10-Q 1 vc-20220331.htm 10-Q vc-20220331
FALSE000111133512/312022Q100011113352022-01-012022-03-3100011113352022-04-21xbrli:sharesiso4217:USD00011113352021-01-012021-03-310001111335us-gaap:RetainedEarningsMember2022-01-012022-03-31iso4217:USDxbrli:shares00011113352022-03-3100011113352021-12-3100011113352020-12-3100011113352021-03-310001111335us-gaap:CommonStockMember2021-12-310001111335us-gaap:AdditionalPaidInCapitalMember2021-12-310001111335us-gaap:RetainedEarningsMember2021-12-310001111335us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001111335us-gaap:TreasuryStockMember2021-12-310001111335us-gaap:ParentMember2021-12-310001111335us-gaap:NoncontrollingInterestMember2021-12-310001111335us-gaap:ParentMember2022-01-012022-03-310001111335us-gaap:NoncontrollingInterestMember2022-01-012022-03-310001111335us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310001111335us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310001111335us-gaap:TreasuryStockMember2022-01-012022-03-310001111335us-gaap:CommonStockMember2022-03-310001111335us-gaap:AdditionalPaidInCapitalMember2022-03-310001111335us-gaap:RetainedEarningsMember2022-03-310001111335us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310001111335us-gaap:TreasuryStockMember2022-03-310001111335us-gaap:ParentMember2022-03-310001111335us-gaap:NoncontrollingInterestMember2022-03-310001111335us-gaap:CommonStockMember2020-12-310001111335us-gaap:AdditionalPaidInCapitalMember2020-12-310001111335us-gaap:RetainedEarningsMember2020-12-310001111335us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001111335us-gaap:TreasuryStockMember2020-12-310001111335us-gaap:ParentMember2020-12-310001111335us-gaap:NoncontrollingInterestMember2020-12-310001111335us-gaap:RetainedEarningsMember2021-01-012021-03-310001111335us-gaap:ParentMember2021-01-012021-03-310001111335us-gaap:NoncontrollingInterestMember2021-01-012021-03-310001111335us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001111335us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001111335us-gaap:TreasuryStockMember2021-01-012021-03-310001111335us-gaap:CommonStockMember2021-03-310001111335us-gaap:AdditionalPaidInCapitalMember2021-03-310001111335us-gaap:RetainedEarningsMember2021-03-310001111335us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001111335us-gaap:TreasuryStockMember2021-03-310001111335us-gaap:ParentMember2021-03-310001111335us-gaap:NoncontrollingInterestMember2021-03-310001111335vc:YFVICMember2022-03-31xbrli:pure0001111335vc:YanfengVisteonElectronicsChinaInvestmentCompanyMember2022-03-310001111335vc:YanfengVisteonElectronicsChinaInvestmentCompanyMember2021-12-310001111335vc:LimitedPartnershipsMember2022-03-310001111335vc:LimitedPartnershipsMember2021-12-310001111335vc:AllOtherNonConsolidatedAffiliatesMember2022-03-310001111335vc:AllOtherNonConsolidatedAffiliatesMember2021-12-310001111335us-gaap:OtherCurrentAssetsMember2022-03-310001111335us-gaap:OtherCurrentAssetsMember2021-12-310001111335us-gaap:FairValueMeasuredAtNetAssetValuePerShareMember2018-12-310001111335us-gaap:FairValueMeasuredAtNetAssetValuePerShareMember2022-03-310001111335vc:RussiaRestructuringMember2022-01-012022-03-310001111335vc:RussiaRestructuringMember2022-03-310001111335vc:EuropeRestructuringMember2022-01-012022-03-310001111335vc:EuropeRestructuringMember2022-03-310001111335vc:BrazilRestructuringMember2022-01-012022-03-310001111335vc:BrazilRestructuringMember2022-03-310001111335vc:EngAndAdminRestructuringMember2022-03-310001111335vc:A2018SouthAmericaLegacyMember2022-03-310001111335vc:A2016OtherRestructuringProgramMemberMember2022-03-310001111335vc:PPEImpairmentMember2022-01-012022-03-310001111335vc:InventoryImpairmentMember2022-01-012022-03-310001111335us-gaap:DevelopedTechnologyRightsMember2022-01-012022-03-310001111335us-gaap:DevelopedTechnologyRightsMember2022-03-310001111335us-gaap:DevelopedTechnologyRightsMember2021-12-310001111335us-gaap:CustomerRelationshipsMember2022-01-012022-03-310001111335us-gaap:CustomerRelationshipsMember2022-03-310001111335us-gaap:CustomerRelationshipsMember2021-12-310001111335us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2022-01-012022-03-310001111335us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2022-03-310001111335us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2021-12-310001111335us-gaap:OtherIntangibleAssetsMember2022-01-012022-03-310001111335us-gaap:OtherIntangibleAssetsMember2022-03-310001111335us-gaap:OtherIntangibleAssetsMember2021-12-310001111335vc:OtherShortTermDebtMember2022-03-310001111335vc:OtherShortTermDebtMember2021-12-310001111335vc:TermLoanMember2022-03-310001111335vc:TermLoanMember2021-12-310001111335srt:AffiliatedEntityMember2022-03-310001111335us-gaap:RevolvingCreditFacilityMember2022-03-310001111335us-gaap:LondonInterbankOfferedRateLIBORMembersrt:MinimumMember2022-01-012022-03-310001111335us-gaap:LondonInterbankOfferedRateLIBORMembersrt:MaximumMember2022-01-012022-03-310001111335srt:MaximumMember2022-01-012022-03-310001111335vc:RestrictedCashLetterOfCreditRelatedMember2022-03-310001111335vc:LocFacilityIssuedByLocalAffiliatesMember2022-03-310001111335country:US2022-01-012022-03-310001111335country:US2021-01-012021-03-310001111335us-gaap:ForeignPlanMember2022-01-012022-03-310001111335us-gaap:ForeignPlanMember2021-01-012021-03-310001111335vc:JurisdictionswherevaluationallowancesaremaintainedMember2022-01-012022-03-310001111335vc:JurisdictionswherevaluationallowancesaremaintainedMember2021-01-012021-03-310001111335vc:DomesticCountryAndForeignCountryWitholdingTaxesMember2022-03-310001111335vc:WorldwideMember2022-03-310001111335vc:SVAEShanghaiElectronicsMember2022-03-310001111335vc:SVAEShanghaiElectronicsMember2021-12-310001111335vc:YFVEMember2022-03-310001111335vc:YFVEMember2021-12-310001111335vc:VisteonInteriorsKoreaLtdMember2022-03-310001111335vc:VisteonInteriorsKoreaLtdMember2021-12-310001111335vc:OtherEntityMember2022-03-310001111335vc:OtherEntityMember2021-12-310001111335us-gaap:AccumulatedTranslationAdjustmentMember2021-12-310001111335us-gaap:AccumulatedTranslationAdjustmentMember2020-12-310001111335us-gaap:AccumulatedTranslationAdjustmentMember2022-01-012022-03-310001111335us-gaap:AccumulatedTranslationAdjustmentMember2021-01-012021-03-310001111335us-gaap:AccumulatedTranslationAdjustmentMember2022-03-310001111335us-gaap:AccumulatedTranslationAdjustmentMember2021-03-310001111335us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:AccumulatedTranslationAdjustmentMember2021-12-310001111335us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:AccumulatedTranslationAdjustmentMember2020-12-310001111335us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:AccumulatedTranslationAdjustmentMember2022-01-012022-03-310001111335us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:AccumulatedTranslationAdjustmentMember2021-01-012021-03-310001111335us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:AccumulatedTranslationAdjustmentMember2022-03-310001111335us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:AccumulatedTranslationAdjustmentMember2021-03-310001111335us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-12-310001111335us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-12-310001111335us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-01-012022-03-310001111335us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-01-012021-03-310001111335us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-03-310001111335us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-03-310001111335us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-12-310001111335us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-12-310001111335us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-01-012022-03-310001111335us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-01-012021-03-310001111335us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-03-310001111335us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-03-310001111335us-gaap:ForeignExchangeContractMember2022-03-310001111335us-gaap:ForeignExchangeContractMember2021-12-310001111335us-gaap:LiabilityMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:ForeignExchangeContractMember2022-03-310001111335us-gaap:LiabilityMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:ForeignExchangeContractMember2021-12-310001111335us-gaap:CrossCurrencyInterestRateContractMember2021-12-310001111335us-gaap:CrossCurrencyInterestRateContractMember2022-03-310001111335us-gaap:CurrencySwapMemberus-gaap:LiabilityMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-03-310001111335us-gaap:CurrencySwapMemberus-gaap:LiabilityMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-12-310001111335us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-01-012022-03-310001111335us-gaap:SwapMember2022-03-310001111335us-gaap:SwapMember2021-12-310001111335us-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMember2022-03-310001111335us-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMember2021-12-310001111335us-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMember2022-01-012022-03-310001111335us-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:ForeignExchangeContractMember2022-01-012022-03-310001111335us-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:ForeignExchangeContractMember2021-01-012021-03-310001111335us-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMember2021-01-012021-03-310001111335us-gaap:NetInvestmentHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:ForeignExchangeContractMember2022-01-012022-03-310001111335us-gaap:NetInvestmentHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:ForeignExchangeContractMember2021-01-012021-03-310001111335us-gaap:ForeignExchangeContractMember2022-01-012022-03-310001111335us-gaap:ForeignExchangeContractMember2021-01-012021-03-310001111335us-gaap:AccountsReceivableMembervc:FordAndAffiliatesMemberus-gaap:CreditConcentrationRiskMember2022-01-012022-03-310001111335us-gaap:AccountsReceivableMembervc:FordAndAffiliatesMemberus-gaap:CreditConcentrationRiskMember2021-01-012021-12-3100011113352003-01-012003-06-3000011113352019-10-012019-10-3100011113352019-12-092019-12-0900011113352014-05-012014-05-310001111335country:BRus-gaap:PendingLitigationMember2022-03-310001111335vc:ClimateTransactionMember2022-03-310001111335vc:InteriorsDivestitureMember2022-03-31vc:segment0001111335srt:EuropeMember2022-01-012022-03-310001111335srt:EuropeMember2021-01-012021-03-310001111335srt:AmericasMember2022-01-012022-03-310001111335srt:AmericasMember2021-01-012021-03-310001111335vc:ChinaDomesticMember2022-01-012022-03-310001111335vc:ChinaDomesticMember2021-01-012021-03-310001111335vc:ChinaExportMember2022-01-012022-03-310001111335vc:ChinaExportMember2021-01-012021-03-310001111335vc:OtherAsiaPacificMember2022-01-012022-03-310001111335vc:OtherAsiaPacificMember2021-01-012021-03-310001111335srt:GeographyEliminationsMember2022-01-012022-03-310001111335srt:GeographyEliminationsMember2021-01-012021-03-310001111335vc:InstrumentclusterMember2022-01-012022-03-310001111335vc:InstrumentclusterMember2021-01-012021-03-310001111335vc:InformationdisplaysMember2022-01-012022-03-310001111335vc:InformationdisplaysMember2021-01-012021-03-310001111335vc:AudioandinfotainmentMember2022-01-012022-03-310001111335vc:AudioandinfotainmentMember2021-01-012021-03-310001111335vc:ClimatecontrolsMember2022-01-012022-03-310001111335vc:ClimatecontrolsMember2021-01-012021-03-310001111335vc:BodyandsecurityMember2022-01-012022-03-310001111335vc:BodyandsecurityMember2021-01-012021-03-310001111335vc:TelematicsMember2022-01-012022-03-310001111335vc:TelematicsMember2021-01-012021-03-310001111335vc:OtherincludesHUDMember2022-01-012022-03-310001111335vc:OtherincludesHUDMember2021-01-012021-03-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
________________
FORM 10-Q
(Mark One)
     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 001-15827
VISTEON CORPORATION
(Exact name of registrant as specified in its charter)
State ofDelaware38-3519512
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer
Identification No.)
One Village Center Drive,Van Buren Township,Michigan48111
(Address of principal executive offices)(Zip code)
Registrant’s telephone number, including area code: (800)-VISTEON
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, Par Value $.01 Per ShareVCThe NASDAQ Stock Market LLC
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ü No__
Indicate by check mark whether the registrant: has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ü No __
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer," "accelerated filer,” "smaller reporting company" and “emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer  ü  Accelerated filer     Non-accelerated filer    Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ü
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ü No
As of April 21, 2022, the registrant had outstanding 28,111,246 shares of common stock.
Exhibit index located on page number 35.
1




Visteon Corporation and Subsidiaries
Index
Page
Condensed Consolidated Statements of Changes in Equity (Unaudited)
2



Part I
Financial Information

Item 1.Condensed Consolidated Financial Statements

VISTEON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In millions except per share amounts)
(Unaudited)
Three Months Ended
March 31,
20222021
Net sales
$818 $746 
Cost of sales
(742)(673)
Gross margin
76 73 
Selling, general and administrative expenses
(44)(45)
Restructuring and impairment
(7)1 
Interest expense
(3)(3)
Interest income
1 1 
Equity in net income of non-consolidated affiliates
3  
Other income, net
5 4 
 Income (loss) before income taxes
31 31 
 Provision for income taxes
(8)(12)
Net income (loss)
23 19 
Less: Net (income) loss attributable to non-controlling interests
(1)(3)
Net income (loss) attributable to Visteon Corporation
$22 $16 
Comprehensive income (loss)
$27 $1 
 Less: Comprehensive (income) loss attributable to non-controlling interests(1)(2)
Comprehensive income (loss) attributable to Visteon Corporation
$26 $(1)
Basic earnings (loss) per share attributable to Visteon Corporation
$0.79 $0.57 
Diluted earnings per share attributable to Visteon Corporation
$0.77 $0.56 

See accompanying notes to the condensed consolidated financial statements.
3



VISTEON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
March 31,December 31,
20222021
ASSETS
 Cash and equivalents
$402 $452 
 Restricted cash
3 3 
Accounts receivable, net
539 549 
Inventories, net
331 262 
Other current assets
176 158 
Total current assets
1,451 1,424 
Property and equipment, net
374 388 
Intangible assets, net
116 118 
Right-of-use assets
133 139 
Investments in non-consolidated affiliates
58 54 
Other non-current assets
111 111 
Total assets
$2,243 $2,234 
LIABILITIES AND EQUITY
Short-term debt
$ $4 
Accounts payable
539 522 
Accrued employee liabilities
68 80 
Current lease liability
28 28 
Other current liabilities
214 218 
Total current liabilities
849 852 
Long-term debt, net
349 349 
Employee benefits
190 198 
Non-current lease liability
111 117 
Deferred tax liabilities
28 27 
Other non-current liabilities
74 75 
Stockholders’ equity:
Preferred stock (par value $0.01, 50 million shares authorized, none outstanding as of March 31, 2022 and December 31, 2021)
  
Common stock (par value $0.01, 250 million shares authorized, 55 million shares issued, 28 million shares outstanding as of March 31, 2022 and December 31, 2021)
1 1 
Additional paid-in capital
1,339 1,349 
Retained earnings
1,686 1,664 
Accumulated other comprehensive loss
(225)(229)
Treasury stock
(2,260)(2,269)
Total Visteon Corporation stockholders’ equity
541 516 
Non-controlling interests
101 100 
Total equity
642 616 
Total liabilities and equity
$2,243 $2,234 

See accompanying notes to the condensed consolidated financial statements.
4



VISTEON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended March 31,
20222021
Operating Activities
Net income (loss)
$23 $19 
Adjustments to reconcile net income (loss) to net cash provided from (used by) operating activities:
Depreciation and amortization
27 27 
Non-cash stock-based compensation
5 4 
Equity in net loss (income) of non-consolidated affiliates, net of dividends remitted
(3)— 
Impairments
4  
Other non-cash items
1 1 
Changes in assets and liabilities:
Accounts receivable
6 4 
Inventories
(71)(17)
Accounts payable
25 2 
Other assets and other liabilities
(38)(29)
Net cash (used by) provided from operating activities
(21)11 
Investing Activities
Capital expenditures, including intangibles
(21)(18)
Contributions to equity method investments(1) 
Loan repayments from non-consolidated affiliates 2 
Other1 1 
Net cash used by investing activities
(21)(15)
Financing Activities
Short-term debt, net(4) 
Net cash used by financing activities
(4) 
Effect of exchange rate changes on cash
(4)(10)
Net decrease in cash, equivalents, and restricted cash
(50)(14)
Cash, equivalents, and restricted cash at beginning of the period
455 500 
Cash, equivalents, and restricted cash at end of the period
$405 $486 

See accompanying notes to the condensed consolidated financial statements.
5



VISTEON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In millions)
(Unaudited)
Total Visteon Corporation Stockholders' Equity
Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Stock
Total Visteon Corporation Stockholders' EquityNon-Controlling InterestsTotal Equity
December 31, 2021
$1 $1,349 $1,664 $(229)$(2,269)$516 $100 $616 
Net income (loss)
— — 22 — — 22 1 23 
Other comprehensive income (loss)
— — — 4 — 4  4 
Stock-based compensation, net
— (10)— — 9 (1)— (1)
March 31, 2022
$1 $1,339 $1,686 $(225)$(2,260)$541 $101 $642 

Total Visteon Corporation Stockholders' Equity
Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Stock
Total Visteon Corporation Stockholders' EquityNon-Controlling InterestsTotal Equity
December 31, 2020
$1 $1,348 $1,623 $(304)$(2,281)$387 $123 $510 
Net income (loss)
— — 16 — — 16 3 19 
Other comprehensive income (loss)
— — — (17)— (17)(1)(18)
Stock-based compensation, net
— (11)— — 9 (2)— (2)
Dividends declared to non-controlling interest— — — — — — (3)(3)
March 31, 2021
$1 $1,337 $1,639 $(321)$(2,272)$384 $122 $506 

See accompanying notes to the condensed consolidated financial statements.




























6



VISTEON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1. Summary of Significant Accounting Policies

Basis of Presentation - Interim Financial Statements

The condensed consolidated financial statements of Visteon Corporation and Subsidiaries (the "Company" or "Visteon") have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with the rules and regulations of the United States Securities and Exchange Commission ("SEC") have been condensed or omitted pursuant to such rules and regulations. These interim condensed consolidated financial statements include all adjustments (consisting of normal recurring adjustments, except as otherwise disclosed) that management believes are necessary for a fair presentation of the results of operations, financial position, stockholders' equity, and cash flows of the Company for the interim periods presented. Interim results are not necessarily indicative of full-year results.

Use of Estimates: The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect amounts reported herein. Considerable judgment is involved in making these determinations and the use of different estimates or assumptions could result in significantly different results. Management believes its assumptions and estimates are reasonable and appropriate. However, actual results could differ from those reported herein. Events and changes in circumstances arising after March 31, 2022, including those resulting from the impacts of COVID-19 and the subsequent semiconductor supply shortage, as further described in Note 14, "Commitments and Contingencies", will be reflected in management's estimates in future periods.

Allowance for Doubtful Accounts: The Company establishes an allowance for doubtful accounts for accounts receivable based on the current expected credit loss impairment model (“CECL”). The Company applies a historical loss rate based on historic write-offs by region to aging categories. The historical loss rate is adjusted for current conditions and reasonable and supportable forecasts of future losses, as necessary. The Company may also record a specific reserve for individual accounts when the Company becomes aware of specific customer circumstances, such as in the case of a bankruptcy filing or deterioration in the customer's operating results or financial position. The allowance for doubtful accounts was $4 million as of March 31, 2022 and December 31, 2021.

Recently Adopted Accounting Pronouncements

Government Assistance - In November 2021, the FASB issued ASU 2021-10, "Government Assistance (Topic 832) - Disclosures by Business Entities about Government Assistance." to increase the transparency of government assistance including the disclosure of the types of assistance, an entity’s accounting for the assistance, and the effect of the assistance on an entity’s financial statements. The amendments in this update are effective for all entities within their scope for financial statements issued for annual periods beginning after December 15, 2021. The adoption of the guidance did not have a material impact on the Company’s condensed consolidated financial statements.


7



NOTE 2. Non-Consolidated Affiliates

Investments in Affiliates

The Company's investments in non-consolidated equity method affiliates include the following:

March 31,December 31,
(In millions)20222021
Yanfeng Visteon Investment Co., Ltd. ("YFVIC") (50%)
$36 $36 
Limited partnerships12 10 
Other
10 8 
Total investments in non-consolidated affiliates
$58 $54 

Variable Interest Entities
The Company evaluates whether joint ventures in which it has invested are Variable Interest Entities (“VIE”) at the start of each new venture and when a reconsideration event has occurred. The Company consolidates a VIE if it is determined to be the primary beneficiary of the VIE having both the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.
The Company determined that YFVIC is a VIE. The Company holds a variable interest in YFVIC primarily related to its ownership interests and subordinated financial support. The Company and Yangfeng Automotive Trim Systems Co. Ltd. ("YF") each own 50% of YFVIC and neither entity has the power to control the operations of YFVIC; therefore, the Company is not the primary beneficiary of YFVIC and does not consolidate the joint venture.
The Company's investments in YFVIC consists of the following:
March 31,December 31,
(In millions)20222021
Payables due to YFVIC
$31 $20 
Exposure to loss in YFVIC:
Investment in YFVIC
$36 $36 
Receivables due from YFVIC
49 48 
    Maximum exposure to loss in YFVIC
$85 $84 
Equity Investments
In 2018, the Company committed to make a $15 million investment in two funds managed by venture capital firms principally focused on the automotive sector pursuant to limited partnership agreements. As a limited partner in each fund, the Company will periodically make capital contributions toward this total commitment amount. As of March 31, 2022, the Company has contributed a total of approximately $10 million toward the aggregate investment commitments. These limited partnerships are classified as equity method investments.

NOTE 3. Restructuring and Impairments
Given the economically-sensitive and highly competitive nature of the automotive electronics industry, the Company continues to closely monitor current market factors and industry trends, including potential impacts related to COVID-19, taking action as necessary which may include restructuring actions. However, there can be no assurance that any such actions will be sufficient to fully offset the impact of adverse factors on the Company or its results of operations, financial position and cash flows.






8



Current restructuring actions include the following:

Due to the current geopolitical situation in Eastern Europe the Company will indefinitely suspend operations in Russia beginning in the second quarter 2022. As such, the Company recorded $1 million of restructuring expense primarily related to employee severance. As of March 31, 2022, $1 million remains accrued related to this action.

During the first quarter 2022 the Company approved and recorded $1 million of restructuring expense, primarily impacting Europe, in order to improve efficiencies and rationalize the Company's footprint. As of March 31, 2022, $1 million remains accrued related to this action.

During 2021 the Company approved various restructuring programs, primarily impacting Europe and Brazil in order to improve efficiencies and rationalize the Company's footprint. During the first quarter 2022 the Company recorded an additional $1 million of expense in Brazil related to these actions. As of March 31, 2022, $3 million remains accrued related to these programs.

During 2020 the Company approved various restructuring programs impacting engineering, administrative and manufacturing functions to improve efficiency and rationalize the Company’s footprint. As of March 31, 2022, $7 million remains accrued related to these programs.

During 2018, the Company approved a restructuring program impacting legacy employees at a South America facility due to the wind-down of certain products. As of March 31, 2022, $2 million remains accrued related to this program.

As of March 31, 2022, the Company retained restructuring reserves as part of the Company's divestiture of the majority of its global Interiors business (the "Interiors Divestiture") of $2 million associated with completed programs for the fundamental reorganization of operations at facilities in Brazil and France.

Restructuring Reserves

The Company’s restructuring reserves and related activity are summarized below.

(In millions)
December 31, 2021$18 
   Expense2 
   Change in estimate1 
   Payments(5)
March 31, 2022$16 

Impairments

During the first quarter of 2022, due to the current geopolitical situation in Eastern Europe the Company will indefinitely suspend operations in Russia beginning in the second quarter 2022. As such, the Company recognized a non-cash impairment charge of $2 million to fully impair property and equipment as of March 31, 2022.

During the first quarter 2022, the Company recorded a $2 million charge to reduce certain inventory in Russia to its net realizable value based on the Company’s plan to suspend operations in Russia during the second quarter 2022.

NOTE 4. Inventories
Inventories, net consist of the following components:
March 31,December 31,
(In millions)20222021
Raw materials
$276 $206 
Work-in-process
28 29 
Finished products
27 27 
$331 $262 

9



NOTE 5. Goodwill and Other Intangible Assets

Intangible assets, net are comprised of the following:
March 31, 2022December 31, 2021
(In millions)Estimated Weighted Average Useful Life (years)Gross IntangiblesAccumulated AmortizationNet IntangiblesGross IntangiblesAccumulated AmortizationNet Intangibles
Definite-Lived:
Developed technology10$41 $(39)$2 $41 $(39)$2 
Customer related1097 (78)19 96 (75)21 
Capitalized software development548 (10)38 48 (10)38 
Other3216 (9)7 15 (8)7 
Subtotal202 (136)66 200 (132)68 
Indefinite-Lived:
Goodwill50 — 50 50 — 50 
Total $252 $(136)$116 $250 $(132)$118 

Capitalized software development consists of software development costs intended for integration into customer products.


NOTE 6. Other Assets

Other current assets are comprised of the following components:
March 31,December 31,
(In millions)20222021
 Non-consolidated receivables
$49 $48 
 Recoverable taxes
48 40 
 Contractually reimbursable engineering costs
35 34 
 Prepaid assets and deposits
29 21 
Derivative financial instruments6 2 
Royalty agreements3 4 
China bank notes1 3 
 Other
5 6 
$176 $158 

The Company receives bank notes from certain customers in China to settle trade accounts receivable. The collection of such bank notes are included in operating cash flows based on the substance of the underlying transactions which are operating in nature. The Company redeemed $46 million and $51 million of China bank notes during the three months ended March 31, 2022 and 2021, respectively. Remaining amounts outstanding at third-party institutions related to sold bank notes will mature by the end of the third quarter of 2022.

10



Other non-current assets are comprised of the following components:
March 31,December 31,
(In millions)20222021
Deferred tax assets$48 $47 
Contractually reimbursable engineering costs30 34 
Recoverable taxes10 9 
Pension assets6 7 
Royalty agreements1 2 
 Other
16 12 
$111 $111 
Current and non-current contractually reimbursable engineering costs are related to pre-production design and development costs incurred pursuant to long-term supply arrangements that are contractually guaranteed for reimbursement by customers. The Company expects to receive cash reimbursement payments of $27 million during the remainder of 2022, $28 million in 2023, $8 million in 2024, $1 million in 2025, and $1 million in 2026 and beyond.

NOTE 7. Other Liabilities

Other current liabilities are summarized as follows:
March 31,December 31,
(In millions)20222021
Deferred income
$59 $69 
Non-consolidated payables
31 20 
Product warranty and recall accruals
31 30 
Non-income taxes payable
19 26 
Restructuring reserves
14 16 
Royalty reserves
12 12 
Income taxes payable
8 8 
Other
40 37 
$214 $218 

Other non-current liabilities are summarized as follows:
March 31,December 31,
(In millions)20222021
Product warranty and recall accruals
$20 $20 
Deferred income
19 15 
Derivative financial instruments
8 13 
Income tax reserves
8 8 
Royalty agreements
4 5 
 Restructuring reserves2 2 
Other
13 12 
$74 $75 

11



NOTE 8. Debt
The Company’s debt consists of the following:
March 31,December 31,
(In millions)20222021
Short-Term Debt:
Short-term borrowings$ $4 
Long-Term Debt:
Term debt facility, net$349 $349 
Short-Term Debt
Short-term borrowings are related to subsidiary borrowings. As of March 31, 2022, the Company has no short-term borrowing and there is $150 million available capacity under short-term credit facilities.
Long-Term Debt

As of March 31, 2022, the Company has an amended credit agreement ("Credit Agreement") which includes a $350 million Term Facility maturing March 24, 2024 and a $400 million Revolving Credit Facility which matures the earlier of (i) December 24, 2024, (ii) 90 days prior to the scheduled maturity of the Term Facility, or (iii) the date of the termination of the Company's Credit Agreement.

The Company has no outstanding borrowings on the Revolving Credit Facility as of March 31, 2022.

Interest on the Term Facility loans accrue at a rate equal to a LIBOR-based rate plus an applicable margin of 1.75% per annum. Loans under the Company's Revolving Credit Facility accrue interest at a rate equal to a LIBOR-based rate plus an applicable margin of between 1.00% and 2.00%, as determined by the Company's total gross leverage ratio.

The Credit Agreement requires compliance with customary affirmative and negative covenants and contains customary events of default. The Revolving Credit Facility also requires that the Company maintain a total net leverage ratio no greater than 3.50:1.00. During any period when the Company’s corporate and family ratings meet investment grade ratings, certain of the negative covenants are suspended.

The Revolving Credit Facility also provides $75 million availability for the issuance of letters of credit and a maximum of $20 million for swing line borrowings. Any amount of the facility utilized for letters of credit or swing line loans outstanding will reduce the amount available under the existing Revolving Credit Facility. The Company may request increases in the limits under the Credit Agreement and may request the addition of one or more term loan facilities. Outstanding borrowings may be prepaid without penalty (other than borrowings made for the purpose of reducing the effective interest rate margin or weighted average yield of the loans). There are mandatory prepayments of principal in connection with: (i) excess cash flow sweeps above certain leverage thresholds, (ii) certain asset sales or other dispositions, (iii) certain refinancing of indebtedness and (iv) over-advances under the Revolving Credit Facility. There are no excess cash flow sweeps required at the Company’s current leverage level.

All obligations under the Credit Agreement and obligations with respect to certain cash management services and swap transaction agreements between the Company and its lenders are unconditionally guaranteed by certain of the Company’s subsidiaries. Under the terms of the Credit Agreement, any amounts outstanding are secured by a first-priority perfected lien on substantially all property of the Company and the subsidiaries party to the security agreement, subject to certain limitations. 

12



Other

The Company has a $5 million letter of credit facility, whereby the Company is required to maintain a cash collateral account equal to 103% (110% for non-U.S. dollar denominated letters) of the aggregate stated amount of issued letters of credit and must reimburse any amounts drawn under issued letters of credit. The Company had $2 million of outstanding letters of credit issued under this facility secured by restricted cash, as of March 31, 2022. Additionally, the Company had $5 million of locally issued letters of credit with $2 million of collateral as of March 31, 2022, to support various tax appeals, customs arrangements and other obligations at its local affiliates.

NOTE 9. Employee Benefit Plans
The Company's net periodic benefit costs for all defined benefit plans for the three month periods ended March 31, 2022 and 2021 were as follows:
U.S. PlansNon-U.S. Plans
(In millions)2022202120222021
Costs Recognized in Income:
Pension service cost:
Service cost
$ $ $ $ 
Pension financing benefits (cost):
Interest cost
$(5)$(4)$(2)$(2)
Expected return on plan assets10 9 2 2 
Amortization of losses and other
— (1)— — 
Total pension financing benefits:5 4 — — 
Net pension benefit (cost)$5 $4 $— $— 
Pension financing benefits are classified as Other income, net on the Company's condensed consolidated statements of comprehensive income.
During the three months ended March 31, 2022, cash contributions to the Company's defined benefit plans were $1 million related to its non-U.S. plans. The Company estimates that total cash contributions to its non-U.S. defined benefit pension plans during 2022 will be $4 million.

13



NOTE 10. Income Taxes
During the three month period ended March 31, 2022, the Company recorded a provision for income tax of $8 million which reflects income tax expense in countries where the Company is profitable, accrued withholding taxes, and the inability to record a tax benefit for pretax losses and/or recognize expense for pretax income in certain jurisdictions, including the United States ("U.S."), due to valuation allowances. Pre-tax losses in jurisdictions where valuation allowances are maintained and no income tax benefits are recognized totaled $10 million and $11 million for the three month periods ended March 31, 2022 and 2021, respectively, resulting in an increase in the Company's effective tax rate in those years.

The Company's provision for income taxes in interim periods is computed by applying an estimated annual effective tax rate against income before income taxes, excluding equity in net income of non-consolidated affiliates for the period. Effective tax rates vary from period to period as separate calculations are performed for those countries where the Company's operations are profitable and whose results continue to be tax-effected and for those countries where full deferred tax valuation allowances exist and are maintained.

The need to maintain valuation allowances against deferred tax assets in the U.S. and other affected countries will cause variability in the Company’s quarterly and annual effective tax rates. Full valuation allowances against deferred tax assets in the U.S. and applicable foreign countries will be maintained until sufficient positive evidence exists to reduce or eliminate them. The Company evaluates its deferred income taxes quarterly to determine if valuation allowances are required or should be adjusted.

During the first quarter of 2022, there were no material changes in unrecognized tax benefits. The long-term portion of uncertain income tax positions (including interest) of $8 million is included in other non-current liabilities on the condensed consolidated balance sheet, while $3 million is reflected as a reduction of a deferred tax asset related to a net operating loss included in other non-current assets on the condensed consolidated balance sheet. Outstanding income tax refund claims related primarily to India and Brazil jurisdictions, total $7 million as of March 31, 2022, and are included in other non-current assets on the condensed consolidated balance sheets.
14



NOTE 11. Stockholders’ Equity and Non-controlling Interests
Non-Controlling Interests
The Company's non-controlling interests are as follows:
March 31,December 31,
(In millions)20222021
Shanghai Visteon Automotive Electronics, Co., Ltd.$46 $45 
Yanfeng Visteon Automotive Electronics Co., Ltd.34 33 
Changchun Visteon FAWAY Automotive Electronics, Co., Ltd.
19 20 
Other
2 2 
$101 $100 
Accumulated Other Comprehensive Income (Loss)

Changes in Accumulated other comprehensive income (loss) (“AOCI”) and reclassifications out of AOCI by component include:
Three Months Ended March 31,
(In millions)20222021
Changes in AOCI:
Beginning balance
$(229)$(304)
Other comprehensive income (loss) before reclassification, net of tax
4 (18)
Amounts reclassified from AOCI
 1 
Ending balance
$(225)$(321)
Changes in AOCI by Component:
Foreign currency translation adjustments
  Beginning balance
$(149)$(115)
Other comprehensive income (loss) before reclassification, net of tax (a)
(7)(33)
  Ending balance
(156)(148)
Net investment hedge
  Beginning balance
4 (15)
  Other comprehensive income (loss) before reclassification, net of tax (a)
8 14 
  Amounts reclassified from AOCI
(2)(1)
  Ending balance
10 (2)
Benefit plans
  Beginning balance
(81)(165)
  Other comprehensive income (loss) before reclassification, net of tax (b)
 1 
  Amounts reclassified from AOCI1 1 
  Ending balance
(80)(163)
Unrealized hedging gain (loss)
  Beginning balance
(3)(9)
  Other comprehensive income (loss) before reclassification, net of tax (c)
3  
Amounts reclassified from AOCI1 1 
  Ending balance
1 (8)
Total AOCI
$(225)$(321)
(a) There were no income tax effects for either period due to the valuation allowance.
(b) Net tax expense was less than $1 million related to benefit plans for the three months ended March 31, 2022 and 2021.
(c) There were no income tax effects related to unrealized hedging gain (loss) for either period due to the valuation allowance.

15



NOTE 12. Earnings Per Share

Basic earnings per share is calculated by dividing net income attributable to Visteon by the weighted average number of shares of common stock outstanding. Diluted earnings per share is calculated by dividing net income by the weighted average number of common and potentially dilutive common shares outstanding. Performance based share units are considered contingently issuable shares and are included in the computation of diluted earnings per share based on the number of shares that would be issuable if the reporting date were the end of the contingency period and if the result would be dilutive.

The table below provides details underlying the calculations of basic and diluted earnings per share:
Three Months Ended March 31,
(In millions, except per share amounts)20222021
Numerator:
Net income (loss) attributable to Visteon
$22 $16 
Denominator:
Average common stock outstanding - basic
28.0 27.9 
Dilutive effect of performance based share units and other
0.4 0.5 
Diluted shares
28.4 28.4 
Basic and Diluted Per Share Data:
Basic earnings (loss) per share attributable to Visteon
$0.79 $0.57 
Diluted earnings (loss) per share attributable to Visteon:
$0.77 $0.56 

NOTE 13. Fair Value Measurements and Financial Instruments
Fair Value Measurements
The Company uses a three-level fair value hierarchy that categorizes assets and liabilities measured at fair value based on the observability of the inputs utilized in the valuation. The fair value hierarchy gives the highest priority to the quoted prices in active markets for identical assets and liabilities and lowest priority to unobservable inputs.
Level 1 – Financial assets and liabilities whose values are based on unadjusted quoted market prices for identical assets and liabilities in an active market that the Company has the ability to access.
Level 2 – Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable for substantially the full term of the asset or liability.
Level 3 – Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.
Items Measured at Fair Value on a Recurring Basis
The Company is exposed to various market risks including, but not limited to, changes in currency exchange rates arising from the sale of products in countries other than the manufacturing source, foreign currency denominated supplier payments, debt, dividends, and investments in subsidiaries. The Company manages these risks, in part, through the use of derivative financial instruments. The maximum length of time over which the Company hedges the variability in the future cash flows related to transactions, excluding those transactions as related to the payment of variable interest on existing debt, is eighteen months. The maximum length of time over which the Company hedges forecasted transactions related to variable interest payments is the term of the underlying debt.
Hedge instruments are measured at fair value on a recurring basis under an income approach using industry-standard models that consider various assumptions, including time value, volatility factors, current market and contractual prices for the underlying and non-performance risk. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument or may derived from observable data. Accordingly, the Company's currency instruments are
16



classified as Level 2 in the fair value hierarchy.
The Company presents its derivative positions and any related material collateral under master netting arrangements that provide for the net settlement of contracts, by counterparty, in the event of default or termination. Derivative financial instruments are included in the Company’s condensed consolidated balance sheets. There is no cash collateral on any of these derivatives.
Currency Exchange Rate Instruments: The Company primarily uses forward contracts denominated in Euro, Japanese yen, Thai baht, Brazilian real, and Mexican peso intended to mitigate the variability of cash flows denominated in currency other than the hedging entity's functional currency.
As of March 31, 2022 and December 31, 2021, the Company had foreign currency economic derivative instruments with notional amounts of $33 million and $32 million, respectively. At March 31, 2022, these instruments are undesignated hedges of recorded foreign currency denominated assets or liabilities that give rise to potential foreign currency gains or losses. The aggregate fair value of these derivative instruments is a liability of $1 million and a liability of less than $1 million as of March 31, 2022 and December 31, 2021, respectively.
Cross Currency Swaps: The Company has executed cross-currency swap transactions intended to mitigate the variability of the U.S. dollar value of its investment in certain of its non-U.S. entities. These transactions are designated as net investment hedges and the Company has elected to assess hedge effectiveness under the spot method. Accordingly, periodic changes in the fair value of the derivative instruments attributable to factors other than spot exchange rate variability are excluded from the measurement of hedge ineffectiveness and reported directly in earnings each reporting period.
As of March 31, 2022 and December 31, 2021, the Company had cross currency swaps with an aggregate notional value of $250 million. The aggregate fair value of these derivatives is an asset of $4 million and a non-current liability of $6 million as of March 31, 2022 and an asset of $2 million and a non-current liability of $9 million as of December 31, 2021. As of March 31, 2022, a gain of $3 million is expected to be reclassified out of accumulated other comprehensive income into earnings within the next 12 months.
Interest Rate Swaps: The Company utilizes interest rate swap instruments to manage its exposure and to mitigate the impact of interest rate variability. The instruments are designated as cash flow hedges, accordingly, the effective portion of the periodic changes in fair value is recognized in accumulated other comprehensive income, a component of shareholders' equity. Subsequently, the accumulated gains and losses recorded in equity are reclassified to income in the period during which the hedged cash flow impacts earnings.
As of March 31, 2022 and December 31, 2021, the Company had interest rate swaps with an aggregate notional value of $300 million. The aggregate fair value of these derivative transactions is an asset of $2 million and a non-current liability of $1 million as of March 31, 2022 and a non-current liability of $4 million as of December 31, 2021. As of March 31, 2022, a loss of $2 million is expected to be reclassified out of accumulated other comprehensive income into earnings within the next twelve months.
17



Financial Statement Presentation
Gains and losses on derivative financial instruments for the three months ended March 31, 2022 and 2021 are as follows:
Recorded Income (Loss) into AOCI, net of tax
Reclassified from AOCI into Income (Loss)
Recorded in (Income) Loss
(In millions)202220212022202120222021
Three months ended March 31,
Foreign currency risk - Cost of sales:
Cash flow hedges
$— $— $— $— $3 $ 
Interest rate risk - Interest expense, net:
Interest rate swap
3  (1)(1)  
Net investment hedges
8 14 2 1   
$11 $14 $1 $— $3 $— 
Items Not Carried at Fair Value
The Company's fair value of debt was $345 million and $354 million as of March 31, 2022 and December 31, 2021, respectively. Fair value estimates were based on the current rates offered to the Company for debt of the same remaining maturities. Accordingly, the Company's debt fair value disclosures are classified as Level 2 in the fair value hierarchy.
Concentrations of Credit Risk
Financial instruments including cash equivalents, derivative contracts, and accounts receivable, expose the Company to counterparty credit risk for non-performance. The Company’s counterparties for cash equivalents and derivative contracts are banks and financial institutions that meet the Company’s credit rating requirements. The Company’s counterparties for derivative contracts are substantial investment and commercial banks with significant experience using such derivatives. The Company manages its credit risk pursuant to written policies that specify minimum counterparty credit profile and by limiting the concentration of credit exposure amongst its multiple counterparties.
The Company's credit risk with any single customer does not exceed ten percent of total accounts receivable except for Ford and its affiliates which represent 15% and 18% of the Company's balance as of March 31, 2022 and December 31, 2021, respectively.

NOTE 14. Commitments and Contingencies
Litigation and Claims
In 2003, the Local Development Finance Authority of the Charter Township of Van Buren, Michigan issued approximately $28 million in bonds finally maturing in 2032, the proceeds of which were used at least in part to assist in the development of the Company’s U.S. headquarters located in the Township. During January 2010, the Company and the Township entered into a settlement agreement (the “Settlement Agreement”) that, among other things, reduced the taxable value of the headquarters property to current market value. The Settlement Agreement also provided that the Company would negotiate in good faith with the Township, pursuant to the terms of the Settlement Agreement, in the event that property tax payments were inadequate to permit the Township to meet its payment obligations with respect to the bonds. In October 2019, the Township notified the Company that the Township had incurred a shortfall under the bonds of less than $1 million and requested that the Company meet to discuss payment. The parties met in November 2019 but no agreement was reached. On December 9, 2019, the Township commenced litigation against the Company in Michigan’s Wayne County Circuit Court claiming damages of $28 million related to what the Township alleges to be the current shortfall and projected future shortfalls under the bonds. The Company disputes the factual and legal assertions made by the Township and intends to defend the matter vigorously. The Company is not able to estimate the possible loss or range of loss in connection with this matter.
In November 2013, the Company and Halla Visteon Climate Control Corporation (“HVCC”), jointly filed an Initial Notice of Voluntary Self-Disclosure statement with the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) regarding certain sales of automotive HVAC components by a minority-owned, Chinese joint venture of HVCC into Iran. The
18



Company updated that notice in December 2013, and subsequently filed a voluntary self-disclosure regarding these sales with OFAC in March 2014. In May 2014, the Company voluntarily filed a supplementary self-disclosure identifying additional sales of automotive HVAC components by the Chinese joint venture, as well as similar sales involving an HVCC subsidiary in China, totaling $12 million, and filed a final voluntary-self disclosure with OFAC on October 17, 2014. OFAC is currently reviewing the results of the Company’s investigation. Following that review, OFAC may conclude that the disclosed sales resulted in violations of U.S. economic sanctions laws and warrant the imposition of civil penalties, such as fines, limitations on the Company's ability to export products from the United States, and/or referral for further investigation by the U.S. Department of Justice. Any such fines or restrictions may be material to the Company’s financial results in the period in which they are imposed, but the Company is not able to estimate the possible loss or range of loss in connection with this matter. Additionally, disclosure of this conduct and any fines or other action relating to this conduct could harm the Company’s reputation and have a material adverse effect on its business, operating results and financial condition. The Company cannot predict when OFAC will conclude its own review of voluntary self-disclosures or whether it may impose any of the potential penalties described above.
The Company's operations in Brazil are subject to highly complex labor, tax, customs and other laws. While the Company believes that it is in compliance with such laws, it is periodically engaged in litigation regarding the application of these laws. The Company maintained accruals of $10 million for claims aggregating $60 million in Brazil as of March 31, 2022. The amounts accrued represent claims that are deemed probable of loss and are reasonably estimable based on the Company's assessment of the claims and prior experience with similar matters.
The adverse impacts of the COVID-19 pandemic led to a significant reduction in vehicle production in the first half of 2020, which was followed by increased consumer demand and vehicle production schedules in the second half of 2020, particularly in the fourth quarter. Because semiconductor suppliers have been unable to rapidly reallocate production to serve the automotive industry, the surge in demand has led to a worldwide semiconductor supply shortage. The Company's semiconductor suppliers, along with most automotive component supply companies that use semiconductors, have been unable to fully meet the vehicle production demands of our customers due to events which are outside the Company's control, including but not limited to, the COVID-19 pandemic, the global semiconductor shortage, a fire at a semiconductor fabrication facility in Japan, significant weather events impacting semiconductor supplier facilities in the southern United States, and other extraordinary events. The Company is working closely with suppliers and customers to attempt to minimize potential adverse impacts of these events. Certain customers have communicated that they expect the Company to absorb some of the financial impact of their reduced production and are reserving their rights to claim damages arising from supply shortages, however, the Company believes it has a number of legal defenses to such claims and intends to defend any such claims vigorously. The Company has also notified semiconductor suppliers that it will seek compensation from them for failure to deliver sufficient quantities. The Company is not able to estimate the possible loss or range of loss in connection with this matter at this time.
While the Company believes its accruals for litigation and claims are adequate, the final amounts required to resolve such matters could differ materially from recorded estimates and the Company's results of operations and cash flows could be materially affected.
Guarantees and Commitments
As part of 2015 divestitures involving the Company's former climate and interiors businesses, the Company continues to provide lease guarantees to divested Climate and Interiors entities. As of March 31, 2022, the Company has $2 million and $2 million of outstanding guarantees, related to the divested Climate and Interiors entities, respectively. The guarantees represent the maximum potential amount that the Company could be required to pay under the guarantees in the event of default by the guaranteed parties. The guarantees will generally cease upon expiration of current lease agreement which expire in 2026 and 2024 for the Climate and Interiors entities, respectively.
Product Warranty and Recall
Amounts accrued for product warranty and recall claims are based on management’s best estimates of the amounts that will ultimately be required to settle such items. The Company’s estimates for product warranty and recall obligations are developed with support from its sales, engineering, quality and legal functions and include due consideration of contractual arrangements, past experience, current claims and related information, production changes, industry and regulatory developments, and various other considerations. The Company can provide no assurances that it will not experience material claims in the future or that it will not incur significant costs to defend or settle such claims beyond the amounts accrued or beyond what the Company may recover from its suppliers.
19



The following table provides a rollforward of changes in the product warranty and recall claims liability:
Three Months Ended March 31,
(In millions)20222021
Beginning balance$50 $64 
Provisions4 5 
Changes in estimates
2 1 
Currency/other (3)
Settlements
(5)(7)
Ending balance$51 $60 

Other Contingent Matters

Various legal actions, governmental investigations and proceedings and claims are pending or may be instituted or asserted in the future against the Company, including those arising out of alleged defects in the Company’s products; governmental regulations relating to safety; employment-related matters; customer, supplier and other contractual relationships; intellectual property rights; product warranties; product recalls; product liability claims; and environmental matters. Some of the foregoing matters may involve compensatory, punitive or antitrust or other treble damage claims in very large amounts, or demands for recall campaigns, environmental remediation programs, sanctions, or other relief which, if granted, would require very large expenditures. The Company enters into agreements that contain indemnification provisions in the normal course of business for which the risks are considered nominal and impracticable to estimate.

Contingencies are subject to many uncertainties, and the outcome of individual litigated matters is not predictable with assurance. Reserves have been established by the Company for matters discussed in the immediately foregoing paragraphs where losses are deemed probable and reasonably estimable. It is possible, however, that some of the matters discussed in the foregoing paragraphs could be decided unfavorably to the Company and could require the Company to pay damages or make other expenditures in amounts, or a range of amounts, that cannot be estimated as of March 31, 2022 and that are in excess of established reserves. The Company does not reasonably expect, except as otherwise described herein, based on its analysis, that any adverse outcome from such matters would have a material effect on the Company’s financial condition, results of operations or cash flows, although such an outcome is possible.

NOTE 15. Segment Information and Revenue Recognition

The Company’s single reportable segment is Electronics. The Company's Electronics segment provides vehicle cockpit electronics products to customers, including instrument clusters, information displays, infotainment systems, audio systems, telematics solutions, head-up displays, as well as battery monitoring systems. As the Company has one reportable segment, total assets, depreciation, amortization, and capital expenditures are equal to consolidated results.
Financial results for the Company's reportable segment have been prepared using a management approach, which is consistent with the basis and manner in which financial information is evaluated by the Company's chief operating decision maker in allocating resources and in assessing performance. The Company’s chief operating decision maker, the Chief Executive Officer, evaluates the performance of the Company’s segment primarily based on net sales, before elimination of inter-company shipments, Adjusted EBITDA (a non-U.S. GAAP financial measure, as defined below), and operating assets.

Adjusted EBITDA

The Company defines Adjusted EBITDA as net income attributable to the Company adjusted to eliminate the impact of depreciation and amortization, non-cash stock-based compensation expense, provision for income taxes, net interest expense, net income attributable to non-controlling interests, restructuring and impairment expense, equity in net income of non-consolidated affiliates, and other gains and losses not reflective of the Company's ongoing operations.

Adjusted EBITDA is presented as a supplemental measure of the Company's financial performance that management believes is useful to investors because the excluded items may vary significantly in timing or amounts and/or may obscure trends useful in evaluating and comparing the Company's operating activities across reporting periods. Not all companies use identical calculations and, accordingly, the Company's presentation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. Adjusted EBITDA is not a recognized term under U.S. GAAP and does not purport to be a
20



substitute for net income as an indicator of operating performance or cash flows from operating activities as a measure of liquidity. Adjusted EBITDA has limitations as an analytical tool and is not intended to be a measure of cash flow available for management's discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments, and debt service requirements. The Company uses Adjusted EBITDA as a factor in incentive compensation decisions and to evaluate the effectiveness of the Company's business strategies. In addition, the Company's credit agreements use measures similar to Adjusted EBITDA to measure compliance with certain covenants.

Segment Adjusted EBITDA and reconciliation to net income (loss) attributable to Visteon is as follows:
Three Months Ended March 31,
(In millions)20222021
Net income (loss) attributable to Visteon Corporation$22 $16 
  Depreciation and amortization27 27 
  Non-cash, stock-based compensation expense5 4 
  Provision for income taxes8 12 
  Interest expense, net2 2 
  Net income (loss) attributable to non-controlling interests1 3 
  Restructuring and impairment expense7 (1)
  Equity in net income of non-consolidated affiliates(3) 
  Other2 1 
Adjusted EBITDA$71 $64 

Revenue Recognition

Disaggregated net sales by geographical market and product lines is as follows:
Three Months Ended March 31,
(In millions)20222021
Geographical Markets
Europe$283 $276 
Americas239 202 
China Domestic142 124 
China Export48 54 
Other Asia-Pacific134 119 
Eliminations(28)(29)
$818 $746 
Three Months Ended March 31,
(In millions)20222021
Product Lines
Instrument clusters$390 $351 
Information displays133 118 
Infotainment110 118 
Cockpit domain controller82 46 
Body and security33 35 
Telematics17 18 
Other53 60 
$818 $746 
21



During the three months ended March 31, 2022, revenue recognized related to performance obligations satisfied in previous periods represented less than 1% of consolidated net sales. The Company has no material contract assets, contract liabilities, or capitalized contract acquisition costs as of March 31, 2022.




22



Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand the results of operations, financial condition, and cash flows of Visteon Corporation (“Visteon” or the “Company”). MD&A is provided as a supplement to, and should be read in conjunction with, the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the Securities and Exchange Commission on February 17, 2022 and the financial statements and accompanying notes to the financial statements included elsewhere herein.
Executive Summary
Strategic Priorities
Visteon is a global automotive technology company serving the mobility industry, dedicated to creating more enjoyable, connected, and safe driving experiences. Our platforms leverage proven, scalable hardware and software solutions that enable the digital, electric and autonomous evolution of our global automotive customers. The automotive mobility market is expected to grow faster than underlying vehicle production volumes as the vehicle shifts from analog to digital and towards device and cloud connected, electric vehicles, and vehicles with more advanced safety features.

The Company has laid out the following strategic priorities:

Technology Innovation - The Company is an established global leader in cockpit electronics and is positioned to provide solutions as the industry transitions to the next generation automotive cockpit experience. The cockpit is becoming fully digital, connected, automated, learning, and voice enabled. Visteon's broad portfolio of cockpit electronics technology, the industry's first wireless battery management system, and the development of the DriveCore™ advanced safety platform positions Visteon to support these macro trends in the automotive industry.

Long-Term Growth - The Company has continued to win business at a rate that exceeds current sales levels by demonstrating product quality, technical and development capability, new product innovation, reliability, timeliness, product design, manufacturing capability, and flexibility, as well as overall customer service.

Enhance Shareholder Returns While Maintaining a Strong Balance Sheet - The Company has returned approximately $3.3 billion to shareholders since 2015. In addition, the Company has continued to maintain a strong balance sheet to withstand near-term industry volatility while providing a foundation for future growth and shareholder returns.
23



Financial Results

The pie charts below highlight the net sales breakdown for Visteon for the three months ended March 31, 2022.
Three Months Ended March 31, 2022
vc-20220331_g1.jpg
*Regional net sales are based on the geographic region where sales originate and not where customer is located (excludes inter-regional eliminations).
Global Automotive Market Conditions and Production Levels
The automotive industry has been negatively impacted by the COVID-19 pandemic and the ongoing semiconductor shortage. In the first half of 2021, semiconductor supply was further impacted by a winter storm in Texas and a fire at the facility of a semiconductor supplier in Japan. In addition, COVID outbreaks in the middle of 2021 in Southeast Asia caused several back-end processing facilities that perform assembly and test of semiconductors to be negatively impacted. Industry vehicle volumes are expected to increase in 2022 due to strong consumer demand and historically low inventory levels at auto dealerships. However, vehicle production volumes will be negatively impacted due to on-going shortages of semiconductors, disruptions caused by the geopolitical situation in Eastern Europe, and the recent COVID-19 related lockdowns in China. The magnitude of the impact on the financial statements and results of operations and cash flows will depend on the evolution of the semiconductor supply shortage, plant production schedules, and supply chain impacts.



24



Results of Operations - Three Months Ended March 31, 2022 and 2021
The Company's consolidated results of operations for the three months ended March 31, 2022 and 2021 were as follows:
Three Months Ended March 31,
(In millions)20222021Change
Net sales$818 $746 $72 
Cost of sales(742)(673)(69)
Gross margin76 73 
Selling, general and administrative expenses(44)(45)
Restructuring and impairment(7)(8)
Interest expense, net(2)(2)— 
Equity in net income of non-consolidated affiliates— 
Other income, net
Provision for income taxes(8)(12)
Net income (loss)23 19 
Less: Net (income) loss attributable to non-controlling interests(1)(3)
Net income (loss) attributable to Visteon Corporation$22 $16 $
Adjusted EBITDA*$71 $64 $
* Adjusted EBITDA is a Non-GAAP financial measure, as further discussed below.
Net Sales, Cost of Sales and Gross Margin
(In millions)Net SalesCost of SalesGross Margin
Three months ended March 31, 2021$746 $(673)$73 
Volume, mix, and net new business45 (33)12 
Currency(12)(3)
Customer pricing41 — 41 
Engineering costs, net *— 10 10 
Cost performance, design changes and other(2)(55)(57)
Three months ended March 31, 2022$818 $(742)$76 
*Excludes the impact of currency.
Net sales for the three months ended March 31, 2022 totaled $818 million, representing an increase of $72 million compared with the same period of 2021. Volumes and net