Nordic Shipping AS</B><BR>
<BR>
As of May 28, 2001, the Company had purchased 100% of the issued and  outstanding  shares of Ugland Nordic Shipping
AS (&#147;UNS&#148;)  (9% of which was  purchased  in fiscal  2000 and the  remaining  91% of which was  purchased  in fiscal
2001), for $222.8 million in cash.<BR>
<BR>
UNS is the world&#146;s  largest owner of shuttle  tankers,  controlling a modern fleet of 18 vessels  (including  three
newbuildings  on order)  (the &#147;UNS  Fleet&#148;)  that  engage in the  transportation  of oil from  offshore  production
platforms  to onshore  storage  and  refinery  facilities.  The UNS Fleet has an average age of  approximately  9.7
years,  excluding  the three  newbuildings  on order,  and  operates  primarily  in the North Sea under  fixed-rate
long-term  contracts.  In addition,  as of September 30, 2002, UNS owned approximately 10.3% of the publicly traded
company  Nordic  American  Tankers  Shipping  Ltd.  (AMEX:  NAT) (&#147;NAT&#148;),  the owner of three Suezmax  tankers on a
long-term contract to BP Shipping.<BR>
<BR>
The operating  results of UNS have been  consolidated in the Company&#146;s  financial  statements  commencing  March 6,
2001,  the date that the  Company  acquired  a  majority  interest  in UNS.  Minority  interest  expense,  which is
included as part of other (loss)  income,  has been  recorded to reflect the minority  shareholders&#146;  share of UNS&#146;
net income for the period from March 6, 2001 to May 28, 2001,  when the Company  acquired the  remaining  shares in
UNS.<BR>
<BR>
<B>Results of Operations</B><BR>
<BR>
Bulk  shipping  industry  freight  rates  are  commonly  measured  at the net  voyage  revenue  level  in  terms of
&#147;time-charter  equivalent&#148; (&#147;TCE&#148;) rates, defined as voyage revenues less voyage expenses (excluding  commissions),
divided by voyage  ship-days for the round-trip  voyage.  Voyage revenues and voyage expenses are a function of the
type of charter,  either spot charter or time-charter,  and port, canal and fuel costs depending on the trade route
upon which a vessel is sailing,  in addition to being a function of the level of shipping  freight rates.  For this
reason,  shipowners base economic  decisions  regarding the deployment of their vessels upon anticipated TCE rates,
and  industry  analysts  typically  measure  bulk  shipping  freight  rates in terms of TCE rates.  Therefore,  the
discussion of revenue below focuses on net voyage revenues and TCE rates.<BR>
<BR>
TCE rates are primarily  dependent on oil production and consumption  levels,  the number of vessels scrapped,  the
number of  newbuildings  delivered and  charterers&#146;  preference  for modern  tankers.  As a result of the Company&#146;s
dependence on the tanker spot market,  any  fluctuations  in Aframax TCE rates will impact the  Company&#146;s  revenues
and earnings.<BR>
<BR>
The Company&#146;s  average fleet size  decreased  1.1% and increased  4.2%,  respectively,  in the three and nine-month
periods ended  September 30, 2002,  compared to the same periods last year. The increase in the  nine-month  period
ended September 30, 2002 was primarily due to the acquisition of UNS in March 2001.<BR>
<BR>
In response to a slowing  global  economy,  OPEC made a series of oil  production  cuts  during  2001.  These cuts
resulted in a reduction in tanker demand,  contributing  to a significant  decline in average TCE rates during the
last three  quarters  of 2001.  Average  TCE rates  continued  to  decline  in the first nine  months of 2002 as a
result of decreased  world oil  production.  The Company&#146;s  average TCE rate decreased 30.6% to $17,380 and 41.6 %
to $18,320,  respectively,  for the three and  nine-month  periods  ended  September  30,  2002,  from $25,030 and
$31,379 in the same periods last year.  OPEC oil  production  increases in the latter part of the third quarter of
2002 have had a positive impact on TCE rates in the early part of the fourth quarter of 2002.<BR>
<BR>
Net voyage revenues decreased 31.1% to $122.8 million and 39.0% to $388.7 million,  respectively,  in the three and
nine-month  periods  ended  September  30, 2002,  from $178.3  million and $637.3  million in the same periods last
year.  The decrease for the  three-month  period ended  September  30, 2002 was due  primarily to a decrease in the
Company&#146;s  average TCE rate. The decrease for the nine-month  period ended  September 30, 2002 was primarily due to
a decrease in the  Company&#146;s  average TCE rate,  partially  offset by the increase in the  Company&#146;s  average fleet
size.<BR>
<BR>
Vessel  operating  expenses,  which include  crewing,  repairs and  maintenance,  insurance,  stores and lubes, and
communication expenses,  increased 10.2% to $44.4 million and 12.4% to $127.4 million,  respectively,  in the three
and  nine-month  periods ended  September 30, 2002,  from $40.3 million and $113.4 million in the same periods last
year.  The increase for the  three-month  period ended  September  30, 2002 was primarily a result of higher repair
and maintenance  costs and the appreciation of the Norwegian  Kroner.  The increase for the nine-month period ended
September 30, 2002 was primarily a result of the acquisition of UNS and higher repair and maintenance costs.<BR>
<BR>
Time-charter hire expense decreased 36.3% to $11.4 million and 26.9% to $37.6 million,  respectively,  in the three
and  nine-month  periods ended  September  30, 2002,  from $17.9 million and $51.5 million in the same periods last
year.  The  decrease in both  periods was due  primarily  to  decreases  in: the average TCE rates earned by the 12
vessels in the  oil/bulk/ore  (&#147;O/B/O&#148;)  pool  managed by the  Company;  the  number of vessels  owned by  minority
participants in the O/B/O pool; and the average number of vessels  time-chartered-in  by the Company.  The minority
participants&#146;  share of the O/B/O pool&#146;s net voyage  revenues,  which is reflected as a time-charter  hire expense,
was $3.6 million and $13.8 million,  respectively,  in the three and nine-month  periods ended  September 30, 2002,
compared  to $6.7  million  and $23.1  million  in the same  periods  last  year.  The  average  number of  vessels
time-chartered-in  by the Company,  excluding the O/B/Os,  was five in both the three and nine-month  periods ended
September  30,  2002,  compared  to  seven  in the  three-month  period  ended  September  30,  2001 and six in the
nine-month period ended September 30, 2001.<BR>
<BR>
Depreciation and amortization  expense  increased 4.0% to $37.3 million and 10.7% to $110.1 million,  respectively,
in the three and  nine-month  periods ended  September  30, 2002,  from $35.9 million and $99.5 million in the same
periods last year.  The increase in the  three-month  period ended  September  30, 2002 was mainly due to increased
vessel  cost  amortization  as a result of the  purchase  of a Suezmax  tanker in June 2002 and  increased  drydock
amortization  expense,  partially  offset by the elimination of goodwill  amortization in 2002. The increase in the
nine-month  period  ended  September  30,  2002 was mainly due to the  acquisition  of UNS  (which  resulted  in an
increase  in the  average  size and  average  cost  base of the  Company&#146;s  owned  fleet),  the  purchase  of the a
2001-built  Suezmax  tanker in June 2002,  and increased  drydock  amortization  expense,  partially  offset by the
elimination of goodwill  amortization.  Depreciation and amortization  expense included  amortization of drydocking
costs of $5.3 million and $15.2  million,  respectively,  in the three and nine-month  periods ended  September 30,
2002, compared to $3.5 million and $9.9 million in the same periods last year.<BR>
<BR>
General and administrative expenses increased 10.5% to $14.3 million and 20.4% to $42.8 million,  respectively,  in
the three and  nine-month  periods  ended  September  30, 2002,  from $13.0  million and $35.6  million in the same
periods last year.  This increase in the  three-month  period ended September 30, 2002 was primarily a result of an
increase  in the number of shore  staff.  The  increase  in the  nine-month  period  ended  September  30, 2002 was
primarily a result of the acquisition of UNS and an increase in the number of shore staff.<BR>
<BR>
Interest  expense  decreased  18.8% to $14.7  million and 13.9% to $43.9  million,  respectively,  in the three and
nine-month  periods ended  September 30, 2002,  from $18.1 million and $50.9 million in the same periods last year.
The decrease in the  three-month  period ended  September 30, 2002 reflects lower interest  rates.  The decrease in
the nine-month  period ended September 30, 2002 reflects lower interest rates,  partially  offset by the additional
debt assumed as part of the UNS acquisition.<BR>
<BR>
Interest  income  decreased  59.5% to $0.9  million  and  65.8% to $2.7  million,  respectively,  in the  three and
nine-month  periods  ended  September  30, 2002,  from $2.2 million and $7.9 million in the same periods last year.
The decrease in both periods was mainly as a result of lower interest rates.<BR>
<BR>
Other loss in the three and  nine-month  periods  ended  September  30,  2002 was $0.9  million  and $9.3  million,
respectively,  and was primarily  comprised of income taxes,  loss on sale of  available-for-sale  securities,  and
minority  interest expense,  partially offset by equity income from 50%-owned joint ventures,  dividend income from
NAT, and foreign  exchange  gains.  Other income in the three and nine-month  periods ended  September 30, 2001 was
$9.0 million and $11.1 million,  respectively,  and was primarily  comprised of equity income from 50%-owned  joint
ventures,  dividend income from NAT, gain on the disposition of available-for-sale  securities and foreign exchange
gains,  partially  offset by income taxes,  minority  interest,  and loss on the disposition of  available-for-sale
securities.  Equity income from 50%-owned  joint ventures for the three and nine-month  periods ended September 30,
2001 included a $10.2 million gain on sale of three 50% owned vessels.<BR>
<BR>
As a result of the foregoing  factors,  net income was $0.6 million and $20.3 million,  respectively,  in the three
and  nine-month  periods ended  September 30, 2002,  compared to net income of $64.4 million and $305.3  million in
the same periods last year.<BR>
<BR>
<B>LIQUIDITY AND CAPITAL RESOURCES</B><BR>
<BR>
As at September 30, 2002, the Company&#146;s  total cash and cash  equivalents  was $161.5  million,  compared to $174.9
million at December 31, 2001. The Company's total liquidity,  including cash,  short-term marketable securities and
undrawn  long-term  borrowings,  was $580.9  million as at  September  30,  2002,  down from  $688.2  million as at
December 31, 2001.  The decrease in  liquidity  was mainly the result of cash used for capital  expenditures,  debt
repayments  and  prepayments,  payment of  dividends, advances to joint venture partner, and a $38.8  million
scheduled  reduction in the  available borrowing limit of the Company&#146;s two long-term  revolving credit facilities
(the &#147;Revolvers&#148;),  partially offset by net cash flow from operating  activities  during the first nine months
of 2002. In the Company&#146;s  opinion,  working capital is sufficient for the Company&#146;s present requirements.<BR>
<BR>
Net cash flow from operating  activities  decreased to $137.2 million in the nine months ended  September 30, 2002,
from $428.1 million in the same period last year, mainly reflecting the significant decrease in TCE rates.<BR>
<BR>
Scheduled debt  repayments  were $34.7 million during the nine months ended  September 30, 2002,  compared to $53.6
million  during the same  period  last year.  Debt  prepayments  were $8.0  million  during the nine  months  ended
September 30, 2002, compared to $596.6 million during the same period last year.<BR>
<BR>
As at September 30, 2002, the Company&#146;s  total debt was $971.7  million,  compared to $935.7 million as at December
31, 2001. The Company&#146;s  Revolvers  provided for additional  borrowings of $419.4 million,  of which $419.4 million
was undrawn.  The amount  available under the Revolvers  reduces  semi-annually,  with final balloon  reductions in
2006 and 2008.  The Company&#146;s  8.32% First  Preferred  Ship Mortgage Notes are due February 1, 2008 and are subject
to a sinking fund which will retire $45.0 million  principal  amount of the 8.32% Notes in February 1 of each year,
commencing  2004.  The Company&#146;s  unsecured  8.875% Senior Notes are due July 15, 2011.  The Company&#146;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 for the  remainder  of fiscal 2002 and the four
following  fiscal years are $17.1 million  (2002),  $64.8 million  (2003),  $84.9 million  (2004),  $111.1  million
(2005) and $180.8 million (2006).<BR>
<BR>
Among other matters,  the Company&#146;s  long-term debt agreements  generally provide for 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 to $433.1 million as of September 30, 2002.  Certain
of the loan  agreements  require that a minimum level of free cash be  maintained.  As at September 30, 2002,  this
amount was $75.0 million.<BR>
<BR>
Dividends declared during the nine months ended September 30, 2002 were $25.5 million, or 64.5 cents per share.<BR>
<BR>
During the nine months  ended  September  30,  2002,  the Company  incurred  capital  expenditures  for vessels and
equipment of $93.1 million.  These capital  expenditures  were  primarily for the purchase of a 2001-built  Suezmax
tanker in June 2002 and for shuttle tanker newbuilding  installment  payments.  During September 2002, the Company,
through a 50%-owned joint venture,  purchased another 2001-built  Suezmax tanker for $52.0 million.  The Company also made
a short-term  advance of $26.0  million to the joint  venture  partner for the partner&#146;s 50% share of this vessel&#146;s
purchase  price.  Cash  expenditures  for drydocking  increased to $23.0 million in the nine months ended September
30, 2002,  from $14.4  million  during the same period last year.  This increase was primarily due to the Company&#146;s
decision to accelerate drydock maintenance on certain vessels during the first nine months of 2002.<BR>
<BR>
As at September 30, 2002, the Company was committed to the  construction  of three  shuttle,  three Suezmax and six
Aframax  tankers.  See  Item  1  -  Notes  to  Consolidated   Financial  Statements:   Note  7  &#150;  Commitments  and
Contingencies.<BR>
<BR>
The Company and certain  subsidiaries of the Company have guaranteed  their share of the outstanding  mortgage debt
in three  50%-owned joint venture  companies.  See Item 1 - Notes to Consolidated  Financial  Statements:  Note 7 &#150;
Commitments and Contingencies.<BR>
<BR>
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.<BR>
<BR>
<B>FORWARD-LOOKING STATEMENTS</B><BR>

This Report on Form 6-K for the  quarterly  period  ended  September  30,  2002  contains  certain  forward-looking
statements (as such term is defined in Section 27A of the  Securities  Act of 1933, as amended,  and Section 21E of
the  Securities  Exchange  Act of  1934,  as  amended)  concerning  future  events  and the  Company's  operations,
performance and financial condition,  including, in particular,  statements regarding: TCE rates; supply and demand
for oil; future capital  expenditures;  and the Company's  growth strategy and measures to implement such strategy.
These  statements  involve known and unknown risks and are based upon a number of  assumptions  and estimates  that
are inherently  subject to significant  uncertainties  and  contingencies,  many of which are beyond the control of
the  Company.  Actual  results  may differ  materially  from  those  expressed  or implied by such  forward-looking
statements.  Important  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;  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  without  limitation,  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  including  political  instability;  the  potential
inability of the Company to generate  internal  cash flow and obtain  additional  debt or equity  financing to fund
capital  expenditures or Company expansion;  and other factors detailed from time to time in the Company's periodic
reports,  including  its Form 20-F for the year  ended  December  31,  2001,  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.<BR>
</P>
<BR>
<BR>
<BR>
<BR>
<BR>
<P ALIGN=CENTER>
<b>                                 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES<BR>
                                                SEPTEMBER 30, 2002<BR>
                                          PART I &#150; FINANCIAL INFORMATION</b></p>
<BR><BR>
<B>ITEM 3 -          QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</B>
<P>
The Company is exposed to market risk from foreign currency  fluctuations,  changes in interest rates,  bunker fuel
prices, and tanker freight rates. The Company uses forward currency contracts,  interest rate swap agreements,  and
bunker fuel swap contracts to manage  currency,  interest rate, and bunker fuel price risks, but does not use these
financial  instruments  for  trading  or  speculative  purposes.  See  Item 1 -  Notes  to  Consolidated  Financial
Statements:  Note 10 - Derivative Instruments and Hedging Activities.<BR>
<BR>
The following  table sets forth the  magnitude of these  foreign  exchange  forward  contracts,  interest rate swap
agreements, bunker fuel swap contracts, and written freight call option:</P>
<BR>
<PRE>
                                             Contract                Carrying Amount                   Fair
(in USD 000&#146;s)                                Amount             Asset           Liability             Value
- ---------------------------------------- ------------------ ---------------- ------------------ --------------------
<U>September 30, 2002</U>
Foreign Exchange Forward Contracts       $      44,898      $       409       $          -           $      409
Interest Rate Swap Agreements                   70,000                -              2,065               (2,065)
Bunker Fuel Swap Contracts                       3,530              782                  -                  782
Written Freight Call Option                      1,500                -                214                 (214)
Debt                                           971,740                -            971,740             (985,318)

December 31, 2001
Foreign Exchange Forward Contracts       $      65,500      $         -       $        343           $     (343)
Interest Rate Swap Agreements                   85,000                -              2,429               (2,429)
Bunker Fuel Swap Contracts                       4,769                -                328                 (328)
Written Freight Call Option                      5,998                -                857                 (857)
Debt                                           935,702                -            935,702             (952,055)
- ---------------------------------------- ------------------ ---------------- ------------------ --------------------
</PRE>
<P>For a more  comprehensive  discussion  related to the  general  characteristics  of  Quantitative  and  Qualitative
Disclosures  about  Market Risk,  refer to Item 11.  Quantitative  and  Qualitative  Disclosures  about Market Risk
contained in the Company&#146;s Annual Report on Form 20-F for the year ended December 31, 2001.</P>
<BR>
<BR>
<BR>
<BR>
<BR>

<P ALIGN=CENTER><b>                                     TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES<BR>
                                                   SEPTEMBER 30, 2002<BR>
                                            PART II &#150; OTHER INFORMATION</b><BR>
</P>
<P><U>Item 1 - Legal Proceedings</U></P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None</P>

<P><U>Item 2 - Changes in Securities</U></P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None</P>

<P><U>Item 3 - Defaults Upon Senior Securities</U></P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None</P>

<P><U>Item 4 - Submission of Matters to a Vote of Security Holders</U></P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None</P>

<P><U>Item 5 - Other Information</U></P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None</P>

<P><u>Item 6 - Exhibits and Reports on Form 6-K</u></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR>
<TD WIDTH=10% ALIGN=CENTER>a.</TD>
<TD WIDTH=90%>Exhibits</TD>
</TR>
</TABLE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=5%>15.1</TD>
<TD WIDTH=85%>Letter from Ernst &amp; Young LLP, as independent chartered accountants, dated November 8, 2002,
regarding unaudited interim financial information.</TD>
</TR>
</TABLE>

<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR>
<TD WIDTH=10% ALIGN=CENTER>b.</TD>
<TD WIDTH=90%>Reports on Form 6-K</TD>
</TR>
</TABLE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=5%>(i)</TD>
<TD WIDTH=85%>None</TD>
</TR>
</TABLE>
<BR>

<P><b>THIS REPORT ON FORM 6-K IS HEREBY  INCORPORATED  BY  REFERENCE  INTO THE  REGISTRATION  STATEMENT OF THE COMPANY ON
FORM F-3 FILED WITH THE COMMISSION ON OCTOBER 4, 1995.</b></P>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>

<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>SIGNATURES</FONT></H1>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
</P>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR>
<TD WIDTH=45% VALIGN=MIDDLE>
Date:    November 14, 2002
</TD>
<TD WIDTH=55% VALIGN=TOP>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TEEKAY SHIPPING CORPORATION
<BR>
<BR>
<BR>
<BR>
By:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>/s/ Peter S. Antturi&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Peter S. Antturi<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Senior Vice President and Chief Financial Officer<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Principal Financial and Accounting Officer)<BR>
</TD>
</TR>
</TABLE>

<BR>
<BR>
<BR>
<BR>
<BR>


<P ALIGN=RIGHT><B>Exhibit 15.1</B></P>

<P>To the Shareholders and Board of Directors of<BR>
<B>Teekay Shipping Corporation</B></P>

<P>We are aware of the  incorporation by reference in the  Registration  Statement (Form F-3 No. 33-97746 filed with the
Commission on October 4, 1995) and related prospectus of Teekay Shipping  Corporation  (&#147;Teekay&#148;) for the
registration  of 2,000,000  shares of Teekay common stock,  with a par value of $0.001 per share, and to  incorporation
by reference  therein of our report dated October 25, 2002 relating to the unaudited  consolidated  interim financial
statements of Teekay for the quarter ended September 30, 2002 that are included in its Form 6-K.</P>

<P>Pursuant  to Rule  436(c) of the  Securities  Act of 1933 our  report is not a part of the  registration  statement
prepared or certified by accountants within the meaning of Section 7 or 11 of the Securities Act of 1933.</P>

<BR>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR>
        <TD WIDTH=45%>Vancouver, Canada,<BR>
        November 12, 2002</TD>
        <TD WIDTH=55%>/s/ ERNST &amp; YOUNG LLP<BR>
        Chartered Accountants</TD>
</TR>
</TABLE>



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