##### 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 30, 2006ORo

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
 (401) 621-4200
 (Address of Principal Executive
    Offices)
  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.
  Rule 12b-2
  o o þ
  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


9Item 2.


Properties


9Item 3.


Legal Proceedings


9Item 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


10Item 7.


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


11Item 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


57Item 9A.


Controls and Procedures


57Item 9B.


Other Information


58PART III.Item 10.


Directors and Executive Officers
    of the Registrant


58Item 11.


Executive Compensation


58Item 12.


Security Ownership of Certain
    Beneficial Owners and Management


58Item 13.


Certain Relationships and Related
    Transactions


58Item 14.


Principal Accounting Fees and
    Services


58PART IV.Item 15.


Exhibits, Financial Statement
    Schedules


59EX-12 Computation of Ratio of Earnings to Fixed ChargesEX-21 List of significant subsidiariesEX-23 Consent of Independent Registered Public Accounting FirmEX-24 Power of Attorney dated February 21, 2007EX-31.1 Section 302 Certification of C.E.O.EX-31.2 Section 302 Certification of C.F.O.EX-32.1 Section 906 Certification of C.E.O.EX-32.2 Section 906 Certification of C.F.O.   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
    rates; 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



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
    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
     8




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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
  day-to-day
  Changes
    in the regulatory environment in which we operate could have an
    adverse affect on our business and earnings
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties  Form 10-K.
  Item 3.
    Legal
    Proceedings   9




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##### Table of Contents



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.
  Item 6.
    Selected
    Financial Data  Form 10-K.
  For the years ended(1)2006


2005


2004


2003


2002(Dollars in millions)Results of OperationsFinance charges

$
652


$
464


$
369


$
404


$
413Securitization gains


42



49



56



43



45Rental revenues on operating leases


32



32



29



29



27Other income


72



83



91



96



99Income from continuing operations


153



114



94



79



76Cumulative effect of change in
    accounting principle, net of income taxes


















15(Loss) income from discontinued
    operations, net of income taxes


(1
)


(3
)






1



(1
)Net income


152



111



94



80



60Balance Sheet DataTotal finance receivables

$
8,310


$
6,763


$
5,837


$
5,135


$
5,534Allowance for losses on finance
    receivables


93



96



99



119



145Equipment on operating
    leases  net


238



231



237



210



255Total assets


9,000



7,441



6,738



6,333



6,654Short-term debt


1,779



1,200



1,307



520



917Long-term debt


5,083



4,220



3,476



3,887



3,923Deferred income taxes


497



461



453



390



398Shareholders equity


1,142



1,050



1,035



1,009



1,021Debt to tangible
    shareholders equity(2)


7.10
x


6.19
x


5.53
x


5.24
x


5.59
xSELECTED DATA AND
    RATIOSProfitabilityNet interest margin as a
    percentage of average net investment(3)


5.81
%


6.40
%


7.14
%


6.92
%


6.89
%Return on average equity(4)


14.13
%


11.17
%


9.49
%


7.86
%


7.59
%Return on average assets(5)


1.84
%


1.58
%


1.49
%


1.25
%


1.18
% 10




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##### Table of Contents



For the years ended(1)2006


2005


2004


2003


2002(Dollars in millions)Selling and administrative
    expenses as a percentage of average managed and serviced finance
    receivables(6)


1.84
%


2.01
%


2.01
%


1.98
%


1.71
%Operating efficiency ratio(7)


45.1
%


48.8
%


47.1
%


46.8
%


39.8
%Credit Quality60+ days contractual delinquency
    as a percentage of finance receivables(8)


0.77
%


0.79
%


1.47
%


2.39
%


2.86
%Nonperforming assets as a
    percentage of finance assets(9)


1.28
%


1.53
%


2.18
%


2.80
%


3.41
%Allowance for losses on finance
    receivables as a percentage of finance receivables


1.11
%


1.43
%


1.70
%


2.32
%


2.62
%Allowance for losses on finance
    receivables as a percentage of nonaccrual finance receivables


123.1
%


108.6
%


83.7
%


78.4
%


81.7
%Net charge-offs as a percentage of
    average finance receivables


0.38
%


0.51
%


1.48
%


2.08
%


1.83
%Ratio of allowance for losses on
    finance receivables to net charge-offs


3.2
x


3.1
x


1.3
x


1.0
x


1.4
x     (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
   11




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Key
    Business Initiatives and Trends
    out-of-trend
     12




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##### Table of Contents



Financial
    Condition
  Liquidity
    and Capital Resources
        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 2011

$
1,750


$
1,719


$
13


$
18Textron multi-year facility
    expiring in 2011


1,250







23



1,227Total

$
3,000


$
1,719


$
36


$
1,245    13




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##### Table of Contents



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

$
1,779


$



$



$



$



$



$
1,779Term debt


1,118



966



1,562



833



442



209



5,130Operating lease rental payments


6



5



4



3



3



1



22Total contractual payments


2,903



971



1,566



836



445



210



6,931Cash and receipts:Finance receivable receipts


3,554



1,396



821



497



504



1,538



8,310Operating lease rental receipts


30



23



20



18



15



26



132Total receipts


3,584



1,419



841



515



519



1,564



8,442Cash


47























47Total cash and receipts


3,631



1,419



841



515



519



1,564



8,489Net cash and receipts (payments)

$
728


$
448


$
(725
)

$
(321
)

$
74


$
1,354


$
1,558Cumulative net cash and receipts

$
728


$
1,176


$
451


$
130


$
204


$
1,558              14




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Off-Balance
    Sheet Arrangements
         15




---



##### Table of Contents



Form 10-K.
      Managed
    Finance Receivables
    2006


2005(Dollars in millions)Distribution Finance

$
3,753



37
%

$
2,993



33
%Aviation Finance


1,939



19
%


1,664



19
%Golf Finance


1,518



15
%


1,435



16
%Resort Finance


1,295



13
%


1,138



13
%Asset-Based Lending


864



8
%


764



8
%Structured Capital


730



7
%


689



8
%Other Segment


142



1
%


312



3
%Total managed finance receivables

$
10,241



100
%

$
8,995



100
%     Nonperforming
    Assets
   16




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##### Table of Contents



2006


2005


2004(Dollars in millions)Golf Finance

$
29



1.89
%

$
13



0.99
%

$
26



2.34
%Resort Finance


16



1.22
%


31



2.67
%


53



4.44
%Asset-Based Lending


16



1.81
%


6



0.81
%


7



1.17
%Aviation Finance


12



0.70
%


14



1.07
%


12



0.96
%Distribution Finance


7



0.28
%


2



0.11
%


5



0.43
%Other


33



19.74
%


45



13.64
%


37



8.35
%Total nonperforming assets

$
113



1.28
%

$
111



1.53
%

$
140



2.18
%     out-of-trend
      Interest
    Rate Sensitivity
     17




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##### Table of Contents



Financial
    Risk Management
      Critical
    Accounting Policies
  Allowance
    for Losses on Finance Receivables
      Goodwill
   18




---



##### Table of Contents



Securitized
    Transactions
    Form 10-K
 19




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##### Table of Contents



Results
    of Operations
  Revenues
    and Net Interest Margin
    2006


2005


2004(Dollars in millions)Finance charges

$
652


$
464


$
369Securitization gains


42



49



56Rental revenues on operating leases


32



32



29Other income


72



83



91Total revenues

$
798


$
628


$
545Interest expense


351



218



154Depreciation of equipment on
    operating leases


17



19



18Net interest margin

$
430


$
391


$
373Portfolio yield


9.11
%


7.91
%


7.35
%Net interest margin as a
    percentage of average net investment


5.81
%


6.40
%


7.14
%   2006 vs.
    2005
      2005 vs.
    2004
     20




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##### Table of Contents



Selling
    and Administrative Expenses
  2006


2005


2004(Dollars in millions)Selling and administrative expenses

$
194


$
191


$
176Selling and administrative
    expenses as a percentage of average managed and serviced finance
    receivables


1.84
%


2.01
%


2.01
%Operating efficiency ratio


45.1
%


48.8
%


47.1
%   2006 vs.
    2005
    2005 vs.
    2004
    Provision
    for Losses
    2006


2005


2004(Dollars in millions)Allowance for losses on finance
    receivables beginning of period

$
96


$
99


$
119Provision for losses


26



29



58Less net charge-offs:Resort Finance


7



10



34Asset-Based Lending


7







2Distribution Finance


6



10



13Aviation Finance


2



2



7Golf Finance


1



3



3Other


6



7



20Total net charge-offs


29



32



79Acquisitions and other










1Allowance for losses on finance
    receivables end of period

$
93


$
96


$
99Net charge-offs as a percentage of
    average finance receivables


0.38
%


0.51
%


1.48
%Allowance for losses on finance
    receivables as a percentage of total finance receivables


1.11
%


1.43
%


1.70
%Allowance for losses on finance
    receivables as a percentage of nonaccrual finance receivables


123.1
%


108.6
%


83.7
%  21




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##### Table of Contents



2006 vs.
    2005
    2005 vs.
    2004
        Income
    Taxes
    2006


2005


2004Federal statutory income tax rate


35.0
%


35.0
%


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


1.0



1.3



1.3Tax exempt interest


(0.2
)


(1.1
)


(0.8
)Foreign tax rate differential


(4.0
)


(2.7
)


(1.5
)Canadian dollar functional currency


(5.5
)






Change in state valuation allowance


1.6



1.1



(1.2
)Interest on tax
    contingencies  leveraged leases


2.7



1.1



0.8Tax credits


(2.1
)


(0.8
)


(1.0
)Other, net


(1.2
)


(0.3
)


(0.1
)Effective income tax rate


27.3
%


33.6
%


32.5
%   Form 10-K.
 22




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##### Table of Contents



Discontinued
    Operations, net of Income Tax Benefit
    Operating
    Results by Segment
    Distribution
    Finance
  2006


2005


2004(In millions)Revenues

$
268


$
178


$
159Net interest margin

$
185


$
140


$
143Selling and administrative expenses


82



68



62Provision for losses


4



2



8Segment income

$
99


$
70


$
73       Aviation
    Finance
  2006


2005


2004(In millions)Revenues

$
133


$
107


$
79Net interest margin

$
52


$
51


$
39Selling and administrative expenses


21



16



14Provision for losses






3



1Segment income

$
31


$
32


$
24    23




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##### Table of Contents



Golf
    Finance
  2006


2005


2004(In millions)Revenues

$
132


$
102


$
80Net interest margin

$
54


$
52


$
41Selling and administrative expenses


19



21



18Provision for losses


3



6



7Segment income

$
32


$
25


$
16       Resort
    Finance
  2006


2005


2004(In millions)Revenues

$
118


$
91


$
85Net interest margin

$
61


$
51


$
57Selling and administrative expenses


23



29



23Provision for losses


6



4



32Segment income

$
32


$
18


$
2      24




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##### Table of Contents



Asset-Based
    Lending
  2006


2005


2004(In millions)Revenues

$
90


$
75


$
56Net interest margin

$
51


$
51


$
44Selling and administrative expenses


23



25



22Provision for losses


16



1



5Segment income

$
12


$
25


$
17       Structured
    Capital
  2006


2005


2004(In millions)Revenues

$
38


$
54


$
52Net interest margin

$
21


$
38


$
33Selling and administrative expenses


4



4



3Provision for losses










Segment income

$
17


$
34


$
30      25




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##### Table of Contents



Other
    Segment
  2006


2005


2004(In millions)Revenues

$
19


$
21


$
34Net interest margin

$
6


$
8


$
15Selling and administrative expenses


22



28



33Provision for losses


(3
)


13



5Segment loss

$
(13
)

$
(33
)

$
(23
)       Recent
    Accounting Pronouncements
     26




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##### Table of Contents



No. 13-2
    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 port-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) performance of acquisitions.
  Item 7A.
    Quantitative
    and Qualitative Disclosure About Market Risk  Form 10-K.
 27




---



##### 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




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  To the Board of Directors
    Textron Financial Corporation
          
     30




---



##### Table of Contents



CONSOLIDATED
    STATEMENTS OF INCOME
    2006


2005


2004(In millions)Finance charges

$
652


$
464


$
369Securitization gains


42



49



56Rental revenues on operating leases


32



32



29Other income


72



83



91Total revenues


798



628



545Interest expense


351



218



154Depreciation of equipment on
    operating leases


17



19



18Net interest margin


430



391



373Selling and administrative expenses


194



191



176Provision for losses


26



29



58Income from continuing
    operations before income taxes


210



171



139Income taxes


57



57



45Income from continuing
    operations


153



114



94Loss from discontinued operations,
    net of income tax benefit


(1
)


(3
)


Net income

$
152


$
111


$
94    31




---



##### Table of Contents



CONSOLIDATED
    BALANCE SHEETS
  December 30,


December 31,2006


2005(In millions)AssetsCash and equivalents

$
47


$
10Finance receivables, net of
    unearned income:Distribution finance receivables


2,423



1,654Revolving loans


1,948



1,633Installment contracts


1,674



1,374Golf course and resort mortgages


1,060



1,020Leveraged leases


615



569Finance leases


590



513Total finance receivables


8,310



6,763Allowance for losses on finance
    receivables


(93
)


(96
)Finance receivables  net


8,217



6,667Equipment on operating
    leases  net


238



231Goodwill


169



169Other assets


329



364Total assets

$
9,000


$
7,441Liabilities and
    shareholders equityLiabilitiesAccrued interest and other
    liabilities

$
479


$
499Amounts due to Textron Inc.


20



11Deferred income taxes


497



461Debt


6,862



5,420Total liabilities


7,858



6,391Shareholders
    equityCapital surplus


592



574Investment in parent company
    preferred stock


(25
)


(25
)Accumulated other comprehensive
    income


7



5Retained earnings


568



496Total shareholders equity


1,142



1,050Total liabilities and
    shareholders equity

$
9,000


$
7,441    32




---



##### Table of Contents



CONSOLIDATED
    STATEMENTS OF CASH FLOWS
    2006


2005


2004(In millions)Cash flows from operating
    activities:Net income

$
152


$
111


$
94Loss from discontinued operations


1



3



Income from continuing
    operations


153



114



94Adjustments to reconcile income
    from continuing operations to net cash provided by operating
    activities:Provision for losses


26



29



58Increase (decrease) in accrued
    interest and other liabilities


66



35



(110
)Depreciation


28



34



36Amortization


11



12



10Collections in excess of noncash
    gains on securitizations and syndications


8



2



2Deferred income tax provision


38



7



69Other  net


8



14



2Net cash provided by operating
    activities of continuing operations


338



247



161Net cash used by operating
    activities of discontinued operations


(13
)


(3
)


Net cash provided by operating
    activities


325



244



161Cash flows from investing
    activities:Finance receivables originated or
    purchased


(12,240
)


(10,940
)


(10,617
)Finance receivables repaid


10,205



9,560



9,359Proceeds from receivable sales,
    including securitizations


513



383



394Net cash used in acquisitions


(164
)






Other investments


18



26



72Proceeds from disposition of
    operating leases and other assets


66



93



126Other capital expenditures


(12
)


(9
)


(12
)Purchase of assets for operating
    leases


(66
)


(63
)


(78
)Net cash used by investing
    activities of continuing operations


(1,680
)


(950
)


(756
)Cash flows from financing
    activities:Principal payments on long-term
    debt


(1,049
)


(677
)


(1,201
)Proceeds from issuance of
    long-term debt


1,853



1,482



770Net increase (decrease) in
    commercial paper


532



(102
)


792Net increase (decrease) in other
    short-term debt


47



(4
)


(5
)Redemption of junior subordinated
    debentures










(26
)Proceeds from issuance of
    nonrecourse debt


142



72



179Principal payments on nonrecourse
    debt


(72
)


(84
)


(77
)Capital contributions from Textron
    Inc.


27



9



9Dividends paid to Textron
    Inc.


(89
)


(109
)


(80
)Net cash provided by financing
    activities of continuing operations


1,391



587



361Effect of exchange rate changes on
    cash


1



2



4Net cash provided (used) by
    continuing operations


50



(114
)


(230
)Net cash used by discontinued
    operations


(13
)


(3
)


Net increase (decrease) in cash
    and equivalents


37



(117
)


(230
)Cash and equivalents at beginning
    of year


10



127



357Cash and equivalents at end of year

$
47


$
10


$
127    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 3,
    2004

$
574


$
(25
)

$
(2
)

$
462


$
1,009Comprehensive income:Net income














94



94Other comprehensive income:Foreign currency translation










10







10Change in unrealized net losses on
    hedge contracts, net of income taxes










(3
)






(3
)Change in unrealized net gains on
    interest-only securities, net of income taxes










(4
)






(4
)Other comprehensive income










3







3Comprehensive income


















97Capital contributions from Textron
    Inc.


9















9Dividends to Textron Inc.


(9
)










(71
)


(80
)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


$
1,142    34




---



##### 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
    Equipment
    on Operating Leases
    Goodwill
   36




---



##### Table of Contents



Pension
    Benefits and Postretirement Benefits Other than
    Pensions
    Income
    Taxes
    Securitized
    Transactions
        Derivative
    Financial Instruments
     37




---



##### Table of Contents



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




---



##### Table of Contents



No. 13-2
    NOTE 2Other Income
  2006


2005


2004(In millions)Servicing fees

$
29


$
32


$
32Investment income


15



12



13Prepayment gains


6



6



16Late charges


3



5



7Syndication income


2



2



8Other


17



26



15Total other income

$
72


$
83


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




---



##### Table of Contents



NOTE 5Finance Receivables
  Portfolio
    Maturities
    2007


2008


2009


2010


2011


Thereafter


Total(In millions)Distribution finance receivables

$
1,519


$
559


$
233


$
44


$
66


$
2


$
2,423Revolving loans


1,422



287



127



60



28



24



1,948Installment contracts


273



185



188



165



215



648



1,674Golf course and resort mortgages


149



171



137



146



167



290



1,060Leveraged leases


(11
)


70



35



(5
)


14



512



615Finance leases


202



124



101



87



14



62



590Total finance receivables

$
3,554


$
1,396


$
821


$
497


$
504


$
1,538


$
8,310        40




---



##### Table of Contents



Concentrations
    2006


2005(Dollars in millions)United States:Southeast

$
2,582



25
%

$
2,311



26
%West


1,776



17
%


1,661



19
%Midwest


1,493



15
%


1,277



14
%Southwest


1,295



13
%


1,249



14
%Mideast


1,010



10
%


924



10
%Northeast


312



3
%


304



3
%Total United States

$
8,468



83
%

$
7,726



86
%Canada


719



7
%


400



4
%South America


337



3
%


283



3
%Mexico


324



3
%


237



3
%Other international


393



4
%


349



4
%Total managed finance receivables

$
10,241



100
%

$
8,995



100
%  41




---



##### Table of Contents



2006


2005(Dollars in millions)General aviation

$
1,966



19
%

$
1,691



19
%Golf


1,625



16
%


1,550



17
%Resort


1,295



13
%


1,135



13
%Recreational vehicles


960



9
%


761



8
%Transportation


629



6
%


504



6
%Manufactured housing


527



5
%


544



6
%Outdoor power equipment


304



3
%


294



3
%Automobiles


261



3
%


181



2
%Information technology equipment


209



2
%


210



2
%Real estate


178



2
%


186



2
%Other


2,287



22
%


1,939



22
%Total managed finance receivables

$
10,241



100
%

$
8,995



100
%   Leveraged
    Leases
  2006


2005(In millions)Rental receivable

$
1,838


$
1,763Nonrecourse debt


(1,292
)


(1,243
)Estimated residual values of
    leased assets


329



311875



831Less unearned income


(260
)


(262
)Investment in leveraged leases


615



569Deferred income taxes


(410
)


(349
)Net investment in leveraged leases

$
205


$
220       2006


2005


2004(In millions)Income recognized

$
39


$
33


$
31Income tax expense


(11
)


(11
)


(10
)Income from leveraged leases

$
28


$
22


$
21   Finance
    Leases
  2006


2005(In millions)Total minimum lease payments
    receivable

$
517


$
457Estimated residual values of
    leased equipment


267



241784



698Less unearned income


(194
)


(185
)Net investment in finance leases

$
590


$
513  42




---



##### Table of Contents



Loan
    Impairment
    2006


2005(In millions)Impaired nonaccrual finance
    receivables

$
60


$
67Impaired accrual finance
    receivables


101



36Total impaired finance receivables

$
161


$
103Impaired nonaccrual finance
    receivables with identified reserve requirements

$
36


$
53Allowance for losses on impaired
    nonaccrual finance receivables

$
17


$
18     2006


2005(In millions)Impaired nonaccrual finance
    receivables

$
60


$
67Nonaccrual homogenous finance
    receivables


15



22Total nonaccrual finance
    receivables


75



89Repossessed assets and properties


38



22Total nonperforming assets

$
113


$
111          43




---



##### Table of Contents



Allowance
    for Losses on Finance Receivables
    2006


2005


2004(In millions)Balance at beginning of year

$
96


$
99


$
119Provision for losses


26



29



58Charge-offs


(40
)


(49
)


(95
)Recoveries


11



17



16Acquisitions and other










1Balance at end of year

$
93


$
96


$
99   Managed
    and Serviced Finance Receivables
    2006


2005(In millions)Total managed and serviced finance
    receivables

$
11,536


$
9,915Nonrecourse participations


(695
)


(383
)Third-party portfolio servicing


(581
)


(509
)SBA sales agreements


(19
)


(28
)Total managed finance receivables


10,241



8,995Securitized receivables


(1,931
)


(2,124
)Other managed finance receivables






(108
)Owned receivables

$
8,310


$
6,763            44




---



##### Table of Contents



NOTE 6Receivable Securitizations
    2006


2005


2004(In millions)Distribution finance receivables

$
42


$
40


$
48General aviation loans






6



7Vacation interval loans






1



1Other






2



Total pre-tax gains on
    securitizations

$
42


$
49


$
56     DistributionFinanceReceivablesWeighted-average life (in years)


0.3Expected credit losses (annual
    rate)


0.2
%Residual cash flows discount rate


10.0
%     General


Distribution


VacationAviation


Finance


IntervalLoans


Receivables


Loans(Dollars in millions)Carrying amount of retained
    interests in securitizations  net

$
56


$
111


$
7Weighted-average life (in years)


1.7



0.3



1.8Prepayment speed (annual
    rate)


25
%






15
%10% adverse change


(1
)






20% adverse change


(2
)






Expected credit losses (annual
    rate)


0.3
%


0.2
%


10% adverse change


(1
)






20% adverse change


(1
)


(1
)


Residual cash flows discount
    rate


5.5
%


10.2
%


6.0
%10% adverse change










20% adverse change


(1
)






    45




---



##### Table of Contents



Total


AggregatePrincipal


Contract











CreditAmount


Value 60











Lossesof Loans


Days or More


60+ Days


Average


Net Credit


AnnualType of Finance Receivable

and Leases


Past Due


Delinquency


Balances


Losses


RateAt December 30, 2006


Year Ended December 30, 2006(Dollars in millions)Distribution finance receivables

$
3,753


$
4



0.1
%

$
3,379


$
6



0.2
%General aviation loans


1,939



22



1.1
%


1,803



2



0.1
%Vacation interval loans


167



2



1.1
%


196







Total loans held and securitized

$
5,859


$
28






$
5,378


$
8Consisting of:Loans held in portfolio

$
3,806


$
15Loans securitized


2,053



13Total loans held and securitized

$
5,859


$
28         2006


2005


2004(In millions)Proceeds from securitizations

$
50


$
361


$
394Cash flows received on retained
    interests


63



64



70Servicing fees received


27



28



26Cash paid for loan repurchases


15



26



20  46




---



##### Table of Contents



NOTE 7Equipment on Operating Leases
  2006


2005(In millions)Equipment on operating leases, at
    cost:Aircraft.

$
253


$
250Golf cars


24



27Accumulated depreciation:Aircraft.


(34
)


(40
)Golf cars


(5
)


(6
)Equipment on operating
    leases  net

$
238


$
231     NOTE 8Goodwill
  2006


2005(In millions)Resort Finance

$
110


$
110Asset-Based Lending


43



43Aviation Finance


16



16$
169


$
169   NOTE 9Other Assets
  2006


2005(In millions)Retained interests in
    securitizations

$
179


$
208Other long-term investments


40



53Repossessed assets and properties


38



22Fixed assets  net


34



33Investment in equipment residuals


3



10Other


35



38Total other assets

$
329


$
364            47




---



##### Table of Contents



NOTE 10Debt and Credit Facilities
  2006


2005(In millions)Short-term debt:Commercial paper

$
1,719


$
1,187Other short-term debt


60



13Total short-term debt


1,779



1,200Long-term debt:Fixed-rate notesDue 2006 (weighted-average rate of
    3.04%)






519Due 2007 (weighted-average rates
    of 5.50% and 5.54%, respectively)


843



813Due 2008 (weighted-average rates
    of 4.12% and 4.12%, respectively)


611



603Due 2009 (weighted-average rates
    of 5.67% and 5.87%, respectively)


649



542Due 2010 (weighted-average rates
    of 4.58% and 4.58%, respectively)


557



557Due 2011 and thereafter
    (weighted-average rates of 5.03% and 4.71%, respectively)


651



226Variable-rate notesDue 2006 (weighted-average rate of
    4.78%)






516Due 2007 (weighted-average rates
    of 5.80% and 4.93%, respectively)


275



275Due 2008 (weighted-average rates
    of 5.45% and 4.38%, respectively)


355



220Due 2009 (weighted-average rates
    of 5.47%)


913



Due 2010 (weighted-average rate of
    5.49%)


276



Long-term debt


5,130



4,271Unamortized discount


(3
)


(4
)Fair value adjustments


(44
)


(47
)Total long-term debt


5,083



4,220Total debt

$
6,862


$
5,420       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 2011

$
1,750


$
1,719


$
13


$
18Textron multi-year facility
    expiring in 2011


1,250







23



1,227Total

$
3,000


$
1,719


$
36


$
1,245  48




---



##### Table of Contents



2006


2005


2004Commercial paper


5.30
%


4.38
%


2.39
%Other short-term debt


4.46
%


4.31
%


5.50
%                 NOTE 11Derivative Financial Instruments
     49




---



##### Table of Contents



back-to-back back-to-back
  NOTE 12Investment in Parent Company Preferred Stock
   50




---



##### Table of Contents



NOTE 13Accumulated Other Comprehensive Income (Loss)
    DeferredForeign


(Losses)


DeferredCurrency


Gains on


GainsTranslation


Hedge


(Losses) onAdjustment


Contracts


Securities


Total(In millions)Balance January 3,
    2004

$
(2
)

$
(6
)

$
6


$
(2
)Foreign currency translation


10











10Amortization of deferred loss on
    terminated hedge contracts, net of income taxes of
    $2 million






4







4Net deferred loss on hedge
    contracts, net of income tax benefit of $4 million






(7
)






(7
)Net deferred loss on interest-only
    securities, net of income tax benefit of $3 million










(4
)


(4
)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


$
7   NOTE 14Income Taxes
    2006


2005


2004(In millions)United States

$
198


$
168


$
134Foreign


12



3



5Total

$
210


$
171


$
139  51




---



##### Table of Contents



2006


2005


2004(In millions)Current:Federal

$
7


$
39


$
(20
)State


6



5



(7
)Foreign


6



6



3Total current income taxes

$
19


$
50


$
(24
)Deferred:Federal

$
36


$
9


$
60State


3



(2
)


9Foreign


(1
)






Total deferred income taxes


38



7



69Total income taxes

$
57


$
57


$
45       2006


2005


2004Federal statutory income tax rate


35.0
%


35.0
%


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


1.0



1.3



1.3Tax exempt interest


(0.2
)


(1.1
)


(0.8
)Foreign tax rate differential


(4.0
)


(2.7
)


(1.5
)Canadian dollar functional currency


(5.5
)






Change in state valuation allowance


1.6



1.1



(1.2
)Interest on tax
    contingencies  leveraged leases


2.7



1.1



0.8Tax credits


(2.1
)


(0.8
)


(1.0
)Other, net


(1.2
)


(0.3
)


(0.1
)Effective income tax rate


27.3
%


33.6
%


32.5
%   Form 10-K.
 52




---



##### Table of Contents



2006


2005(In millions)Deferred tax assets:Allowance for losses

$
34


$
15State net operating losses


13



15Deferred origination fees


9



9Nonaccrual finance receivables


8



7Other


35



33Total deferred tax assets


99



79Valuation allowance


(10
)


(7
)Net deferred tax assets


89



72Deferred tax
    liabilities:Leveraged leases


410



366Finance leases


77



85Equipment on operating leases


57



61Other


42



21Total deferred tax liabilities


586



533Net deferred tax liabilities

$
497


$
461       NOTE 15Fair Value of Financial Instruments
    Finance
    Receivables
   53




---



##### Table of Contents



Debt,
    Interest Rate Exchange Agreements, Foreign Currency Forward
    Exchange Contracts and Foreign Currency Exchange
    Agreements
      2006


2006


2005


2005Carrying


Estimated


Carrying


EstimatedValue


Fair Value


Value


Fair Value(In millions)Assets:Distribution finance receivables

$
2,411


$
2,409


$
1,638


$
1,637Revolving loans


1,924



1,912



1,613



1,591Installment contracts


1,637



1,618



1,342



1,297Golf course and resort mortgages


1,047



1,043



996



990Retained interests in
    securitizations


179



179



208



208Derivative financial instruments


3



3



8



8$
7,201


$
7,164


$
5,805


$
5,731Liabilities:Total short-term debt

$
1,779


$
1,779


$
1,200


$
1,200Variable rate long-term notes


1,819



1,820



1,011



1,014Fixed rate long-term debt


3,264



3,269



3,209



3,209Amounts due to Textron Inc.


20



17



11



9Retained interests in
    securitizations


1



1



7



7Derivative financial instruments


54



54



55



55$
6,937


$
6,940


$
5,493


$
5,494   NOTE 16Commitments
     54




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##### Table of Contents



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

$
1,335Standby letters of credit


49Loans


4     NOTE 17Contingencies
       55




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##### Table of Contents



NOTE 18Financial Information About Operating Segments
    2006


2005


2004(Dollars in millions)Revenues:Distribution Finance

$
268



34
%

$
178



28
%

$
159



29
%Aviation Finance


133



17
%


107



17
%


79



14
%Golf Finance


132



16
%


102



16
%


80



15
%Resort Finance


118



15
%


91



15
%


85



16
%Asset-Based Lending


90



11
%


75



12
%


56



10
%Structured Capital


38



5
%


54



9
%


52



10
%Other


19



2
%


21



3
%


34



6
%Total revenues

$
798



100
%

$
628



100
%

$
545



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

$
99






$
70






$
73Aviation Finance


31







32







24Golf Finance


32







25







16Resort Finance


32







18







2Asset-Based Lending


12







25







17Structured Capital


17







34







30Other


(13
)






(33
)






(23
)Income from continuing
    operations before income taxes

$
210






$
171






$
139Finance assets:(3)Distribution Finance

$
2,422






$
1,710






$
1,084Aviation Finance


1,776







1,278







1,217Golf Finance


1,524







1,344







1,100Resort Finance


1,296







1,155







1,196Asset-Based Lending


864







764







584Structured Capital


756







704







774Other


170







332







450Total finance assets

$
8,808






$
7,287






$
6,405     (1)
    
    Interest expense is allocated to each segment in proportion to
    its net investment in finance assets. Net investment in finance
    assets includes deferred income taxes, security deposits and
    other specifically identified liabilities. The interest
    allocated matches, to the extent possible, variable-rate debt
    with variable-rate finance assets and fixed-rate debt with
    fixed-rate finance assets.(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. 56




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##### Table of Contents



(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


Quarter2006


2005


2006


2005


2006


2005


2006


2005(In millions)Revenues

$
182


$
141


$
192


$
147


$
212


$
155


$
212


$
185Net interest margin

$
105


$
92


$
103


$
91


$
113


$
94


$
109


$
114Selling and administrative expenses


47



47



48



46



50



47



49



51Provision for losses


9



12



(1
)


1



10



4



8



12Income from continuing
    operations before income taxes


49



33



56



44



53



43



52



51Income taxes


18



11



20



15



7



14



12



17Income from continuing
    operations


31



22



36



29



46



29



40



34Loss from discontinued operations,
    net of income tax benefit


























(1
)


(3
)Net income

$
31


$
22


$
36


$
29


$
46


$
29


$
39


$
31   NOTE 20Subsequent Event
  Fixed-to-Floating
  and/or
  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))
 57




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##### Table of Contents



a)
    See Report of Management in Item 8 of this
    Form 10-K.b)
    See the Reports of Independent Registered Public Accounting Firm
    in Item 8 of this
    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 Services
 58




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##### Table of Contents



PART IV.  Item 15.
    Exhibits,
    Financial Statement Schedules  (1) List
    of Financial Statements and Financial Statement
    Schedules
    1.
    Consolidated Statements of Income for each of the years in the
    three-year period ended December 30, 2006.2.
    Consolidated Balance Sheets at December 30, 2006 and
    December 31, 2005.3.
    Consolidated Statements of Cash Flows for each of the years in
    the three-year period ended December 30, 2006.4.
    Consolidated Statements of Changes in Shareholders Equity
    for each of the years in the three-year period ended
    December 30, 2006.5.
    Notes to the consolidated financial statements.    (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. 59




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##### Table of Contents



ExhibitNo.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, 2005.4
.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, 2006.10
.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
.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, 2004.10
.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. 60




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##### Table of Contents



ExhibitNo.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, 2006.12


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 21, 2007.31
.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 1350.99
.1

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, 2005.99
.2

Amended and Restated Receivables
    Purchase Agreement, dated as of May 26, 2005, by and
    between Textron Financial and Textron Receivables Corporation
    III, incorporated herein by reference to Exhibit 99.2 of
    Textron Financial Corporations Current Report on
    Form 8-K
    filed June 1, 2005.99
.3A

Amended and Restated Sale and
    Servicing Agreement, dated as of May 26, 2005, by and among
    Textron Receivables Corporation III, Textron Financial
    Floorplan Master Note Trust, and Textron Financial, as
    servicer, incorporated herein by reference to Exhibit 99.3
    of Textron Financial Corporations Current Report on
    Form 8-K
    filed June 1, 2005.99
.3B

Amendment No. 1, dated as of
    April 19, 2006, to the Amended and Restated Sale and
    Servicing Agreement dated as of May 26, 2005, by and among
    Textron Receivables Corporation III, Textron Financial
    Floorplan Master Note Trust, and Textron Financial as
    servicer, incorporated herein by reference to Exhibit 99.1
    of Textron Financial Corporations Current Report on
    Form 8-K
    filed April 24, 2006.99
.4

Amended and Restated
    Administration Agreement, dated as of May 26, 2005, among
    Textron Receivables Corporation III, Textron Financial and
    The Bank of New York, as indenture trustee, incorporated herein
    by reference to Exhibit 99.4 of Textron Financial
    Corporations Current Report on
    Form 8-K
    filed June 1, 2005.     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.
 61




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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   Attorney-in-fact
 62