Visteon Corporation (the "Company" or "Visteon") is a global automotive supplier that designs, engineers and manufactures innovative electronics products for nearly every original equipment vehicle manufacturer ("OEM") worldwide including Ford, Nissan, Renault, Mazda, BMW,Nissan/Renault, General Motors, Honda, BMW and Honda.Daimler. Visteon is headquartered in Van Buren Township, Michigan and has an international network of manufacturing operations, technical centers and joint venture operations, supported by approximately 10,000 employees, dedicated to the design, development, manufacture and support of its product offerings and its global customers. The Company's manufacturing and engineering footprint is principally located outside of the U.S., with a heavy concentration in low-cost geographic regions.United States. Visteon delivers value for its customers and stockholders through its technology-focused core vehicle cockpit electronics business. The Company's cockpit electronics product portfolio includes audio systems, information displays, instrument clusters, head upinformation displays, infotainment systems, audio systems, telematics solutions, and telematics solutions.head up displays. The Company's vehicle cockpit electronics business is comprised of and reported under the Electronics segment. In addition to the Electronics segment, the Company has residualhad operations in South America and Europe previously associated with the former Interiors and Climate businesses,business, not subject to discontinued operations classification, that comprise Other. A summary of transactions impacting the Company's businesses is provided below.

The unaudited consolidated financial statements of the Company have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") have been condensed or omitted pursuant to such rules and regulations. These interim consolidated financial statements include all adjustments

Transformation initiativesinitiative costs include information technology separation costs, integration of acquired business, and financial and advisory services incurred in connection with the execution ofCompany's transformation into a pure play cockpit electronics business. The gain on non-consolidated affiliate transactions represents the Company's comprehensive value creation plansale of two cost method investments and certain severance costs associated withan equity method investment during the acquisition of substantially of the global automotive electronics business of Johnson Controls Inc. (the "Electronics Acquisition") and the Climate Transaction. Transaction hedging and exchange gains for the ninesix months ended SeptemberJune 30, 2015 of $19 million, relate to Climate Transaction proceeds hedging and exchange impacts.

The Company has, with other industry leaders, interacted with the FASB approved a one-year deferralon certain interpretation issues as well as interacted with non-authoritative industry groups with respect to the implementation of the effective date ofstandard and will continue to monitor the standard. As such,interactions between its industry group and the new standard will become effective for annual and interim periods beginning after December 15, 2017 with early adoption on the original effective date permitted.setters. The Company isdoes not expect any changes to how it accounts for reimbursable

pre-production costs, currently evaluatingaccounted for as a cost reduction. In addition, the Company continues to evaluate its contracts with customers, analyzing the impact, if any, on revenue from the sale of adoptingproduction parts. Currently, the Company does not expect the adoption of this standard to have a material impact on its consolidatedresults of operations or financial statements and anticipates changes toposition; however, the revenue recognition of customer owned tooling and engineering recoveries. The Company expects to expand disclosures in line with the requirements of the new standard. The Company will adopt this standard duringJanuary 1, 2018 and has selected the first quarter 2018.

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842).": The amendments in Topic 842 supersede current lease requirements in Topic 840 which require lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets. The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. This new guidance is effective for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, "Compensation - Stock Compensation (Topic 718)": Improvements to Employee Share-Based Payment Accounting." The ASU includes multiple provisions intended to simplify various aspects of the accounting for share-based payments. While aimed at reducing the cost and complexity of the accounting for share-based payments, these amendments are not expected to significantly impact net income, earnings per share, and the statement of cash flows. This new guidance iswas effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. The Company is currently evaluating the impactCompany's adoption of adopting this standard did not have a material impact on its consolidated financial statements. The Company has adopted an entity-wide accounting policy election to account for forfeitures in compensation cost when they occur.

In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230)": Classification of certain cash receipts and cash payments." The ASU addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain transactions are classified in the statement of cash flows. The ASU will be applied using a retrospective

On July 8, 2016 Visteon acquired AllGo Embedded Systems Private Limited, a leading developerIn May 2017, the FASB issued ASU 2017-09, "Compensation - Stock Compensation (Topic 718): Scope of embedded multimedia system solutions to global vehicle manufacturers,Modification Accounting." The ASU amends the scope of modification accounting for a purchase priceshare-based payment arrangements, provides guidance on the types of $17 million ("AllGo Purchase") including $2 million of contingent consideration to be paid over the next year if certain technology milestones are achieved. In addition, the purchase agreement includes contingent payments of $5 million if key employees remain employed through July 2019. The AllGo Purchase is expected to add greater scale and depthchanges to the Company's infotainment software capabilities.terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. The operating resultsnew guidance will allow companies to make certain changes to awards without accounting for the business acquired have been included in the Electronics segment from the date of acquisition. During the nine months ended September 30, 2016, the Company incurred acquisition-related costs of approximately $1 million. These amounts were recordedthem as incurred and have been classified as "Other expenses,net" within the Company's consolidated statements of comprehensive income.

TheDuring 2014 and 2015, the Company divested 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. As the operations subject to the Interiors Divestiture

and Climate Transaction met conditions required to qualify for discontinued operations reporting. Accordingly,reporting, the results of operations for Interiors operations subject to the Interiors Divestitureand Climate businesses have been reclassified to income (loss) from discontinued operations, net of tax in the consolidated statements of comprehensive income for the three and ninesix month periods ended SeptemberJune 30, 20162017 and 2015. The nine month period ended September 30, 2015 also included the results of operations for the Climate transaction, sold during the second quarter of 2015.

Discontinued operations are summarized as follows:

During the ninesix months ended SeptemberJune 30, 2016, the Company recorded currency impacts of $8 million of income tax expense associated with adverse currency impacts in connection with the Korean capital gains withholding tax recovered during the first quarter of 2016.

During the thirdfirst quarter of 2017, the Company completed the sale of its 50% interest in an equity method investment for proceeds of $7 million, consistent with its carrying value. Additionally, the Company sold a cost method investment for proceeds of approximately $3 million and recorded a pretax loss of $1 million classified as "Other (income) expense, net."

The Company recorded equity in net income of affiliates of $3 million for both three month periods ended June 30, 2017 and 2016. For the six month periods ended June 30, 2017 and 2016, the Company recorded a $17net income of affiliates of $5 million income tax benefit to reflect change in estimates associated with the filing of the Company’s U.S. tax returns that resulted in a reduction in U.S. income tax related to the 2015 Climate Transaction. and $3 million, respectively.

30, 2015. In January 2016, the Company recovered the entire amount of the Korean capital gains withholding tax, adjusted for currencyInvestments in affiliates were $39 million and exchange impacts, of $356 million.

The Company determines whether joint ventures in which it has combined cash flowsinvested are Variable Interest Entities (“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 discontinued operations with cash flows from continuing operations within the operating, investing and financing categories withinVIE that could potentially be significant to the consolidated statements of cash flows. Cash and non-cash items for certain operating and investing activitiesVIE.

The Company determined that YFVIC, is a VIE. The Company holds a variable interest in YFVIC primarily related to discontinuedits ownership interests and subordinated financial support. The Company and YFV each own 50% of YFVIC and neither entity has the power to control the operations forof YFVIC, therefore the nine months ended September 30, 2016Company is not the primary beneficiary of YFVIC and 2015 are as follows:does not consolidate the joint venture.

During the three and nine months ended September 30, 2016, the Company recorded $5 million and $22 million of restructuring expenses, net of reversals. 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, taking action as necessary including but not limited to, additionalwhich 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. During the three and six months ended June 30, 2017, the Company recorded $3 million and $4 million of restructuring expenses, net of reversals, respectively.

During the first quarter of 2016, the Company announced a restructuring program to transform the Company's engineering organization and supporting functional areas to focus on execution and technology. The organization will be comprised of regional engineering, product management and advanced technologies, and global centers of competence. DuringFor the three and nine monthssix month periods ended SeptemberJune 30, 2016, the Company has recorded approximately $1 million and $13$12 million, respectively, of restructuring expenses under this program, associated with approximately 100 employees. As of June 30, 2017 the plan is considered substantially complete.

As of SeptemberJune 30, 2016,2017, the Company retained approximately $2$6 million of restructuring reserves as part of the Interiors Divestiture associated with a previously announced programprograms for the fundamental reorganization of operations at a facilityfacilities in Brazil.Brazil and France.

Restructuring reserve balances of $33$30 million and $38$40 million at Septemberas of June 30, 20162017 and December 31, 2015,2016, respectively, are classified as "Other current liabilities" on the consolidated balance sheets. The Company anticipates that the activities associated with the current restructuring reserve balance will be substantially complete by the end of 2017.within one year. The Company’s consolidated restructuring reserves and related activity are summarized below, including amounts associated with discontinued operations.

Inventories consist of the following components:

Other current assets are comprised of the following components:

Recoverable taxesNotes receivable represent bank notes generally maturing within six months. The Company has entered into arrangements with a financial institution to sell customer notes receivable in Asia. The receivables under the arrangement are sold with recourse, but qualify as of December 31, 2015 included Korean capital gains tax withheld by the Purchasers and paida sale as all rights to the Korean government in connection withnotes have passed to the Climate Transaction of $364 million adjusted for currency and interest impacts. In January 2016,financial institution. During the six months ended June 30, 2017 the Company recoveredreceived cash of $6 million for the entire amountsale of the Korean capital gains withholding tax, adjusted for currency impacts,notes receivables under these arrangements, of $356 million.which $5 million remain outstanding.

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

Intangible assets, net at Septemberas of June 30, 20162017 and December 31, 2015,2016, are comprised of the following:

The Company recorded approximately $4$3 million and $11$6 million of amortization expense related to definite-lived intangible assets for the three and ninesix months ended SeptemberJune 30, 2016.2017. The Company currently estimates annual amortization expense to be $13 million for 2017, $14 million for 2016, $12 million each year from 2017 through2018 and 2019, and $11 million for 2020.2020, and $10 million for 2021. Indefinite-lived intangible assets are not amortized but are tested for impairment at least annually, or earlier when events and circumstances indicate that it is more likely than not that such assets have been impaired. There were no indicators of potential impairment during the six months ended June 30, 2017.

Other current liabilities are summarized as follows:

In connection withOn December 1, 2015, Visteon completed the Climate Transaction,sale and transfer of its equity ownership in Visteon Deutschland GmbH, which operated the Company entered into an agreement to purchase certain electronics operations located in India, expected to close in 2016.Berlin, Germany interiors plant ("Germany Interiors Divestiture"). The Company has recorded a repurchase commitmentcontributed cash, of $50approximately $141 million, during 2015, representing the estimated purchase priceassets of the subject business.

On July 18,January 22, 2016 the Company reachedpaid to shareholders a special distribution of $1.74 billion, an agreementadditional $14 million will be paid over a two-year period upon vesting and settlement of restricted stock units and performance-based share units previously granted to sell its South Africa climate operations.the Company's employees. The sale is expected to close during 2016 for proceeds of approximately $2 million.  The Company recorded a charge of approximately $11 million related to foreign currency translation amounts recorded in accumulated other comprehensive loss, and classified as "Other liabilities" until the transaction close date.

Following the divested businesses to operateinitial sale as independent entities. Aspart of September 30, 2016 and December 31, 2015 remaining obligations totaled $7 million and $37 million, respectively.the Climate Transaction, the Company repurchased an Electronics operation located in India on March 27, 2017 as further described in Note 3, "Discontinued Operations."

The Company’s short and long-term debt consists of the following:

Short-term borrowings are primarily related to the Company's non-U.S. consolidated joint ventures and are payable in USD,U.S. Dollars, Chinese Yuan, Indian RupeeRenminbi and Thai Baht.India Rupee. The Company had international affiliate short-term borrowings of $23$41 million and $34$33 million as of SeptemberJune 30, 20162017 and December 31, 20152016, respectively. Availability underShort-term borrowings increased in the second quarter of 2017 primarily due to changes in working capital needs.

Available borrowings on outstanding affiliate credit facilities as of SeptemberJune 30, 2016 is2017 are approximately $34 million.

The Credit Agreement, dated asAs of April 9, 2014 and asDecember 31, 2016, the Company had an amended by Waiver and Amendment No. 1 dated as of March 25, 2015credit agreement (the “Credit Agreement”), by and among the Company, as borrower, each lender from time to time party thereto, each letter of credit issuer from time to time party thereto and Citibank, N.A., as administrative agent, provides for (i) an aggregate principal of which included a $350 million (the “Term Facility”) and (ii) a $200 million revolving credit facility (the “Revolving Facility”). The Term Facility matures onmaturing April 9, 2021 and thea Revolving Credit Facility matures onwith capacity of $200 million maturing April 9, 2019. Borrowings under the Term Facility accrued interest at the greater of LIBOR or 0.75%, plus 2.75%, with an option by the Company to specify the LIBOR tenor of either 1, 2, 3, or 6 months.   Loans drawn under the Revolving Credit Facility had an interest rate equal to LIBOR plus a margin ranging from 2.00% to 2.75% as specified by a ratings grid contained in the Credit Agreement. As of December 31, 2016, borrowings under the Revolving Credit Facility would accrue interest at LIBOR plus 2.50%.  There were no outstanding borrowings at year-end.

The Credit Agreement requires the Company and its subsidiaries to comply with customary affirmative and negative covenants, including financial covenants and contains customary events of default.  The Revolving Credit Facility also requires that the Company maintain a total net leverage ratio no greater than 3.00:1.00.  During any period when the Company’s corporate and family ratings meet investment

grade ratings, certain of the negative covenants shall be suspended.  As of June 30, 2017, the Company was in compliance with such covenants as of September 30, 2016.all covenants. 

The Company has a $15 million letter of credit facility whereby the Company must maintain a collateral account equal to 103% of the aggregate stated amount of issued letters of credit (or 110% for non-U.S. currencies) and must reimburse any amounts drawn under issued letters of credit. The Company had $2 million and $1$3 million of other long-term debt outstanding letters of credit issued under this facility secured by restricted cash, as of SeptemberJune 30, 20162017.

Additionally, the Company had $17 million of locally issued letters of credit as of June 30, 2017, to support various tax appeals, customs arrangements and December 31, 2015, respectively, primarily related to information technology software leases.other obligations at its local affiliates.

The Company's net periodic benefit costs for all defined benefit plans for the three month periods ended SeptemberJune 30, 20162017 and 20152016 were as follows:

The Company's net periodic benefit costs for all defined benefit plans for the ninesix month periods ended SeptemberJune 30, 20162017 and 2015 2016

were as follows: