<PAGE>
 
                                                                    Exhibit 13.2

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE THREE YEARS ENDED SEPTEMBER 30, 1997
(Not covered by Report of Independent Public Accountants)

     The discussion below contains certain forward-looking statements relating
     to, among other things, 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 Reform Act of 1995" contained below.

Revenues and Business Conditions

     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'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.
     The discussion and data below are presented on a consolidated basis.

     The Company's pretax profits have been 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.

     The June 1995 marine container acquisition, in addition to providing a
     further diversification of its customer base, has reduced 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. This discussion includes the marine container
     operating results for fiscal years 1997 and 1996 and for the three months
     ended September 30, 1995. Reference to years in the discussion below refer
     to XTRA Corporation's fiscal years (the period from October 1 to 
     September 30).

     Revenues

     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.

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<PAGE>
 
     The following table sets forth the Company's average equipment utilization
     (dollar weighted by investment in each type of equipment), average fleet
     size in units, and average net investment in revenue equipment for the
     years ended September 30, 1997, 1996, and 1995. The Company's average fleet
     size and net investment includes 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>

Year ended September 30,                              1997          1996         1995/(1)/
-----------------------------------------------------------------------------------------
<S>                                               <C>           <C>        <C>
North America:                                                
Utilization                                            85%           81%             86%
Units                                              131,000       133,000         129,000
Net investment in equipment (in millions)             $996        $1,005            $919
                                                                           
International:                                                             
Utilization                                            79%           81%             90%
Units                                              157,000       141,000          31,000
Net investment in equipment (in millions)             $418          $403            $147
                                                                           
Consolidated:                                                              
Utilization                                            84%           81%             86%
Units                                              288,000       274,000         160,000
Net investment in equipment (in millions)           $1,414        $1,408          $1,066
</TABLE>

     /(1)/The Company acquired certain net assets of Matson Leasing Company,
          Inc. on June 30, 1995. The 1995 figures shown here are annual
          averages. 1995 fourth quarter average International utilization was
          90%, fleet size was 125,000 units, and net investment in equipment was
          $367 million. 1995 fourth quarter average Consolidated dollar-weighted
          utilization was 84%, fleet size was 256,000 units, and net investment
          in equipment was $1,357 million.

     Overall 1996 revenues increased by 12% to $422 million from $378 million in
     1995, principally due to the inclusion of the marine container business for
     the full fiscal year versus one quarter of the year in 1995, partially
     offset by lower revenues generated from the Company's domestic business,
     primarily intermodal trailers. The domestic transportation industry did not
     experience the moderate growth seen in the domestic economy in 1996. The
     decrease in utilization of the Company's domestic transportation equipment
     to 81% in 1996 from 86% in 1995 reflected reduced freight levels and
     increased industry-wide equipment supply. The over-supply of domestic
     transportation equipment was due to the record level of industry purchases
     in 1994 and 1995. In 1996, industry purchases of equipment were reduced
     considerably. Lower growth in freight demand, particularly in the Far East,
     affected worldwide growth of marine container usage. An increase in the
     supply of marine containers resulting from substantial industry-wide
     purchases also reduced utilization of leased containers. XTRA's marine
     container utilization declined to average 81% for 1996 from 90% in 1995.
     The significant increase in average net investment in equipment in 1996 was
     primarily attributable to the acquisition of the marine container business
     in late 1995.

     Revenues increased 3% or $13 million to $435 million in 1997, primarily due
     to improvement in the North American businesses. The Company's overall
     average equipment utilization increased by 3%.

     In 1997, XTRA's North American revenues increased 3% or $12 million due to
     higher equipment utilization and improving lease rates. The Company's North
     American utilization began improving during the second half of 1996 and
     continued into 1997. Utilization averaged 85% in 1997, as compared to 81%
     in 1996. Lower industry-wide capital spending and increasing demand, as
     reflected in improving intermodal loadings and truck tonnage, positively
     impacted the supply/demand balance during 1997. The 2,000 unit decrease in
     fleet size was primarily due to reductions in the intermodal trailer fleet,
     offset by additions to the over-the-road trailer fleet.


                                                                               2
<PAGE>
 
     XTRA's 1997 International revenues increased 2% or $1 million, primarily
     due to a larger fleet size and an increase in the number of working units
     in the second half of 1997, offset by a lower average effective lease rate.
     More balanced world-wide trade resulted in more efficient use of equipment
     by shippers, hence lower usage of leased containers. In 1996, substantial
     industry-wide purchases had increased the supply of marine containers.
     XTRA's marine container utilization declined to average 79% in 1997 from
     81% in 1996. The industry over-capacity and sluggish demand for leased
     marine containers continue to exert pressure on container lease rates. The
     Company's average international fleet size increased to 157,000 units in
     1997 from 141,000 units in 1996 as a result of modest capital spending.

     In 1997, industry container purchases were down considerably versus 1996.
     In the third quarter of 1997, XTRA's international utilization improved
     over the comparable prior year period for the first time in seven quarters.
     This improvement continued into the fourth quarter of 1997. While industry
     over-capacity and rate deterioration continue to be a problem, XTRA remains
     cautiously optimistic about the longer term prospects of this business
     segment.

     Operating Expenses

     Depreciation expense increased 25% or $29 million in 1996 due to the
     addition of the marine container fleet for the full fiscal year as well as
     an increase in the over-the-road fleet. In 1997, depreciation expense
     increased 2% or $3 million mainly due to a larger fleet.

     In 1996, rental equipment operating expenses increased 15% or $13 million
     due to the inclusion of the marine container business for the full fiscal
     year. In 1997, rental equipment operating expenses increased 8% or 
     $8 million due to higher storage and repositioning costs associated with
     more idle marine containers, as well as increased facility costs.

     In 1996, selling and administrative expenses increased 20% or $6 million
     due to the marine container business included for the full fiscal year. In
     1997, selling and administrative expenses increased 8% or $3 million.
     Approximately half of the increase was due to an increase in bad debt
     expense.

     Interest Expense

     Interest expense is a function of the amount of average net debt
     outstanding (long-term debt less cash) and average interest rates. The
     following table sets forth total average net debt outstanding and interest
     expense as a percentage of total average net debt outstanding.
<TABLE>
<CAPTION>

Year ended September 30,                                              1997    1996    1995
------------------------------------------------------------------------------------------
<S>                                                                   <C>     <C>     <C>
Average net debt outstanding (millions of dollars)                    $882    $906    $518
Interest expense as a percentage of average net debt outstanding      7.1%    7.3%    8.0%
</TABLE>

     In 1996, interest expense increased 60% or $25 million due primarily to an
     increase in average net debt outstanding. In 1997, interest expense
     decreased 5% or $3 million, due to a decrease in average net debt
     outstanding, as well as a decrease in the average effective interest rate.

     Income Before Provision for Income Taxes

     In 1996, pretax earnings decreased 29% or $29 million primarily due to
     lower domestic equipment utilization and as a result of the Company's high
     percentage of fixed costs. Pretax earnings in 1997 increased 3% or 
     $2 million due primarily to improving utilization.

     Provision for Income Taxes

     The Company's effective income tax rate was approximately 42%, 41%, and 40%
     in 1995, 1996, and 1997, respectively. For additional information regarding
     the provision for income taxes, see Notes 1 and 5 of the Notes to
     Consolidated Financial Statements.

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<PAGE>
 
Financial Liquidity and Capital Resources

     Significant capital investment is required by the Company's leasing
     operations, not only for growth but also for replacement of units retired
     from service. However, during periods of slower economic growth or excess
     equipment supplies, capital expenditures may be curtailed until demand for
     transportation equipment increases.

     The following table sets forth capital expenditures by equipment type,
     including units acquired by acquisition, units purchased, and units leased-
     in from third parties under operating leases. The capital expenditures for
     1998 represent XTRA's commitments for 1998 as of November 12, 1997.

<TABLE>
<CAPTION>

     (Millions of dollars)                 1998      1997      1996      1995 
     ------------------------------------------------------------------------
     <S>                                   <C>       <C>       <C>       <C>  
     Over-the-road trailers                 $14      $193      $100      $204 
     Marine containers                        9        30        79       379 
     Intermodal trailers                      -         -         2        50 
     Chassis                                  -         2        22        46 
     Domestic containers                      -        18         2         1 
     Other                                    1         6         5        19
                                            --------------------------------- 
       Total                                $24      $249      $210      $699  
                                            --------------------------------- 
</TABLE>

     The Company recognizes the importance of managing capital spending as
     essential to maintaining the quality of its fleet. The Company increases
     its fleet by purchasing new and used equipment and by acquiring equipment
     from other leasing companies. 1995 capital expenditures included 
     $360 million in equipment acquired from Matson Leasing Company, Inc. In
     1996, capital expenditures decreased to $210 million in response to weak
     industry conditions in both the domestic and international businesses. In
     1997, capital expenditures increased to $249 million as XTRA purchased 
     over-the-road trailers to respond to current and anticipated strong future
     market demand. As of November 12, 1997, XTRA's committed capital
     expenditures for 1998 amounted to $24 million. The Company may increase
     capital spending in 1998 if conditions warrant. Actual capital expenditures
     for 1998 will depend on the Company's assessment of business conditions.

     During the three years ended September 30, 1997, the Company generated 
     $778 million of cash flow from operations. During this same period, XTRA
     invested $1,156 million in property and equipment including acquisitions,
     paid dividends of $34 million, repurchased $74 million of common stock net
     of stock options exercised, and increased net debt (debt less cash)
     outstanding by $486 million.

     Although some level of future capital spending can be financed internally,
     the ability to fund expenditures above that level will depend upon the
     availability of external financing.

     In addition to cash flow from operations, XTRA generally has available to
     it a variety of external means to finance future growth of its leasing
     equipment fleet. The Company's external financing options include a
     combination of medium-term and long-term borrowings in the public debt
     market, a revolving credit agreement, intermediate and long-term financing
     from banks and institutional investors, and lease financing. The Company
     has registered with the Securities and Exchange Commission $604 million of
     securities consisting of Preferred Stock and Common Stock of the Company
     and Senior and Subordinated Debt Securities of its subsidiary XTRA, Inc.,
     fully and unconditionally guaranteed by XTRA Corporation (see Note 4 of
     Notes to Consolidated Financial Statements). As of November 12, 1997, XTRA,
     Inc. has $532 million available for future issuance under this Shelf
     Registration. As of November 12, 1997, the Company had $144 million of
     unused committed credit available under its $300 million Revolving Credit
     Agreement. The Company's access to external financing will depend upon
     prevailing market conditions and the Company's credit ratings. There can be
     no assurance that XTRA will be able to borrow funds in


                                                                               4
<PAGE>
 
     those markets at attractive rates or with covenants that are not more
     restrictive than the current debt covenants. The Company also has potential
     access to external funds through the issuance of capital stock. XTRA deems
     its sources of financing adequate to meet projected needs.

     The Company's source of funds for the payment of dividends on its capital
     stock are advances and dividends from its direct and indirect wholly-owned
     subsidiaries, including XTRA, Inc. The primary sources of funds for XTRA,
     Inc. are cash flows from operations, external financing, and advances from
     its subsidiaries. Several of 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 $110 million at September 30, 1997.
     For additional information regarding debt, see Note 4 of the Notes to
     Consolidated Financial Statements.

     The Company has authorized the repurchase of up to $200 million of XTRA's
     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, 1997, the Company had repurchased $79 million
     of common stock under this authorization.

     Year 2000

     The Company does not expect to incur significant costs during the next two
     to three years to address the impact of the "Year 2000 problem" on its
     information systems. The "Year 2000 problem," which is common to most
     corporations, concerns the inability of information systems, primarily
     computer software programs, to properly recognize and process date
     sensitive information as the year 2000 approaches. The Company has
     completed an assessment of the majority of its systems and is in the
     process of developing a specific workplan to address this issue. The
     Company currently believes it will be able to modify or replace its
     affected systems in time to minimize any detrimental effects on operations.
     The Company expects that the costs it will incur to ensure its systems are
     Year 2000 compliant will not be material to the Company's results of
     operations, liquidity, or consolidated financial position.

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 and letter to our shareholders contain 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.

Variable Revenues and Fixed Operating Expenses

     The Company's revenues, which are based on lease rates, utilization, and
     supply of and demand for equipment, are variable due to their dependence on
     the level of domestic and international economic activity, as well as
     changing industry levels of equipment supply. In addition, the Company has
     a high percentage of fixed operating expenses,


5
<PAGE>
 
     which include depreciation, a portion of rental equipment operating
     expenses, and selling and administrative expenses. As a result, the
     Company's pretax profits are cyclical. If domestic or global economic
     activity remains slow or if an oversupply of industry equipment exists,
     operating margins may be adversely affected. See below for further
     discussion.

     Lease Rates

     Lease rates depend on the type of lease, length of term, maintenance
     provided, and the type and age of the equipment. Future lease rates may
     increase or decrease depending on competition, economic conditions, and
     other factors.

     Utilization

     Utilization is the ratio of revenue earning units to the total fleet.
     Utilization is directly impacted by the level of economic activity in North
     America, world trade activity, the supply of and demand for available
     equipment, the actions of competitors, and other factors in the freight
     transportation industry.

     Supply of Equipment

     New equipment, supplied by a number of manufacturers, is built to the
     Company's specifications and reflects industry standards and customer
     needs. There is often a considerable amount of time between when an order
     is placed and when the equipment is delivered. 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 either because of its inability to quickly increase fleet size
     because of extended back orders, to take advantage of unexpectedly strong
     demand, or to quickly reduce fleet size in order to react to reduced
     demand.

     Demand

     Demand for equipment is affected by economic factors, equipment supply, and
     shifting traffic trends in the industry. A softening domestic or
     international economy may result in lower levels of freight shipments.
     Shifting traffic trends in the industry, such as truckers competing more
     aggressively, may divert some intermodal freight to over-the-road. Other
     items affecting demand which may impact leasing needs can include severe
     adverse weather conditions such as floods or snow storms or strikes by
     transportation unions.

     Operating Expenses

     The Company's operating expenses consist of a high percentage of fixed
     costs and thus profitability can change as revenues fluctuate due to
     increases and decreases in utilization and/or lease rates. The fixed costs
     include depreciation, a portion of rental equipment operating expenses, and
     selling and administrative expenses. As a result, income from operations
     can be cyclical. If revenues decline in any period, operating margins may
     change from those reported in prior periods due to the fixed nature of a
     significant portion of the Company's expenses.

Capital Needs

     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 and Matson Leasing Company, Inc.,
     requiring additional capital. While the Company generally has had available
     a variety of sources to finance such expenditures and acquisitions at
     favorable rates or terms, 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 financing will continue to
     be available at attractive rates or with covenants that are not more
     restrictive than the Company's current debt covenants.

Interest Rates

     Over the past several years, interest rates have remained at relatively low
     levels. Due to the Company's heavy dependence upon external financing to
     fund its capital needs and acquisitions, the level of interest rates
     directly affects the Company's profitability. The Company attempts to
     moderate the effect of changing interest rates by maintaining a


                                                                              6
<PAGE>
 
     high percentage of its debt with fixed rates. An increase in interest rates
     or a downgrade in the Company's debt ratings would adversely impact the
     cost of new borrowings, thereby adversely affecting its profitability.

Foreign Exchange Rates

     A portion of the Company's business is transacted in local currencies. As a
     result, the Company's financial results are subject to foreign exchange
     rate fluctuations.

Acquisitions

     Over the past years, the Company has used acquisitions of fleets operated
     by other companies to help grow its business. In order for the Company to
     take advantage of favorable acquisition opportunities as they are
     presented, it may be necessary for the Company to significantly increase
     its debt leverage ratio which could adversely affect its credit ratings.
     Also, the ability of the Company to take advantage of acquisition
     opportunities will depend on the availability of capital. See financial
     liquidity and capital resources above for discussion.

Consolidations of the Company's Customer Base

     Consolidations through mergers or acquisitions of the Company's customer
     base, including railroad or steamship lines, may result in reduced demand
     for leased equipment.


7