##### 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 31, 2005ORo

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).  Yes 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


10 PART 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


26Item 8.

Financial
    Statements and Supplementary Data


27Item 9.

Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


56Item 9A.

Controls and
    Procedures


56Item 9B.

Other
    Information


56 PART III.Item 10.

Directors and
    Executive Officers of the Registrant


57Item 11.

Executive
    Compensation


57Item 12.

Security Ownership
    of Certain Beneficial Owners and Management


57Item 13.

Certain
    Relationships and Related Transactions


57Item 14.

Principal
    Accounting Fees and Services


57 PART IV.Item 15.

Exhibits, Financial
    Statement Schedules


57Ex-12 Computation of Ratio of earnings to Fixed ChargesEx-21 List of significant subsidiariesEx-23.1 Consent of Independent AuditorsEx-24.1 Power of Attorney dated as of February 24, 2006Ex-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
    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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##### Table of Contents



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)2005


2004


2003


2002


2001(Dollars in millions)Results of OperationsFinance charges and discounts

$
464


$
369


$
404


$
413


$
500Rental revenues on operating leases


32



29



29



27



19Securitization gains


49



56



43



45



43Other income


83



91



96



99



119Income from continuing operations


114



94



79



76



120Cumulative effect of change in
    accounting principle, net of income taxes














15



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


(3
)






1



(1
)


1Net income


111



94



80



60



121Balance Sheet DataTotal finance receivables

$
6,763


$
5,837


$
5,135


$
5,534


$
5,252Allowance for losses on finance
    receivables


96



99



119



145



125Equipment on operating
    leases  net


231



237



210



255



201Total assets


7,441



6,738



6,333



6,654



6,464Junior subordinated debentures










26



27



27Total short-term debt


1,200



1,307



520



917



1,197Long-term debt


4,220



3,476



3,887



3,923



3,501Deferred income taxes


461



453



390



398



357Shareholders equity


1,050



1,035



1,009



1,021



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


6.19
x


5.53
x


5.24
x


5.59
x


5.62
xSELECTED DATA AND
    RATIOSProfitabilityNet interest margin as a
    percentage of average net investment(3)


6.40
%


7.14
%


6.92
%


6.89
%


7.48
%Return on average equity(4)


11.17
%


9.49
%


7.86
%


7.59
%


12.66
%Return on average assets(5)


1.58
%


1.49
%


1.25
%


1.18
%


1.91
% 10




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##### Table of Contents



For the years ended
    (1)2005


2004


2003


2002


2001Selling and administrative
    expenses as a percentage of average managed and serviced finance
    receivables(6)


2.01
%


2.01
%


1.98
%


1.71
%


1.77
%Operating efficiency ratio(7)


48.8
%


47.1
%


46.8
%


39.8
%


36.4
%Credit Quality60+ days contractual delinquency
    as a percentage of finance receivables(8)


0.79
%


1.47
%


2.39
%


2.86
%


2.26
%Nonperforming assets as a
    percentage of finance assets(9)


1.53
%


2.18
%


2.80
%


3.41
%


2.21
%Allowance for losses on finance
    receivables as a percentage of finance receivables


1.43
%


1.70
%


2.32
%


2.62
%


2.37
%Allowance for losses on finance
    receivables as a percentage of nonaccrual finance receivables


108.6
%


83.7
%


78.4
%


81.7
%


113.2
%Net charge-offs as a percentage of
    average finance receivables


0.51
%


1.48
%


2.08
%


1.83
%


1.09
%Ratio of allowance for losses on
    finance receivables to net charge-offs


3.1
x


1.3
x


1.0
x


1.4
x


2.0
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 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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##### Table of Contents



Key
    Business Initiatives and Trends
  out-of-trend
      Financial
    Condition
  Liquidity
    and Capital Resources
   12




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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

$
1,200


$



$



$



$



$



$
1,200Term debt


1,035



1,088



823



542



557



226



4,271Operating lease rental payments


6



5



5



3



1



1



21Total contractual payments


2,241



1,093



828



545



558



227



5,492Contractual receipts:Finance receivables


2,350



1,015



850



584



566



1,398



6,763Operating lease rental receipts


24



18



14



12



12



28



108Total contractual receipts


2,374



1,033



864



596



578



1,426



6,871Cash


10























10Total cash and contractual receipts


2,384



1,033



864



596



578



1,426



6,881Net cash and contractual receipts
    (payments)

$
143


$
(60
)

$
36


$
51


$
20


$
1,199


$
1,389Cumulative net cash and
    contractual receipts

$
143


$
83


$
119


$
170


$
190


$
1,389    13




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Off-Balance
    Sheet Arrangements
   14




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##### Table of Contents



Form 10-K.
       15




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##### Table of Contents



Managed
    Finance Receivables
    2005


2004(Dollars in millions)Distribution Finance

$
2,993



33
%

$
2,269



28
%Aircraft Finance


1,664



19
%


1,610



20
%Golf Finance


1,435



16
%


1,296



16
%Resort Finance


1,138



13
%


1,183



15
%Structured Capital


689



8
%


745



9
%Asset-Based Lending


764



8
%


584



7
%Other


312



3
%


448



5
%Total managed finance receivables

$
8,995



100
%

$
8,135



100
%     Nonperforming
    Assets
      2005


2004


2003(Dollars in millions)Resort Finance

$
31



2.67
%

$
53



4.44
%

$
55



5.15
%Aircraft Finance


14



1.07
%


12



0.96
%


26



2.21
%Golf Finance


13



0.99
%


26



2.34
%


22



2.43
%Asset-Based Lending


6



0.81
%


7



1.17
%


6



1.25
%Distribution Finance


2



0.11
%


5



0.43
%


11



1.35
%Other


45



13.64
%


37



8.35
%


42



5.72
%Total nonperforming assets

$
111



1.53
%

$
140



2.18
%

$
162



2.80
%    16




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##### Table of Contents



out-of-trend
      Interest
    Rate Sensitivity
      Financial
    Risk Management
   17




---



##### Table of Contents



Critical
    Accounting Policies
  Allowance
    for Losses on Finance Receivables
        Goodwill
       18




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##### Table of Contents



Securitized
    Transactions
    Form 10-K
  Results
    of Operations
  Revenues
    and Net Interest Margin
    2005


2004


2003(Dollars in millions)Finance charges and discounts

$
464


$
369


$
404Rental revenues on operating leases


32



29



29Securitization gains


49



56



43Other income


83



91



96Total revenues

$
628


$
545


$
572Interest expense


218



154



171Depreciation of equipment on
    operating leases


19



18



18Net interest margin

$
391


$
373


$
383Portfolio yield


7.91
%


7.35
%


7.60
%Net interest margin as a
    percentage of average net investment


6.40
%


7.14
%


6.92
%   2005
    vs. 2004
   19




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##### Table of Contents



2004
    vs. 2003
      Selling
    and Administrative Expenses
  2005


2004


2003(Dollars in millions)Selling and administrative
    expenses as a percentage of managed and serviced receivables


2.01
%


2.01
%


1.98
%Operating efficiency ratio


48.8
%


47.1
%


46.8
%Selling and administrative expenses

$
191


$
176


$
179   2005
    vs. 2004
    2004
    vs. 2003
   20




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##### Table of Contents



Provision
    for Losses
    2005


2004


2003(Dollars in millions)Allowance for losses on finance
    receivables beginning of period

$
99


$
119


$
145Provision for losses


29



58



81Less net charge-offs:Resort Finance


10



34



6Distribution Finance


10



13



19Aircraft Finance


2



7



16Golf Finance


3



3



2Asset-Based Lending






2



6Other


7



20



68Total net charge-offs


32



79



117Acquisitions and other






1



10Allowance for losses on finance
    receivables end of period

$
96


$
99


$
119Net charge-offs as a percentage of
    average finance receivables


0.5
%


1.5
%


2.1
%Allowance for losses on finance
    receivables as a percentage of total finance receivables


1.4
%


1.7
%


2.3
%Allowance for losses on finance
    receivables as a percentage of nonaccrual finance receivables


108.6
%


83.7
%


78.4
%   2005
    vs. 2004
      2004
    vs. 2003
   21




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##### Table of Contents



Share-Based
    Compensation
  (SFAS No. 123-R), SFAS No. 123-R SFAS No. 123-R SFAS No. 123-R
  Operating
    Results by Segment
    Distribution
    Finance
  2005


2004


2003(In millions)Revenues

$
178


$
159


$
151Net interest margin

$
140


$
143


$
132Selling and administrative expenses


68



62



53Provision for losses


2



8



21Segment income

$
70


$
73


$
58      22




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##### Table of Contents



Resort
    Finance
  2005


2004


2003(In millions)Revenues

$
91


$
85


$
87Net interest margin

$
51


$
57


$
61Selling and administrative expenses


29



23



26Provision for losses


4



32



9Segment income

$
18


$
2


$
26       Golf
    Finance
  2005


2004


2003(In millions)Revenues

$
102


$
80


$
81Net interest margin

$
52


$
41


$
47Selling and administrative expenses


21



18



17Provision for losses


6



7



2Segment income

$
25


$
16


$
28      23




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##### Table of Contents



Aircraft
    Finance
  2005


2004


2003(In millions)Revenues

$
107


$
79


$
81Net interest margin

$
51


$
39


$
32Selling and administrative expenses


16



14



14Provision for losses


3



1



8Segment income

$
32


$
24


$
10       Asset-Based
    Lending
  2005


2004


2003(In millions)Revenues

$
75


$
56


$
59Net interest margin

$
51


$
44


$
48Selling and administrative expenses


25



22



26Provision for losses


1



5



2Segment income

$
25


$
17


$
20      24




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##### Table of Contents



Structured
    Capital
  2005


2004


2003(In millions)Revenues

$
54


$
52


$
35Net interest margin

$
38


$
33


$
15Selling and administrative expenses


4



3



3Provision for losses










Segment income

$
34


$
30


$
12       Other
    Segment
  2005


2004


2003(In millions)Revenues

$
21


$
34


$
78Net interest margin

$
8


$
15


$
48Selling and administrative expenses


28



33



41Provision for losses


13



5



38Segment loss

$
(33
)

$
(23
)

$
(31
)       Income
    from Continuing Operations
   25




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##### Table of Contents



Discontinued
    Operations
    New
    Accounting Pronouncements
  FAS 140-2,
  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
    nonhistorical 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 related to lower than expected asset performance or
    changes in discount rates; (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 and (k) performance
    of acquisitions.
  Item 7A.
    Quantitative
    and Qualitative Disclosure About Market Risk  Form 10-K.
 26




---



##### 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
       27




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON
    INTERNAL CONTROL OVER FINANCIAL REPORTING
  The Board
    of Directors
    Textron Financial Corporation
              
    28




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  To the Board of Directors
 Textron Financial Corporation
          
    29




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##### Table of Contents



CONSOLIDATED
    STATEMENTS OF INCOME
    2005


2004


2003(In millions)Finance charges and discounts

$
464


$
369


$
404Rental revenues on operating leases


32



29



29Securitization gains


49



56



43Other income


83



91



96Total revenues


628



545



572Interest expense


218



154



171Depreciation of equipment on
    operating leases


19



18



18Net interest margin


391



373



383Selling and administrative expenses


191



176



179Provision for losses


29



58



81Special charges










6Income from continuing
    operations before income taxes and distributions on preferred
    securities


171



139



117Income taxes


57



45



37Distributions on preferred
    securities, net of income taxes










1Income from continuing
    operations


114



94



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


(3
)






1Net income

$
111


$
94


$
80    30




---



##### Table of Contents



CONSOLIDATED
    BALANCE SHEETS
  December 31,


January 1,2005


2005(In millions)AssetsCash and equivalents

$
10


$
127Finance receivables, net of
    unearned income:Distribution finance receivables


1,654



1,026Revolving loans


1,633



1,402Installment contracts


1,374



1,455Golf course and resort mortgages


1,020



1,005Leveraged leases


569



539Finance leases


513



410Total finance receivables


6,763



5,837Allowance for losses on finance
    receivables


(96
)


(99
)Finance
    receivables  net


6,667



5,738Equipment on operating
    leases  net


231



237Goodwill


169



169Other assets


364



467Total assets

$
7,441


$
6,738Liabilities and
    shareholders equityLiabilitiesAccrued interest and other
    liabilities

$
499


$
453Amounts due to Textron Inc.


11



14Deferred income taxes


461



453Debt


5,420



4,783Total liabilities


6,391



5,703Shareholders
    equityCapital surplus


574



574Investment in parent company
    preferred stock


(25
)


(25
)Accumulated other comprehensive
    income


5



1Retained earnings


496



485Total shareholders equity


1,050



1,035Total liabilities and
    shareholders equity

$
7,441


$
6,738    31




---



##### Table of Contents



CONSOLIDATED
    STATEMENTS OF CASH FLOWS    2004


2003(Revised 


(Revised 2005


See Note 1)


See Note 1)(In millions)Cash flows from operating
    activities:Net income

$
111


$
94


$
80Loss (income) from discontinued
    operations


3







(1
)Income from continuing
    operations


114



94



79Adjustments to reconcile income
    from continuing operations to net cash provided by operating
    activities:Provision for losses


29



58



81Increase (decrease) in accrued
    interest and other liabilities


35



(110
)


82Depreciation


34



36



34Amortization


12



10



11Net noncash gains on
    securitizations and syndications


2



2



(15
)Deferred income tax provision


7



69



(29
)Other  net


14



2



(1
)Net cash provided by operating
    activities of continuing operations


247



161



242Net cash (used) provided by
    operating activities of discontinued operations


(3
)






27Net cash provided by operating
    activities


244



161



269Cash flows from investing
    activities:Finance receivables originated or
    purchased


(10,940
)


(10,617
)


(9,824
)Finance receivables repaid


9,560



9,359



8,793Proceeds from receivable sales,
    including securitizations


383



394



1,162Other investments


26



72



105Proceeds from disposition of
    operating leases and other assets


93



126



110Other capital expenditures


(9
)


(12
)


(17
)Purchase of assets for operating
    leases


(63
)


(78
)


(56
)Net cash (used) provided by
    investing activities of continuing operations


(950
)


(756
)


273Net cash provided by investing
    activities of discontinued operations










234Net cash (used) provided by
    investing activities


(950
)


(756
)


507Cash flows from financing
    activities:Principal payments on long-term
    debt


(677
)


(1,201
)


(1,311
)Proceeds from issuance of
    long-term debt


1,482



770



1,237Net (decrease) increase in
    commercial paper


(102
)


792



(290
)Net decrease in other short-term
    debt


(4
)


(5
)


(21
)Redemption of junior subordinated
    debentures






(26
)


Proceeds from issuance of
    nonrecourse debt


72



179



199Principal payments on nonrecourse
    debt


(84
)


(77
)


(63
)Decrease in amounts due to Textron
    Inc.










(1
)Capital contributions from Textron
    Inc.


9



9



9Dividends paid to Textron
    Inc.


(109
)


(80
)


(114
)Net cash provided (used) by
    financing activities of continuing operations


587



361



(355
)Net cash used by financing
    activities of discontinued operations










(86
)Net cash provided (used) by
    financing activities


587



361



(441
)Effect of exchange rate changes on
    cash


2



4



1Net cash (used) provided by
    continuing operations


(114
)


(230
)


161Net cash (used) provided by
    discontinued operations


(3
)






175Net (decrease) increase in cash
    and equivalents


(117
)


(230
)


336Cash and equivalents at beginning
    of year


127



357



21Cash and equivalents at end of year

$
10


$
127


$
357    32




---



##### 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 December 28,
    2002

$
574


$
(25
)

$
(15
)

$
487


$
1,021Comprehensive income:Net income














80



80Other comprehensive income:Foreign currency translation










2







2Change in unrealized net losses on
    hedge contracts, net of income taxes










15







15Change in unrealized net gains on
    interest-only securities, net of income taxes










(4
)






(4
)Other comprehensive income










13







13Comprehensive income


















93Capital contributions from Textron
    Inc.


9















9Dividends to Textron Inc.


(9
)










(105
)


(114
)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


$
1,050    33




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  NOTE 1Summary of Significant Accounting Policies
  Nature of
    Operations
  E-Z-GO
      Principles
    of Consolidation
      Use of
    Estimates
    Finance
    Charges and Discounts
   34




---



##### Table of Contents



Finance
    Receivable Origination Fees and Costs
    Other
    Income
    Allowance
    for Losses on Finance Receivables
        Loan
    Impairment
    Equipment
    on Operating Leases
    Goodwill
   35




---



##### Table of Contents



Pension
    Benefits and Postretirement Benefits Other than
    Pensions
    Income
    Taxes
      Securitized
    Transactions
        Derivative
    Financial Instruments
   36




---



##### Table of Contents



Fair
    Value of Financial Instruments
    Cash
    and Equivalents
    Reclassifications
    Share-Based
    Compensation
  (SFAS No. 123-R), SFAS No. 123-R SFAS No. 123-R SFAS No. 123-R
  New
    Accounting Pronouncements
  FAS 140-2,
 37




---



##### Table of Contents



NOTE 2Other Income
  2005


2004


2003(In millions)Servicing fees

$
32


$
32


$
32Investment income


12



13



11Prepayment gains


6



16



14Late charges


5



7



9Syndication income


2



8



10Other


26



15



20Total other income

$
83


$
91


$
96     NOTE 3Special Charges
    NOTE 4Discontinued Operations
      2005


2004


2003(In millions)Revenues

$



$



$
46(Loss) income from discontinued
    operations, before income taxes

$
(4
)

$



$
2Income tax benefit (expense)


1







(1
)Net (loss) income from
    discontinued operations

$
(3
)

$



$
1   NOTE 5Relationship with Textron Inc.
   38




---



##### Table of Contents



NOTE 6Finance Receivables
  Contractual
    Maturities
    2006


2007


2008


2009


2010


Thereafter


Total(In millions)Distribution finance receivables

$
1,057


$
428


$
49


$
3


$
117


$



$
1,654Revolving loans


676



205



303



211



123



115



1,633Installment contracts


252



167



171



146



125



513



1,374Golf course and resort mortgages


193



146



160



121



158



242



1,020Leveraged leases


7



(11
)


71



37



(4
)


469



569Finance leases


165



80



96



66



47



59



513Total finance receivables

$
2,350


$
1,015


$
850


$
584


$
566


$
1,398


$
6,763      39




---



##### Table of Contents



Concentrations
    2005


2004(Dollars in millions)United States:Southeast

$
2,311



26
%

$
2,148



26
%West


1,661



19
%


1,548



19
%Midwest


1,277



14
%


1,100



14
%Southwest


1,249



14
%


1,041



13
%Mideast


924



10
%


904



11
%Northeast


304



3
%


300



4
%Total United States

$
7,726



86
%

$
7,041



87
%Canada


400



4
%


258



3
%South America


283



3
%


260



3
%Mexico


237



3
%


220



3
%Other international


349



4
%


356



4
%Total managed finance receivables

$
8,995



100
%

$
8,135



100
%  40




---



##### Table of Contents



2005


2004(Dollars in millions)General Aviation

$
1,691



19
%

$
1,611



20
%Golf


1,550



17
%


1,442



18
%Resort


1,135



13
%


1,176



14
%Recreational vehicles


761



8
%


408



5
%Manufactured housing


544



6
%


517



6
%Transportation


504



6
%


418



5
%Outdoor power equipment


294



3
%


264



3
%Information technology equipment


210



2
%


286



4
%Real estate


186



2
%


152



2
%Automobiles


181



2
%






Other


1,939



22
%


1,861



23
%Total managed finance receivables

$
8,995



100
%

$
8,135



100
%   Leveraged
    Leases
  2005


2004(In millions)Rental receivable

$
1,763


$
1,800Nonrecourse debt


(1,243
)


(1,255
)Estimated residual values of
    leased assets


311



286Less unearned income


(262
)


(292
)Investment in leveraged leases


569



539Deferred income taxes


(349
)


(358
)Net investment in leveraged leases

$
220


$
181       2005


2004


2003(In millions)Income recognized

$
33


$
31


$
27Income tax expense


(11
)


(10
)


(8
)Income from leveraged leases

$
22


$
21


$
19   Finance
    Leases
  2005


2004(In millions)Total minimum lease payments
    receivable

$
457


$
383Estimated residual values of
    leased equipment


241



205698



588Unearned income


(185
)


(178
)Net investment in finance leases

$
513


$
410    41




---



##### Table of Contents



Loan
    Impairment
    2005


2004(In millions)Nonaccrual finance receivables

$
89


$
119Impaired nonaccrual finance
    receivables (included in nonaccrual finance receivables above)

$
67


$
85Impaired accrual finance
    receivables


36



58Total impaired finance receivables

$
103


$
143Impaired finance receivables with
    identified reserve requirements

$
53


$
48Allowance for losses on finance
    receivables related to impaired loans

$
18


$
16           Allowance
    for Losses on Finance Receivables
    2005


2004


2003(In millions)Balance at beginning of year

$
99


$
119


$
145Provision for losses


29



58



81Charge-offs


(49
)


(95
)


(131
)Recoveries


17



16



14Acquisitions and other






1



10Balance at end of year

$
96


$
99


$
119  42




---



##### Table of Contents



Managed
    and Serviced Finance Receivables
    2005


2004(In millions)Total managed and serviced finance
    receivables

$
9,915


$
9,268Third-party portfolio servicing


(509
)


(606
)Nonrecourse participations


(383
)


(488
)SBA sales agreements


(28
)


(39
)Total managed finance receivables


8,995



8,135Securitized receivables


(2,124
)


(2,032
)Other managed finance receivables


(108
)


(266
)Owned receivables

$
6,763


$
5,837             NOTE 7Receivable Securitizations
    2005


2004


2003(In millions)Distribution finance receivables

$
40


$
48


$
28General aviation loans


6



7



5Vacation interval loans


1



1



7Other


2







3Total pre-tax gains on
    securitizations

$
49


$
56


$
43  43




---



##### Table of Contents



General


Distribution


VacationAviation


Finance


IntervalLoans


Receivables


LoansPrepayment speed (annual rate)


24.3
%






17.5
%Weighted average life (in years)


2.2



0.3



3.2Expected credit losses (annual
    rate)


0.5
%


0.4
%


Residual cash flows discount rate


7.1
%


9.2
%


7.8
%     General


Distribution


VacationAviation


Finance


IntervalLoans


Receivables


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

$
82


$
107


$
10Weighted average life (in years)


2.3



0.3



2.1Prepayment speed (annual
    rate)


25
%






15
%10% adverse change


(1
)






20% adverse change


(3
)






Expected credit losses (annual
    rate)


0.3
%


0.4
%


10% adverse change


(2
)


(1
)


20% adverse change


(3
)


(1
)


Residual cash flows discount
    rate


5.4
%


9.3
%


5.8
%10% adverse change


(1
)






20% adverse change


(1
)






    44




---



##### Table of Contents



Year Securitized2001


2000Static pool loss rate


1.0
%


0.8
%       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 31,
    2005


Year-Ended December 31,
    2005(Dollars in millions)General aviation loans

$
1,664


$
19



1.1
%

$
1,621


$
3



0.2
%Distribution finance receivables


2,993



1







2,561



10



0.4
%Vacation interval loans


224



2



0.7
%


242



1



0.6
%Total loans held and securitized

$
4,881


$
22






$
4,424


$
14Consisting of:Loans held in portfolio

$
2,582



13Loans securitized


2,299



9Total loans held and securitized

$
4,881


$
22       2005


2004(In millions)Proceeds from securitizations

$
361


$
394Servicing fees received


28



26Cash flows received on retained
    interests


64



70Cash paid for loan repurchases


26



20  45




---



##### Table of Contents



NOTE 8Equipment on Operating Leases
  2005


2004(In millions)Equipment on operating leases, at
    cost:Aircraft.

$
250


$
224Golf cars


27



36Other






14Accumulated depreciation:Aircraft.


(40
)


(29
)Golf cars


(6
)


(7
)Other






(1
)Equipment on operating
    leases  net

$
231


$
237     NOTE 9Goodwill
    NOTE 10Other Assets
  2005


2004(In millions)Retained interests in
    securitizations

$
208


$
233Other long-term investments


53



64Fixed assets  net


33



41Repossessed assets and properties


22



21Investment in equipment residuals


10



13Other


38



95Total other assets

$
364


$
467            46




---



##### Table of Contents



NOTE 11Debt and Credit Facilities
  2005


2004(In millions)Short-term debt:Commercial paper

$
1,187


$
1,289Other short-term debt


13



18Total short-term debt


1,200



1,307Long-term debt:Fixed rate notesDue 2005 (weighted average rate of
    5.59%)






181Due 2006 (weighted average rates
    of 3.04% and 3.04%, respectively)


519



519Due 2007 (weighted average rates
    of 5.54% and 5.55%, respectively)


813



808Due 2008 (weighted average rates
    of 4.12% and 4.39%, respectively)


603



42Due 2009 (weighted average rates
    of 5.87% and 5.87%, respectively)


542



542Due 2010 and thereafter (weighted
    average rates of 4.62% and 4.66%, respectively)


783



268Variable rate notesDue 2005 (weighted average rate of
    3.24%)






475Due 2006 (weighted average rates
    of 4.78% and 2.81%, respectively)


516



466Due 2007 (weighted average rates
    of 4.93% and 3.15%, respectively)


275



175Due 2008 (weighted average rate of
    4.38%)


220



Long-term debt


4,271



3,476Unamortized discount


(4
)


(3
)Fair value adjustments


(47
)


3Total long-term debt


4,220



3,476Total debt

$
5,420


$
4,783       2005


2004


2003Commercial paper


4.38
%


2.39
%


1.23
%Other short-term debt


4.31
%


5.50
%


3.55
%    47




---



##### Table of Contents



NOTE 12Derivative Financial Instruments
       48




---



##### Table of Contents



back-to-back back-to-back
  NOTE 13Junior Subordinated Debentures
    NOTE 14Investment in Parent Company Preferred Stock
   49




---



##### Table of Contents



NOTE 15Accumulated Other Comprehensive Income (Loss)
    DeferredForeign


Gains


DeferredCurrency


(Losses) on


GainsTranslation


Hedge


(Losses) onAdjustment


Contracts


Securities


Total(In millions)Balance December 28,
    2002

$
(4
)

$
(21
)

$
10


$
(15
)Foreign currency translation


2











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






3







3Net deferred gain on hedge
    contracts, net of income taxes of $7 million






12







12Net deferred loss on interest-only
    securities, net of income tax benefit of $2 million










(4
)


(4
)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


$
5   NOTE 16Income Taxes
    2005


2004


2003(In millions)United States

$
168


$
134


$
110Foreign


3



5



7Total

$
171


$
139


$
117  50




---



##### Table of Contents



2005


2004


2003(In millions)Current:Federal

$
39


$
(20
)

$
54State


5



(7
)


11Foreign


6



3



1Total current income taxes

$
50


$
(24
)

$
66Deferred:Federal

$
9


$
60


$
(23
)State


(2
)


9



(8
)Foreign










2Total deferred income taxes


7



69



(29
)Total income taxes

$
57


$
45


$
37       2005


2004


2003Federal statutory income tax rate


35.0
%


35.0
%


35.0
%State income taxes


1.3



1.3



1.9Tax exempt interest


(1.1
)


(0.8
)


(0.3
)Favorable tax settlement










(1.8
)Foreign tax rate differential


(2.7
)


(1.5
)


(2.1
)Other, net


1.1



(1.5
)


(1.0
)Effective income tax rate


33.6
%


32.5
%


31.7
%     2005


2004(In millions)Deferred tax assets:Allowance for losses

$
15


$
18State net operating losses


15



12Deferred origination fees


9



4Nonaccrual finance receivables


7



6Other


33



27Total deferred tax assets


79



67Valuation allowance


(7
)


(4
)Net deferred tax assets


72



63Deferred tax liabilities:Leveraged leases


366



358Finance leases


85



91Equipment on operating leases


61



55Other


21



12Total deferred tax liabilities


533



516Net deferred tax liabilities

$
461


$
453  51




---



##### Table of Contents



NOTE 17Fair Value of Financial Instruments
    Finance
    Receivables
    Debt,
    Interest Rate Exchange Agreements, Foreign Currency Forward
    Exchange Contracts and Foreign Currency Exchange
    Agreements
   52




---



##### Table of Contents



2005


2005


2004


2004Carrying


Estimated


Carrying


EstimatedValue


Fair Value


Value


Fair Value(In millions)Assets:Distribution finance receivables

$
1,638


$
1,637


$
1,003


$
1,003Revolving loans


1,613



1,591



1,384



1,352Installment contracts


1,342



1,297



1,416



1,406Golf course and resort mortgages


996



990



990



986Retained interests in
    securitizations


208



208



233



233Derivative financial instruments


8



8



69



69$
5,805


$
5,731


$
5,095


$
5,049Liabilities:Total short-term debt

$
1,200


$
1,200


$
1,307


$
1,307Variable rate long-term notes


1,011



1,014



1,116



1,126Fixed rate long-term debt


3,209



3,209



2,360



2,431Amounts due to Textron Inc.


11



9



14



12Retained interests in
    securitizations


7



7



8



8Derivative financial instruments


55



55



29



29$
5,493


$
5,494


$
4,834


$
4,913   NOTE 18Commitments
        (In millions)Commitments to extend credit:Committed revolving lines of credit

$
1,228Loans


9Standby letters of credit


53  53




---



##### Table of Contents



NOTE 19Contingencies
        NOTE 20Financial Information About Operating Segments
    2005


2004


2003(Dollars in millions)Revenues:Distribution Finance

$
178



28
%

$
159



29
%

$
151



26
%Aircraft Finance


107



17
%


79



14
%


81



14
%Golf Finance


102



16
%


80



15
%


81



15
%Resort Finance


91



15
%


85



16
%


87



15
%Asset-Based Lending


75



12
%


56



10
%


59



10
%Structured Capital


54



9
%


52



10
%


35



6
%Other


21



3
%


34



6
%


78



14
%Total revenues

$
628



100
%

$
545



100
%

$
572



100
% 54




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##### Table of Contents



2005


2004


2003(Dollars in millions)Income (loss) before special
    charges, income taxes, distributions on preferred
    securities:(1) (2)Distribution Finance

$
70






$
73






$
58Aircraft Finance


32







24







10Golf Finance


25







16







28Resort Finance


18







2







26Asset-Based Lending


25







17







20Structured Capital


34







30







12Other


(33
)






(23
)






(31
)Income from continuing
    operations before special charges, income taxes and
    distributions on preferred securities

$
171






$
139






$
123Special charges


















(6
)Income from continuing
    operations before income taxes and distributions on preferred
    securities

$
171






$
139






$
117Finance assets:(3)Distribution Finance

$
1,710






$
1,084






$
825Golf Finance


1,344







1,100







886Aircraft Finance


1,278







1,217







1,160Resort Finance


1,155







1,196







1,070Asset-Based Lending


764







584







468Structured Capital


704







774







634Other


332







450







748Total finance assets

$
7,287






$
6,405






$
5,791     (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.(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). 55




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##### Table of Contents



NOTE 21Quarterly
    Financial Data (Unaudited)
  FirstQuarter


Second Quarter


Third Quarter


Fourth Quarter2005


2004


2005


2004


2005


2004


2005


2004(In millions)Revenues

$
141


$
134


$
147


$
137


$
155


$
129


$
185


$
145Net interest margin

$
92


$
91


$
91


$
98


$
94


$
86


$
114


$
98Selling and administrative expenses


47



40



46



48



47



44



51



44Provision for losses


12



20



1



14



4



14



12



10Income from continuing
    operations before income taxes


33



31



44



36



43



28



51



44Income taxes


11



10



15



12



14



9



17



14Income from continuing
    operations


22



21



29



24



29



19



34



30Loss from discontinued operations,
    net of income tax benefit


























(3
)


Net income

$
22


$
21


$
29


$
24


$
29


$
19


$
31


$
30   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.
  Form 10-K.
    Item 9B.
    Other
    Information   56




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##### Table of Contents



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
  Other Services
   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 31, 20052.
    Consolidated Balance Sheets at December 31, 2005 and
    January 1, 20053.
    Consolidated Statements of Cash Flows for each of the years in
    the three-year period ended December 31, 20054.
    Consolidated Statements of Changes in Shareholders Equity
    for each of the years in the three-year period ended
    December 31, 20055.
    Notes to consolidated financial statements 57




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##### Table of Contents



(2)
    Exhibits  Regulation S-K
  ExhibitNo.3
.1*

Restated Certificate of
    Incorporation of Textron Financial, dated July 19, 19933
.2**

By-Laws of Textron Financial as of
    May 2, 20004
.1***

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)4
.2****

Indenture dated as of
    November 30, 2001, between Textron Financial Canada Funding
    Corp. and SunTrust Bank, guaranteed by Textron Financial
    Corporation4
.3

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 of Textron Financial Corporations Current
    Report on
    Form 8-K
    dated May 26, 20054
.4

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
    of Textron Financial Corporations Current Report on
    Form 8-K
    dated May 26, 20054
.5

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
    of Textron Financial Corporations Current Report on
    Form 8-K
    dated May 26, 200510
.1*

Support Agreement dated as of
    May 25, 1994, between Textron Financial and Textron10
.2*

Receivables Purchase Agreement
    between Textron Financial and Textron dated as of
    January 1, 198610
.3*

Tax Sharing Agreement between
    Textron Financial and Textron dated as of December 29, 199010
.4

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
    Report on
    8-K as filed
    on August 26, 200310
.5

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 Report on
    8-K as filed
    on August 26, 200310
.6

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, 200510
.7

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, 200310
.8

Amendment to the
    364-Day
    Credit Agreement dated as of July 28, 2003 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, 200310
.9

Amendment No. 2 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 58




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##### Table of Contents



ExhibitNo.10
.10

Amendment to the
    364-day
    Credit Agreement dated as of July 28, 2003 among Textron
    Financial Corporation, the Banks party thereto, and JP Morgan
    Chase Bank, as Administrative Agent. Incorporated by reference
    to Exhibit 10.1 to Textron Financials Quarterly
    Report on
    Form 10-Q
    for the fiscal quarter ended September 30, 200410
.11

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 Report on
    Form 8-K
    as filed on July 27, 200510
.12

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 10.1 to Textron Financial Corporations Report
    on
    Form 8-K
    as filed on July 27, 200512


Computation of Ratios of Earnings
    to Fixed Charges21


List of significant subsidiaries23


Consent of Independent Auditors24


Power of Attorney dated as of
    February 24, 200631
.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 135032
.2

Certification of Chief Financial
    Officer Pursuant to 18 U.S.C. Section 135099
.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
    dated May 26, 200599
.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
    dated May 26, 200599
.3

Amended and Restated Sale and
    Servicing Agreement, dated as of May 26, 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
    dated May 26, 200599
.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
    dated May 26, 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.*
    
    Incorporated by reference to the Exhibit with the same number of
    Textron Financials Registration Statement on Form 10
    (File
    No. 0-27559)**
    
    Incorporated by reference to Exhibit 3.1 of Textron
    Financials quarterly report on
    Form 10-Q
    dated August 11, 2000***
    
    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)****
    
    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)  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.
 59




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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
 60