##### Table of Contents





UNITED STATES
 SECURITIES AND EXCHANGE
    COMMISSION
 Washington, D.C.
    20549
    FORM 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 29, 2007ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF
    THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number 0-27559
  Textron Financial
    Corporation
 (Exact Name of Registrant as
    Specified in Its Charter)
  Delaware

05-6008768(State or Other Jurisdiction
    of
    Incorporation or Organization)

(I.R.S. Employer
    Identification No.)   40 Westminster Street, P.O. Box 6687,
    Providence, R.I.

02940-6687(Address of Principal Executive
    Offices)

(Zip Code)   Registrants Telephone Number, Including Area Code:
 (401) 621-4200
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Class

Name of Each Exchange on Which Registered$100,000,000 5.125% Notes

New York Stock Exchangedue August 15, 2014   Securities registered pursuant to Section 12(g) of the
    Act:
  Common Stock, $100.00 par value
  þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K.
  12b-2
  o Large
    accelerated filer

o Accelerated
    filer

þ Non-accelerated
    filer

o Smaller
    reporting company(Do not check if a smaller reporting company)   Rule 12b-2 o þ
    REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL
    INSTRUCTION I (1) (a) AND (b) OF
    FORM 10-K
    AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
    DISCLOSURE FORMAT.




---



##### 





TABLE OF
    CONTENTS
  PART I.Item 1.


Business


3Item 1A.


Risk Factors


8Item 1B.


Unresolved Staff Comments


10Item 2.


Properties


10Item 3.


Legal Proceedings


10Item 4.


Submission of Matters to a Vote of Security
    Holders


10PART II.Item 5.


Market for Registrants Common Equity and
    Related Stockholder Matters


10Item 6.


Selected Financial Data


11Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


12Item 7A.


Quantitative and Qualitative Disclosure about
    Market Risk


27Item 8.


Financial Statements and Supplementary Data


28Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


58Item 9A.


Controls and Procedures


58Item 9B.


Other Information


59PART III.Item 10.


Directors and Executive Officers of the
    Registrant


59Item 11.


Executive Compensation


59Item 12.


Security Ownership of Certain Beneficial Owners
    and Management


59Item 13.


Certain Relationships and Related Transactions


59Item 14.


Principal Accounting Fees and Services


59PART IV.Item 15.


Exhibits, Financial Statement Schedules


59EX-12 Computation of Ration of Earnings to Fixed ChangesEX-21 List of significent subsidiariesEX-23 Consent of Independent Registered Public Accounting FirmEX-24 Power of Attorney dated as of February 20, 2008EX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of CFOEX-32.1 Section 906 Certification of CEOEX-32.2 Section 906 Certification of CFO   2




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##### Table of Contents



PART I.  Item 1.
    Business  General
  E-Z-GO
        Form 10-K.
  Form 10-K.
  Competition
   3




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##### Table of Contents



Relationship
    with Textron
  General
    Form 10-K.
  Agreements
    with Textron
    Receivables
    Purchase Agreement
    Support
    Agreement with Textron
    Tax
    Sharing Agreement with Textron
   4




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##### Table of Contents



Form 10-K.
  Regulations
    
    Regulate credit-granting activities;
    Establish maximum interest rates, finance charges and other
    charges;
    Require disclosures to customers;
    Govern secured transactions;
    Affect insurance brokerage activities; and
    Set collection, foreclosure, repossession and claims handling
    procedures and other trade practices.      Employees
    Risk
    Management
    
    Credit risk;
    Asset/liability risk (including interest rate and foreign
    exchange risk); and
    Liquidity risk.    Credit
    Risk Management
    
    Underwriting procedures;
    Centralized approval of individual transactions exceeding
    certain size limits; and
    Active portfolio and account management. 5




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##### Table of Contents




    Analyzing business or property cash flows and collateral values;
    Performing financial sensitivity analyses; and
    Assessing potential exit strategies.        Geographic
    Concentration
  Form 10-K.
  Asset/Liability
    Risk Management
    
    Interest rate exposure arising from changes in interest rate
    indices; and
    Foreign currency exposure arising from changes in exchange rates.   6




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##### Table of Contents



Interest
    Rate Risk Management
  Form 10-K.
  Foreign
    Exchange Risk Management
  and/or
  Liquidity
    Risk Management
    
    Cash from operations;
    Commercial paper borrowings;
    Issuances of medium-term notes and other term debt
    securities; and
    Syndication and securitization of receivables.  Form 10-K.
  Available
    Information
  http://www.textronfinancial.com Form 10-K, Form 10-Q, Form 8-K,
 7




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##### Table of Contents



Forward-looking
    Information
  Certain statements in this Annual Report on
    Form 10-K
    and other oral and written statements made by Textron Financial
    from time to time are forward-looking statements, including
    those that discuss strategies, goals, outlook or other
    non-historical matters; or project revenues, income, returns or
    other financial measures. These forward-looking statements speak
    only as of the date on which they are made, and we undertake no
    obligation to update or revise any forward-looking statements.
    These forward-looking statements are subject to risks and
    uncertainties that may cause actual results to differ materially
    from those contained in the statements, including the following:
    (a) changes in worldwide economic and political conditions
    that impact interest and foreign exchange rates; (b) the
    occurrence of slowdowns or downturns in customer markets in
    which Textron products are sold or supplied and financed or
    where we offer financing; (c) the ability to realize full
    value of receivables and investments in securities; (d) the
    ability to control costs and successful implementation of
    various cost reduction programs; (e) increases in pension
    expenses and other post-retirement employee costs; (f) the
    impact of changes in tax legislation; (g) the ability to
    maintain portfolio credit quality; (h) access to debt
    financing at competitive rates; (i) access to equity in the
    form of retained earnings and capital contributions from
    Textron; (j) uncertainty in estimating contingent
    liabilities and establishing reserves tailored to address such
    contingencies; (k) the launching of significant new
    products or programs which could result in unanticipated
    expenses; and (l) risks and uncertainties related to
    acquisitions and dispositions.
  Item 1A.
    Risk
    Factors    We may be
    unable to effectively mitigate pricing pressures
    Our
    business is dependent on its continuing access to reliable
    capital markets
    If we are
    unable to maintain portfolio credit quality, our financial
    performance may be adversely affected
   8




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The use
    of estimates and assumptions in determining our allowance for
    losses may adversely affect our profitability
    Currency
    and interest rate fluctuations, and our ability to hedge those
    transactions may adversely affect our results
      Unanticipated
    changes in tax rates or exposure to additional income tax
    liabilities could affect our profitability
    An
    interruption of our information technology networks may limit
    our ability to conduct our regular operations and react to
    sudden changes in market conditions, both of which could
    adversely impact our results
    Changes
    in the regulatory environment in which we operate could have an
    adverse affect on our business and earnings
   9




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##### Table of Contents



Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties  Form 10-K.
  Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders  Form 10-K.
 PART II.  Item 5.
    Market
    for Registrants Common Equity and Related Stockholder
    Matters  Form 10-K.
 10




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##### Table of Contents



Item 6.
    Selected
    Financial Data  Form 10-K.
  For the years ended(1)2007


2006


2005


2004


2003(Dollars in millions)Results of OperationsFinance charges

$
671


$
652


$
464


$
369


$
404Securitization gains


62



42



49



56



43Rental revenues on operating leases


34



32



32



29



29Other income


108



72



83



91



96Income from continuing operations beforeincome taxes


222



210



171



139



116Net income


145



152



111



94



80Balance Sheet DataTotal finance receivables

$
8,603


$
8,310


$
6,763


$
5,837


$
5,135Allowance for losses on finance receivables


89



93



96



99



119Equipment on operating leases  net


259



238



231



237



210Total assets


9,383



9,000



7,441



6,738



6,333Short-term debt


1,461



1,779



1,200



1,307



520Long-term debt


5,850



5,083



4,220



3,476



3,887Deferred income taxes


472



497



461



453



390Shareholders equity


1,138



1,142



1,050



1,035



1,009Debt to tangible shareholders equity(2)


7.76
x


7.10
x


6.19
x


5.53
x


5.24
xSELECTED DATA AND RATIOSProfitabilityNet interest margin as a percentage of average net investment(3)


5.66
%


5.81
%


6.40
%


7.14
%


6.92
%Return on average equity(4)


13.28
%


14.13
%


11.17
%


9.49
%


7.86
%Return on average assets(5)


1.60
%


1.84
%


1.58
%


1.49
%


1.25
%Selling and administrative expenses as a percentage of average
    managed and serviced finance receivables(6)


1.71
%


1.84
%


2.01
%


2.01
%


1.98
%Operating efficiency ratio(7)


44.6
%


45.1
%


48.8
%


47.1
%


46.8
%Credit Quality60+ days contractual delinquency as a percentage of finance
    receivables(8)


0.43
%


0.77
%


0.79
%


1.47
%


2.39
%Nonperforming assets as a percentage of finance assets(9)


1.34
%


1.28
%


1.53
%


2.18
%


2.80
%Allowance for losses on finance receivables as a percentage of
    finance receivables


1.03
%


1.11
%


1.43
%


1.70
%


2.32
%Allowance for losses on finance receivables as a percentage of
    nonaccrual finance receivables


111.7
%


123.1
%


108.6
%


83.7
%


78.4
%Net charge-offs as a percentage of average finance receivables


0.45
%


0.38
%


0.51
%


1.48
%


2.08
%Ratio of allowance for losses on finance receivables to net
    charge-offs


2.4
x


3.2
x


3.1
x


1.3
x


1.0x  11




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##### Table of Contents



(1)
    
    Textron Financials year-end dates conform with
    Textrons year-end, which falls on the nearest Saturday to
    December 31.(2)
    
    Tangible shareholders equity equals Shareholders
    equity, excluding Accumulated other comprehensive income (loss),
    less Goodwill.(3)
    
    Represents revenues earned less interest expense on borrowings
    and operating lease depreciation as a percentage of average net
    investment. Average net investment includes finance receivables
    plus operating leases, less deferred taxes on leveraged leases.(4)
    
    Return on average equity excludes the cumulative effect of
    change in accounting principle.(5)
    
    Return on average assets excludes the cumulative effect of
    change in accounting principle.(6)
    
    Average managed and serviced finance receivables include owned
    receivables, receivables serviced under securitizations,
    participations and third-party portfolio servicing agreements.(7)
    
    Operating efficiency ratio is selling and administrative
    expenses divided by net interest margin.(8)
    
    Delinquency excludes any captive receivables with recourse to
    Textron. Captive receivables represent third-party finance
    receivables originated in connection with the sale or lease of
    Textron manufactured products. Percentages are expressed as a
    function of total Textron Financial independent and nonrecourse
    captive receivables.(9)
    
    Finance assets include: finance receivables; equipment on
    operating leases, net of accumulated depreciation; repossessed
    assets and properties; retained interests in securitizations;
    interest-only securities; investment in equipment residuals;
    Acquisition, Development and Construction arrangements; and
    short- and long-term investments (some of which are classified
    in Other assets on Textron Financials Consolidated Balance
    Sheets). Nonperforming assets include independent and
    nonrecourse captive finance assets.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Overview
       12




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Key
    Business Initiatives and Trends
          Financial
    Condition
  Liquidity
    and Capital Resources
     13




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##### Table of Contents



Amount Not Reservedas Support forLetters of Credit


Commercial PaperCommercial Paper


Issued under


and Letters ofFacility Amount


Outstanding


Facility


Credit(In millions)Textron Financial multi-year facility expiring in 2012

$
1,750


$
1,447


$
13


$
290Textron multi-year facility expiring in 2012


1,250







22



1,228Total

$
3,000


$
1,447


$
35


$
1,518         Payments / Receipts Due by PeriodLess than


1-2


2-3


3-4


4-5


More than1 year


Years


Years


Years


Years


5 years


Total(In millions)Contractual payments:Commercial paper and other short-term debt

$
1,461


$



$



$



$



$



$
1,461Term debt


1,259



1,551



1,913



592



42



477



5,834Loan commitments


49



2







3











54Operating lease rental payments


6



5



4



4



1



2



22Total contractual payments


2,775



1,558



1,917



599



43



479



7,371Cash and receipts:Finance receivable receipts


3,362



1,484



669



645



686



1,757



8,603Operating lease rental receipts


28



23



22



19



15



30



137Total receipts


3,390



1,507



691



664



701



1,787



8,740Cash


60























60Total cash and receipts


3,450



1,507



691



664



701



1,787



8,800Net cash and receipts (payments)

$
675


$
(51
)

$
(1,226
)

$
65


$
658


$
1,308


$
1,429Cumulative net cash and receipts

$
675


$
624


$
(602
)

$
(537
)

$
121


$
1,429    14




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Off-Balance
    Sheet Arrangements
   15




---



##### Table of Contents



Distribution
    Finance
  2007


2006


2005(In millions)Net pre-tax gains

$
58


$
42


$
40Proceeds from securitizations

$
549


$
50


$
80Cash flows received on retained interests


54



42



40   and/or
 16




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##### Table of Contents



Aviation
    Finance
  2007


2006


2005(In millions)Net pre-tax gains

$
4


$



$
6Proceeds from securitizations

$
182


$



$
229Cash flows received on retained interests


12



17



18     Form 10-K.
  Managed
    Finance Receivables
    2007


2006(Dollars in millions)Distribution Finance

$
3,812



34
%

$
3,753



37
%Aviation Finance


2,448



22
%


1,939



19
%Golf Finance


1,663



15
%


1,518



15
%Resort Finance


1,506



14
%


1,295



13
%Asset-Based Lending


1,004



9
%


864



8
%Structured Capital


608



5
%


730



7
%Corporate and Other


82



1
%


142



1
%Total managed finance receivables

$
11,123



100
%

$
10,241



100
%   No. 13-2 (FSP 13-2).
   17




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##### Table of Contents



Nonperforming
    Assets
      2007


2006


2005(Dollars in millions)Asset-Based Lending

$
23



2.31
%

$
16



1.81
%

$
6



0.81
%Distribution Finance


23



1.20
%


7



0.28
%


2



0.11
%Golf Finance


21



1.24
%


29



1.89
%


13



0.99
%Aviation Finance


20



0.89
%


12



0.70
%


14



1.07
%Resort Finance


9



0.57
%


16



1.22
%


31



2.67
%Corporate and Other


27



24.73
%


33



19.74
%


45



13.64
%Total nonperforming assets

$
123



1.34
%

$
113



1.28
%

$
111



1.53
%       Interest
    Rate Sensitivity
     18




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##### Table of Contents



Financial
    Risk Management
      Critical
    Accounting Policies
  Allowance
    for Losses on Finance Receivables
     19




---



##### Table of Contents



Goodwill
        Securitized
    Transactions
    Form 10-K
  Income
    Taxes
   20




---



##### Table of Contents



Results
    of Operations
  Revenues
    and Net Interest Margin
    2007


2006


2005(Dollars in millions)Finance charges

$
671


$
652


$
464Securitization gains


62



42



49Rental revenues on operating leases


34



32



32Other income


108



72



83Total revenues

$
875


$
798


$
628Interest expense


397



351



218Depreciation of equipment on operating leases


18



17



19Net interest margin

$
460


$
430


$
391Portfolio yield


8.51
%


9.11
%


7.91
%Net interest margin as a percentage of average net investment


5.66
%


5.81
%


6.40
%   2007 vs.
    2006
  FSP 13-2
     21




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##### Table of Contents



2006 vs.
    2005
      Selling
    and Administrative Expenses
  2007


2006


2005(Dollars in millions)Selling and administrative expenses

$
205


$
194


$
191Selling and administrative expenses as a percentage of average
    managed and serviced finance receivables


1.71
%


1.84
%


2.01
%Operating efficiency ratio


44.6
%


45.1
%


48.8
%   2007 vs.
    2006
    2006 vs.
    2005
   22




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##### Table of Contents



Provision
    for Losses
    2007


2006


2005(Dollars in millions)Allowance for losses on finance receivables beginning of period

$
93


$
96


$
99Provision for losses


33



26



29Less net charge-offs:Distribution Finance


19



6



10Asset-Based Lending


7



7



Golf Finance


3



1



3Aviation Finance


2



2



2Resort Finance


(2
)


7



10Corporate and Other


8



6



7Total net charge-offs


37



29



32Allowance for losses on finance receivables end of period

$
89


$
93


$
96Net charge-offs as a percentage of average finance receivables


0.45
%


0.38
%


0.51
%Allowance for losses on finance receivables as a percentage of
    total finance receivables


1.03
%


1.11
%


1.43
%Allowance for losses on finance receivables as a percentage of
    nonaccrual finance receivables


111.7
%


123.1
%


108.6
%   2007 vs.
    2006
      2006 vs.
    2005
   23




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##### Table of Contents



Income
    Taxes
    2007


2006


2005Federal statutory income tax rate


35.0
%


35.0
%


35.0
%Increase (decrease) in taxes resulting from:State income taxes


1.9



1.0



1.3Tax exempt interest


(0.2
)


(0.2
)


(1.1
)Foreign tax rate differential


(3.3
)


(4.0
)


(2.7
)Canadian dollar functional currency


(1.0
)


(5.5
)


Change in state valuation allowance


0.3



1.6



1.1Interest on tax contingencies  leveraged leases


3.1



2.7



1.1Tax credits


(1.1
)


(2.1
)


(0.8
)Other, net


0.2



(1.2
)


(0.3
)Effective income tax rate


34.9
%


27.3
%


33.6
%       Operating
    Results by Segment
    Distribution
    Finance
  2007


2006


2005(In millions)Revenues

$
290


$
268


$
178Net interest margin

$
206


$
185


$
140Selling and administrative expenses


96



82



68Provision for losses


24



4



2Segment income

$
86


$
99


$
70    24




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##### Table of Contents



Aviation
    Finance
  2007


2006


2005(In millions)Revenues

$
176


$
133


$
107Net interest margin

$
72


$
52


$
51Selling and administrative expenses


21



21



16Provision for losses


3







3Segment income

$
48


$
31


$
32       Golf
    Finance
  2007


2006


2005(In millions)Revenues

$
138


$
132


$
102Net interest margin

$
62


$
54


$
52Selling and administrative expenses


19



19



21Provision for losses


5



3



6Segment income

$
38


$
32


$
25      25




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##### Table of Contents



Resort
    Finance
  2007


2006


2005(In millions)Revenues

$
137


$
118


$
91Net interest margin

$
68


$
61


$
51Selling and administrative expenses


23



23



29Provision for losses


(6
)


6



4Segment income

$
51


$
32


$
18       Asset-Based
    Lending
  2007


2006


2005(In millions)Revenues

$
94


$
90


$
75Net interest margin

$
47


$
51


$
51Selling and administrative expenses


24



23



25Provision for losses


2



16



1Segment income

$
21


$
12


$
25      26




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##### Table of Contents



Structured
    Capital
  2007


2006


2005(In millions)Revenues

$
33


$
38


$
54Net interest margin

$
20


$
21


$
38Selling and administrative expenses


4



4



4Segment income

$
16


$
17


$
34   FSP 13-2
    Corporate
    and Other
  2007


2006


2005(In millions)Revenues

$
7


$
19


$
21Net interest margin

$
(15
)

$
6


$
8Selling and administrative expenses


18



22



28Provision for losses


5



(3
)


13Segment loss

$
(38
)

$
(13
)

$
(33
)       Item 7A.
    Quantitative
    and Qualitative Disclosure about Market Risk  Form 10-K.
 27




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##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  REPORT OF
    MANAGEMENT
  Form 10-K. Rules 13a-15(f).
      Ted
    R. French
       Thomas
    J. Cullen
       28




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON
    INTERNAL CONTROL OVER FINANCIAL REPORTING
  To the Board of Directors
    Textron Financial Corporation
              
     29




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  To the Board of Directors
    Textron Financial Corporation
          No. 13-2,
  
     30




---



##### Table of Contents



CONSOLIDATED
    STATEMENTS OF INCOME
    2007


2006


2005(In millions)Finance charges

$
671


$
652


$
464Securitization gains


62



42



49Rental revenues on operating leases


34



32



32Other income


108



72



83Total revenues


875



798



628Interest expense


397



351



218Depreciation of equipment on operating leases


18



17



19Net interest margin


460



430



391Selling and administrative expenses


205



194



191Provision for losses


33



26



29Income from continuing operations before income taxes


222



210



171Income taxes


77



57



57Income from continuing operations


145



153



114Loss from discontinued operations, net of income tax benefit






(1
)


(3
)Net income

$
145


$
152


$
111    31




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##### Table of Contents



CONSOLIDATED
    BALANCE SHEETS
  December 29,


December 30,2007


2006(In millions)AssetsCash and equivalents

$
60


$
47Finance receivables, net of unearned income:Revolving loans


2,254



1,948Installment contracts


2,052



1,674Distribution finance receivables


1,900



2,423Golf course and resort mortgages


1,240



1,060Finance leases


613



590Leveraged leases


544



615Total finance receivables


8,603



8,310Allowance for losses on finance receivables


(89
)


(93
)Finance receivables  net


8,514



8,217Equipment on operating leases  net


259



238Goodwill


169



169Other assets


381



329Total assets

$
9,383


$
9,000Liabilities and shareholders equityLiabilitiesAccrued interest and other liabilities

$
437


$
479Amounts due to Textron Inc.


25



20Deferred income taxes


472



497Debt


7,311



6,862Total liabilities


8,245



7,858Shareholders equityCapital surplus


592



592Investment in parent company preferred stock


(25
)


(25
)Accumulated other comprehensive income


26



7Retained earnings


545



568Total shareholders equity


1,138



1,142Total liabilities and shareholders equity

$
9,383


$
9,000    32




---



##### Table of Contents



CONSOLIDATED
    STATEMENTS OF CASH FLOWS
    2007


2006


2005(In millions)Cash flows from operating activities:Net income

$
145


$
152


$
111Loss from discontinued operations






1



3Income from continuing operations


145



153



114Adjustments to reconcile income from continuing operations to
    net cash provided by operating activities:Provision for losses


33



26



29Increase in accrued interest and other liabilities


36



66



35Depreciation


28



28



34Amortization


12



11



12Noncash gains in excess of collections on securitizations and
    syndications


(4
)


8



2Deferred income tax provision


(7
)


38



7Other  net


19



8



14Net cash provided by operating activities of continuing
    operations


262



338



247Net cash used by operating activities of discontinued operations






(13
)


(3
)Net cash provided by operating activities


262



325



244Cash flows from investing activities:Finance receivables originated or purchased


(13,124
)


(12,240
)


(10,940
)Finance receivables repaid


11,863



10,205



9,560Proceeds from receivable sales, including securitizations


994



513



383Net cash used in acquisitions






(164
)


Other investments


(10
)


18



26Proceeds from disposition of operating leases and other assets


55



66



93Other capital expenditures


(10
)


(12
)


(9
)Purchase of assets for operating leases


(49
)


(66
)


(63
)Net cash used by investing activities of continuing
    operations


(281
)


(1,680
)


(950
)Cash flows from financing activities:Principal payments on long-term debt


(1,248
)


(1,049
)


(677
)Proceeds from issuance of long-term debt


1,878



1,853



1,482Net (decrease) increase in commercial paper


(315
)


532



(102
)Net (decrease) increase in other short-term debt


(55
)


47



(4
)Proceeds from issuance of nonrecourse debt






142



72Principal payments on nonrecourse debt


(96
)


(72
)


(84
)Capital contributions from Textron Inc.


9



27



9Dividends paid to Textron Inc.


(144
)


(89
)


(109
)Net cash provided by financing activities of continuing
    operations


29



1,391



587Effect of exchange rate changes on cash


3



1



2Net cash provided (used) by continuing operations


13



50



(114
)Net cash used by discontinued operations






(13
)


(3
)Net increase (decrease) in cash and equivalents


13



37



(117
)Cash and equivalents at beginning of year


47



10



127Cash and equivalents at end of year

$
60


$
47


$
10    33




---



##### Table of Contents



CONSOLIDATED
    STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
    Investment


AccumulatedIn Parent


OtherCompany


Comprehensive





TotalCapital


Preferred


Income


Retained


ShareholdersSurplus


Stock


(Loss)


Earnings


Equity(In millions)Balance January 1, 2005

$
574


$
(25
)

$
1


$
485


$
1,035Comprehensive income:Net income














111



111Other comprehensive income:Foreign currency translation










(1
)






(1
)Change in unrealized net losses on hedge contracts, net of
    income taxes


















Change in unrealized net gains on interest-only securities, net
    of income taxes










5







5Other comprehensive income










4







4Comprehensive income


















115Capital contributions from Textron Inc.


9















9Dividends to Textron Inc.


(9
)










(100
)


(109
)Balance December 31, 2005


574



(25
)


5



496



1,050Comprehensive income:Net income














152



152Other comprehensive income:Foreign currency translation










1







1Change in unrealized net losses on hedge contracts, net of
    income taxes










5







5Change in unrealized net gains on interest-only securities, net
    of income taxes










(4
)






(4
)Other comprehensive income










2







2Comprehensive income


















154Capital contributions from Textron Inc.


27















27Dividends to Textron Inc.


(9
)










(80
)


(89
)Balance December 30, 2006


592



(25
)


7



568



1,142Comprehensive income:Net income














145



145Other comprehensive income:Foreign currency translation










19







19Change in unrealized net losses on hedge contracts, net of
    income taxes










2







2Change in unrealized net gains on interest-only securities, net
    of income taxes










(2
)






(2
)Other comprehensive income










19







19Comprehensive income


















164Cumulative effect of a change in accounting principle














(33
)


(33
)Capital contributions from Textron Inc.


9















9Dividends to Textron Inc.


(9
)










(135
)


(144
)Balance December 29, 2007

$
592


$
(25
)

$
26


$
545


$
1,138    34




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##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
  NOTE 1Summary of Significant Accounting Policies
  Nature of
    Operations
  E-Z-GO
      Principles
    of Consolidation
    Use of
    Estimates
    Finance
    Charges
    Finance
    Receivable Origination Fees and Costs
   35




---



##### Table of Contents



Other
    Income
    Allowance
    for Losses on Finance Receivables
        Loan
    Impairment
      Fixed
    Assets
    Equipment
    on Operating Leases
   36




---



##### Table of Contents



Goodwill
    Pension
    Benefits and Postretirement Benefits Other than
    Pensions
    Income
    Taxes
      Securitized
    Transactions
     37




---



##### Table of Contents



Derivative
    Financial Instruments
        Fair
    Value of Financial Instruments
    Cash and
    Equivalents
    Recent
    Accounting Pronouncements
     38




---



##### Table of Contents



NOTE 2Other Income
  2007


2006


2005(In millions)Servicing fees

$
36


$
29


$
32Investment income


14



15



12Prepayment gains


7



6



6Syndication income


4



2



2Late charges


3



3



5Other


44



17



26Total other income

$
108


$
72


$
83       NOTE 3Discontinued Operations
    NOTE 4Relationship with Textron Inc.
     39




---



##### Table of Contents



NOTE 5Finance Receivables
  Portfolio
    Maturities
    2008


2009


2010


2011


2012


Thereafter


Total(In millions)Revolving loans

$
1,631


$
315


$
156


$
77


$
38


$
37


$
2,254Installment contracts


257



234



209



248



290



814



2,052Distribution finance receivables


1,190



506



62



42



63



37



1,900Golf course and resort mortgages


66



253



121



193



277



330



1,240Finance leases


160



133



127



70



28



95



613Leveraged leases


58



43



(6
)


15



(10
)


444



544Total finance receivables

$
3,362


$
1,484


$
669


$
645


$
686


$
1,757


$
8,603            40




---



##### Table of Contents



Concentrations
    2007


2006(Dollars in millions)United States:Southeast

$
2,782



25
%

$
2,582



25
%West


1,823



16
%


1,776



17
%Southwest


1,546



14
%


1,295



13
%Midwest


1,306



12
%


1,493



15
%Mideast


974



9
%


1,010



10
%Northeast


289



2
%


312



3
%Total United States

$
8,720



78
%

$
8,468



83
%Canada


1,062



10
%


719



7
%Mexico


383



3
%


324



3
%South America


342



3
%


337



3
%Other international


616



6
%


393



4
%Total managed finance receivables

$
11,123



100
%

$
10,241



100
%     2007


2006(Dollars in millions)General aviation

$
2,475



22
%

$
1,966



19
%Golf


1,680



15
%


1,567



16
%Resort


1,506



13
%


1,295



13
%Recreational vehicles


1,116



10
%


960



9
%Marine


783



7
%


552



5
%Manufactured housing


487



4
%


527



5
%Transportation


437



4
%


441



4
%Finance company services


318



3
%


235



2
%Outdoor power equipment


301



3
%


304



3
%Information technology equipment


220



2
%


209



2
%Real estate


170



2
%


178



2
%Other


1,630



15
%


2,007



20
%Total managed finance receivables

$
11,123



100
%

$
10,241



100
%  41




---



##### Table of Contents



Leveraged
    Leases
  2007


2006(In millions)Rental receivable

$
1,561


$
1,838Nonrecourse debt


(1,030
)


(1,292
)Estimated residual values of leased assets


297



329828



875Less unearned income


(284
)


(260
)Investment in leveraged leases


544



615Deferred income taxes


(408
)


(410
)Net investment in leveraged leases

$
136


$
205       2007


2006


2005(In millions)Income recognized

$
11


$
39


$
33Income tax expense


(4
)


(11
)


(11
)Income from leveraged leases

$
7


$
28


$
22   No. 13-2 (FSP 13-2). FSP 13-2 FSP 13-2
  FSP 13-2
  Finance
    Leases
  2007


2006(In millions)Total minimum lease payments receivable

$
568


$
517Estimated residual values of leased equipment


267



267835



784Less unearned income


(222
)


(194
)Net investment in finance leases

$
613


$
590  42




---



##### Table of Contents



Loan
    Impairment
    2007


2006(In millions)Impaired nonaccrual finance receivables

$
59


$
60Impaired accrual finance receivables


143



101Total impaired finance receivables

$
202


$
161Impaired nonaccrual finance receivables with identified reserve
    requirements

$
40


$
36Allowance for losses on impaired nonaccrual finance receivables

$
15


$
17     2007


2006(In millions)Impaired nonaccrual finance receivables

$
59


$
60Nonaccrual homogeneous finance receivables


20



15Total nonaccrual finance receivables


79



75Repossessed assets and properties


44



38Total nonperforming assets

$
123


$
113        43




---



##### Table of Contents



Allowance
    for Losses on Finance Receivables
    2007


2006


2005(In millions)Balance at beginning of year

$
93


$
96


$
99Provision for losses


33



26



29Charge-offs


(49
)


(40
)


(49
)Recoveries


12



11



17Balance at end of year

$
89


$
93


$
96   Managed
    and Serviced Finance Receivables
    2007


2006(In millions)Total managed and serviced finance receivables

$
12,478


$
11,536Nonrecourse participations


(760
)


(695
)Third-party portfolio servicing


(592
)


(581
)Small business administration sales agreements


(3
)


(19
)Total managed finance receivables


11,123



10,241Securitized receivables


(2,520
)


(1,931
)Owned receivables

$
8,603


$
8,310           NOTE 6Receivable Securitizations
   44




---



##### Table of Contents



2007


2006


2005(In millions)Net pre-tax gains

$
62


$
42


$
49Proceeds from securitizations

$
731


$
50


$
361Cash flows received on retained interests


71



63



64Servicing fees received


32



27



28Cash paid for loan repurchases


17



15



26     Distribution
    Finance
    10%


20%Assumptions at


Assumptions at


Adverse


AdverseDate of Sale


Year-End


Change


ChangeWeighted-average life (in years)


0.4



0.4







Expected credit losses (annual rate)


1.0
%


0.9
%


(2
)


(4
)Residual cash flows discount rate


9.9
%


9.4
%






Monthly payment rate


19.1
%


19.6
%


(2
)


(3
)   Aviation
    Finance
    10%


20%Assumptions at


Assumptions at


Adverse


AdverseDate of Sale


Year-End


Change


ChangeWeighted-average life (in years)


2.2



2.0







Expected credit losses (annual rate)


0.5
%


0.2
%






(1
)Residual cash flows discount rate


7.7
%


9.6
%


(1
)


(1
)Prepayment rate


27.0
%


27.0
%


(1
)


(2
)    45




---



##### Table of Contents



Total


AggregatePrincipal


Contract











CreditAmount


Value 60


60+ Day








Lossesof Loans


Days or More


Delinquency


Average


Net Credit


AnnualType of Finance Receivable

and Leases


Past Due


Percentage


Balances


Losses


PercentageAt December 29, 2007


Year Ended December 29, 2007(Dollars in millions)Distribution finance receivables

$
3,812


$
8



0.2
%

$
3,821


$
19



0.5
%Aviation finance receivables


2,448



24



1.0
%


2,140



1



0.1
%Total loans held and securitized

$
6,260


$
32






$
5,961


$
20Consisting of:Loans held in portfolio

$
3,781


$
15Loans securitized


2,479



17Total loans held and securitized

$
6,260


$
32     NOTE 7Equipment on Operating Leases
  2007


2006(In millions)Equipment on operating leases, at cost:Aircraft

$
279


$
253Golf cars


28



24Accumulated depreciation:Aircraft


(43
)


(34
)Golf cars


(5
)


(5
)Equipment on operating leases  net

$
259


$
238     NOTE 8Goodwill
  2007


2006(In millions)Resort Finance

$
110


$
110Asset-Based Lending


43



43Aviation Finance


16



16$
169


$
169  46




---



##### Table of Contents



NOTE 9Other Assets
  2007


2006(In millions)Retained interests in securitizations

$
203


$
179Other long-term investments


52



40Repossessed assets and properties


44



38Fixed assets  net


33



34Investment in equipment residuals






3Other


49



35Total other assets

$
381


$
329          47




---



##### Table of Contents



NOTE 10Debt and Credit Facilities
  2007


2006(In millions)Short-term debt:Commercial paper

$
1,447


$
1,719Other short-term debt


14



60Total short-term debt


1,461



1,779Long-term debt:Fixed-rate notesDue 2007 (weighted-average rate of 5.50%)






843Due 2008 (weighted-average rates of 4.15% and 4.12%,
    respectively)


654



611Due 2009 (weighted-average rates of 5.60% and 5.67%,
    respectively)


726



649Due 2010 (weighted-average rates of 4.83% and 4.58%,
    respectively)


1,007



557Due 2011 (weighted-average rates of 5.05% and 5.05%,
    respectively)


442



442Due 2012 and thereafter (weighted-average rates of 5.03% and
    4.98%, respectively)


219



209Total fixed-rate notes


3,048



3,311Variable-rate notesDue 2007 (weighted-average rate of 5.80%)






275Due 2008 (weighted-average rates of 5.05% and 5.45%,
    respectively)


605



355Due 2009 (weighted-average rates of 5.09% and 5.47%,
    respectively)


825



913Due 2010 (weighted-average rates of 5.06% and 5.49%,
    respectively)


906



276Due 2011 (weighted-average rate of 5.02%)


150



Total variable-rate notes


2,486



1,819Subordinated debt:Due 2017 and thereafter (6.00%)


300



Unamortized discount


(4
)


(3
)Fair value adjustments


20



(44
)Total long-term debt and subordinated debt


5,850



5,083Total debt

$
7,311


$
6,862       Amount NotReserved asSupport forCommercial


Letters of Credit


Commercial PaperPaper


Issued Under


and Letters ofFacility Amount


Outstanding


Facility


Credit(In millions)Textron Financial multi-year facility expiring in 2012

$
1,750


$
1,447


$
13


$
290Textron multi-year facility expiring in 2012


1,250







22



1,228Total

$
3,000


$
1,447


$
35


$
1,518  48




---



##### Table of Contents



2007


2006


2005Commercial paper:U.S.


5.20
%


5.39
%


4.38
%Canadian


4.59
%


4.34
%


Other short-term debt


4.92
%


4.46
%


4.31
%       and/or
           49




---



##### Table of Contents



NOTE 11Derivative Financial Instruments
      Notional Amount


Fair Value AmountHedged Item

Hedge Classification

Description

2007


2006


2007


2006(In millions)Interest Rate
    Exchange AgreementsFixed-rate debt

Fair Value

Converts fixed-rate interest expense to floating-rate interest
    expense

$
2,293


$
3,162


$
19


$
(44
)Firm commitments

Fair Value

Mitigates changes in fair value of receivable subsequent to loan
    commitment


37



31



(1
)


(1
)Fixed-rate receivables

Fair Value

Converts fixed-rate interest earnings to floating-rate interest
    earnings






15







Retained interests in securitizations

Cash Flow

Converts net residual floating-rate cash flows to fixed-rate
    cash flows


26



71







Variable-rate debt

Cash Flow

Converts floating-rate interest expense to fixed-rate interest
    expense






100







1Receivable cap

Cash Flow

Mitigates changes in fair value of receivable containing
    embedded option






7







$
2,356


$
3,386


$
18


$
(44
)      50




---



##### Table of Contents



NOTE 12Investment in Parent Company Preferred Stock
    NOTE 13Accumulated Other Comprehensive Income (Loss)
    DeferredForeign


(Losses)


DeferredCurrency


Gains on


GainsTranslation


Hedge


(Losses) onAdjustment


Contracts


Securities


Total(In millions)Balance January 1, 2005

$
8


$
(9
)

$
2


$
1Foreign currency translation


(1
)










(1
)Amortization of deferred loss on terminated hedge contracts, net
    of income taxes of $3 million






5







5Net deferred loss on hedge contracts, net of income tax benefit
    of $2 million






(5
)






(5
)Net deferred gain on interest-only securities, net of income
    taxes of $2 million










5



5Balance December 31, 2005


7



(9
)


7



5Foreign currency translation


1











1Amortization of deferred loss on terminated hedge contracts, net
    of income taxes of $2 million






4







4Net deferred gain on hedge contracts, net of income taxes of
    $1 million






1







1Net deferred loss on interest-only securities, net of income tax
    benefit of $2 million










(4
)


(4
)Balance December 30, 2006


8



(4
)


3



7Foreign currency translation


19











19Amortization of deferred loss on terminated hedge contracts, net
    of income taxes of $3 million






5







5Net deferred loss on hedge contracts, net of income tax benefit
    of $2 million






(3
)






(3
)Net deferred loss on interest-only securities, net of income tax
    benefit of $1 million










(2
)


(2
)Balance December 29, 2007

$
27


$
(2
)

$
1


$
26  51




---



##### Table of Contents



NOTE 14Income Taxes
    2007


2006


2005(In millions)United States

$
206


$
198


$
168Foreign


16



12



3Total

$
222


$
210


$
171     2007


2006


2005(In millions)Current:Federal

$
55


$
7


$
39State


14



6



5Foreign


15



6



6Total current income taxes

$
84


$
19


$
50Deferred:Federal

$
14


$
36


$
9State


(10
)


3



(2
)Foreign


(11
)


(1
)


Total deferred income taxes


(7
)


38



7Total income taxes

$
77


$
57


$
57       2007


2006


2005Federal statutory income tax rate


35.0
%


35.0
%


35.0
%Increase (decrease) in taxes resulting from:State income taxes


1.9



1.0



1.3Tax exempt interest


(0.2
)


(0.2
)


(1.1
)Foreign tax rate differential


(3.3
)


(4.0
)


(2.7
)Canadian dollar functional currency


(1.0
)


(5.5
)


Change in state valuation allowance


0.3



1.6



1.1Interest on tax contingencies  leveraged leases


3.1



2.7



1.1Tax credits


(1.1
)


(2.1
)


(0.8
)Other, net


0.2



(1.2
)


(0.3
)Effective income tax rate


34.9
%


27.3
%


33.6
%      52




---



##### Table of Contents



2007(In millions)Balance  Beginning of year

$
9Additions for tax positions of the current year


2Additions for tax positions of prior years


Reductions for tax positions of prior years


(2
)Settlements


Balance  End of year

$
9       non-U.S. income
 53




---



##### Table of Contents



2007


2006(In millions)Deferred tax assets:Allowance for losses

$
31


$
34State net operating losses


15



13Deferred origination fees


10



9Nonaccrual finance receivables


5



8Other


56



35Total deferred tax assets


117



99Valuation allowance


(11
)


(10
)Net deferred tax assets


106



89Deferred tax liabilities:Leveraged leases


408



410Finance leases


66



77Equipment on operating leases


55



57Other


49



42Total deferred tax liabilities


578



586Net deferred tax liabilities

$
472


$
497       NOTE 15Fair Value of Financial Instruments
    Finance
    Receivables
   54




---



##### Table of Contents



Debt,
    Interest Rate Exchange Agreements, Foreign Currency Forward
    Exchange Contracts and Foreign Currency Exchange
    Agreements
      2007


2007


2006


2006Carrying


Estimated


Carrying


EstimatedValue


Fair Value


Value


Fair Value(In millions)Assets:Revolving loans

$
2,232


$
2,235


$
1,924


$
1,912Installment contracts


2,023



2,025



1,637



1,618Distribution finance receivables


1,883



1,883



2,411



2,409Golf course and resort mortgages


1,225



1,235



1,047



1,043Retained interests in securitizations


203



203



179



179Derivative financial instruments


22



22



3



3Marketable debt security


20



20







$
7,608


$
7,623


$
7,201


$
7,164Liabilities:Fixed rate long-term debt

$
3,363


$
3,369


$
3,264


$
3,269Variable rate long-term notes


2,487



2,458



1,819



1,820Total short-term debt


1,461



1,461



1,779



1,779Amounts due to Textron Inc


25



21



20



17Retained interests in securitizations










1



1Derivative financial instruments


2



2



54



54$
7,338


$
7,311


$
6,937


$
6,940   NOTE 16Commitments
     55




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##### Table of Contents



(In millions)Commitments to extend credit:Committed revolving lines of credit

$
1,577Standby letters of credit


51Loans


54     NOTE 17Contingencies
     56




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##### Table of Contents



NOTE 18Financial Information about Operating Segments
    2007


2006


2005(Dollars in millions)Revenues:Distribution Finance

$
290



33
%

$
268



34
%

$
178



28
%Aviation Finance


176



20
%


133



17
%


107



17
%Golf Finance


138



16
%


132



16
%


102



16
%Resort Finance


137



15
%


118



15
%


91



15
%Asset-Based Lending


94



11
%


90



11
%


75



12
%Structured Capital


33



4
%


38



5
%


54



9
%Corporate and Other


7



1
%


19



2
%


21



3
%Total revenues

$
875



100
%

$
798



100
%

$
628



100
%Income from continuing operations before income taxes:(1)(2)Distribution Finance

$
86






$
99






$
70Aviation Finance


48







31







32Golf Finance


38







32







25Resort Finance


51







32







18Asset-Based Lending


21







12







25Structured Capital


16







17







34Corporate and Other


(38
)






(13
)






(33
)Income from continuing operations before income taxes

$
222






$
210






$
171Finance assets:(3)Aviation Finance

$
2,279






$
1,776






$
1,278Distribution Finance


1,936







2,422







1,710Golf Finance


1,680







1,524







1,344Resort Finance


1,521







1,296







1,155Asset-Based Lending


1,004







864







764Structured Capital


631







756







704Corporate and Other


109







170







332Total finance assets

$
9,160






$
8,808






$
7,287     (1)
    
    Interest expense is allocated to each segment in proportion to
    its net investment in finance assets. Net investment in finance
    assets includes finance assets less deferred income taxes,
    security deposits and other specifically identified liabilities.
    The interest allocated matches all variable-rate finance assets
    with variable-rate debt costs and all fixed-rate finance assets
    with fixed-rate debt costs and includes only debt issued during
    historical periods with credit spreads consistent with those in
    existence during the periods in which the current receivable
    portfolio was originated. If this allocation results in greater
    or less interest expense than was actually incurred by the
    Company, the remaining balance is included in the Corporate and
    Other segments interest expense. 57




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##### Table of Contents



Prior to 2007, we allocated 100% of the interest expense
    recognized to the Companys operating segments without
    adjustment. In addition, the allocation was determined, to the
    extent possible, based on matching variable-rate debt with
    variable-rate finance assets and fixed-rate debt with fixed-rate
    finance assets. Any excess floating-rate debt was allocated to
    fixed-rate finance assets. A change in the allocation
    methodology was made in 2007 to measure the results of each
    segment more consistently with the economic characteristics of
    its existing portfolio, which coincided with a change in how
    management internally evaluates segment operating performance.
    The 2006 and 2005 results have not been restated under the new
    methodology. This change had a $13 million positive effect
    on the collective results of the six core portfolio segments for
    the twelve months ended December 29, 2007.(2)
    
    Indirect expenses are allocated to each segment based on the use
    of such resources. Most allocations are based on the
    segments proportion of net investment in finance assets,
    headcount, number of transactions, computer resources and senior
    management time.(3)
    
    Finance assets include: finance receivables; equipment on
    operating leases, net of accumulated depreciation; repossessed
    assets and properties; retained interests in securitizations;
    investment in equipment residuals; Acquisition, Development and
    Construction arrangements; and other short- and long-term
    investments (some of which are classified in Other assets on
    Textron Financials Consolidated Balance Sheets).  NOTE 19Quarterly Financial Data (Unaudited)
  First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter2007


2006


2007


2006


2007


2006


2007


2006(In millions)Revenues

$
210


$
182


$
239


$
192


$
214


$
212


$
212


$
212Net interest margin

$
106


$
105


$
133


$
103


$
113


$
113


$
108


$
109Selling and administrative expenses


49



47



54



48



53



50



49



49Provision for losses


5



9



11



(1
)


6



10



11



8Income from continuing operations before income taxes


52



49



68



56



54



53



48



52Income taxes


17



18



27



20



22



7



11



12Income from continuing operations


35



31



41



36



32



46



37



40Loss from discontinued operations, net of income tax benefit






























(1
)Net income

$
35


$
31


$
41


$
36


$
32


$
46


$
37


$
39   Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Rule 13a-15(e) 15d-15(e))
  Form 10-K.
 58




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##### Table of Contents



Form 10-K.
  c)
    Changes in Internal Controls  There has been no
    change in our internal control over financial reporting during
    the fourth fiscal quarter of the fiscal year covered by this
    report that has materially affected, or is reasonably likely to
    materially affect, our internal control over financial reporting.  Item 9B.
    Other
    Information   PART III.  Item 10.
    Directors
    and Executive Officers of the Registrant  Form 10-K.
  Item 11.
    Executive
    Compensation  Form 10-K.
  Item 12.
    Security
    Ownership of Certain Beneficial Owners and
    Management  Form 10-K.
  Item 13.
    Certain
    Relationships and Related Transactions  Form 10-K.
  Item 14.
    Principal
    Accounting Fees and Services    Audit Fees  Forms 10-Q,
  Audit Related Fees
  Tax Fees
  All Other Fees
 PART IV.  Item 15.
    Exhibits,
    Financial Statement Schedules  (1) List
    of Financial Statements and Financial Statement
    Schedules
       59




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##### Table of Contents



3.
    Consolidated Statements of Cash Flows for each of the years in
    the three-year period ended December 29, 2007.4.
    Consolidated Statements of Changes in Shareholders Equity
    for each of the years in the three-year period ended
    December 29, 2007.      (2) Exhibits
  Regulation S-K
  ExhibitNo.3
.1

Restated Certificate of Incorporation of Textron Financial,
    dated July 19, 1993. Incorporated by reference to
    Exhibit 3.1 to Textron Financial Corporations
    Registration Statement on Form 10 (File
    No. 0-27559).3
.2

By-Laws of Textron Financial Corporation as of May 2, 2000.
    Incorporated by reference to Exhibit 3.1 to Textron
    Financial Corporations Quarterly Report on
    Form 10-Q
    filed August 11, 2000.4
.1A

Indenture dated as of December 9, 1999, between Textron
    Financial Corporation and SunTrust Bank (formerly known as Sun
    Trust Bank, Atlanta) (including form of debt securities).
    Incorporated by reference to Exhibit 4.1 to Amendment
    No. 2 to Textron Financial Corporations Registration
    Statement on
    Form S-3
    (No. 333-88509).4
.1B

First Supplemental Indenture dated November 16, 2006
    between Textron Financial Corporation and U.S. Bank National
    Association (successor to SunTrust Bank) to Indenture dated as
    of December 9, 1999. Incorporated by reference to
    Exhibit 4.3 to Textron Financial Corporations
    Registration Statement on
    Form S-3
    (File
    No. 333-138755).4
.1C

Form of Medium-Term Note of Textron Financial Corporation.
    Incorporated by reference to Exhibit 4.3 to Textron
    Financial Corporations Current Report on
    Form 8-K
    filed November 17, 2006.4
.2A

Indenture dated as of November 30, 2001, between Textron
    Financial Canada Funding Corp. and SunTrust Bank, guaranteed by
    Textron Financial Corporation. Incorporated by reference to
    Exhibit 4.2 to Amendment No. 1 to Textron Financial
    Corporations Registration Statement on
    Form S-3
    (No. 333-108464).4
.2B

First Supplemental Indenture dated November 16, 2006
    between Textron Financial Canada Funding Corp., Textron
    Financial Corporation and U.S. Bank National Association
    (successor trustee to SunTrust Bank) to Indenture dated
    November 30, 2001. Incorporated by reference to
    Exhibit 4.4 to Textron Financial Corporations
    Registration Statement on
    Form S-3
    (File
    No. 333-138755).4
.2C

Form of Medium-Term Note of Textron Financial Canada Funding
    Corp., including the form of the Guaranty by Textron Financial
    Corporation. Incorporated by reference to Exhibit 4.4 to
    Textron Financial Corporations Current Report on
    Form 8-K
    filed November 17, 2006.4
.3A

Amended and Restated Indenture, dated as of May 26, 2005,
    by and between Textron Financial Floorplan Master Note Trust and
    The Bank of New York, as indenture trustee. Incorporated herein
    by reference to Exhibit 4.1 to Textron Financial
    Corporations Current Report on
    Form 8-K
    filed June 1, 2005.4
.3B

Amended and Restated
    Series 2001-1
    Supplement, dated as of May 26, 2005, to the Amended and
    Restated Indenture, dated as of May 26, 2005, by and among
    Textron Financial Floorplan Master Note Trust, The Bank of New
    York, as indenture trustee, and Textron Financial, as servicer,
    incorporated herein by reference to Exhibit 4.2 to Textron
    Financial Corporations Current Report on
    Form 8-K
    filed June 1, 2005.4
.3C

Series 2005-A
    Supplement, dated as of May 26, 2005, to the Amended and
    Restated Indenture, dated as of May 26, 2005, by and among
    Textron Financial Floorplan Master Note Trust, The Bank of New
    York, as indenture trustee, and Textron Financial, as servicer,
    incorporated herein by reference to Exhibit 4.3 to Textron
    Financial Corporations Current Report on
    Form 8-K
    filed June 1, 2005. 60




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##### Table of Contents



ExhibitNo.4
.3D

Series 2006-A
    Supplement, dated as of April 19, 2006, to the Amended and
    Restated Indenture, dated as of May 26, 2005, by and among
    Textron Financial Floorplan Master Note Trust, The Bank of New
    York, as indenture trustee, and Textron Financial, as servicer,
    incorporated herein by reference to Exhibit 4.1 to Textron
    Financial Corporations Current Report on
    Form 8-K
    filed April 24, 2006.4
.3E

Series 2007-A
    Supplement, dated as of March 29, 2007, to the Amended and
    Restated Indenture, dated as of May 26, 2005, by and among
    Textron Financial Floorplan Master Note Trust, The Bank of New
    York, as indenture trustee, and Textron Financial, as servicer,
    incorporated herein by reference to Exhibit 4.1 to Textron
    Financial Corporations Current Report on
    Form 8-K
    filed March 30, 2007.4
.3F

Amended and Restated Trust Agreement, dated as of
    May 26, 2005, among Textron Financial, Textron Receivables
    Corporation III and SunTrust Delaware Trust Company,
    as owner trustee, incorporated herein by reference to
    Exhibit 99.1 of Textron Financial Corporations
    Current Report on
    Form 8-K
    filed June 1, 2005.4
.4A

Indenture, dated as of February 8, 2007, between Textron
    Financial Corporation and Deutsche Bank Trust Company
    Americas, as trustee, incorporated herein by reference to
    Exhibit 99.1 of Textron Financial Corporations
    Current Report on
    Form 8-K
    filed February 13, 2007.4
.4B

Contribution Agreement, dated February 8, 2007, between
    Textron Financial Corporation and Textron Inc, incorporated
    herein by reference to Exhibit 99.2 of Textron Financial
    Corporations Current Report on
    Form 8-K
    filed February 13, 2007.4
.4C

Replacement Capital Covenant, dated February 8, 2007,
    incorporated herein by reference to Exhibit 99.3 of Textron
    Financial Corporations Current Report on
    Form 8-K
    filed February 13, 2007.10
.1

Support Agreement dated as of May 25, 1994, between Textron
    Financial Corporation and Textron Inc. Incorporated by reference
    to Exhibit 10.1 to Textron Financial Corporations
    Statement on Form 10 (File
    No. 0-27559).10
.2

Receivables Purchase Agreement between Textron Financial and
    Textron dated as of January 1, 1986. Incorporated by
    reference to Exhibit 10.2 to Textron Financial
    Corporations Statement on Form 10 (File
    No. 0-27559).10
.3

Tax Sharing Agreement between Textron Financial and Textron
    dated as of December 29, 1990. Incorporated by reference to
    Exhibit 10.3 to Textron Financial Corporations
    Statement on Form 10 (File
    No. 0-27559).10
.4A

5-Year
    Credit Agreement, dated as of March 28, 2005, among
    Textron, the Banks listed therein, JPMorgan Chase Bank, N.A., as
    Administrative Agent, and Citibank, N.A., as Syndication Agent.
    Incorporated by reference to Exhibit 10.1 to Textrons
    Current Report on
    Form 8-K
    filed March 31, 2005.10
.4B

Amendment No. 1, dated as of April 21, 2006, to the
    5-Year
    Credit Agreement, dated as of March 28, 2005, among
    Textron, the Banks listed therein, JPMorgan Chase Bank, N.A., as
    Administrative Agent, and Citibank, N.A., as Syndication Agent.
    Incorporated by reference to Exhibit 10.1 to Textrons
    Current Report on
    Form 8-K
    filed April 25, 2006.10
.4C

Amendment No. 2, dated as of April 20, 2007, to the
    5-Year
    Credit Agreement, dated as of March 28, 2005, as amended on
    April 21, 2006, among Textron the Banks listed therein,
    JPMorgan Chase Bank, N.A., as Administrative Agent, and
    Citibank, N.A., as Syndication Agent, incorporated herein by
    reference to Exhibit 10.1 of Textron Inc.s Current
    Report on
    Form 8-K
    filed April 25, 2007.10
.5A

364-Day
    Credit Agreement dated March 31, 2003 among Textron Inc.,
    the Banks listed therein, and JPMorgan Chase Bank, as
    Administrative Agent. Incorporated by reference to
    Exhibit 10.3 to Textron Inc.s Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended March 29, 2003.10
.5B

Amendment, dated as of July 28, 2003, to the
    364-Day
    Credit Agreement among Textron Inc., the Banks listed therein,
    and JPMorgan Chase Bank, as Administrative Agent. Incorporated
    by reference to Exhibit 10.5 to Textron Financial
    Corporations Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended September 30, 2003.10
.5C

Amendment No. 2, dated as of March 29, 2004, to the
    364-day
    Credit Agreement among Textron Inc., the Banks listed therein,
    and JPMorgan Chase Bank, as Administrative Agent. Incorporated
    by reference to Exhibit 10.1 to Textrons Quarterly
    Report on
    Form 10-Q
    for the fiscal quarter ended April 3, 2004. 61




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##### Table of Contents



ExhibitNo.10
.6A

364-Day
    Credit Agreement dated July 28, 2003 among Textron
    Financial Corporation, the Banks listed therein, and JPMorgan
    Chase Bank, as Administrative Agent. Incorporated by reference
    to Exhibit 10.1 to Textron Financial Corporations
    Current Report on
    Form 8-K
    filed August 26, 2003.10
.6B

Amendment, dated as of July 26, 2004, to the
    364-day
    Credit Agreement dated as of July 28, 2003, among Textron
    Financial Corporation, the Banks listed therein, and JPMorgan
    Chase Bank, as Administrative Agent. Incorporated by reference
    to Exhibit 10.1 to Textron Financial Corporations
    Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended September 30, 2004.10
.6C

Amendment No. 2, dated as of July 25, 2005, to the
    364-Day
    Credit Agreement dated as of July 28, 2003, among Textron
    Financial, the Banks listed therein, and JPMorgan Chase Bank
    N.A., as Administrative Agent. Incorporated by reference to
    Exhibit 10.2 to Textron Financial Corporations
    Current Report on
    Form 8-K
    filed July 27, 2005.10
.7A

Five-Year Credit Agreement dated July 28, 2003 among
    Textron Financial Corporation, the Banks listed therein, and
    JPMorgan Chase Bank, as Administrative Agent. Incorporated by
    reference to Exhibit 10.2 to Textron Financial
    Corporations Current Report on
    Form 8-K
    filed August 26, 2003.10
.7B

Amendment No. 1, dated as of July 25, 2005, to the
    Five-Year Credit Agreement dated as of July 28, 2003 among
    Textron Financial, the Banks listed therein, and JPMorgan Chase
    Bank N.A., as Administrative Agent. Incorporated by reference to
    Exhibit 10.1 to Textron Financial Corporations
    Current Report on
    Form 8-K
    filed July 27, 2005.10
.7C

Amendment No. 2, dated as of April 28, 2006, to the
    Five-Year Credit Agreement, dated as of July 28, 2003,
    among Textron Financial Corporation, the Banks listed therein
    and JPMorgan Chase Bank N.A., as Administrative Agent.
    Incorporated by reference to Exhibit 10.1 to Textron
    Financial Corporations Current Report on
    Form 8-K
    filed May 1, 2006.10
.7D

Amendment No. 3, dated as of April 27, 2007, to the
    Five-Year Credit Agreement, dated as of July 28, 2003, as
    amended on March 28, 2005 and April 28, 2006, among
    Textron Financial Corporation, the Banks listed therein and
    JPMorgan Chase Bank N.A., as Administrative Agent. Incorporated
    by reference to Exhibit 10.1 to Textron Financial
    Corporations Current Report on
    Form 8-K
    filed April 27, 2007.12


Computation of Ratio of Earnings to Fixed Charges.21


List of significant subsidiaries.23


Consent of Independent Registered Public Accounting Firm.24


Power of Attorney dated as of February 20, 2008.31
.1

Certification of Chief Executive Officer Pursuant to
    Rule 13a-14(a).31
.2

Certification of Chief Financial Officer Pursuant to
    Rule 13a-14(a).32
.1

Certification of Chief Executive Officer Pursuant to
    18 U.S.C. Section 1350.32
.2

Certification of Chief Financial Officer Pursuant to
    18 U.S.C. Section 1350.     Note:
    Instruments defining the rights of holders of certain issues of
    long-term debt of Textron Financial have not been filed as
    exhibits to this Report because the authorized principal amount
    of any one of such issues does not exceed 10% of the total
    assets of Textron Financial and its subsidiaries on a
    consolidated basis. Textron Financial agrees to furnish a copy
    of each such instrument to the Commission upon request.  Textron Financial, Textron, Bell
    Helicopter, Cessna, Cessna Finance Corporation, Textron Business
    Services, Inc., Asset
 Control, a division of Textron
    Business Services, Inc., Textron Golf, Turf and Specialty
    Products,
    E-Z-GO,
    Jacobsen
 turf-care and their related
    trademark designs and logotypes (and variations of the
    foregoing) are trademarks,
 trade names or service marks of
    Textron Inc., its subsidiaries, affiliates or joint
    ventures.
 62




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##### Table of Contents



SIGNATURES
  Form 10-K
  
  By:
    *       By:
    *      By:
    *      By:
    *     By:
    /s/  Thomas
    J. Cullen      By:
    /s/  Thomas
    N. Nichipor      *By:
    /s/  Elizabeth
    C. Perkins    63