<PAGE>
 
                                                                    EXHIBIT 13.3


INDEX TO FINANCIAL STATEMENTS

XTRA Corporation and Subsidiaries
(Information required by Part II, Items 7 and 8 and Part IV, Item 14 of Form 
10-K)

<TABLE> 
<CAPTION> 
-------------------------------------------------------------------------------------------------------  
FINANCIAL STATEMENTS                                                                               PAGE  
-------------------------------------------------------------------------------------------------------  
<S>                                                                                                <C>   
Consolidated balance sheets  September 30, 1998 and 1997                                            38   
Consolidated income statements for the three years ended September 30,                              39   
Consolidated statements of cash flows for the three years ended September 30, 1998                  40   
Unaudited quarterly condensed consolidated income statements for the years end                           
 September 30, 1998 and 1997                                                                        41   
Consolidated statements of stockholders' equity for the three years ended September 30, 1998        42   
Notes to consolidated financial statements                                                          43   
Report of independent public accountants                                                            55   
Parent and subsidiaries                                                                             56    
</TABLE> 

                                      37
<PAGE>
 
CONSOLIDATED BALANCE SHEETS

XTRA Corporation and Subsidiaries

<TABLE> 
<CAPTION> 
                                                                        September 30,                     1998         1997
                                                                        (Millions of dollars except     
                                                                        per share and share amounts)
                                                                        ---------------------------------------------------- 
<S>                                                                                                      <C>          <C>  
ASSETS                                                                                                                             

Property and equipment                                                                                   $2,200       $2,112  
Accumulated depreciation                                                                                   (748)        (658) 
                                                                                                     -----------------------
  Net property and equipment                                                                              1,452        1,454  
                                                                                                     -----------------------
Lease contracts receivable                                                                                   42           43  
Trade receivables, net                                                                                       64           65  
Other assets                                                                                                 14           19  
Cash                                                                                                          3            4
                                                                                                     -----------------------  
                                                                                                         $1,575       $1,585  
                                                                                                     =======================
LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                          

Liabilities                                                                                                                   
Debt                                                                                                     $  802       $  892  
Deferred income taxes                                                                                       287          252  
Accounts payable and accrued expenses                                                                        78           81
                                                                                                     -----------------------  
  Total liabilities                                                                                       1,167        1,225
                                                                                                     -----------------------  

Commitments and contingencies (Note 5)                                                                                        

Stockholders' equity                                                                                                          
Preferred Stock, without par value; total authorized: 3,000,000 shares                                                        
Common Stock, par value $.50 per share; authorized:                                                                           
  30,000,000 shares; issued and outstanding:                                                                                  
  15,372,903 shares at September 30, 1998;                                                                                    
  15,276,600 shares at September 30, 1997                                                                     8            8  
Capital in excess of par value                                                                               57           52  
Retained earnings                                                                                           354          304  
Cumulative translation adjustment                                                                           (11)          (4)
                                                                                                     -----------------------
  Total stockholders' equity                                                                                408          360
                                                                                                     -----------------------  
                                                                                                         $1,575       $1,585
                                                                                                     =======================
</TABLE> 

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

                                      38
<PAGE>
 
CONSOLIDATED INCOME STATEMENTS

XTRA Corporation and Subsidiaries

<TABLE> 
<CAPTION> 
                                           For the year ended September 30,     1998       1997        1996         
                                           (Millions of dollars except                                             
                                           per share amounts)                                          
                                           -----------------------------------------------------------------              
<S>                                                                             <C>        <C>        <C>          
REVENUES                                                                        $ 461      $ 435      $  422       
                                                                                                                   
OPERATING EXPENSES                                                                                                 

Depreciation on rental equipment                                                  151        149         146       
Rental equipment operating expense                                                108        109         101       
Selling and administrative expense                                                 43         43          40
                                                                              ------------------------------       
                                                                                  302        301         287       
                                                                              ------------------------------       
 Operating income                                                                 159        134         135       
                                                                                                                   
INTEREST EXPENSE                                                                   58         63          66       

FOREIGN EXCHANGE LOSS                                                               2          -           -       
                                                                              ------------------------------       
                                                                                                                   
 Pretax income                                                                     99         71          69       
                                                                                                                   
PROVISION FOR INCOME TAXES                                                         39         28          28       
                                                                              ------------------------------      

 NET INCOME                                                                     $  60      $  43      $   41       
                                                                              ==============================

EARNINGS PER BASIC COMMON SHARE                                                 $3.90      $2.79      $ 2.56       
BASIC SHARES OUTSTANDING (IN MILLIONS)                                           15.3       15.3        16.0       
                                                                                                                   
EARNINGS PER DILUTED COMMON SHARE                                               $3.88      $2.78      $ 2.56       
DILUTED SHARES OUTSTANDING (IN MILLIONS)                                         15.4       15.3        16.1        
                                                                              ------------------------------
</TABLE> 

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

                                      39
<PAGE>
 
CONSOLIDATED STATEMENTS OF CASH FLOWS

XTRA Corporation and Subsidiaries

<TABLE>
<CAPTION>
                                                  For the year ended September 30,     1998      1997      1996
                                                  (Millions of dollars)
                                                  --------------------------------------------------------------
<S>                                               <C>                                  <C>      <C>       <C>
CASH FLOWS FROM OPERATIONS

Net Income                                                                             $  60    $  43     $   41
Add non-cash income and expense items:
  Depreciation and amortization, net                                                     150      148        146
  Deferred income taxes, net                                                              36       26         31
  Bad debt expense                                                                         5        5          3
Add other cash items:
  Net change in receivables, other assets,
     payables and accrued expenses                                                        (8)      (7)         2
  Cash receipts on lease contracts receivable                                             24       21         18
  Recovery of property and equipment net book value                                       26       33         31
                                                                                     --------------------------- 
     Total cash provided from operations                                                 293      269        272
                                                                                     ---------------------------  

CASH USED FOR INVESTMENT ACTIVITIES

Additions to property and equipment                                                     (199)    (249)      (210)
                                                                                     --------------------------- 
     Total cash used for investment activities                                          (199)    (249)      (210)
                                                                                     --------------------------- 
 
CASH FLOWS FROM FINANCING ACTIVITIES

Borrowings of debt                                                                         -       72        247
Payments of debt                                                                         (90)     (72)      (252)
Net proceeds from exercise of stock options                                                5        1          1
Repurchase of common stock                                                                 -      (13)       (45)
Dividends paid                                                                           (10)     (12)       (11)
                                                                                     --------------------------- 
     Total cash used for financing activities                                            (95)     (24)       (60)
                                                                                     ---------------------------  

Net increase (decrease) in cash                                                           (1)      (4)         2
Cash at beginning of year                                                                  4        8          6
                                                                                     --------------------------- 
Cash at end of year                                                                    $   3    $   4     $    8
                                                                                     --------------------------- 
 
Total interest paid                                                                    $  58    $  59     $   52
Total income taxes paid (refunded)                                                     $   3    $  (5)    $   (2)
                                                                                     --------------------------- 
</TABLE>

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

                                      40
<PAGE>
 
Unaudited Quarterly Condensed Consolidated Income Statements

XTRA Corporation and Subsidiaries


<TABLE>
<CAPTION>
                                         For the four quarters ended     
                                         September 30, 1998 and 1997              First   Second    Third   Fourth 
                                         (Millions of dollars except             Quarter  Quarter  Quarter  Quarter
                                         per share amounts)
                                         -----------------------------------------------------------------------------
<S>                                                                              <C>      <C>      <C>      <C>    
1998                                                                                                               
Revenues                                                                         $ 121    $ 109    $ 112    $ 119
Expenses(1)                                                                         91       91       92       88
                                                                                 -------------------------------------
Pretax income                                                                       30       18       20       31
Provision for income taxes                                                          12        7        8       12
                                                                                 -------------------------------------
 Net income                                                                      $  18    $  11    $  12    $  19
                                                                                 -------------------------------------

Earnings per basic common share                                                  $1.18    $ .71    $ .80    $1.20
Basic shares outstanding (in millions)                                            15.3     15.3     15.3     15.4
                                                                                                                 
Earnings per diluted common share                                                $1.17    $ .71    $ .80    $1.20
Diluted shares outstanding (in millions)                                          15.4     15.4     15.4     15.4

1997                                                                                                             
Revenues                                                                         $ 111    $ 102    $ 105    $ 117
Expenses(1)                                                                         89       89       91       95
                                                                                 -------------------------------------
Pretax income                                                                       22       13       14       22
Provision for income taxes                                                           9        5        5        9
                                                                                 -------------------------------------
  Net income                                                                     $  13    $   8    $   9    $  13
                                                                                 -------------------------------------

Earnings per basic common share                                                  $ .85    $ .49    $ .56    $ .89
Basic shares outstanding (in millions)                                            15.3     15.3     15.3     15.3
                                                                                                                 
Earnings per diluted common share                                                $ .85    $ .49    $ .56    $ .89
Diluted shares outstanding (in millions)                                          15.3     15.3     15.3     15.3 
                                                                                 -------------------------------------
</TABLE>


(1) Includes operating and interest expenses.

                                      41
<PAGE>
 
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

XTRA Corporation and Subsidiaries

<TABLE> 
<CAPTION> 
                                         Common      Capital in      
       For the three years ended         Stock       Excess                     Cumulative                                  
       September 30, 1998                $.50 Par     of Par        Retained    Translation                          
       (Millions of dollars)             Value        Value         Earnings    Adjustment            
-------------------------------------------------------------------------------------------
<S>                                      <C>         <C>            <C>         <C>     
                                                                                                             
BALANCE AT SEPTEMBER 30, 1995             $  8            $108          $243        $    -           
Net income                                   -               -            41             -
Common stock cash dividends                                                                                  
 declared at $.70 per share                  -               -           (11)            -
Options exercised and related tax                                                                            
 benefits                                    -               1             -             - 
Repurchase of common stock                   -             (45)            -             -                     
Translation adjustment                       -               -             -            (3)                                
                                         ----------------------------------------------------- 
BALANCE AT SEPTEMBER 30, 1996                8              64           273            (3)           

Net income                                   -               -            43             - 
Common stock cash dividends                                                                                  
 declared at $.78 per share                  -               -           (12)            -
Options exercised and related tax                                                                            
 benefits                                    -               1             -             -                     
Repurchase of common stock                   -             (13)            -             -                     
Translation adjustment                       -               -             -            (1)                                
                                          ----------------------------------------------------- 
 BALANCE AT SEPTEMBER 30, 1997               8              52           304            (4)           
                                                                                                              
 Net income                                  -               -            60             -
 Common stock cash dividends                                                                                  
  declared at $.64 per share                 -               -           (10)            -
 Options exercised and related tax                                                                            
  benefits                                   -               5             -             -
 Repurchase of common stock                  -               -             -             -                        
 Translation adjustment                      -               -             -            (7)                                
                                         -----------------------------------------------------  
 BALANCE AT SEPTEMBER 30, 1998            $  8            $ 57          $354        $  (11)            
                                         -----------------------------------------------------  

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

                                      42
<PAGE>
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

XTRA Corporation and Subsidiaries
 

1
------------------------------------------
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
 
Nature of Operations

XTRA Corporation leases, primarily on an operating basis, freight transportation
equipment including over-the-road trailers, marine containers, intermodal
trailers, chassis, and domestic containers. XTRA leases over-the-road and
intermodal equipment throughout North America, predominantly within the United
States, to contract and common motor carriers, railroads, and private fleet
owners. In addition, the Company leases marine containers worldwide to steamship
lines.

Principles of Consolidation

The consolidated financial statements include the accounts of XTRA Corporation
and its wholly-owned subsidiaries ("the Company"). All material intercompany
accounts and transactions have been eliminated. Certain amounts in the prior
year financial statements have been reclassified to be consistent with the
current year's presentation.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

Income Taxes

Provisions for income taxes recognize the tax effect of all revenue and expense
transactions as well as any change during the period in deferred tax assets and
liabilities. The effects of changes in tax rates and laws on deferred tax assets
and liabilities are reflected in net income in the period in which such changes
are enacted.

Leases

The Company records the majority of its leases using the operating method of
accounting. Full-payout or near full-payout leases, where the present value of
the of the minimum lease payments at the beginning of the lease term equals or
exceeds 90% of the fair value of the leased property, are accounted for under
the finance method.

Depreciation

The Company provides for depreciation by using the straight-line method to
amortize the cost of property and equipment to its estimated residual value over
its estimated useful life. Revenue equipment is depreciated using estimated
useful lives of 10 to 20 years. In addition, the Company reviews the condition
and types of its revenue equipment to determine if any impairment has occurred.

When equipment is sold or retired, its cost and accumulated depreciation are
removed from the balance sheet, and any gain or loss is included in revenues.
Revenue equipment with an original cost of approximately $122 million, which has
reached the end of its estimated useful life, remains in service and is included
in Revenue Equipment at September 30, 1998.

Equipment Disposals

For purposes of the statements of cash flows, the net book value of equipment
sold is included in cash flow from operations to reflect the total proceeds,
including the gain or loss on sale already included in income, from the
continuous disposal of fleet assets.

Repair and Maintenance

Repair and maintenance expenses are charged to operating expenses when incurred
and amounted to $28 million, $29 million, and $27 million in 1998, 1997, and
1996, respectively.

                                      43
<PAGE>
 
Earnings per Share

The computation of basic earnings per share excludes dilution and is computed by
dividing income available to common stockholders by weighted average shares
outstanding.  Diluted earnings per share reflects the effect of all other
outstanding common stock equivalents under the treasury stock method.

Foreign Currency Translation

The Company translates the assets and liabilities of its foreign operations at
the exchange rates in effect at year-end. Revenues and expenses are translated
using average exchange rates in effect during the year. Gains and losses from
foreign currency translation for the Company's Canadian operations are credited
or charged to cumulative translation adjustment included in stockholders' equity
in the accompanying Consolidated Balance Sheets. The gains and losses from
remeasurement of certain intercompany liabilities of the Company's Canadian
businesses are included in foreign exchange loss. The Company's operations in
Mexico are accounted for as a highly inflationary economy and, accordingly, all
translation gains and losses are charged to foreign exchange loss.


2
----------------
EQUIPMENT LEASES
----------------

The Company uses the operating method of accounting for the majority of its
equipment leases. Under this method, revenue is recognized in the month earned
based on the terms of the lease contract, and the equipment is depreciated to
its estimated residual value over its estimated useful life.

The finance method of accounting is used for revenue equipment leased to
customers on a full-payout or near full-payout basis at lease inception. Under
this method, finance lease income, the difference between the total lease
receivable and the net book value less the unguaranteed residual value of the
related equipment, is deferred and amortized as revenue over the lease term
using the interest method, which provides a level rate of return on the net
investment in the lease.

The following schedule summarizes the future minimum rental receipts on
operating and finance leases by year as of September 30, 1998:

<TABLE>
<CAPTION>
                                                           Operating      Finance 
                        (Millions of dollars)               Leases        Leases  
                        ---------------------------------------------------------
<S>                                                        <C>            <C>     
1999                                                       $ 112          $  21   
2000                                                          56             15   
2001                                                          33             10   
2002                                                          23              3   
2003                                                          13              1   
2004 and thereafter                                           10              1   
                                                       --------------------------  
 Total                                                     $ 247          $  51    
                                                       --------------------------  
</TABLE> 

The components of the net investment in finance leases as of September 30, 1998 
and 1997 were as follows:

<TABLE>
<CAPTION>
                                                  (Millions of dollars)           1998           1997
                                                  -----------------------------------------------------
<S>                                               <C>                             <C>           <C>  
Minimum lease payments receivable                                                 $  51         $  53
Add: estimated unguaranteed residual values                                           7             7
                                                                                ----------------------- 
                                                                                     58            60
Less: deferred finance lease income                                                 (16)          (17)
                                                                                ----------------------- 
      Lease contracts receivable, net                                             $  42         $  43
                                                                                ----------------------- 
</TABLE>

                                      44
<PAGE>
 
3
----
DEBT
----

Debt as of September 30, 1998 and 1997 consisted of the following:

<TABLE>
<CAPTION>
                              (Millions of dollars)            1998    1997
                              -----------------------------------------------
<S>                                                            <C>     <C>
UNSECURED FINANCING

Medium-term Notes                                              $ 656   $ 703
Revolving Credit Agreement                                       128     161
                                                            -----------------
   Total unsecured financing                                     784     864
SECURED FINANCING                                                 18      28
                                                            -----------------
   Total debt                                                    802     892
Less: current portion                                            (72)    (57)
                                                            -----------------
   Long-term debt                                              $ 730   $ 835
                                                            =================
</TABLE>

The $656 million of Medium-term Notes have a weighted average interest rate of
7.1% and maturities from 1999 to 2012. At September 30, 1998, $532 million
remained available under the shelf registration for future debt issuance. The
weighted average interest rates incurred were 7.0%, 7.0%, and 7.1% during 1998,
1997, and 1996, respectively.

The Company's Revolving Credit Agreement has bank commitments of $300 million at
September 30, 1998 and a revolving period maturity date of June 30, 1999.
Pricing on the Revolving Credit Agreement is dependent on the Company's credit
ratings and is based on a fixed spread over the London Interbank Offered Rate
(LIBOR). The Company pays a facility fee on any unused commitment in the
facility.

Unless the Company requests and the banks approve a renewal or extension of the
agreement, borrowings outstanding on the revolving period maturity date will be
converted to a five year term loan payable in equal quarterly installments with
a final term maturity of June 30, 2004.

The Company borrows on a short-term basis by issuing commercial paper and using
uncommitted lines of credit. Short-term borrowings are back-stopped by the
unused borrowing capacity under the Revolving Credit Agreement. They have
therefore been classified as Revolving Credit Agreement borrowings. At September
30, 1998 and September 30, 1997, such borrowings amounted to $78 million and
$161 million, respectively. At September 30, 1998, the $128 million of Revolving
Credit Agreement borrowings had a weighted average interest rate of 5.8%. The
weighted average interest rates incurred under the Revolving Credit Agreement,
consisting primarily of short-term borrowings, were 5.8%, 5.7%, and 5.8% during
1998, 1997, and 1996, respectively. At September 30, 1998, $172 million of
unused commitment was available under the Revolving Credit Agreement.

The secured financing at September 30, 1998, consisting of capital lease
obligations, has a weighted average interest rate of 8.8% and is payable in
installments through 2001. The weighted average interest rates incurred under
the secured financing were 9.1%, 10.0%, and 9.4% during 1998, 1997, and 1996,
respectively.

Revenue equipment recorded on the consolidated balance sheets related to secured
financing was as follows at September 30, 1998 and 1997:

<TABLE>
<CAPTION>
                              (Millions of dollars)            1998    1997
                              -----------------------------------------------
<S>                                                            <C>     <C>
Revenue equipment                                              $  41   $  61
Accumulated depreciation                                         (22)    (28)
                                                            -----------------
Net secured equipment                                          $  19   $  33
                                                            =================
</TABLE>

                                      45
<PAGE>
 
Assuming the Company were to convert the Revolving Credit Agreement to a term
loan on its revolving period maturity date, the amount of minimum maturities of
all debt during each of the next five fiscal years and thereafter would be as
follows:

<TABLE>
<CAPTION>
                                                                 Minimum
                                  (Millions of dollars)  Debt Maturities
                                  --------------------------------------
<S>                                                      <C>
1999                                                               $ 72
2000                                                                100
2001                                                                 99
2002                                                                 98
2003                                                                 95
2004 and thereafter                                                 338
                                                        ----------------
 Total payments and maturities                                     $802
                                                        ================
</TABLE>

The Company's loan agreements contain minimum debt service tests and restrictive
covenants including restrictions on the amount of debt in relation to revenue
equipment and stockholders' equity and limitations on secured borrowings. The
Company's loan agreements contain covenants that restrict the payment of
dividends or repurchases of common stock by the Company. In addition, certain
loan agreements contain covenants that restrict advances to and the payment of
dividends to the Company by its subsidiaries, including XTRA, Inc. Under the
most restrictive provisions of the Company's loan agreements, the repurchase of
common stock and/or the amount of cash dividends which could be paid on the
Company's capital stock was limited to $168 million at September 30, 1998. The
Company had agreed in the Recapitalization Merger Agreement not to pay dividends
on the Company Common Stock and not to repurchase any shares of Company Common
Stock pending consummation of the Merger (see Note 13 of the Notes to
Consolidated Financial Statements).


4
------------
INCOME TAXES
------------

The components of the provision for income taxes for 1998, 1997, and 1996 are as
follows:

<TABLE>
<CAPTION>
                                 (Millions of dollars)      1998   1997   1996
                                 ---------------------------------------------  
<S>                                                       <C>    <C>    <C>
CURRENT TAX PROVISION

Federal                                                   $   2  $   1  $  (4)
State                                                         2      1      1
                                                        ----------------------
 Current tax provision                                        4      2     (3)
                                                        ----------------------
 
DEFERRED TAX PROVISION

Federal                                                      30     22     25
State                                                         6      4      6
                                                        ----------------------
 Deferred tax provision                                      36     26     31
                                                        ----------------------
   Provision for income taxes                             $  40  $  28  $  28
                                                        ======================
</TABLE>

The provision differs from income taxes currently payable because certain items
of income and expense are recognized in different periods for financial
statement purposes than for tax return purposes.

                                      46

<PAGE>
 
The reasons for the difference between the statutory U.S. Federal income tax
rates and the Company's effective income tax rates for 1998, 1997, and 1996 are
as follows:

<TABLE>
<CAPTION>
                                   Percent of Pretax Income  1998   1997   1996
                                   --------------------------------------------
<S>                                                          <C>    <C>    <C>
Federal statutory rate                                       35%     35%   35%
Increase in taxes resulting from:
 State taxes and other                                        5%      5%    6%
                                                         ---------------------
  Effective income tax rate                                  40%     40%   41%
                                                         =====================
</TABLE> 

The components of the net deferred tax liability as of September 30, 1998 and
1997 are as follows:

<TABLE> 
<CAPTION> 
                                   (Millions of dollars)         1998    1997
                                   --------------------------------------------
<S>                                                              <C>     <C>    
ASSETS

Capital lease obligations                                        $   7   $  15
Investment tax credits                                               1       3
Alternative minimum tax credits                                     22      20
Other                                                               16      16
                                                            -------------------
 Total deferred tax assets                                       $  46   $  54
                                                            ===================
 
LIABILITIES

Revenue equipment                                                $ 312   $ 286
Other                                                               21      20
                                                            -------------------
 Total deferred tax liabilities                                    333     306
                                                            -------------------
 Net deferred tax liability                                      $ 287   $ 252
                                                            ===================
</TABLE>

The Company estimates that after filing its fiscal 1998 tax return, it will have
$1 million of investment  tax credit carryforwards available to reduce future
federal income tax liabilities. The investment tax credit carryforwards expire
beginning in 2000. The Company also estimates that after filing its fiscal 1998
tax return, it will have $22 million of alternative minimum tax credit carry
forwards available to reduce future federal income tax liabilities. The benefit
of both tax credit carry forwards has been recorded in the Company's financial
statements. The Company has not recognized a valuation allowance for deferred
tax assets.

                                      47
<PAGE>
 
5
-----------------------------
COMMITMENTS AND CONTINGENCIES
-----------------------------

The Company's offices and certain facilities are occupied under leases expiring
at various dates. At September 30, 1998, the Company's lease commitments under
the non-cancelable portion of these leases for the next five years and in total
thereafter were as follows:

<TABLE>
<CAPTION>
                                                                 Total Lease
                                        (Millions of dollars)    Commitments
                                        ------------------------------------
<S>                                                              <C>
1999                                                                     $ 6
2000                                                                       5
2001                                                                       4
2002                                                                       3
2003                                                                       2
2004 and thereafter                                                        5
                                                                ------------ 
 Total                                                                   $25
                                                                ------------ 
</TABLE>

Rental equipment lease financing expense amounted to $1 million in both 1997 and
1996, which is included in the income statement under the caption "Depreciation
on rental equipment."  Other rental expense amounted to $6 million, $6 million,
and $5 million in 1998, 1997, and 1996, respectively.

As of November 11, 1998, the Company had committed capital expenditures of $115
million, principally for revenue equipment in fiscal 1999.

The Illinois Environmental Protection Agency has notified the Company of alleged
environmental contamination of its Fairmont City, Illinois property that
resulted from the prior owners' zinc smelting operations. As a result, the
Company has taken certain actions to suppress dust that have significantly
reduced the level of airborne contaminants at the site. Based on the Company's
current understanding of the nature of the contamination at the site, the
Company does not believe that the ultimate resolution of this matter will have a
material adverse effect on the Company's results of operations, cash flows or
financial condition.


6
----------------
RETIREMENT PLANS
----------------

The Company provides retirement benefits to substantially all of its employees
through a qualified and funded defined contribution retirement plan. The
Company's yearly profit sharing cash contributions are discretionary and the
retirement trust fund's assets are administered by a trustee. The Company's
contributions include an employee-matching contribution to a 401(k) plan and a
profit sharing contribution and are based on a specified percentage of employee
qualified compensation. Participants are entitled to their vested portion of the
retirement assets upon termination of employment. The Company recorded expenses
of $2 million each year in 1998, 1997, and 1996 in connection with the defined
contribution retirement plan.

                                      48
<PAGE>
 
7
--------------------
BUSINESS INFORMATION
--------------------

The Company leases transportation equipment throughout North America and
internationally. The over-the-road and intermodal equipment is leased throughout
North America and the marine containers are moved between countries in
international commerce. Information about the business of the Company by
geographic area is presented in the table below.

<TABLE>
<CAPTION>
                               (Millions of dollars)   1998    1997    1996
                               ----------------------------------------------
<S>                            <C>                     <C>     <C>     <C> 
REVENUES

North America                                          $  381  $  359  $  347 
International                                              80      76      75 
                                                       ----------------------
                                                       $  461  $  435  $  422 
                                                       ======================
OPERATING INCOME                                           

North America                                          $  141  $  121  $  115 
International                                              18      13      20 
                                                       ----------------------
                                                       $  159  $  134  $  135 
                                                       ======================
IDENTIFIABLE ASSETS                                        

North America                                          $1,165  $1,150  $1,100 
International                                             410     435     437 
                                                       ----------------------
                                                       $1,575  $1,585  $1,537  
                                                       ======================
</TABLE>


8
------------
COMMON STOCK
------------

Repurchase of Common Stock

The Company has authorized the repurchase of up to $200 million of its common
stock. The timing of the repurchases, which could occur over an extended period
of time, will depend on price, market conditions, and other factors. As of
November 12, 1998, the Company repurchased $79 million of common stock. The
Company had agreed in the Recapitalization Merger Agreement not to repurchase
any shares of Company Common Stock pending consummation of the Merger (see Note
13 of the Notes to Consolidated Financial Statements).

1997 Stock Incentive Plan

The 1997 Stock Incentive Plan authorizes the issuance of 500,000 shares of
common stock under the plan.  The plan allows the Company to grant awards to key
employees including restricted stock awards, stock options, and stock
appreciation rights, subject primarily to the requirement of continuing
employment.  The awards under this plan are available for grant over a period of
ten years from the date on which the plan was adopted,  but the grants may vest
beyond the ten year period.  Stock options issued by the Company are exercisable
at a future time as specified by the Company and generally expire from five to
ten years from the date of grant.  The exercise price of stock options may not
be less than the fair market value of the common stock at the date of grant.

1991 Stock Option Plan for Non-Employee Directors

The 1991 Stock Option Plan for Non-Employee Directors authorizes the granting of
options for a maximum of 100,000 shares. The option price per share is equal to
the fair market value of the common stock on the date of grant. The term of each
option is five years and options become exercisable one year after the date of
grant.

                                      49
<PAGE>
 
The XTRA Corporation Deferred Director Fee Option Plan

The Deferred Director Fee Option Plan allows a non-employee director to elect to
receive, in lieu of his annual retainer fee and/or board and committee meeting
fees, a non-qualified stock option. The option exercise price is 50% of the fair
market value of the shares at the time the options are awarded and the amount of
shares is determined by dividing the director's fees by the exercise price.

1987 Stock Incentive Plan

The 1987 Stock Incentive Plan, which expired November 1997, authorized the
issuance of 1,150,000 shares of common stock under the plan. The plan allowed
the Company to grant awards to key employees including restricted stock awards,
stock options, and stock appreciation rights, subject primarily to the
requirement of continuing employment. The awards under this plan were available
for grant over a period of ten years from the date on which the plan was
adopted, but grants were allowed to vest beyond the ten year period. Stock
options issued by the Company are exercisable at a future time as specified by
the Company and generally expire from five to ten years from the date of grant.
The exercise price of stock options may not be less than the fair market value
of the common stock at the date of grant.

Accounting for Stock-Based Compensation

In October 1995, the Financial Accounting Standards Board issued Statement of
Accounting Standards Number 123 (SFAS 123), "Accounting for Stock-Based
Compensation," which sets forth a fair-value-based method of recognizing stock-
based compensation expense. As permitted by SFAS 123, the Company has elected to
continue to apply APB No. 25, "Accounting for Stock Issued to Employees," to
account for its stock-based compensation plans.

Had the compensation cost for these plans been determined according to SFAS 123,
the Company's net income and earnings per share would have been the following
pro forma amounts:

<TABLE>
<CAPTION>
                               (Millions of dollars,       1998   1997   1996
                               except  per share amounts)
                               -------------------------------------------------
<S>                            <C>                         <C>    <C>    <C>
NET INCOME

As reported                                                $  60  $  43  $  41
Pro forma                                                  $  59  $  41  $  41
                                                                             
BASIC EPS                                                                    

As reported                                                $3.90  $2.79  $ 2.56 
Pro forma                                                  $3.87  $2.72  $ 2.56 
                                                                             
DILUTED EPS                                                                  

As reported                                                $3.88  $2.78  $ 2.56 
Pro forma                                                  $3.86  $2.71  $ 2.55
                                                           --------------------
</TABLE>

For purposes of the pro forma disclosure, the fair value of each option is
estimated on the date of grant using the Black-Scholes option pricing model with
the following weighted average assumptions:

<TABLE>
<CAPTION>
                                                       1998      1997     1996
                                                     --------------------------
<S>                                                  <C>         <C>      <C>
Volatility                                             20.1%     20.1%    22.9%
Risk-free interest rate                                 4.4%      5.8%     6.3%
Dividend yield                                          1.8%      1.8%     1.6%
Expected life of options                             3 years   3 years  3 years
                                                     ---------------------------
</TABLE>

                                      50
<PAGE>
 
For shares granted under the 1987 Stock Incentive Plan, the weighted average
grant date fair value of options granted during 1997 and 1996 was $9.32 and
$9.35 per share, respectively. For shares granted under the 1991 Stock Option
Plan for Non-Employee Directors, the weighted average grant date fair value of
options granted during 1998, 1997, and 1996 was $9.86, $8.29, and $8.83 per
share, respectively. The weighted average grant date fair value of options
granted during 1998, 1997, and 1996 for the shares granted under the Deferred
Director Fee Option Plan was $4.92, $4.02, and $4.40 per share respectively.
For shares granted under the 1997 Stock Incentive Plan, the weighted average
grant fair value of options granted during 1998 was $8.59 per share.

Because SFAS 123 does not require a fair-value-based method of accounting to be
applied to options granted prior to October 1, 1995, the resulting pro forma
compensation cost may not be representative of that to be expected in future
years.

The following table summarizes the stock option transactions pursuant to the
Company's stock incentive and stock option plans for the three-year period ended
September 30, 1998:

<TABLE>
<CAPTION>
                                                               Weighted Average
                                                     Shares     Exercise Price
                                                     (000s)     Per Share ($)
                                                     ---------------------------
<S>                                                  <C>       <C>
OPTIONS OUTSTANDING AT SEPTEMBER 30, 1995              666             $46.71 

Granted                                                 21              41.08 
Exercised                                              (36)             14.43 
Forfeited                                              (11)             47.96 
                                                      -----------------------

OPTIONS OUTSTANDING AT SEPTEMBER 30, 1996              640              48.27  

Group                                                  262              50.05 
Exercised                                              (30)             34.95
Forfeited                                              (64)             50.04 
                                                      ----------------------- 

OPTIONS OUTSTANDING AT SEPTEMBER 30, 1997              808              49.10 

Granted                                                 95              52.52 
Exercised                                              (96)             45.03 
Forfeited                                              (14)             47.17  
                                                      -----------------------

OPTIONS OUTSTANDING AT SEPTEMBER 30, 1998              793              49.95
                                                      =======================

Exercisable options at September 30, 1998              641              50.45
 
Shares available for grant at September 30, 1998       496
                                                      -----------------------
</TABLE> 

                                      51
<PAGE>
 
The following table summarizes information about stock options outstanding at
September 30, 1998:

<TABLE> 
<CAPTION> 
                                                                 Options outstanding            Options exercisable
                                                  -------------------------------------------------------------------
                                                                 Weighted  
                                                  Number         Average        Weighted       Number       Weighted  
                                                  Outstanding    Remaining      Average      Exercisable     Average  
                                                  at 9/30/98    Contractual    Exercise       at 9/30/98    Exercise  
                                                    (000s)      Life (Years)     Price          (000s)       Price      
                                                  ------------------------------------------------------------------- 
<S>                                               <C>           <C>            <C>           <C>            <C> 
RANGE OF EXERCISE PRICES

$20.75 to $29.88                                          7         2.7         $24.47                5       $23.28    
$40.75 to $60.44                                        786         2.4          50.17              636        50.68    
                                                  ------------------------------------------------------------------- 
Total                                                   793         2.4         $49.95              641       $50.45     
                                                  ===================================================================
</TABLE>

9
-----------------------------------------------------
DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
-----------------------------------------------------

The following methods and assumptions were used to estimate the fair value of
each class of financial instrument:

Cash and Short-term Investments
The carrying amount approximates fair value because of the short maturity of
those instruments.

Debt
The fair value of the Company's fixed rate debt is estimated based on the quoted
market prices for the same or similar issues or on the current rates offered to
the Company for debt of the same remaining maturities. The fair value of the
Company's floating rate debt is its carrying amount.

The carrying amounts and estimated fair values of the Company's financial
instruments are as follows:

<TABLE> 
<CAPTION> 
                                        For the two years ended September 30, 1998    Carrying     Fair   
                                        (Millions of dollars)                          Amount     Value   
                                        ----------------------------------------------------------------  
<S>                                     <C>                                           <C>         <C>      
1998

Cash and short-term investments                                                        $   3      $   3
Debt                                                                                     802        866
 
1997

Cash and short-term investments                                                        $   4      $   4
Debt                                                                                     892        917
                                                                                     ------------------
</TABLE> 

                                      52
<PAGE>
 
10
-------------------------------
ALLOWANCE FOR DOUBTFUL ACCOUNTS
-------------------------------

The allowance for doubtful accounts as of September 30, 1998, 1997, and 1996
consists of the following:

<TABLE> 
<CAPTION>
                                             For the year ended September 30,     1998     1997    1996
                                             (Millions of dollars)                                     
                                             ----------------------------------------------------------- 
<S>                                          <C>                                  <C>      <C>     <C> 
Balance at beginning of year                                                      $  14    $  13   $  16
Additions charged to operating expenses                                               5        5       3
Deductions(1)                                                                        (3)      (4)     (6)
                                                                                  ----------------------
Balance at end of year                                                            $  16    $  14   $  13
                                                                                  ======================
</TABLE> 

(1) Amounts charged against reserves, net of recoveries.

11
---------------------------------------------------
SELECTED FINANCIAL DATA OF SIGNIFICANT SUBSIDIARIES
---------------------------------------------------

The condensed consolidated data for XTRA, Inc., a wholly-owned subsidiary of
XTRA Corporation, included in the consolidated financial information of the
Company, is summarized below:

<TABLE>
<CAPTION>
                                             For the three years ended September 30,     1998    1997    1996
                                             (Millions of dollars)
                                             -----------------------------------------------------------------
<S>                                          <C>                                         <C>     <C>     <C> 
INCOME STATEMENT DATA

Revenues                                                                                 $  461  $  435  $  422
Pretax income                                                                                99      71      69
Net income                                                                                   59      43      41
                                                                                                               
SELECTED BALANCE SHEET DATA                                                                                    

Receivables, net                                                                         $  106  $  108  $   94
Net property and equipment                                                                1,452   1,454   1,407
Other assets                                                                                 17      23      35
                                                                                         ----------------------
   Total assets                                                                          $1,575  $1,585  $1,536 
                                                                                         ======================
Debt                                                                                     $  802  $  892  $  892 
Deferred income taxes                                                                       287     252     227  
Other liabilities                                                                            84      86      76  
                                                                                         ----------------------
   Total liabilities                                                                      1,173   1,230   1,195   
Stockholders' equity                                                                        402     355     341
                                                                                         ----------------------
   Total liabilities and stockholders' equity                                            $1,575  $1,585  $1,536
                                                                                         ======================
</TABLE>

                                      53
<PAGE>
 
12
------------------------------------
BASIC AND DILUTED EARNINGS PER SHARE
------------------------------------

The following tables provide a reconciliation of the numerators and denominators
of basic and diluted earnings per share computations:

<TABLE> 
<CAPTION> 
                                                  Year ended September 30,         1998       1997      1996             
                                                  (Millions of dollars except                                             
                                                  per share amounts)                                                      
                                                  ------------------------------------------------------------            
<S>                                               <C>                             <C>        <C>      <C>  
Net income (in millions) (numerator)                                              $     60   $    43  $    41             
                                                                                  ============================            
                                                                                                                          
COMPUTATION OF BASIC SHARES OUTSTANDING                                                                                   
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                                                                                  
                                                                                                                          
Weighted average number of basic shares                                                                                   
outstanding (denominator)                                                           15,319    15,268   16,027             
                                                                                  ----------------------------            
Basic earnings per common share                                                   $   3.90   $  2.79  $  2.56             
                                                                                  ============================            
                                                                                                                          
COMPUTATION OF DILUTED SHARE OUTSTANDING                                                                                  
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                                                                                  
                                                                                                                          
Weight average number of basic shares outstanding                                   15,319    15,268   16,027             
                                                                                                                          
Common Stock equivalents for diluted                                                                                      
shares outstanding                                                                      72        18       25             
                                                                                  ----------------------------            
                                                                                                                          
                                                                                                                          
Weight average number of diluted shares                                                                                   
outstanding (denominator)                                                           15,391    15,288   16,052             
                                                                                  ----------------------------            
                                                                                                                          
Diluted earnings per common share                                                 $   3.88    $ 2.78  $  2.56             
                                                                                  ============================             
</TABLE> 

13
--------------------------------------
TERMINATION OF RECAPITALIZATION MERGER
--------------------------------------

XTRA entered into an Agreement and Plan of Merger and Recapitalization dated as 
of June 18, 1998, as amended and restated as of July 31, 1998, with Wheels 
MergerCo LLC ("MergerCo"). MergerCo is a newly organized Delaware limited
liability company formed by Apollo Management IV, L.P. and Atlas Capital
Partners LLC, an affiliate of Interpool, Inc. On June 26, 1998, a Current Report
on Form 8-K was filed by the Company which included a copy of the Agreement and
Plan of Merger and Recapitalization. In addition, the Company filed a proxy
statement on October 30, 1998 which included further information regarding the
merger. Among other restrictions in the Agreement, the Company was restricted
from paying dividends and repurchasing stock.

On November 25, 1998, the Company and MergerCo mutually agreed to terminate 
their existing merger agreement. Previously, MergerCo had indicated that due to
market conditions it did not think it would be able to obtain the financing
necessary to complete the deal. The Company filed a Current Report on Form 8-K
on December 15, 1998, disclosing the conditions of the merger agreement
termination.

                                      54
<PAGE>
 
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders of XTRA Corporation:

We have audited the accompanying consolidated balance sheets of XTRA Corporation
(a Delaware corporation) and subsidiaries as of September 30, 1998 and 1997, and
the related consolidated statements of income, stockholders' equity and cash
flows for each of the three years in the period ended September 30, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of XTRA Corporation and
subsidiaries as of September 30, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
September 30, 1998, in conformity with generally accepted accounting principles.


ARTHUR ANDERSEN LLP

Boston, Massachusetts
November 11, 1998

(except with respect to the matters discussed
in Note 13, as to which the date is
November 13, 1998)

                                      55