<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549


                                   Form 10-Q


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



For quarterly period ended                     March 31, 1999
                           -----------------------------------------------------

Commission File Number                            1-7654
                      ----------------------------------------------------------

                               XTRA CORPORATION
--------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)



            DELAWARE                                          06-0954158
-------------------------------                       ------------------------- 
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                            Identification No.)



                 60 State Street, Boston, Massachusetts  02109
--------------------------------------------------------------------------------
                   (Address of principal executive offices)



                                (617) 367-5000
--------------------------------------------------------------------------------
             (Registrant's telephone number, including area code)


                                      N/A
--------------------------------------------------------------------------------
  (Former name, former address and former fiscal year, if changed since last
                                    report)

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

                               Yes    X         No 
                                   -------         -------        

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.


       Class                                    Outstanding at April 30, 1999
------------------------                       -------------------------------
Common Stock, Par Value                                 13,281,927
$.50 Per Share
<PAGE>
 
                       XTRA CORPORATION AND SUBSIDIARIES
                       ---------------------------------

                                     INDEX
                                     -----

                                                                       Page No.
                                                                       --------
   
Part I.  Financial Information
         ---------------------

         Management Representation....................................      3

         Consolidated Balance Sheets
           March 31, 1999 and September 30, 1998......................      4

         Consolidated Statements of Operations
           For the Three Months and Six Months Ended
           March 31, 1999 and 1998....................................      5

         Consolidated Statements of Cash Flows
           For the Six Months Ended
           March 31, 1999 and 1998....................................      6

         Consolidated Statements of Stockholders' Equity
           For the Six Month Periods Ended
           March 31, 1999 and 1998 ...................................      7

         Notes to Consolidated Financial Statements...................      8

         Management's Discussion and Analysis of
           Financial Condition and Results of Operations..............     11
   
Part II. Other Information
         -----------------

         Item 4.  Submission of Matter to a Vote of Security Holders..     19

         Item 5.  Other Matters.......................................     19

         Item 6.  Exhibits and Reports on Form 8-K....................     22

         Item 7A. Quantitative and Qualitative Disclosures about 
                    Market Risk.......................................     22

         Signatures...................................................     23
  
         Exhibit Index................................................     24

                                       2
<PAGE>
 
                        PART 1 - FINANCIAL INFORMATION
                        ------------------------------
                                        
                       XTRA CORPORATION AND SUBSIDIARIES
                       ---------------------------------
                                        
                           MANAGEMENT REPRESENTATION
                           -------------------------


     The financial statements included herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission.  Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations.  The Company believes, however, that the disclosures are adequate
to make the information presented not misleading.

     The Board of Directors carries out its responsibility for the financial
statements included herein through its Audit Committee, composed of non-employee
Directors.  During the year, the Committee meets periodically with both
management and the independent public accountants to ensure that each is
carrying out its responsibilities.  The independent public accountants have full
and free access to the Audit Committee and meet with its members, with and
without management being present, to discuss auditing and financial reporting
matters.

     These financial statements should be read in conjunction with the financial
statements and the notes thereto included in the Company's latest Annual Report
on Form 10-K.

     This financial information reflects, in the opinion of management, all
adjustments necessary to present fairly the results for the interim periods.
Such adjustments consist of only normal recurring adjustments.  The results of
operations for such interim periods are not necessarily indicative of the
results to be expected for the full year.

                                       3
<PAGE>
 
                       XTRA CORPORATION AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                          ---------------------------
                (Millions of dollars, except per share amounts)

<TABLE> 
<CAPTION> 
                                                     March 31,
                                                       1999      September 30,
                                                    (Unaudited)    1998/(1)/
                                                    -----------    ---------
<S>                                                 <C>            <C> 
Assets 
------ 
Property and equipment                              $   2,280      $  2,200
Accumulated depreciation                                 (818)         (748)
                                                    ---------      --------
   Net property and equipment                           1,462         1,452
Lease contracts receivable                                 40            42
Trade receivables, net                                     61            64
Other assets                                               20            14
Cash                                                        3             3
                                                    ---------      --------
                                                    $   1,586      $  1,575
                                                    =========      ========

Liabilities and Stockholders' Equity
------------------------------------
Liabilities:                                      
Debt                                                $     881      $    802
Deferred income taxes                                     291           287
Accounts payable and accrued expenses                      83            78
                                                    ---------      --------
   Total liabilities                                    1,255         1,167
                                                    ---------      --------

Commitments and contingencies:

Stockholders' equity:
Common stock, par value $.50 per share; authorized:
   30,000,000 shares; issued and outstanding;
   13,280,927 shares at March 31, 1999
   and 15,372,903 at September 30, 1998                     7             8
Capital in excess of par value                              -            57
Retained earnings                                         332           354
Cumulative translation adjustment                          (8)          (11)
                                                    ---------      --------
   Total stockholders' equity                             331           408
                                                    ---------      --------
                                                    $   1,586      $  1,575
                                                    =========      ========

</TABLE> 

/(1)/ Derived from XTRA Corporation's audited September 30, 1998 financial 
      statements.

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

                                       4
<PAGE>
 
                       XTRA CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     -------------------------------------
                (Millions of dollars, except per share amounts)

                                  (Unaudited)

<TABLE> 
<CAPTION> 
                                                      Three Months Ended      Six Months Ended
                                                          March 31,              March 31,
                                                       1999        1998        1999      1998
                                                      ------      ------      ------    ------
<S>                                                   <C>         <C>         <C>       <C> 
Revenues                                              $  110      $  109      $  232    $  230

Operating expenses                      
  Depreciation on rental equipment                        38          38          76        76
  Rental equipment operating expenses                     28          28          56        54
  Selling and administrative expense                      11          11          22        22
  Revenue equipment writedown                             25           -          25         -
  Restructuring costs                                     13           -          13         -
                                                      ------      ------      ------    ------
                                                         115          77         192       152
                                                      ------      ------      ------    ------
    Operating income (loss)                               (5)         32          40        78

Interest expense                                          14          14          28        30
                                                      ------      ------      ------    ------

    Income (loss) from operations before provision
    (benefit) for income taxes and unusual item          (19)         18          12        48

Unusual item: costs related to terminated merger           -           -           1         -
                                                      ------      ------      ------    ------
    Pretax income (loss)                                 (19)         18          11        48

Provision (benefit) for income taxes                      (8)          7           4        19
                                                      ------      ------      ------    ------
Net income (loss)                                     $  (11)     $   11      $    7    $   29
                                                      ======      ======      ======    ======
Basic earnings (loss) per common share                $(0.82)     $ 0.71      $ 0.46    $ 1.89
Basic common shares outstanding (in millions)           13.9        15.3        14.6      15.3

Diluted earnings (loss) per common share              $(0.82)     $ 0.71      $ 0.46    $ 1.88
Diluted common shares outstanding (in millions)         13.9        15.4        14.6      15.4

Cash dividends declared per share                     $    -      $ 0.22      $    -    $ 0.42

</TABLE> 

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

                                       5
<PAGE>
 
                       XTRA CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENT OF CASH FLOWS
                     ------------------------------------
                (Millions of dollars, except per share amounts)

                                  (Unaudited)
<TABLE> 
<CAPTION> 
                                                          Six Months Ended
                                                               March 31,
                                                           1999       1998
                                                          ------     ------
<S>                                                       <C>       <C> 
Cash flows from operations:                               $    7     $   29
  Net income
  Add non-cash income and expense items:
    Depreciation and amortization, net                        75         75
    Restructuring charges and revenue equipment 
      writedown                                               38          -
    Deferred income taxes, net                                 4         17
    Bad debt expense                                           2          2
  Add other cash items:
    Net change in receivables, other assets,
    payables and accrued expenses                             (9)         -
    Cash receipts from lease contracts receivable             13         13
    Recovery of property and equipment net book value         10         12
                                                          ------     ------
      Total cash provided from operations                    140        148
                                                          ------     ------

Cash used for investment activities:
  Additions to property and equipment                       (129)       (53)
                                                          ------     ------
    Total cash used for investing activities                (129)       (53)
                                                          ------     ------

Cash flows from financing activities:
  Borrowings of long-term debt                                79          -
  Payments of long-term debt                                   -         87
  Repurchase of common stock                                 (90)         - 
  Options issued and related tax benefits                      -          1
  Dividends paid                                               -         (6)
                                                          ------     ------
    Total cash used for financing activities                 (11)       (92)
                                                          ------     ------

Net increase (decrease) in cash                                -          3
Cash at beginning of period                                    3          4
                                                          ------     ------
Cash at end of period                                     $    3     $    7
                                                          ======     ======
Total interest paid                                       $   28     $   30
Total net income taxes paid                               $    -     $    3

</TABLE> 

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

                                       6
<PAGE>
 
                       XTRA CORPORATION AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                -----------------------------------------------
                   Six months ended March 31, 1998 and 1999
                   ----------------------------------------
                             (Millions of dollars)

                                  (Unaudited)


<TABLE> 
<CAPTION> 
                                                Common
                                                 Stock      Capital in              Cumulative
                                                $ 0.50      Excess of    Retained   Translation   Comprehensive
                                                Par Value   Par Value    Earnings   Adjustment        Income
                                                ---------   ----------   --------   -----------   -------------
<S>                                             <C>         <C>          <C>        <C>           <C> 
Balance at September 30, 1997                   $     8     $     52     $   304      $    (4)
                                                                                    
Net income                                            -            -          29            -       $      29
Foreign currency translation adjustment               -            -           -           (2)             (2)
                                                                                                    ---------
Comprehensive Income                                                                                $      27
                                                                                                    =========
Common stock cash dividends                                                         
  declared at $.42 per share                          -            -          (6)           -
Options exercised and related tax benefits            -            1           -            -
                                                -------     --------     -------      -------     
Balance at March 31, 1998                       $     8     $     53     $   327      $    (6)   
                                                =======     ========     =======      =======      

Balance at September 30, 1998                   $     8     $     57     $   354      $   (11)
                                                                                    
Net income                                            -            -           7            -       $       7
Foreign currency translation adjustment               -            -           -            3               3
                                                                                                    ---------
Comprehensive Income                                                                                $      10
                                                                                                    =========
Shares granted under restricted stock plan,
 forfeitures, options exercised, and                  -            3           -            -
 related tax benefits
Common stock repurchased                             (1)         (60)        (29)           - 
                                                -------     --------     -------      -------                
Balance at March 31, 1999                       $     7     $      -     $   332     $    (8)               
                                                =======     ========     =======      =======                

</TABLE> 

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

                                       7
<PAGE>
 
                       XTRA CORPORATION AND SUBSIDIARIES
                       ---------------------------------
             NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
             ----------------------------------------------------


(1)  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 prior period financial statements have been reclassified
     to be consistent with the current period's presentation.

(2)  The effective income tax rates used in the interim financial statements are
     estimates of the fiscal years' rates.  The effective income tax rate for
     fiscal 1998 was 40%.  For the six months ended March 31, 1999, the Company
     recorded a provision for income taxes using an estimated effective income
     tax rate of 40%.  The Company's effective income tax rate for fiscal 1998
     and its estimated effective income tax rate for fiscal 1999 are higher than
     the statutory U.S. Federal income tax rate due primarily to state income
     taxes.

(3)  The Company's long-term debt includes a current portion of $128 million at
     March 31, 1999 and $72 million at September 30, 1998.

(4)  In fiscal 1999, the Company adopted Statement of Financial Accounting
     Standards No. 130, "Reporting Comprehensive Income," (SFAS 130), which
     requires companies to report all non-owner changes in equity during a
     period in a financial statement for the period in which they are
     recognized. The Company has chosen to disclose Comprehensive Income, which
     encompasses net income and foreign currency translation adjustments, in the
     Consolidated Statements of Stockholders' Equity.

(5)  XTRA recorded one-time charges during the second quarter of fiscal 1999 for
     establishing a Shared Service Center, restructuring its marine container
     operations and recording additional depreciation to adjust a portion of its
     marine container fleet to realizable value. These charges were $4 million,
     $9 million and $25 million, respectively. The Company will consolidate its
     financial, accounting, human resources, and information technology
     operations into a Shared Service Center located in St. Louis, Missouri to
     achieve cost savings and efficiencies. The Company anticipates that the
     transition to the Shared Service Center will be completed by the end of
     fiscal 1999. The $4 million charge is principally related to severance
     payments and the shutdown and consolidation of existing facilities. XTRA
     has agreed to outsource the management of its international container
     leasing business effective June 1, 1999. XTRA recorded a restructuring
     charge of approximately $9 million related to the costs of closing its XTRA
     International offices. Approximately one half of the charge is for
     severance payments and the remainder is related primarily to the write-off
     of non-revenue assets. Additionally, the Company has identified a number of
     older and less desirable marine containers that it intends to sell over the
     next twelve months, and as a result recorded a depreciation charge of $25
     million to writedown the containers to their estimated net realizable
     value. Excluding these charges, net income and diluted earnings per share
     would have been $11 million and $.0.82 for the three months ended March 31,
     1999. Excluding these charges and the one-time unusual charge of $1 million
     related to the terminated merger made in the first quarter of fiscal 1999,
     net income and diluted earnings per share would have been $30 million and
     $2.04 for the six months ended March 31, 1999.

                                       8
<PAGE>
 
(6)  XTRA Corporation's assets consist substantially of the aggregate assets,
     liabilities, earnings and equity of XTRA, Inc., a wholly-owned direct
     subsidiary. In addition, XTRA Corporation generally guarantees the debt of
     XTRA, Inc.

     The condensed consolidated financial data for XTRA, Inc. included in the
     consolidated financial information of the Company is summarized below:

<TABLE> 
<CAPTION> 
     Selected Balance Sheet Data:                   March 31,     September 30,
     ---------------------------                      1999            1998
     (Millions of dollars)                          --------      ------------
     <S>                                            <C>           <C>
     Net property and equipment                      $ 1,462         $ 1,452
     Receivables, net                                    101             106
     Other assets                                         19              17
                                                     -------         -------
          Total assets                               $ 1,582         $ 1,575
                                                     =======         =======

     Debt                                            $   881         $   802
     Deferred income taxes                               291             287
     Other liabilities                                    83              84
                                                     -------         -------
          Total liabilities                            1,255           1,173
                                                     -------         -------

     Stockholders' equity                                327             402
                                                     -------         -------
     Total liabilities and stockholders' equity      $ 1,582         $ 1,575
                                                     =======         =======
</TABLE> 

Selected Income Statement Data:
------------------------------
(Millions of dollars)

<TABLE> 
<CAPTION> 
For the three months ended March 31,                  1999           1998
                                                     ------         ------
<S>                                                  <C>            <C>
Revenues                                              $ 110          $ 109
Pretax income (loss)                                    (15)            18
Net income (loss)                                        (8)            11

For the six months ended March 31,                     1999           1998
                                                     ------         ------
Revenues                                              $ 232          $ 230
Pretax income                                            15             48
Net income                                               11             29
</TABLE> 

                                       9
<PAGE>
 
(7)  The following tables provide a reconciliation of the numerators and
     denominators of the basic and diluted earnings per share computations, as
     required by SFAS 128:


<TABLE> 
<CAPTION> 
                                                               Three Months Ended      Six Months Ended
                                                                    March 31,               March 31,
                                                              --------------------    --------------------
                                                                1999        1998        1999        1998
                                                              --------    --------    --------    --------  
<S>                                                           <C>         <C>         <C>         <C>
     Net income (loss) (in millions) (numerator)               $   (11)    $    11     $     7     $    29
                                                              ========    ========    ========    ======== 
                                                                                      
     Computation of Basic Shares Outstanding                                          
     ---------------------------------------                                          
     (in thousands, except per share amounts)                                         
     ----------------------------------------                                         
                                                                                      
     Weighted average number of basic common shares                                   
     outstanding (denominator)                                  13,895      15,299      14,642      15,291
                                                              ========    ========    ========    ======== 
                                                                                      
     Basic earnings (loss) per common share                    $ (0.82)    $  0.71     $  0.46     $  1.89
                                                              ========    ========    ========    ======== 
                                                                                      
                                                                                      
     Computation of Diluted Shares Outstanding                                        
     -----------------------------------------                                        
     (in thousands, except per share amounts)                                         
     ----------------------------------------                                         
                                                                                      
     Weighted average common shares outstanding                 13,895      15,299      14,642      15,291
                                                                                      
     Common stock equivalents for diluted common shares                               
     outstanding                                                    --          98           5          74
                                                              --------    --------    --------    --------  
                                                                                      
                                                                                      
     Weighted average number of diluted common shares                                 
     outstanding (denominator)                                  13,895      15,397      14,647      15,365
                                                              ========    ========    ========    ======== 
                                                                                      
     Diluted earnings (loss) per common share                  $ (0.82)    $  0.71     $  0.46     $  1.88
                                                              ========    ========    ========    ======== 
</TABLE> 

(8)  On March 9, 1999, XTRA announced that it had completed the $90 million
     repurchase plan announced on January 25, 1999. The Company repurchased 2.2
     million shares of its common stock representing 14% of the total shares
     outstanding at the beginning of the year.

                                       10
<PAGE>
 
                       XTRA CORPORATION AND SUBSIDIARIES
                       ---------------------------------
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                    ---------------------------------------
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                 ---------------------------------------------
                                        
     The discussion below contains certain forward-looking statements, including
estimates of economic and industry conditions, equipment utilization, and
capital expenditures.  Actual results may vary from those contained in such
forward-looking statements.  See "Cautionary Statements for Purposes of the
`Safe Harbor' Provisions of the Private Securities Litigation Act of 1995"
contained in Part II, Item 5.

     XTRA leases, primarily on an operating basis, freight transportation
equipment including over-the-road trailers, marine containers, intermodal
trailers, chassis, and domestic containers. XTRA's equipment utilization, lease
rates, and therefore, profitability, are impacted by the supply of and demand
for available equipment, the level of economic activity in North America, world
trade activity, the actions of its competitors, and other factors in the freight
transportation industry. Utilization and profitability are usually seasonally
lower in the second and third fiscal quarters than in the first and fourth
fiscal quarters. In general, the Company's receivable collection experience has
been good. However industry downturns tend to lengthen the collection period of
certain receivables.

     The Company's pretax profits are cyclical, principally due to the
variability of the Company's revenues and the high percentage of fixed costs. To
moderate this cyclicality, the Company attempts to maintain a balance between
the amount of equipment leased on a per diem and term basis and maintains a mix
of various types of freight transportation equipment available for lease. The
Company has historically maintained a high proportion of its debt at fixed rates
to reduce the impact of fluctuations in interest rates.

     XTRA's marine container leasing operation reduces XTRA's dependence on the
North American transportation industry. Although the marine container business
is international, substantially all transactions are denominated in U.S.
dollars.

The Three Months Ended March 31, 1999
--------------------------------------
Versus the Three Months Ended March 31, 1998:
---------------------------------------------

Revenues and Changes in Business Conditions
-------------------------------------------

     Revenues are a function of lease rates and working units; the latter
depends on fleet size and equipment utilization. Utilization, the ratio of
revenue-earning units to the total fleet, is derived from billing information,
usage reports and other information from customers, assumptions based on
historical experience, and equipment inventories taken at Company depots, and is
an approximation. Utilization is impacted by the supply of, and demand for,
available equipment, the level of economic activity in North America, and world
trade activity.

                                       11
<PAGE>
 
     The following table sets forth the Company's average equipment utilization
(dollar-weighted by net investment in equipment), average fleet size in units,
and average net investment in revenue equipment for the three months ended March
31, 1999 and 1998.  The Company's fleet size and average net investment include
equipment owned by the Company, equipment leased-in from third parties under
operating and capital leases, and equipment leased to third parties under
finance leases.



The Three Months Ended March 31, 1999
--------------------------------------
Versus the Three Months Ended March 31, 1998:
---------------------------------------------

<TABLE> 
<CAPTION> 
                                                         Three Months Ended
                                                             March 31,
                                                         1999          1998
                                                       --------      --------
<S>                                                    <C>           <C> 
XTRA Lease
----------
Utilization                                                  83%           88%
Units                                                    83,000        77,000
Net investment in equipment (in millions)              $    824      $    712

XTRA Intermodal:
---------------
Utilization                                                  78%           79%
Units                                                    54,000        54,000
Net investment in equipment (in millions)              $    273      $    292

Total North America:
-------------------
Utilization                                                  81%           85%
Units                                                   137,000       131,000
Net investment in equipment (in millions)              $  1,097      $  1,004

International:
-------------
Utilization                                                  69%           82%
Units                                                   163,000       165,000
Net investment in equipment (in millions)              $    361      $    409

Consolidated:
------------
Utilization                                                  78%           84%
Units                                                   300,000       296,000
Net investment in equipment (in millions)              $  1,458      $  1,413
</TABLE> 

                                       12
<PAGE>
 
     Revenues increased by 1% or $1 million for the three months ended March 31,
1999 over the same period a year ago.  The Company's average equipment
utilization declined from 84% in the second quarter of fiscal year 1998 to 78%
in the second quarter of fiscal 1999.  Average net investment in equipment
increased by $45 million from the same quarter of the prior year due primarily
to an increase in the over-the-road fleet which more than offset a decline in
the net investment in the marine container and intermodal equipment fleets.  For
the full fiscal year 1999, average equipment utilization is expected to be less
than the 1998 average of 86%.

     The Company's North American revenues increased $5 million from the same
quarter a year ago due to strong levels of domestic freight leading to more
working units, as well as an improvement in over-the-road lease rates.  The
Company's North American utilization averaged 81% in the second quarter of
fiscal 1999, as compared to 85% in the comparable prior year period.  Increasing
demand for equipment was reflected in increased truck tonnage, which is an
indicator of domestic freight levels in the U.S. XTRA Lease's revenues increased
$5 million from the comparable prior year quarter due to an improvement in lease
rates as well as   more over-the-road trailer working units. XTRA Lease's
utilization averaged 83% on a larger total fleet size in the current quarter,
compared to 88% in the comparable prior quarter. XTRA Intermodal's  revenues
remained unchanged from the first quarter of fiscal 1998. XTRA Intermodal's
utilization averaged 78% in the first quarter of fiscal 1999, compared to 79% in
the same period of 1998.

     The Company's North American over-the-road trailer fleet averaged 81,000
units, or 56% of average net investment in equipment in the second quarter of
fiscal year 1999, compared to 75,000 units, or 49% of average net investment in
equipment, in the comparable prior year period.  The Company continues to
downsize its North American intermodal trailer fleet as the railroads shift
toward more domestic container usage.  XTRA's intermodal trailer fleet averaged
22,000 units, or 10% of average net investment in equipment in the second
quarter of 1999, versus 23,000 units, or 11% of average net investment in
equipment, in the comparable prior year period.

     International revenues decreased $4 million from the same quarter of the
prior year, primarily due to fewer working units and, to a lesser extent, to
lower average lease rates.  Equipment utilization declined to 69% from 82% in
the comparable prior year period. The Company's average international fleet size
of 163,000 units in the second quarter of fiscal 1999 was approximately the same
as the comparable prior year period.

Operating Expenses
------------------

     Total operating expenses, excluding one-time charges, were approximately
the same in  the three months ended March 31, 1999 as in the same period of
fiscal 1998.  A decline in rental equipment operating expense in North America
was offset by higher storage and repositioning costs at XTRA International.

                                       13
<PAGE>
 
One-Time Charges Included in Operating Loss
-------------------------------------------

     XTRA recorded a one-time charge of $4 million in the second fiscal quarter
of 1999 to consolidate its financial, accounting, human resources, and
information technology operations into a Shared Service Center located in St.
Louis, Missouri to achieve cost savings and gain efficiencies. Approximately $2
million of the charge is related to severance payments. The remainder is
provided for the shutdown and consolidation of existing facilities.

     XTRA announced that it had agreed to outsource the management of its
international container leasing business effective June 1, 1999 to Textainer
Equipment Management Limited, a major equipment lessor. The agreement allows the
Company to achieve economies of scale by having its fleet managed by a quality
container lessor like Textainer with its significantly larger fleet and cost
effective infrastructure.  XTRA recorded a one-time charge of $9 million for the
costs of closing its XTRA International offices in conjunction with this
transaction. Approximately one half of  the XTRA International restructuring
charges is for severance payments and the remainder is related primarily to the
write-off of non-revenue assets.

     The Company does not currently anticipate making any further investment
in the international container business and will embark on a program to sell
older and less desirable equipment located in areas with lower demand. XTRA
recorded a one-time depreciation charge of $25 million during the second quarter
of fiscal 1999 in order to write down to estimated realizable value the
containers that it expects to sell over the next twelve months. Excluding these 
charges, net income and diluted earnings per share would have been $11 million 
and $0.82 per share for the three months ended March 31, 1999.

Interest Expense
----------------

     For the three months ended March 31, 1999, interest expense of $14 million
was unchanged from the same period of fiscal 1998.

Provision for Income Taxes
--------------------------

     The effective income tax rates used in the interim financial statements are
estimates of the fiscal years' rates.  The effective income tax rate for fiscal
1998 was 40%.  For the three months ended March 31, 1999, the Company has
recorded a provision for income taxes using an estimated effective income tax
rate of 40%.  The Company's effective income tax rate for fiscal 1998 and its
estimated effective income tax rate for fiscal 1999 are higher than the
statutory U.S. Federal income tax rate due primarily to state income taxes.

                                       14
<PAGE>
 
The Six Months Ended March 31, 1999
------------------------------------
Versus the Six Months Ended March 31, 1998: Revenues
-----------------------------------------------------

     The following table sets forth the Company's average equipment utilization
(dollar-weighted by net investment in equipment), average fleet size in units,
and average net investment in revenue equipment for the six months ended March
31, 1999 and 1998.  The Company's fleet size and average net investment include
equipment owned by the Company, equipment leased-in from third parties under
operating and capital leases, and equipment leased to third parties under
finance leases.

<TABLE> 
<CAPTION> 
                                                          Six Months Ended
                                                              March 31,
                                                         1999          1998
                                                       --------      --------
<S>                                                    <C>           <C> 
XTRA Lease
----------
Utilization                                                  87%           91%
Units                                                    82,000        78,000
Net investment in equipment (in millions)              $    810      $    718

XTRA Intermodal:
---------------
Utilization                                                  82%           82%
Units                                                    54,000        54,000
Net investment in equipment (in millions)              $    275      $    297

Total North America:
-------------------
Utilization                                                  85%           88%
Units                                                   136,000       132,000
Net investment in equipment (in millions)              $  1,085      $  1,015

International:
-------------
Utilization                                                  71%           83%
Units                                                   164,000       164,000
Net investment in equipment (in millions)              $    370      $    411

Consolidated:
------------
Utilization                                                  82%           87%
Units                                                   300,000       296,000
Net investment in equipment (in millions)              $  1,455      $  1,426
</TABLE> 

                                       15
<PAGE>
 
     Revenues increased by 1% or $2 million for the six months ended March 31,
1999 over the same period a year ago. The Company's average equipment
utilization declined from 87% in the first six months of fiscal year 1998 to 82%
in the first six months of fiscal 1999. Average net investment in equipment
increased by $29 million from the same period of the prior year due primarily to
an increase in the net investment in over-the-road trailers, which was partially
offset by a decline in the net investment in the marine container and intermodal
equipment fleets. For the full fiscal year 1999, average equipment utilization
is expected to be less than the 1998 average of 86%.

     The Company's North American revenues increased $9 million from the same
period a year ago due to strong levels of domestic freight leading to more
working units, as well as an improvement in lease rates.  The Company's North
American utilization averaged 85% in the first six months of fiscal 1999, as
compared to 88% in the comparable prior year period.  XTRA Lease's revenues
increased $9.0 million from the comparable six months of fiscal 1998 due to an
improvement in lease rates as well as  more over-the-road trailer working units.
XTRA Lease's utilization averaged 87% on a larger total fleet size for the first
six months of fiscal 1999, compared to 91% for the first six months of fiscal
1998. XTRA Intermodal's revenues were unchanged from the first six months of
fiscal 1998. XTRA Intermodal's utilization averaged 82% in the first six
months of fiscal 1999, unchanged from the first six months of 1998.

     The Company's North American over-the-road trailer fleet averaged 80,000
units, or 55% of average net investment in equipment in the first six months of
fiscal year 1999, compared to 76,000 units, or 49% of average net investment in
equipment, in the comparable prior year period.  The Company continues to
downsize its North American intermodal trailer fleet as the railroads shift
toward more domestic container usage.  XTRA's intermodal trailer fleet averaged
22,000 units, or 10% of average net investment in equipment in the first half of
1999, versus 23,000 units, or 11% of average net investment in equipment, in the
comparable prior year period.

     International revenues decreased $7 million from the same period of the
prior year, primarily due to fewer working units. Equipment utilization declined
to 71% from 83% in the comparable prior year period.  Marine container lease
rates in the first six months of fiscal year 1999 show a slight decline compared
to the comparable prior year period and continue to be at low levels for the
Company and the industry as a whole.  The Company's average international fleet
size was stable at 164,000 units when compared  to the first six months of
fiscal 1998.

Operating Expenses
------------------

     Total operating expenses, excluding one time charges, increased by 1% or $2
million for the six months ended March 31, 1999 from the same period of fiscal
1998.  Depreciation expense was unchanged.  Rental equipment operating expense
increased by 4% or $2 million due primarily to higher storage and repositioning
expenses at XTRA International.  Selling and administrative expenses were
unchanged.

One-Time Charges Included in Operating Income
---------------------------------------------

     Operating income for the six months ended March 31,1999 includes one-time
charges of $4 million to establish the Shared services Center, $9 million for
the closing of the XTRA 

                                       16
<PAGE>
 
International offices and $25 million to write down to estimated realizable
value the marine containers that XTRA expects to sell over the next twelve
months.

Interest Expense
----------------

     Interest expense decreased by 7% or $2 million for the six months ended
March 31, 1999 from the same period of fiscal 1998, due to lower average
interest rates and lower average net debt outstanding.

Unusual Item: Costs Related to Terminated Merger
------------------------------------------------

     During the first quarter of fiscal 1999, XTRA recorded approximately $1
million as an unusual item on the income statement. These costs represent the
balance of expenses related to the terminated merger with Wheels MergerCo. 
Excluding this unusual charge and the one-time charges included in operating 
income recorded in the second quarter of fiscal 1999, net income and diluted 
earnings per share would have been $30 million and $2.04 for the six months 
ended March 31, 1999.

Provision for Income Taxes
--------------------------

     The effective income tax rates used in the interim financial statements are
estimates of the fiscal years' rates.  The effective income tax rate for fiscal
1998 was 40%.  For the six months ended March 31, 1999, the Company has recorded
a provision for income taxes using an estimated effective income tax rate of
40%.  The Company's effective income tax rate for fiscal 1998 and its estimated
effective income tax rate for fiscal 1999 are higher than the statutory U.S.
Federal income tax rate primarily due to state income taxes.

Share Repurchases
-----------------

     On March 9, 1999, XTRA announced that it had completed the $90 million
repurchase plan announced on January 25,1999. The Company has repurchased
approximately 2.2 million shares of its common stock representing 14% of the
total shares outstanding at the beginning of the year. The repurchases will be
accretive to earnings per share and have increased the debt/equity ratio from
approximately 1.9:1.0 at December 31, 1998 to 2.6:1.0 at March 31, 1999.

Liquidity and Capital Resources
-------------------------------

     During the six months ended March 31, 1999, the Company generated cash
flows from operations of $140 million.  During the same period, XTRA invested
$129 million in property and equipment and repurchased $90 million of common
stock.  Net debt outstanding (debt less cash) increased $79 million.

     As of April 30, 1999, committed capital expenditures for revenue equipment
for fiscal 1999 amounted to $255 million.  Any additional capital expenditures
for the remainder of fiscal year 1999 will likely be modest.

                                       17
<PAGE>
 
     As of April 30, 1999, XTRA Inc. had $487 million available for future
issuance under its $604 million Shelf Registration.  As of April 30, 1999, the
Company had $87 million of unused credit available under its $300 million
Revolving Credit Agreement.


Year 2000
---------

     The Company has completed an assessment of the majority of its systems and
has developed a specific workplan to address the year 2000 issue. The Company's
assessment resulted in the identification of certain applications and
information systems that needed to be replaced or modified. The applications
consisted of certain purchased software packages used on the Company's personal
computers and the information systems are primarily those used by the Company's
XTRA Intermodal business. With respect to the purchased software packages, work
plans were created and new applications were installed to replace each of the
purchased software packages with applications that are year 2000 compliant. The
Company has completed modification and testing of its systems applications used
by the Intermodal business. The Company expects that the total costs to fix its
year 2000 issues Company-wide will  approximate $1 million.

     The Company is in the process of completing an assessment of the potential
risks associated with business disruption as a result of year 2000 issues
experienced by the Company's vendors, suppliers and customers.  Upon completion
of this assessment, the Company will determine whether certain contingency plans
should be put in place and what the cost of those plans will be. At this point,
the Company has not identified any required contingency plans which would
require that material expenditures be made by the Company.

     While the Company does not believe that the year 2000 matters discussed
above will have a material impact on its business, financial conditions, or
results of operations, no assurances can be given as to what extent the Company
may be affected by such matters.


Federal Motor Carrier Safety Regulation
---------------------------------------

     The Company's over-the-road and intermodal equipment is subject to various 
Federal and state licensing and operating regulations as well as to various 
industry standards. In early April, 1999 the Federal Highway Administration (the
"FHWA") published a rule, effective June 1, 1999, to amend the Federal Motor 
Carrier Safety Regulations. The rule requires that motor carriers engaged in 
interstate commerce install retroreflective tape or reflex reflectors on the 
sides and rear of all trailers that (i) were manufactured prior to December 1, 
1993, (ii) have an overall width of 80 inches or more and (iii) have a gross 
vehicle weight rating of 10,000 lbs. or more. The FHWA has mandated that motor 
carriers complete the installation within two years of the effective date of the
rule. The Company's over-the-road and intermodal trailers are impacted by the 
rule, although the number of trailers ultimately impacted will depend upon the 
ongoing disposition or conversion to off-road use, thereby decreasing the number
of trailers that will be effected. The Company currently believes that the cost 
of complying with the regulation could amount to more than $5 million. The 
Company currently anticipates that the cost to install the reflective tape will 
be capitalized and depreciated over the remaining life of the trailers.

                                       18
<PAGE>
 
                         Part  II  - OTHER INFORMATION
                         -----------------------------

Item 4  - Submission of Matter to a Vote of Security Holders
------------------------------------------------------------

     At the 1999 Annual Meeting of Stockholders held on February 18, 1999, at
which a quorum was present, the stockholders re-elected eight of the incumbent
Directors  by the number of shares of common stock as noted:

(1)  Nominees for the office of Director:
<TABLE> 
<CAPTION> 
                                           Number of Shares
                                    ----------------------------------
                                       Voted For           Withheld
                                       ---------           --------
<S>                                    <C>                 <C>
     Michael D. Bills                   14,083,094          42,751
     H. William Brown                   14,083,698          42,147
     Michael N. Christodolou            14,083,698          42,147
     Robert B. Goergen                  14,083,298          42,547
     Herbert C. Knortz                  14,082,918          42,927
     Francis J. Palamara                14,081,918          43,927
     Lewis Rubin                        14,083,014          42,831
     Martin L. Solomon                  14,083,698          42,147
</TABLE> 


 Item 5 - Other Matters
-----------------------


CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
-------------------------------------------------------------------------
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
------------------------------------------------

     The foregoing Management's Discussion and Analysis of Financial Condition
and Results of Operations contains certain forward-looking statements, including
estimates of economic and industry conditions, equipment utilization, and
capital expenditures. In addition, the Company may occasionally make forward-
looking statements and estimates such as forecasts and projections of the
Company's future performance or statements of management's plans and objectives.
These forward-looking statements may be contained in, among other things, SEC
filings and press releases made by the Company and in oral statements made by
the officers of the Company. Actual results could differ materially from those
contained in such forward-looking statements. Therefore, no assurances can be
given that the results in such forward-looking statements will be achieved.
Important factors that could cause the Company's actual results to differ from
those contained in such forward-looking statements include, among others, the
factors mentioned below. An additional risk factor is the Company's ability to
address the "Year 2000 problem" in a timely and efficient manner.

                                       19
<PAGE>
 
VARIABLE REVENUES AND OPERATING RESULTS
---------------------------------------

     The Company's revenues may vary significantly from period to period while a
high percentage of its operating costs are fixed. As a result of the variability
of the Company's revenues and the Company's limited ability to reduce its fixed
operating costs, the Company's profitability may be cyclical and subject to
significant fluctuation from period-to-period. The Company's revenues are a
function of lease rates and working units; the latter depends on fleet size and
equipment utilization (the ratio of revenue earning equipment to the total
fleet). Some of the factors which affect lease rates and working units are
competition, economic conditions and world trade activity, the supply of and
demand for available equipment, aggressive purchasing of equipment by the
Company's customers and competitors leading to an excess supply of equipment and
reduced lease rates and utilization, shifting traffic trends in the industry,
severe adverse weather conditions, strikes by transportation unions and other
factors in the freight transportation industry. The Company's fixed costs
include depreciation, a portion of rental equipment operating expenses and
selling and administrative expenses.

AVAILABILITY OF NEW EQUIPMENT
-----------------------------

     New equipment is built to the Company's specifications and reflects
industry standards and customer needs. The Company obtains new equipment from a
number of manufacturers. Certain of these manufacturers have consolidated and,
in the process, eliminated manufacturing facilities. These manufacturers are, in
turn dependent on the prompt delivery and supply of the components required to
assemble the trailers, chassis and containers. Historically, delivery times have
varied from three to fifteen months from when the order is placed, and there can
be no assurance that equipment will be available at the times or of the types
needed by the Company. In addition, it is difficult to accurately predict demand
for the Company's equipment in future periods. As a result, the Company's
performance in a given period may be adversely affected because of its inability
to quickly increase fleet size to take advantage of unexpectedly strong demand
due to extended back orders.

COMPETITION
-----------

     Leasing transportation equipment is a highly competitive business and is
affected by factors related to the transportation market. Lease terms and lease
rates, as well as availability, condition and size of equipment and customer
service are all important factors to the lessee. The Company has many
competitors, some of which have leasing fleets that are larger in size than the
Company's leasing fleet and some of which have greater resources. Various types
of transportation equipment compete for freight movement. Over-the-road
trailers, intermodal trailers, marine and domestic containers and railroad
rolling stock are all potential vehicles for the movement of freight.

                                       20
<PAGE>
 
CUSTOMER CONSOLIDATION
----------------------

     Certain industries in which the Company competes, including trucking and
shipping, are in the process of consolidation. As a result of this
consolidation, the Company's customers may be better able to manage their
equipment requirements and may seek increased efficiencies through direct
ownership of equipment. In such event, the ratio of leased equipment to owned
equipment may decrease, which could reduce the overall market for the Company's
services.

AVAILABILITY OF CAPITAL
-----------------------

     The acquisition of new equipment, both for growth as well as replacement of
older equipment, requires significant capital. In addition, over the past
several years, the Company has grown its fleet through acquisitions of other
companies such as Strick Lease, Inc. and Matson Leasing Company, Inc., requiring
additional capital. The Company plans to continue to pursue acquisition
opportunities. Historically, the Company generally has had available a variety
of sources to finance such expenditures and acquisitions at favorable rates and
terms. However, the availability of such capital depends heavily upon prevailing
market conditions, the Company's capital structure, and its credit ratings. No
assurances can be given that the Company will be able to obtain sufficient
financing on terms that are acceptable to it to fund its operations and capital
expenditures or to enable the Company to take advantage of favorable acquisition
opportunities.

                                       21
<PAGE>
 
Item 6 - Exhibits and Reports on Form 8-K
-----------------------------------------

(a)  Exhibits
---  --------

<TABLE>
<CAPTION>
Exhibit No.    Description
-----------    ----------------------------------------------------------------
<C>            <S>
 10             Equipment Management Services Agreement, dated as of April 1,
                1999, between XTRA International Ltd. and TexTainer Equipment
                Management Limited.

 12.1           Statement of the calculation of earnings to fixed charges for
                the six months ended March 31, 1999 and 1998 for XTRA
                Corporation

 12.2           Statement of the calculation of earnings to fixed charges for
                the six months ended March 31, 1999 and 1998 for XTRA, Inc.

 27             Financial Data Schedule

 (b)            Reports on Form 8-K
 ---            -------------------
</TABLE>



     On March 22, 1999, a Current Report on Form 8-K was filed by the Company to
disclose the retirement of two Directors under Item 5, "Other Events".

     On April 30, 1999, a Current Report on Form 8-K was filed by the Company to
disclose certain financial information under Item 5, "Other Events", for the
second fiscal quarter ended March 31, 1999.

     On May  7, 1999, a Current Report on Form 8-K was filed by the Company to
disclose the retirement of a Director under Item 5, "Other Events".

 Item 7A - Quantitative and Qualitative Disclosures about Market Risk
---------------------------------------------------------------------

     At March 31, 1999, there were no material changes in the market rate risks
reported in the Company's Form 10-K for the fiscal year ended September 30,
1998.


                                       22
<PAGE>
 
                                  SIGNATURES


     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.


                                      XTRA CORPORATION
                                      -------------------------------------
                                      (Registrant)








Date:    May 17, 1999                 /s/ Michael J. Soja
         ------------                 -------------------------------------
                                      Michael J. Soja
                                      Vice President and Chief Financial Officer








Date:    May 17, 1999                 /s/ Thomas S. McHugh
         ------------                 -------------------------------------
                                      Thomas S. McHugh
                                      Controller

                                       23
<PAGE>
 
                                 EXHIBIT INDEX
                                 -------------

<TABLE> 
<CAPTION> 
Exhibit No.     Description                                          Page No.
-----------     -------------------------------------------------    -------- 
<C>             <S>                                                  <C>
10              Equipment Management Services Agreement, dated as 
                of April 1, 1999, between XTRA International Ltd. 
                and TexTainer Equipment Management Limited.*          10

12.1            Statement of the calculation of earnings to fixed 
                charges for the six months ended March 31, 1999 
                and 1998 for XTRA Corporation                         26
 
12.2            Statement of the calculation of earnings to fixed 
                charges for the six months ended March 31, 1999 
                and 1998 for XTRA, Inc.                               27
 
27              Financial Data Schedule                               27
 
</TABLE>




*Confidential treatment has been requested for certain portions of this exhibit.