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Item 7.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 the Company. MD&A is provided as a supplement to, and should be read in conjunction with, the Company’s consolidated financial statements and related notes appearing in Item 8 of this Form 10-K “Financial Statements and Supplementary Data”.

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 DriveCoreTM 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.

Financial Results

The pie charts below highlight the sales breakdown for Visteon for the year ended December 31, 2021.

*Regional sales are based on the geographic region where sale originates 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. Throughout 2020, demand for semiconductors changed significantly as a result of the pandemic. Automotive demand dropped sharply in the first half of 2020 due to COVID-related shutdowns. At the same time, demand for consumer electronics increased due to work from home and the proliferation of connected devices. In the second half of 2020, automotive production recovered faster than expected resulting in demand for 200-millimeter wafers exceeding supply and setting the stage for a tight supply environment in 2021.

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 continue to be negatively impacted due to on-going shortages of semiconductors. 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, related plant production schedules, and supply chain impacts.

Company Highlights

Visteon continued to focus on execution throughout 2021, building a foundation of sustainable growth, margin expansion, and cash flow generation. To address the near-term challenges created from the worldwide semiconductor and supply chain shortages, Visteon implemented a series of proactive initiatives aimed at increasing product availability for our customers while minimizing the impact of incremental costs to the business.

Early in 2021, Visteon set up a cross-functional task force which implemented several actions including the purchase of semiconductors through brokers and distributors, expedited logistics, and engineering redesigns while leading calls with customers and suppliers to minimizing manufacturing downtime. In addition, Visteon worked with our customers to pass along the elevated costs caused by semiconductor shortages.

As a result of these actions, Visteon reported sales of $2,773 million, a year-over-year increase of 7% when excluding the positive impact from currency. This represents a continued out-performance compared to industry and customer production volumes. Adjusted EBITDA was $228 million, or 8.2% of sales. Visteon continued to build the foundation for sustainable growth launching 43 new products during 2021 including the industry's first wireless battery management system ("BMS"). Visteon's next-generation products continue to be featured on our customer's key vehicles and platforms. Additionally, Visteon was awarded $5.1 billion in new business wins with strong performance in all product categories. Wins included our newly introduced MicroZone display product, multiple SmartCoreTM domain wins with lifetime revenue in excess of $1 billion, discrete cluster wins of more than $2 billion, and an additional battery management system win, representing Visteon's third BMS customer.

In addition, Visteon developed a proprietary app store, debuted at CES in January 2022. The AllGo branded App Store offers native applications as well as the ability to download popular mobility apps. This solution provides the opportunity for developers to create new and OEM-proprietary applications.

Results of Operations

Year ended December 31, 2021 Compared to Year ended December 31, 2020

The Company's consolidated results of operations for the years ended December 31, 2021 and 2020 were as follows:

Year Ended December 31,

Selling, general and administrative expenses (175) (193) 18

Restructuring and impairment expense (14) (76) 62

Interest expense, net (8) (11) 3

Equity in net income of non-consolidated affiliates 6 6 —

Other income, net 18 9 9

Income (loss) before income taxes 81 (20) 101

Provision for income taxes (31) (28) (3)

Net income (loss) from continuing operations 50 (48) 98

Net income (loss) from discontinued operations, net of tax — — —

Net (income) loss attributable to non-controlling interests (9) (8) (1)

Net income (loss) attributable to Visteon Corporation $ 41 $ (56) $ 97

Net Sales and Cost of Sales

(In millions) Net Sales Cost of Sales Gross Margin

Volume, mix, and net new business 185 (168) 17

Customer pricing, net 8 — 8

Engineering costs, net — 20 20

Cost performance, design changes and other (20) (27) (47)

Net sales for the year ended December 31, 2021 totaled $2,773 million, which represents an increase of $225 million compared with 2020. Favorable volumes and net new business increased net sales by $185 million. Customer pricing increased net sales by $8 million, primarily due to customer recoveries. Favorable currency increased net sales by $52 million, primarily attributable to the euro, Brazilian real, and Chinese renminbi. Other cost performance, primarily related to design changes, reduced sales by $20 million.

Cost of sales increased $216 million for the year ended December 31, 2021, when compared with 2020. Volume, mix and net new business increased cost of sales by $168 million. Foreign currency increased cost of sales by $41 million, primarily

attributable to the euro, Brazilian real, and Chinese renminbi. Net engineering costs, excluding currency, decreased cost of sales by $20 million. Unfavorable cost performance, design changes and other increased cost of sales by $27 million primarily due supply chain and material cost impacts associated with the worldwide semiconductor supply shortage and the non-recurrence of certain 2020 temporary austerity measures.

A summary of net engineering costs is shown below:

Year Ended December 31,

Gross engineering costs $ (325) $ (335)

Engineering costs, net $ (191) $ (201)

Gross engineering costs relate to forward model program development and advanced engineering activities and exclude contractually reimbursable engineering costs. Net engineering costs of $191 million for the year ended December 31, 2021, including the impacts of currency, were $10 million lower than the same period of 2020. This decrease is primarily related to the benefits of previously announced restructuring actions and ongoing cost reduction efforts, partially offset by the reclassification of expenses in 2021 related to program management from selling, general, and administrative to align with the Company's optimized structure.

Selling, General and Administrative Expenses

Selling, general, and administrative expenses were $175 million, or 6.3% of net sales, and $193 million, or 7.6% of net sales, during the years ended December 31, 2021 and 2020, respectively. Selling, general, and administrative expenses decreased due to the reclassification of expenses in 2021 related to program management to gross engineering costs to align with the Company's optimized structure and restructuring savings, partially offset by the non-recurrence of 2020 temporary austerity measures.

Restructuring and Impairment

During 2021, the Company approved various global restructuring actions impacting engineering, administrative, and manufacturing functions primarily in South America and Europe to improve efficiency and rationalize the Company's footprint. The Company recorded $4 million of restructuring expense for cash severance, and termination costs for the year ended December 31, 2021 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. The Company recorded $1 million and $76 million of restructuring expense for cash severance, retention, and termination costs for the years ended December 31, 2021 and 2020, respectively related to these programs.

During the fourth quarter of 2021, the Company identified an impairment of certain long-lived assets in Brazil due to rising costs and deteriorating business conditions. As a result, the Company recorded a non-cash impairment charge of $9 million to write-down property and equipment to its fair value as of December 31, 2021.

Interest Expense, Net

Net interest expense for the year ended December 31, 2021, was $8 million, representing a decrease of $3 million as compared to 2020. The decrease is primarily due to 2020 interest expense related to borrowings on the Company's $400 million revolving credit facility.

Equity in Net Income of Non-Consolidated Affiliates

Equity in net income of non-consolidated affiliates was $6 million for the years ended December 31, 2021 and 2020.

Other Income, Net

Other income, net consists of the following:

Year Ended December 31,

Pension financing benefits, net $ 18 $ 14

Pension settlement charge — (5)

During 2020, the Company transferred a portion of the benefit obligation related to its defined benefit U.S. pension plan toa third-party issuer. The transaction met the criteria for settlement accounting, and accordingly the Company recognized a $5 million pension settlement charge in the fourth quarter of 2020.

Income Taxes

The Company's provision for income taxes was $31 million for year ended December 31, 2021, an increase of $3 million when compared with 2020. The increase in tax expense reflects $7 million attributable to changes in the year-over-year mix of earnings and differing tax rates between jurisdictions which reflects the overall increase in earnings in jurisdictions where the Company is profitable and withholding taxes, as well as $3 million related to the year-over-year impact of various tax law changes primarily in India and uncertain tax positions. The increases described above were partially offset by the non-recurrence of $7 million related to the reassessment of the valuation allowances in connection with the realization of deferred tax assets in Germany and Brazil. Other changes in the Company’s deferred tax asset valuation allowances did not materially impact net tax expense during the years ended December 31, 2021 or 2020.

Net Income (Loss) Attributable to Visteon

Net income attributable to Visteon was $41 million for the year ended December 31, 2021, compared to net loss of $56 million for 2020. The increase of $97 million is primarily related to an increase in gross margin of $9 million, decrease in selling, general, and administrative expense of $18 million, and a decrease in restructuring expense of $71 million. Other one time changes include a 2021 impairment which reduced net income by $9 million partially offset by the non-recurrence of a 2020 pension settlement charge of $5 million.

Adjusted EBITDA

Adjusted EBITDA was $228 million for the year ended December 31, 2021, representing an increase of $36 million when compared with Adjusted EBITDA of $192 million for 2020. Favorable volumes and mix increased Adjusted EBITDA by $17 million. Foreign currency increased Adjusted EBITDA by $7 million, primarily attributable to the euro, Brazilian real, and Chinese renminbi. Increased costs, primarily due to supply chain and material cost impacts associated with the worldwide semiconductor supply shortage, partially offset by customer recoveries, decreased Adjusted EBITDA by $13 million. Lower warranty expense and net engineering costs, excluding currency, increased Adjusted EBITDA by $5 million and $20 million, respectively.

The reconciliation of Adjusted EBITDA to net income attributable to Visteon for the years ended December 31, 2021 and 2020 is as follows:

Year Ended December 31,

Net income (loss) attributable to Visteon Corporation $ 41 $ (56) $ 97

Depreciation and amortization 108 104 4

Restructuring and impairment expense 14 76 (62)

Provision for income taxes 31 28 3

Non-cash, stock-based compensation expense 18 18 —

Interest expense, net 8 11 (3)

Net (income) loss attributable to non-controlling interests 9 8 1

Equity in net income of non-consolidated affiliates (6) (6) —

Other, net 5 9 (4)

Year ended December 31, 2020 Compared to Year ended December 31, 2019

The Company's consolidated results of operations for the years ended December 31, 2020 and 2019 were as follows:

Year Ended December 31,

Selling, general and administrative expenses (193) (221) 28

Restructuring expense (76) (4) (72)

Interest expense, net (11) (9) (2)

Equity in net income of non-consolidated affiliates 6 6 —

Other income, net 9 10 (1)

Income (loss) before income taxes (20) 106 (126)

Provision for income taxes (28) (24) (4)

Net income (loss) from continuing operations (48) 82 (130)

Net income (loss) from discontinued operations, net of tax — (1) 1

Net (income) loss attributable to non-controlling interests (8) (11) 3

Net income (loss) attributable to Visteon Corporation $ (56) $ 70 $ (126)

Net Sales and Cost of Sales

(In millions) Net Sales Cost of Sales Gross Margin

Volume, mix, and net new business (318) 128 (190)

Customer pricing, net (58) — (58)

Engineering costs, net — 93 93

Cost performance, design changes and other (8) 92 84

Net sales for the year ended December 31, 2020 totaled $2,548 million, which represents a decrease of $397 million compared with 2019. Unfavorable volumes, primarily due to the impacts of COVID-19, and mix, partially offset by net new business, decreased net sales by $318 million. Customer pricing decreased net sales by $58 million. Unfavorable currency decreased net sales by $13 million, primarily attributable to the euro, Chinese renminbi, Brazilian real and Indian rupee. Other cost performance, primarily related to design changes, reduced sales by $8 million.

Cost of sales decreased $318 million for the year ended December 31, 2020, when compared with 2019. Lower volumes, primarily due to the impacts of COVID-19, partially offset by unfavorable product mix, decreased cost of sales by $128 million. Engineering costs, excluding currency, decreased cost of sales by $93 million. Foreign currency decreased cost of sales by $5 million primarily attributable to the euro, Chinese renminbi, Indian rupee, Brazilian real, and Bulgarian lev. Favorable cost performance including material design, usage, and economics decreased cost of sales by $92 million.

A summary of net engineering costs is shown below:

Year Ended December 31,

Gross engineering costs $ (335) $ (440)

Engineering costs, net $ (201) $ (300)

Gross engineering includes program development costs and advanced engineering activities, excluding contractually reimbursable engineering costs. Net engineering costs of $201 million for the year ended December 31, 2020, including the impacts of currency, were $99 million lower than 2019, primarily related to short-term and long-term cost reduction initiatives including the benefits of previously announced restructuring actions implemented to optimize the structure while supporting future growth.

Selling, General and Administrative Expenses

Selling, general, and administrative expenses were $193 million, or 7.6% of net sales, and $221 million, or 7.5% of net sales, during the years ended December 31, 2020 and 2019, respectively. The decrease of $28 million is primarily related to temporary austerity measures in 2020, other cost reduction initiatives, and the impacts of previously announced restructuring actions.

Restructuring Expense

Restructuring actions initiated during 2020 include the following:

•In January, the Company approved a plan primarily related to European engineering and administrative functions to improve the Company’s efficiency and rationalize its footprint. The Company incurred $26 million of net restructuring expense for cash severance, retention, and termination costs related to this plan.

•In March, the Company approved a global restructuring plan impacting engineering, administrative and manufacturing functions to improve the Company’s efficiency and rationalize its footprint. The Company incurred $16 million of net restructuring expense for cash severance, retention, and termination costs related to this plan.

•In September, the Company approved a plan to respond to COVID-19 impacts while at the same time improving efficiency and rationalizing the Company’s footprint. The Company has incurred $32 million of net restructuring expense related to this plan.

•In December, the Company approved a plan related to engineering, administrative, and manufacturing functions in Asia to improve the Company's efficiency and rationalize its footprints. The Company has incurred $2 million in restructuring costs relation to this plan.

During 2019, the Company recorded approximately $4 million of net restructuring expenses related to end of life of certain products and the optimization of certain operations.

Interest Expense, Net

Net interest expense for the year ended December 31, 2020, was $11 million, representing an increase of $2 million as compared to 2019. The increase is primarily due to the first quarter 2020 borrowing of $400 million under the Company's revolving credit facility. The Company fully repaid the amount borrowed during the third quarter of 2020 following stronger than expected industry recovery and improved Company performance.

Equity in Net Income of Non-Consolidated Affiliates

Equity in net income of non-consolidated affiliates was $6 million for the years ended December 31, 2020 and 2019.

Other Income, Net

Other income, net consists of the following:

Year Ended December 31,

Pension financing benefits, net $ 14 $ 10

Pension settlement charge (5) —

Income Taxes

The Company's provision for income taxes was $28 million for year ended December 31, 2020, a $4 million increase when compared with 2019. The increase in tax expense reflects the reassessment of the 2020 valuation allowances in connection with the realization of deferred tax assets in Germany and Brazil, as well as the non-recurrence of a 2019 discrete income tax valuation allowance release in Germany, resulting in an increase in income tax expense of $19 million. Other changes in the Company’s deferred tax asset valuation allowances did not materially impact net tax expense during the years ended December 31, 2020 or 2019. The increases described above were partially offset by approximately $15 million decrease in income tax expense primarily due to changes in the mix of earnings and differing tax rates between jurisdictions which reflects the overall decrease in earnings in jurisdictions where the Company is profitable and withholding taxes.

Discontinued Operations

During 2019, the Company recorded a $1 million charge for legal expenses related to former employees at a closed plant in Brazil.

Net Income (Loss) Attributable to Visteon

Net loss attributable to Visteon was $56 million for the year ended December 31, 2020, compared to net income of $70 million for 2019. The decrease of $126 million is related to a decrease in gross margin of $79 million, higher restructuring expense of $72 million, and higher provision for income taxes of $4 million. These decreases were partially offset by lower selling, general and administrative expense of $28 million, and lower other income, net of $1 million.

Adjusted EBITDA

Adjusted EBITDA was $192 million for the year ended December 31, 2020, representing a decrease of $42 million when compared with Adjusted EBITDA of $234 million for 2019. Unfavorable volumes, primarily due to the impacts of COVID-19, and mix reduced Adjusted EBITDA by $190 million. Foreign currency decreased Adjusted EBITDA by $7 million, primarily attributable to the euro, Chinese renminbi, Brazilian real and Japanese yen, partially offset by the Mexican peso and Bulgarian lev. Lower net engineering costs, excluding currency, increased Adjusted EBITDA by $93 million. Favorable cost performance of $128 million, including material, design, and usage economics, lower manufacturing costs, lower selling and general and administrative expenses more than offset annual customer pricing of $58 million.

The reconciliation of Adjusted EBITDA to net income attributable to Visteon for the years ended December 31, 2020 and 2019 is as follows:

Year Ended December 31,

Net income (loss) attributable to Visteon Corporation $ (56) $ 70 $ (126)

Depreciation and amortization 104 100 4

Restructuring expense 76 4 72

Provision for income taxes 28 24 4

Non-cash, stock-based compensation expense 18 17 1

Interest expense, net 11 9 2

Net (income) loss attributable to non-controlling interests 8 11 (3)

Net income (loss) from discontinued operations, net of tax — 1 (1)

Equity in net income of non-consolidated affiliates (6) (6) —

Other, net 9 4 5

Liquidity

Overview

The Company's primary sources of liquidity are cash flows from operations, existing cash balances, and borrowings under available credit facilities. As we continue to evaluate ongoing supply chain impacts associated with the semiconductor supply shortage and other supply chain impacts related to the COVID-19 pandemic, the Company believes funds generated from these sources will continue to sufficiently sustain ongoing operations and support investment in differentiating technologies. The Company will continue to closely monitor its available liquidity and maintain access to additional liquidity to weather these challenging conditions. The Company's intra-year needs are normally impacted by seasonal effects in the industry, such as mid-year shutdowns, the ramp-up of new model production, and year-end shutdowns at key customers. The ongoing COVID-19 pandemic and related semiconductor supply shortage may exacerbate the intra-year requirements.

A substantial portion of the Company's cash flows from operations are generated by operations located outside of the United States. Accordingly, the Company utilizes a combination of cash repatriation strategies, including dividends and distributions, royalties, and other intercompany arrangements to provide the funds necessary to meet obligations globally. The Company’s ability to access funds from its subsidiaries is subject to, among other things, customary regulatory and statutory requirements and contractual arrangements including joint venture agreements and local credit facilities. Moreover, repatriation efforts may be modified by the Company according to prevailing circumstances.

On March 19, 2020, the Company borrowed the entire $400 million amount available under the revolving credit facility. On September 24, 2020, the Company fully repaid the amount borrowed under the Revolving Credit Facility following stronger than expected industry recovery and improved Company performance in the third quarter of 2020.

Access to additional capital through the debt or equity markets is influenced by the Company's credit ratings. As of December 31, 2021, the Company’s corporate credit rating is Ba3 and BB- by Moody’s and Standard & Poor’s, respectively. See Note 11, "Debt" in the Company's consolidated financial statements included in Item 8 of this Form 10-K for a comprehensive discussion of the Company's debt facilities. Incremental funding requirements of the Company's consolidated foreign entities are primarily accommodated by intercompany cash pooling structures. Affiliate working capital lines, which are utilized by the Company's consolidated joint ventures, had availability of $168 million and the Company had $400 million of available credit under the revolving credit facility, as of December 31, 2021.

Cash Balances

As of December 31, 2021, the Company had total cash and equivalents of $455 million, including $3 million of restricted cash. Cash balances totaling $338 million were located in jurisdictions outside of the United States, of which approximately $135 million is considered permanently reinvested for funding ongoing operations outside of the U.S. If such permanently reinvested funds were repatriated to the U.S., no U.S. federal taxes would be imposed on the distribution of such foreign earnings due to U.S. tax reform enacted in December 2017, but the Company would be required to accrue additional tax expense, primarily related to foreign withholding taxes.

Other Items Affecting Liquidity

During the year ended December 31, 2021, cash contributions to the Company's U.S. defined benefit pension plans were $12 million and $8 million related to its non-U.S. employee retirement plans. Contributions related to certain non-U.S. plans of approximately $2 million have been deferred until 2024 due to COVID-19 relief measures. Additionally, the Company expects to make contributions to its non-US defined benefit pension plans of $4 million during 2022.

During the year ended December 31, 2021, the Company paid $34 million related to restructuring activities. Additional discussion regarding the Company's restructuring activities is provided in Note 4, "Restructuring Activities" in the Company's consolidated financial statements included in Item 8 of this Form 10-K.

The Company has committed to make investments totaling $15 million in two entities principally focused on the automotive sector pursuant to limited partnership agreements. As of December 31, 2021, the Company has contributed $9 million toward the aggregate investment commitments. As a limited partner in each entity, the Company will periodically make capital contributions toward this total commitment amount.

Purchase Obligations

As of December 31, 2021, the Company has contractual purchase obligations of approximately $71 million through 2024.

Leases

The Company has operating leases primarily for corporate offices, technical and engineering centers, customer centers, vehicles, and certain equipment with future lease obligations ranging from 2022 to 2033. Additional discussion regarding the Company's restructuring activities is provided in Note 9, "Leases" in the Company's consolidated financial statements included in Item 8 of this Form 10-K.

Taxes

The Company may be required to make significant cash outlays related to its unrecognized tax benefits, including interest and penalties. As of December 31, 2021, the Company had unrecognized tax benefits, including interest and penalties, that would be expected to result in a cash outlay of $8 million. Given the number of years, jurisdictions and positions subject to examination, the Company is unable to estimate the period of cash settlement, if any, with the respective taxing authorities. For further information related to the Company’s unrecognized tax benefits, see Note 14, “Income Taxes,” to the consolidated financial statements included in this Report.

Cash Flows

Operating Activities

The Company generated $58 million of cash from operating activities during the year ended December 31, 2021, as compared to $168 million during 2020 representing a $110 million decrease.

Lower cash flow from operating activities is primarily due to lower working capital outflows partially offset by increased net income. Working capital out flows of $178 million are primarily related to higher inventory levels resulting from the worldwide semiconductor supply shortage and increased accounts receivable due to higher volume and higher than anticipated customer receipts during December 2020 of $40 million. These unfavorable impacts were partially offset by higher net income of $98 million and dividends received from non-consolidated affiliates of $18 million.

The Company generated $168 million of cash from operating activities during the year ended December 31, 2020, as compared to $183 million during 2019, representing a $15 million decrease in cash provided from operations. Favorable changes in accounts receivable, partially attributable to $40 million of higher than anticipated customer receipts during the final month of 2020, were more than offset by unfavorable changes in inventory and accounts payable balances resulting in lower trade working capital of $17 million in 2020 as compared to 2019. These unfavorable impacts were partially offset by lower cash tax payments, higher net recoveries of reimbursable taxes and higher net proceeds received from customers to fund the Company's pre-production design, engineering and tooling costs necessary to support current and future programs.

Investing Activities

Net cash used by investing activities during the year ended December 31, 2021 totaled $63 million, as compared to $98 million in 2020, representing a decrease of $35 million. The decrease is primarily due to lower cash paid for capital expenditures of $34 million.

Net cash used by investing activities during the year ended December 31, 2020 totaled $98 million, as compared to $128 million in 2019, representing a decrease of $30 million. This decrease is primarily due to lower capital expenditures of $38 million partially offset by lower loan repayments received from a non-consolidated affiliate of $9 million.

Financing Activities

Net cash used by financing activities during the year ended December 31, 2021 totaled $29 million, as compared to $58 million for 2020, representing a decrease of $29 million. The decrease is primarily due to 2020 share repurchases of $16 million and debt repayments of $37 million partially offset by higher dividends paid to non-controlling interests of $28 million.

Net cash used by financing activities during the year ended December 31, 2020 totaled $58 million, as compared to $49 million for 2019, representing an increase of $9 million. Higher net cash used by financing activities during the year ended December 31, 2020 as compared to 2019 is primarily attributable to an increase in short-term debt repayment of $18 million partially offset by lower stock 2020 stock repurchases of $4 million and lower dividends paid to non-controlling interests of $2 million.

Debt and Capital Structure

See "Liquidity" above and also see Note 11, "Debt" and Note 15, "Stockholders' Equity and Non-controlling Interests" to the Company's consolidated financial statements included in Item 8 of this Form 10-K for further information.

Fair Value Measurements

See Note 17, "Fair Value Measurements" to the Company's consolidated financial statements included in Item 8 of this Form 10-K for additional information.

Critical Accounting Estimates

The Company’s significant accounting policies have been disclosed in the consolidated financial statements and accompanying notes under Note 1, “Summary of Significant Accounting Policies” to the Company's consolidated financial statements included in Item 8 of this Form 10-K for further information. Certain policies relate to estimates that involve matters that are highly uncertain at the time the accounting estimate is made and different estimates or changes to an estimate could have a material impact on the reported financial position, changes in financial condition or results of operations. Such critical estimates are discussed below. For these, materially different amounts could be reported under varied conditions and assumptions. Other

items in the Company's consolidated financial statements require estimation, however, in our judgment, they are not as critical as those discussed below.

Impairment of Long-lived Assets

The Company monitors long-lived assets for impairment indicators on an ongoing basis. If an impairment indicator exists, the Company will test the long-lived asset group for recoverability by comparing the undiscounted cash flows expected to be generated from the long-lived assets compared to the related net book values. If the net book value of the asset group exceeds the undiscounted cash flows, the asset group is written down to its fair value and an impairment loss recognized. Fair value is determined using appraisals, management estimates or discounted cash flow calculations.

During the fourth quarter of 2021, the Company recorded an impairment of certain long-lived assets in Brazil due to rising costs and deteriorating business conditions. As a result, the Company recorded a non-cash impairment charge of $9 million to write-down property and equipment to its fair value as of December 31, 2021. The Company did not record impairment charges for the year ended December 31, 2020. See Note 4, "Restructuring and Impairment” in the Company's consolidated financial statements included in Item 8 of this Form 10-K for additional information.

Revenue Recognition

Revenue is measured based on the transaction price and the quantity of parts specified in a contract with a customer. Discrete price adjustments may occur during the vehicle production period in order for the Company to remain competitive with market prices or based on changes in product specifications. Some of these price adjustments are non-routine in nature and require estimation. In the event the Company concludes that a portion of the revenue for a given part may vary from the purchase order, the Company records consideration at the most likely amount to which the Company expects to be entitled based on historical experience and input from customer negotiations. See Note 1, "Summary of Significant Accounting Policies” in the Company's consolidated financial statements included in Item 8 of this Form 10-K for additional information.

Product Warranty and Recall

The Company accrues for warranty obligations for products sold based on management estimates, with support from the Company’s sales, engineering, quality, and legal functions, of the amount that eventually will be required to settle such obligations. This accrual is based on several factors including contractual arrangements, past experience, current claims, production changes, industry developments, and various other considerations. The Company accrues for product recall claims related to potential financial participation in customer actions to provide remedies as a result of actual or threatened regulatory or court actions or the Company’s determination of the potential for such actions. The Company's accrual for recall claims is based on specific facts and circumstances underlying individual claims with support from the Company’s engineering, quality, and legal functions. Amounts accrued are based upon management’s best estimate of the amount that will ultimately be required to settle such claims. See Note 19, "Commitments and Contingencies" in the Company's consolidated financial statements included in Item 8 of this Form 10-K for additional information.

Restructuring

The Company accrues costs in connection with its restructuring of the engineering, administration, and manufacturing organizations. These accruals include estimates primarily related to employee headcount, local statutory benefits, and other employee termination costs. Actual costs may vary from these estimates. These accruals are reviewed on a quarterly basis and changes to restructuring actions are appropriately recognized when identified. See Note 4, “Restructuring and Impairments” in the Company's consolidated financial statements included in Item 8 of this Form 10-K for additional information.

Pension Plans

Certain Company employees participate in defined benefit pension plans or retirement/termination indemnity plans. The Company has approximately $177 million in unfunded net pension liabilities as of December 31, 2021, of which approximately $136 million and $41 million are attributable to U.S. and non-U.S. pension plans, respectively. The determination of the Company’s obligations and expense for its pension plans is dependent on assumptions set by the Company used by actuaries in calculating such amounts. Assumptions are described in Note 12, “Employee Benefit Plans” to the Company’s consolidated financial statements included in Item 8 of this Form 10-K, which are incorporated herein by reference, including the discount rate, expected long-term rate of return on plan assets, and rate of increase in compensation.

Actual results that differ from assumptions used are accumulated and amortized over future periods and, accordingly, generally affect recognized expense in future periods. Therefore, assumptions used to calculate benefit obligations as of the annual measurement date directly impact the expense to be recognized in future periods. The primary assumptions affecting the Company’s accounting for employee benefits, as of December 31, 2021, are as follows:

Expected long-term rate of return on plan assets

The expected long-term rate of return is used to calculate net periodic pension cost. The required use of the expected long-term rate of return on plan assets may result in recognized returns that are greater or less than the actual returns on those plan assets in any given year. Over time the expected long-term rate of return on plan assets is designed to approximate actual returns. The expected long-term rate of return for pension assets has been estimated based on various inputs, including historical returns for the different asset classes held by the Company’s trusts and its asset allocation, as well as inputs from internal and external sources regarding expected capital market returns, inflation, and other variables.

U.S. Plans Non-U.S. Plans

The Company has set the long-term rates of return assumptions for its 2022 pension expense which range from 2.0% to 7.0% outside the U.S. and 6.23% in the U.S.

Discount rate

The Company uses the spot rate method to estimate the service and interest components of net periodic benefit cost for pension benefits for its U.S. and certain non-U.S. plans. The Company has elected to utilize an approach that discounts individual expected cash flows underlying interest and service costs using the applicable spot rates derived from the yield curve used to determine the benefit obligation to the relevant projected cash flows. The discount rate assumption is based on market rates for a hypothetical portfolio of high-quality corporate bonds rated Aa or better with maturities closely matched to the timing of projected benefit payments for each plan at its annual measurement date.

While the Company believes that these assumptions are appropriate, significant differences in actual experience or significant changes in these assumptions may materially affect the Company’s pension benefit obligations and its future expense. The following table illustrates the sensitivity to a change in certain assumptions for Company sponsored U.S. and non-U.S. pension plans on its 2021 funded status and 2022 pretax pension expense.

(a) Assumes all other assumptions are held constant.

(b) Excludes impact of assets used to hedge discount rate volatility.

Income Taxes

The Company is subject to income taxes in the U.S. and numerous non-U.S. jurisdictions. Significant judgment is required in determining the Company’s worldwide provision for income taxes, deferred tax assets and liabilities, and valuation allowances recorded against the Company’s net deferred tax assets. Deferred tax assets and liabilities are recorded for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company records a valuation allowance to reduce deferred tax assets when it is more likely than not that such assets will not be realized. In the event our operating performance improves or deteriorates in a filing jurisdiction or entity, future assessments could conclude a smaller or larger valuation allowance will be needed. Due to the complexity of some of these uncertainties, the ultimate resolution may be materially different from the current estimate.

In the ordinary course of the Company’s business, there are many transactions and calculations where the final tax determination is uncertain. The Company is regularly audited by tax authorities. Where appropriate, the Company accrues for contingencies related to income tax risks and non-income tax risks. See Note 14, "Income Taxes" in the Company's consolidated financial statements included in Item 8 of this Form 10-K for additional information.

Fair Value Measurements

The Company uses fair value measurements in the preparation of its financial statements, utilizing various inputs including those that can be readily observable, indirectly observable or are unobservable. The Company utilizes market-based data and valuation techniques that maximize the use of observable inputs. Additionally, the Company applies assumptions that market participants would use in pricing an asset or liability, including assumptions about risk. See Note 17, "Fair Value Measurements" and Note 7, "Property and Equipment" in the Company's consolidated financial statements included in Item 8 of this Form 10-K for additional information.

Recent Accounting Pronouncements

See Note 1, “Summary of Significant Accounting Policies” to the Company's consolidated financial statements under Item 8 of this Form 10-K for a discussion of recent accounting pronouncements.

Forward-Looking Statements

Certain statements contained or incorporated in this Annual Report on Form 10-K which are not statements of historical fact constitute “Forward-Looking Statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Forward-looking statements give current expectations or forecasts of future events. Words such as “anticipate”, “expect”, “intend”, “plan”, “believe”, “seek”, “estimate” and other words and terms of similar meaning in connection with discussions of future operating or financial performance signify forward-looking statements. These statements reflect the Company’s current views with respect to future events and are based on assumptions and estimates, which are subject to risks and uncertainties including those discussed in Item 1A under the heading “Risk Factors” and elsewhere in this Form 10-K. Accordingly, undue reliance should not be placed on these forward-looking statements. Also, these forward-looking statements represent the Company’s estimates and assumptions only as of the date of this Form 10-K. The Company does not intend to update any of these forward-looking statements to reflect circumstances or events that occur after the statement is made and qualifies all of its forward-looking statements by these cautionary statements.

You should understand that various factors, in addition to those discussed elsewhere in this document, could affect the Company’s future results and could cause results to differ materially from those expressed in such forward-looking statements, including:

•Significant or prolonged shortage of critical components from Visteon’s suppliers including, but not limited to semiconductors and those components from suppliers who are sole or primary sources.

•Continued and future impacts of the coronavirus ("COVID-19") pandemic on the Visteon’s financial condition and business operations including global supply chain disruptions, market downturns, reduced consumer demand, and new government actions or restrictions.

•Significant changes in the competitive environment in the major markets where Visteon procures materials, components, or supplies or where its products are manufactured, distributed, or sold.

•Visteon’s ability to satisfy its future capital and liquidity requirements; Visteon’s ability to access the credit and capital markets at the times and in the amounts needed and on terms acceptable to Visteon; Visteon’s ability to comply with covenants applicable to it; and the continuation of acceptable supplier payment terms.

•Visteon’s ability to access funds generated by its foreign subsidiaries and joint ventures on a timely and cost-effective basis.

•Changes in the operations (including products, product planning and part sourcing), financial condition, results of operations, or market share of Visteon’s customers.

•Changes in vehicle production volume of Visteon’s customers in the markets where it operates.

•Increases in commodity costs or disruptions in the supply of commodities, including resins, copper, fuel, and natural gas.

•Visteon’s ability to generate cost savings to offset or exceed agreed-upon price reductions or price reductions to win additional business and, in general, improve its operating performance; to achieve the benefits of its restructuring actions; and to recover engineering and tooling costs and capital investments.

•Visteon’s ability to compete favorably with automotive parts suppliers with lower cost structures and greater ability to rationalize operations; and to exit non-performing businesses on satisfactory terms, particularly due to limited flexibility under existing labor agreements.

•Restrictions in labor contracts with unions that restrict Visteon’s ability to close plants, divest unprofitable, noncompetitive businesses, change local work rules and practices at a number of facilities, and implement cost-saving measures.

•The costs and timing of facility closures or dispositions, business or product realignments, or similar restructuring actions, including potential asset impairment or other charges related to the implementation of these actions or other adverse industry conditions and contingent liabilities.

•Legal and administrative proceedings, investigations and claims, including shareholder class actions, inquiries by regulatory agencies, product liability, warranty, employee-related, environmental and safety claims, and any recalls of products manufactured or sold by Visteon.

•Changes in economic conditions, currency exchange rates, changes in foreign laws, regulations or trade policies, or political stability in foreign countries where Visteon procures materials, components, or supplies or where its products are manufactured, distributed, or sold.

•Shortages of materials or interruptions in transportation systems, labor strikes, work stoppages, or other interruptions to or difficulties in the employment of labor in the major markets where Visteon purchases materials, components, or supplies to manufacture its products or where its products are manufactured, distributed, or sold.

•Visteon’s ability to satisfy its pension and other postretirement employee benefit obligations, and to retire outstanding debt and satisfy other contractual commitments, all at the levels and times planned by management.

•Changes in laws, regulations, policies, or other activities of governments, agencies and similar organizations, domestic and foreign, that may tax or otherwise increase the cost of, or otherwise affect, the manufacture, licensing, distribution, sale, ownership, or use of Visteon’s products or assets.

•Possible terrorist attacks or acts of war, which could exacerbate other risks such as slowed vehicle production, interruptions in the transportation system, changes in fuel prices, and disruptions of supply.

•The cyclical and seasonal nature of the automotive industry.

•Visteon’s ability to comply with environmental, safety, and other regulations applicable to it and any increase in the requirements, responsibilities and associated expenses and expenditures of these regulations.

•Visteon’s ability to protect its intellectual property rights and to respond to changes in technology and technological risks and to claims by others that Visteon infringes their intellectual property rights.

•Visteon’s ability to quickly and adequately remediate control deficiencies in its internal control over financial reporting.

•Other factors, risks and uncertainties detailed from time to time in Visteon’s Securities and Exchange Commission filings.

Item 7A.Quantitative and Qualitative Disclosures About Market Risk

The primary market risks to which the Company is exposed include changes in foreign currency exchange rates, interest rates and certain commodity prices. The Company manages these risks through derivative instruments and various operating actions including fixed price contracts with suppliers and cost sourcing arrangements with customers. The Company's use of derivative instruments is limited to mitigation of market risks, including hedging activities. However, derivative instruments are not used for speculative or trading purposes, as per clearly defined risk management policies. Additionally, the Company's use of derivative instruments creates exposure to credit loss in the event of non-performance by the counter-party to the derivative financial instruments. The Company limits this exposure by entering into agreements directly with a variety of major financial institutions with high credit standards and that are expected to fully satisfy their obligations under the contracts. Additionally, the Company's ability to utilize derivatives to manage market risk is dependent on credit conditions and market conditions given the current economic environment.

Foreign Currency Risk

The Company’s net cash inflows and outflows exposed to the risk of changes in foreign currency exchange rates arise from the sale of products in countries other than the manufacturing source, foreign currency denominated supplier payments, debt and other payables, subsidiary dividends, investments in subsidiaries, and anticipated foreign currency denominated transaction proceeds. Where possible, the Company utilizes derivative financial instruments to manage foreign currency exchange rate risks. Forward and option contracts may be utilized to reduce the impact to the Company's cash flow from adverse movements in exchange rates. Foreign currency exposures are reviewed periodically and any natural offsets are considered prior to entering into a derivative financial instrument. The Company’s primary hedged foreign currency exposures include the euro and Brazilian real. Where possible, the Company utilizes a strategy of partial coverage for transactions in these currencies. The Company's policy requires that hedge transactions relate to a specific portion of the exposure not to exceed the aggregate amount of the underlying transaction.

In addition to the transactional exposure described above, the Company's operating results are impacted by the translation of its foreign operating income into U.S. dollars. The Company does not enter into foreign exchange contracts to mitigate this exposure. The hypothetical pretax gain or loss in fair value from a 10% favorable or adverse change in quoted currency exchange rates would be approximately $29 million and $31 million for foreign currency derivative financial instruments as of December 31, 2021 and 2020, respectively. These estimated changes assume a parallel shift in all currency exchange rates and include the gain or loss on financial instruments used to hedge investments in subsidiaries. Because exchange rates typically do not all move in the same direction, the estimate may overstate the impact of changing exchange rates on the net fair value of the Company's financial derivatives. It is also important to note that gains and losses indicated in the sensitivity analysis would generally be offset by gains and losses on the underlying exposures being hedged.

Interest Rate Risk

See Note 18, "Financial Instruments" to the Company's consolidated financial statements included in Item 8 of this Form 10-K for additional information.

Commodity Risk

The Company's exposures to market risk from changes in the price of production material are managed primarily through negotiations with suppliers and customers, although there can be no assurance that the Company will recover all such costs. The Company continues to evaluate derivatives available in the marketplace and may decide to utilize derivatives in the future to manage select commodity risks if an acceptable hedging instrument is identified for the Company's exposure level at that time, as well as the effectiveness of the financial hedge among other factors.

Item 8.Financial Statements and Supplementary Data

Visteon Corporation and Subsidiaries

Index to Consolidated Financial Statements

Page No.

Reports of Independent Registered Public Accounting Firm (PCAOB ID: 0042) 40

Consolidated Balance Sheets as of December 31, 2021 and 2020 45

Notes to Consolidated Financial Statements 48

Management's Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined under Rule 13a-15(f) of the Securities Exchange Act of 1934. Under the supervision and with the participation of the principal executive and financial officers of the Company, an evaluation of the effectiveness of internal control over financial reporting was conducted based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations (“the COSO 2013 Framework”) of the Treadway Commission.

Based on the evaluation performed under the COSO 2013 Framework as of December 31, 2021, management has concluded that the Company’s internal control over financial reporting is effective. Additionally, Ernst & Young LLP, an independent registered public accounting firm, has audited the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021, as stated in their report which is included herein.

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Visteon Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Visteon Corporation and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), cash flows and changes in equity for each of the three years in the period ended December 31, 2021, and the related notes and financial statement schedule included in Item 15(a)(2) (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework),and our report dated February 17, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue Recognition

Impairment of Long-lived Assets - Property and Equipment

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2012.

Detroit, Michigan

February 17, 2022

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Visteon Corporation

Opinion on Internal Control Over Financial Reporting

We have audited Visteon Corporation and subsidiaries’ internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Visteon Corporation and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2021 consolidated financial statements of the Company and our report dated February 17, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Detroit, Michigan

February 17, 2022

VISTEON CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share amounts)

Year Ended December 31,

Selling, general and administrative expenses (175) (193) (221)

Restructuring and impairment expense (14) (76) (4)

Interest expense (10) (16) (13)

Interest income 2 5 4

Equity in net income of non-consolidated affiliates 6 6 6

Income (loss) before income taxes 81 (20) 106

Provision for income taxes (31) (28) (24)

Net income (loss) from continuing operations 50 (48) 82

Net income (loss) from discontinued operations, net of tax — — (1)

Net (income) loss attributable to non-controlling interests (9) (8) (11)

Net income (loss) attributable to Visteon Corporation $ 41 $ (56) $ 70

Basic earnings (loss) per share:

Discontinued operations — — (0.04)

Diluted earnings (loss) per share:

Discontinued operations — — (0.04)

See accompanying notes to the consolidated financial statements.

VISTEON CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In millions)

Year Ended December 31,

Net income (loss) $ 50 $ (48) $ 81

Foreign currency translation adjustments (31) 45 (13)

Net investment hedge 19 (19) 9

Benefit plans, net of tax (a) 84 (51) (43)

Unrealized hedging gains (losses), net of tax (b) 6 (5) (6)

Other comprehensive income (loss), net of tax 78 (30) (53)

Comprehensive income (loss) 128 (78) 28

Comprehensive income (loss) attributable to non-controlling interests 12 15 9

(a) Benefit plans, net of tax reflects tax expense of $4 million for the year ended December 31, 2021, tax expense of less than $1 million for the year ended December 31,2020, and tax benefit of $5 million for the year ended December 31, 2019.

(b) Unrealized hedging gains (losses), net of tax reflects no income tax effects for the years ended December 31, 2021, 2020, and 2019.

See accompanying notes to the consolidated financial statements.

VISTEON CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions)

December 31,

ASSETS

Cash and equivalents $ 452 $ 496

Restricted cash 3 4

Accounts receivable, net 549 484

Property and equipment, net 388 436

Investments in non-consolidated affiliates 54 60

Other non-current assets 111 135

LIABILITIES AND EQUITY

Short-term debt $ 4 $ —

Accrued employee liabilities 80 83

Current lease liability 28 32

Other current liabilities 218 209

Total current liabilities 852 824

Non-current lease liability 117 146

Deferred tax liabilities 27 28

Other non-current liabilities 75 92

Stockholders’ equity:

Accumulated other comprehensive loss (229) (304)

Total Visteon Corporation stockholders’ equity 516 387

Non-controlling interests 100 123

Total liabilities and equity $ 2,234 $ 2,271

See accompanying notes to the consolidated financial statements.

VISTEON CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

Year Ended December 31,

Operating Activities

Net income (loss) $ 50 $ (48) $ 81

Non-cash stock-based compensation 18 18 17

Impairments 9 — —

Other non-cash items 14 7 8

Changes in assets and liabilities:

Accounts receivable (78) 51 (33)

Other assets and other liabilities (11) 56 (70)

Net cash provided from operating activities 58 168 183

Investing Activities

Capital expenditures, including intangibles (70) (104) (142)

Contributions to equity method investments (5) (2) (3)

Net investment hedge transactions 4 8 6

Loan repayments from non-consolidated affiliates 6 2 11

Other, net 2 (2) —

Net cash used by investing activities (63) (98) (128)

Financing Activities

Borrowings on debt — 400 —

Principal payments on debt — (400) —

Repurchase of common stock — (16) (20)

Short-term debt, net 4 (37) (19)

Dividends paid to non-controlling interests (35) (7) (9)

Net cash used by financing activities (29) (58) (49)

Effect of exchange rates (11) 19 (4)

Net increase (decrease) in cash, equivalents, and restricted cash (45) 31 2

Cash, equivalents, and restricted cash at beginning of the period 500 469 467

Cash, equivalents, and restricted cash at end of the period $ 455 $ 500 $ 469

Supplemental Disclosures:

Cash paid for interest $ 15 $ 18 $ 14

Cash paid for income taxes, net of refunds $ 15 $ 19 $ 40

See accompanying notes to the consolidated financial statements.

VISTEON CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In millions)

Total Visteon Corporation Stockholders' Equity

Other comprehensive income (loss) — — — (51) — (51) (2) (53)

Stock-based compensation, net — 5 — — 9 14 — 14

Repurchase of shares of common stock — — — — (20) (20) — (20)

Cash dividends — — — — — — (9) (9)

Acquisition of non-controlling interest — 2 — — — 2 (2) —

Net income (loss) — — (56) — — (56) 8 (48)

Other comprehensive income (loss) — — — (37) — (37) 7 (30)

Stock-based compensation, net — 6 — — 10 16 — 16

Repurchase of shares of common stock — — — — (16) (16) — (16)

Cash dividends — — — — — — (7) (7)

Net income (loss) — — 41 — — 41 9 50

Other comprehensive income (loss) — — — 75 — 75 3 78

Stock-based compensation, net — 1 — — 12 13 — 13

Cash dividends — — — — — — (35) (35)

See accompanying notes to the consolidated financial statements.

VISTEON CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. Summary of Significant Accounting Policies

Basis of Presentation: Visteon Corporation (the "Company" or "Visteon") financial statements have been prepared in conformity with accounting principles generally accepted in the United States ("U.S. GAAP") on a going concern basis, which contemplates the continuity of operations, realization of assets, and satisfaction of liabilities in the normal course of business.

Principles of Consolidation: The consolidated financial statements include the accounts of the Company and its consolidated subsidiaries. Investments in affiliates over which the Company does not exercise control, but does have the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method. All other investments are measured at cost, less impairment, with changes in fair value recognized in net income.

The Company determines whether the joint venture in which it has invested is a Variable Interest Entity (“VIE”) at the start of each new venture and when a reconsideration event has occurred. An enterprise must consolidate a VIE if it is determined to be the primary beneficiary of the VIE. The primary beneficiary has 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.

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 December 31, 2021, including those resulting from the impacts of COVID-19 and related subsequent semiconductor supply shortage, as further described in Note 19, "Commitments and Contingencies", will be reflected in management's estimates for future periods.

Foreign Currency: Assets and liabilities for most of the Company’s non-U.S. businesses are translated into U.S. dollars at end-of-period exchange rates. Income and expense accounts of the Company’s non-U.S. businesses are translated into U.S. dollars at average-period exchange rates. The related translation adjustments are recorded in accumulated other comprehensive income (loss) ("AOCI") in the Consolidated Balance Sheets.

The effects of remeasuring monetary assets and liabilities of the Company’s businesses denominated in currencies other than their functional currency are recorded as transaction gains and losses in the Consolidated Statements of Operations. Additionally, gains and losses resulting from transactions denominated in a currency other than the functional currency are recorded as transaction gains and losses in the Consolidated Statements of Operations. Net transaction gains and losses increased net income by $2 million and decreased net income by $2 million for the year ended December 31, 2021 and 2020, respectively. Net transaction gains and losses, inclusive of amounts associated with discontinued operations, decreased net income by $3 million for the years ended December 31, 2019.

Revenue Recognition: The Company generates revenue from the production of automotive vehicle cockpit electronics parts sold to Original Equipment Manufacturers ("OEMs"), or Tier 1 suppliers at the direction of the OEM, under long-term supply agreements supporting new vehicle production. Such agreements may also require related production for service parts subsequent to initial vehicle production periods.

The Company’s contracts with customers involve various governing documents (sourcing agreements, master purchase agreements, terms and conditions agreements, etc.) which do not reach the level of a performance obligation of the Company until the Company receives either a purchase order and/or a customer release for a specific number of parts at a specified price, at which point the collective group of documents represent an enforceable contract. While the long-term supply agreements generally range from three to five years, customers make no commitments to volumes, and pricing or specifications can change prior to or during production. The Company recognizes revenue when control of the parts produced are transferred to the customer according to the terms of the contract, which is usually when the parts are shipped or delivered to the customer’s premises. Customers are generally invoiced upon shipment or delivery and payment generally occurs within 45 to 90 days and do not include significant financing components. Customers in China are often invoiced one month after shipment or delivery. Customer returns, when they occur, relate to quality rework issues and are not connected to any repurchase obligation of the Company. As of December 31, 2021, all unfulfilled performance obligations are expected to be fulfilled within the next twelve months.

Revenue is measured based on the transaction price and the quantity of parts specified in a contract with a customer. Discrete price adjustments may occur during the vehicle production period in order for the Company to remain competitive with market prices or based on changes in product specifications. Some of these price adjustments are non-routine in nature and require estimation. In the event the Company concludes that a portion of the revenue for a given part may vary from the purchase order, the Company records consideration at the most likely amount to which the Company expects to be entitled based on historical experience and input from customer negotiations. The Company records such estimates within Net sales and Accounts receivable, net, within the Consolidated Statements of Operations and Consolidated Balance Sheets, respectively. The Company adjusts its pricing reserves at the earlier of when the most likely amount of consideration changes or when the consideration becomes fixed. In 2021, revenue recognized related to performance obligations satisfied in previous periods represented less than 1% of consolidated net sales.

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction that are collected by the Company from a customer are excluded from revenue. Shipping and handling costs associated with outbound freight after control of the parts has transferred to a customer are accounted for as a fulfillment cost and are included in Cost of Sales.

Restructuring Expense: Restructuring expense includes costs directly associated with exit or disposal activities. Such costs include employee severance and termination benefits, special termination benefits, contract termination fees and penalties, and other exit or disposal costs. In general, the Company records involuntary employee-related exit and disposal costs when there is a substantive plan for employee severance and related costs are probable and estimable. For one-time termination benefits (i.e., no substantive plan) and employee retention costs, expense is recorded when the employees are entitled to receive such benefits and the amount can be reasonably estimated. Contract termination fees and penalties and other exit and disposal costs are generally recorded when incurred.

Debt Issuance Costs: The costs related to issuance or modification of long-term debt are deferred and amortized into interest expense over the life of each respective debt issue. Deferred amounts associated with debt extinguished prior to maturity are expensed upon extinguishment.

Other Costs within Cost of Sales: Repair and maintenance costs, pre-production costs, and research and development expenses are expensed as incurred. Pre-production costs expensed represent engineering and development costs that are not contractually guaranteed for reimbursement by the customer. Research and development expenses include salary and related employee benefits, contractor fees, information technology, occupancy, telecommunications, depreciation, forward model program development, and advanced engineering activities. Research and development expenses were $191 million, $201 million, and $300 million in 2021, 2020 and 2019, respectively, which includes recoveries from customers of $134 million, $134 million and $140 million.

Net Earnings (Loss) Per Share Attributable to Visteon: Basic earnings (loss) per share is calculated by dividing net income (loss) attributable to Visteon by the average number of shares of common stock outstanding. Diluted earnings (loss) per share is computed by dividing net income (loss) attributable to Visteon by the average number of common and potential dilutive common shares outstanding after deducting undistributed income allocated to participating securities. Performance based share units are considered contingently issuable shares and are included in the computation of diluted earnings per share if their conditions have been satisfied as if the reporting date was the end of the contingency period.

Cash and Equivalents: The Company considers all highly liquid investments purchased with an original maturity of three months or less, including short-term time deposits, commercial paper, repurchase agreements, and money market funds to be cash and cash equivalents. As of December 31, 2021 the Company's cash balances are invested in a diversified portfolio of cash and highly liquid cash equivalents including money market funds, commercial paper rated A2/P2 and above with maturity under three months, time deposits and other short-term cash investments, which mature under three months with highly rated banking institutions. The cost of such funds approximates fair value based on the nature of the investment.

Restricted Cash: Restricted cash represents amounts designated for uses other than current operations and includes $2 million related to a Letter of Credit Facility, and $1 million related to cash collateral for other corporate purposes as of December 31, 2021. As of December 31, 2020, restricted cash includes $3 million related to a Letter of Credit Facility and $1 million related to cash collateral for other corporate purposes.

Accounts Receivable: Accounts receivable are stated at the invoiced amount, less an allowance for doubtful accounts for estimated amounts not expected to be collected, and do not bear interest.

The Company receives bank notes from certain customers in China to settle trade accounts receivable. The collection on such bank notes are included in operating cash flows based on the substance of the underlying transactions, which are operating in nature. The Company may hold such bank notes until maturity, exchange them with suppliers to settle liabilities, or sell them to third-party financial institutions in exchange for cash. The Company has entered into arrangements with financial institutions to sell certain bank notes, generally maturing within nine months. Bank notes are sold with recourse but qualify as a sale as all rights to the notes have passed to the financial institution.

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 elected to apply a historical loss rate based on historic write-offs by region to aging categories. The historical loss rate will be 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 related to accounts receivable and related activity are summarized below:

December 31,

Balance at beginning of year $ 4 $ 10 $ 6

Provision — 1 6

Recoveries — (3) (1)

Write-offs charged against the allowance — (4) (1)

Balance at end of year $ 4 $ 4 $ 10

Provision for estimated uncollectible accounts receivable are included in Selling, general and administrative expenses in the Company's Consolidated Statements of Operations.

Inventories: Inventories are stated at the lower of cost, determined on a first-in, first-out (“FIFO”) basis, or net realizable value. Cost includes the cost of materials, direct labor, in-bound freight and the applicable share of manufacturing overhead. The cost of inventories is reduced for excess and obsolete inventories based on management’s review of on-hand inventories compared to historical and estimated future sales and usage.

Product Tooling: Product tooling includes molds, dies, and other tools used in production of a specific part or parts of the same basic design owned either by the Company or its customers. Company owned tooling is capitalized and depreciated over the shorter of the expected useful life of the assets or the term of the supply arrangement, generally not exceeding six years. The Company had receivables of $21 million and $26 million as of December 31, 2021 and 2020, respectively, related to product tools, which will not be owned by the Company and for which there is a contractual agreement for reimbursement from the customer.

Contractually Reimbursable Engineering Costs: Engineering, testing, and other costs incurred in the design and development of production parts are expensed as incurred, unless the cost reimbursement is contractually guaranteed in a customer contract, in which case costs are capitalized as incurred and subsequently reduced upon lump sum or piece price recoveries.

Property and Equipment: Property and equipment is stated at cost or fair value for impaired assets. Property and equipment is depreciated principally using the straight-line method of depreciation over the related asset's estimated useful life.

Asset impairment charges are recorded for assets held-in-use when events and circumstances indicate that such assets may not be recoverable and the undiscounted net cash flows estimated to be generated by those assets are less than their carrying amounts. If estimated future undiscounted cash flows are not sufficient to recover the carrying value of the assets, an impairment charge is recorded for the amount by which the carrying value of the assets exceeds fair value. Fair value is determined using appraisals, management estimates or discounted cash flow calculations. For further detail on the Company’s impairments see Note 4, "Restructuring and Impairments."

Leases: The Company determines if an arrangement is a lease at contract inception. Right-of-use ("ROU") assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company's leases do not provide an implicit rate, the Company estimates the incremental borrowing rate to discount the lease payments based on information available at lease commencement. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. Lease expense is recognized on a straight-line basis over the lease term. The Company has lease agreements containing lease and non-lease components which are accounted for as a single lease component.

Goodwill: The Company performs either a qualitative or quantitative assessment of goodwill for impairment on an annual basis. Goodwill impairment testing is performed at the reporting unit level. The qualitative assessment considers several factors at the reporting unit level including the excess of fair value over carrying value as of the last quantitative impairment test, the length of time since the last fair value measurement, the current carrying value, market and industry metrics, actual performance compared to forecast performance, and the Company's current outlook on the business. If the qualitative assessment indicates it is more likely than not that goodwill is impaired, the reporting unit is quantitatively tested for impairment. To quantitatively test goodwill for impairment, the fair value of each reporting unit is determined and compared to the carrying value. An impairment charge is recognized for the amount by which the reporting unit's carrying value exceeds its fair value. Management has tested for impairment using a quantitative assessment and concluded that no impairment exists as of December 31, 2021.

Intangible Assets: Definite-lived intangible assets are amortized over their estimated useful lives, and tested for impairment in

accordance with the methodology discussed above under "Property and Equipment."

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. For further detail on the Company’s warranty obligations see Note 19, "Commitments and Contingencies."

Income Taxes: Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company records a valuation allowance to reduce deferred tax assets when it is more likely than not that such assets will not be realized. This assessment requires judgment, and must be done on a jurisdiction-by-jurisdiction basis. In determining the need for a valuation allowance, all available positive and negative evidence, including historical and projected financial performance, is considered along with any other pertinent information.

Value Added Taxes: The Company reports value added taxes collected from customers and remitted to government authorities, on a net basis within Cost of sales.

Financial Instruments: The Company uses derivative financial instruments, including forward contracts, swaps, and options to manage exposures to changes in currency exchange rates and interest rates. The Company's policy specifically prohibits the use of derivatives for speculative or trading purposes.

Recently Adopted Accounting Pronouncements

Reference Rate Reform - In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting." Subsequently, in 2021, the FASB issued ASU 2021-01, "Reference Rate Reform", to further clarify and expand certain aspects of ASC 848. ASU 2020-04 and ASU 2021-01 provide optional expedients and exceptions related to certain contract modifications and hedging relationships that reference the London Interbank Offered Rate ("LIBOR") or another rate that is expected to be discontinued. The guidance was effective upon issuance and is generally applied to applicable contract modifications and hedge relationships prospectively through December 31, 2022. The adoption of the guidance did not have a material impact on the Company’s consolidated financial statements.

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 Company is current evaluating the impact of the adoption of Topic 848.

NOTE 2. Discontinued Operations

During 2014 and 2015, the Company completed its divestiture of the majority of its global Interiors business (the "Interiors Divestiture") and completed the sale of its Argentina and Brazil interiors operations on December 1, 2016. Separately, the Company completed the sale of the majority of its global Climate business (the "Climate Transaction") during 2015. These transactions met the conditions required to qualify for discontinued operations reporting and accordingly the results of operations and the settlement of retained contingencies have been classified in income (loss) from discontinued operations, net of tax, in the Consolidated Statements of Operations.

There were no discontinued operations during 2021 or 2020. During 2019 the Company recognized approximately $2 million of cost of sales for corrections of judicial deposits related to former employees at a closed plant in Brazil and recorded a $1 million release of restructuring expense due to a change in estimate.

NOTE 3. Non-Consolidated Affiliates

Non-Consolidated Affiliate Transactions

Visteon and Yangfeng Automotive Trim Systems Co. Ltd. ("YF") each own 50% of a joint venture under the name of Yanfeng Visteon Investment Co., Ltd. ("YFVIC"). In October 2014, YFVIC completed the purchase of YF’s 49% direct ownership in Yanfeng Visteon Automotive Electronics Co., Ltd ("YFVE") a consolidated joint venture of the Company ("The YFVIC Transaction"). The purchase by YFVIC was financed through a shareholder loan from YF and external borrowings, guaranteed by Visteon, which were paid in 2019.

The Company has committed to make investments totaling $15 million in two entities principally focused on the automotive sector pursuant to limited partnership agreements. As a limited partner in each entity, the Company will periodically make capital contributions toward this total commitment amount. Through December 31, 2021, the Company had contributed approximately $9 million to these entities. These investments are classified as equity method investments.

Investments in Affiliates

The Company recorded equity in the net income of non-consolidated affiliates of $6 million for each of the years ended December 31, 2021, 2020 and 2019, respectively.

The Company monitors its investments in affiliates for indicators of other-than-temporary declines in value on an ongoing basis. If the Company determines that an other-than-temporary decline in value has occurred, an impairment loss will be recorded, which is measured as the difference between the recorded book value and the fair value of the investment. As of December 31, 2021, the Company determined that no such indicators were present.

Variable Interest Entities

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 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.

A summary of the Company's investments in non-consolidated equity method affiliates is provided below:

December 31,

Limited partnerships 10 4

Total investments in non-consolidated affiliates $ 54 $ 60

A summary of transactions with affiliates is shown below:

Year Ended December 31,

Billings to affiliates (a) $ 76 $ 95

Purchases from affiliates (b) $ 61 $ 58

(a) Primarily relates to parts production and engineering reimbursement

A summary of the Company's investments in YFVIC is provided below:

December 31,

Payables due to YFVIC $ 20 $ 9

Exposure to loss in YFVIC

Investment in YFVIC $ 36 $ 50

Receivables due from YFVIC 48 53

Subordinated loan receivable — 6

Maximum exposure to loss in YFVIC $ 84 $ 109

NOTE 4.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.

Current restructuring actions include the following:

•During 2021 the Company approved various restructuring programs, primarily impacting Europe and Brazil in order to improve efficiencies and rationalize the Company's footprint. Accordingly, the Company recorded $4 million of restructuring expense related to these actions. As of December 31, 2021, $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. The Company recorded $1 million and $76 million of net restructuring expenses for cash severance, retention, and termination costs for the years ended December 31, 2021 and December 31, 2020, respectively related to these programs. As of December 31, 2021, $12 million remains accrued related to these programs.

•During 2019, the Company approved a restructuring program impacting two European manufacturing facilities due to the end of certain product lines. During the year ended December 31, 2019, the Company recorded net restructuring expense of $2 million related to this program

•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 December 31, 2021, $1 million remains accrued related to this program.

As of December 31, 2021, the Company retained restructuring reserves as part of the Company's divestiture of the majority of its Interiors Divestiture of $2 million associated with completed programs for the fundamental reorganization of operations at facilities in Brazil and France.

Restructuring Reserves

Restructuring reserve balances of $16 million and $2 million as of December 31, 2021 are classified as Other Current Liabilities and Other non-current liabilities, respectively. Restructuring reserve balances of $39 million and $10 million as of December 31, 2020 are classified as Other current liabilities and Other non-current liabilities, respectively. The Company anticipates that the activities associated with the current restructuring reserve balance will be substantially complete by end of 2022.

The Company’s consolidated restructuring reserves and related activity are summarized below, including amounts associated with discontinued operations.

(In millions)

Expense $ 5

Change in estimates $ (2)

Utilization $ (15)

Foreign currency $ (1)

Expense $ 67

Change in estimates $ 9

Utilization $ (39)

Foreign currency $ 2

Expense $ 4

Change in estimates $ 1

Utilization $ (34)

Foreign currency and other $ (2)

Impairment of Long-lived Assets

The Company evaluates its long-lived assets for impairment whenever events or circumstances indicate the value of these long-lived asset groups are not recoverable. During the fourth quarter of 2021, the Company concluded impairment triggers had occurred for a long-lived asset group in Brazil due to rising costs and deteriorating business conditions. The Company determined the cash flows related to certain long-lived assets were not sufficient to recover the carrying value. As such, the Company estimated the fair values of this asset group at December 31, 2021 and compared the fair value to its net carrying value. As the net carrying value of the long-lived asset group exceeded the fair value, the Company recorded a non-cash impairment charge of $9 million to write-down property and equipment to its fair value as of December 31, 2021.

NOTE 5. Inventories

Inventories, net consist of the following components:

December 31,

Work-in-process 29 25

Finished products 27 38

NOTE 6. Other Assets

Other current assets are comprised of the following components:

December 31,

Joint venture receivables $ 48 $ 53

Recoverable taxes 40 52

Contractually reimbursable engineering costs 34 31

Prepaid assets and deposits 21 18

Royalty agreements 4 7

China bank notes 3 15

Derivative financial instruments 2 —

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 $149 million and $163 million of China bank notes during the years ended December 31, 2021 and 2020, respectively. Remaining amounts outstanding at third-party institutions relate to sold bank notes will mature by June 30, 2022.

Other non-current assets are comprised of the following components:

December 31,

Deferred tax assets $ 47 $ 55

Contractually reimbursable engineering costs 34 31

Recoverable taxes 9 21

Pension assets 7 2

Royalty agreements 2 8

Joint venture note receivables — 7

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 approximately $34 million in 2022, $24 million in 2023, $8 million in 2024, $2 million in 2025 and less than $1 million in 2026 and beyond.

NOTE 7. Property and Equipment

Property and equipment, net consists of the following:

December 31,

(In millions) Estimated Useful Life (years) 2021 2020

Buildings and improvements 40 91 96

Construction in progress 47 44

Total property and equipment 930 920

Accumulated depreciation and amortization (542) (484)

Property and equipment, net $ 388 $ 436

Depreciation and product tooling amortization expenses are summarized as follows:

Year Ended December 31,

Amortization 6 7 6

The net book value of capitalized internal use software costs was approximately $12 million and $18 million as of December 31, 2021 and 2020, respectively. Related amortization expense was approximately $8 million, $9 million and $9 million for the years ended 2021, 2020 and 2019, respectively. Amortization expense of approximately $5 million, $3 million, $2 million, $1 million, and $1 million is expected for the annual periods ended December 31, 2022, 2023, 2024, 2025, and 2026 respectively.

NOTE 8. Intangible Assets

Intangible assets consisted of the following:

Definite-Lived:

Indefinite-Lived:

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

The Company recorded approximately $14 million, $14 million, and $16 million of amortization expense related to definite-lived intangible assets for the years ended December 31, 2021, 2020, and 2019, respectively. The Company currently estimates annual amortization expense to be $16 million for 2022, $15 million 2023, $9 million for both 2024 and 2025, and $7 million for 2026.

NOTE 9. Leases

The Company has operating leases primarily for corporate offices, technical and engineering centers, customer centers, vehicles, and certain equipment. As of December 31, 2021 and 2020 assets and related accumulated depreciation recorded under finance leasing arrangements were not material.

Certain of the Company's lease agreements include rental payments adjusted periodically primarily for inflation. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company subleases certain real estate to third parties, which primarily consists of operating leases in the United States, Germany, and Brazil.

For the years ended December 31, 2021 and 2020, the weighted average remaining lease term and discount rate were 6 years and 4.01% and 6 years and 4.1%, respectively.

The components of lease expense are as follows:

Year Ended December 31,

Operating lease expense (includes immaterial variable lease costs) $ (42) $ (42)

Short-term lease expense (1) (1)

Sublease income 5 5

Total lease expense $ (38) $ (38)

Other information related to leases is as follows:

Year Ended December 31,

Cash flows from operating leases $ 37 $ 40

VC US Equity

VC · 10-K · period ended 2021-12-31

Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 7A.Quantitative and Qualitative Disclosures About Market Risk

Item 8.Financial Statements and Supplementary Data

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VC · 10-K · period ended 2021-12-31

Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 7A.Quantitative and Qualitative Disclosures About Market Risk

Item 8.Financial Statements and Supplementary Data

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