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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
________________
FORM 10-Q
(Mark One)
     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 001-15827
VISTEON CORPORATION
(Exact name of registrant as specified in its charter)
State ofDelaware38-3519512
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer
Identification No.)
One Village Center Drive,Van Buren Township,Michigan48111
(Address of principal executive offices)(Zip code)
Registrant’s telephone number, including area code: (800)-VISTEON
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, Par Value $.01 Per ShareVCThe NASDAQ Stock Market LLC
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ü No__
Indicate by check mark whether the registrant: has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ü No __
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer," "accelerated filer,” "smaller reporting company" and “emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer  ü  Accelerated filer     Non-accelerated filer    Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ü
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ü No
As of October 21, 2021, the registrant had outstanding 27,996,638 shares of common stock.
Exhibit index located on page number 40.
1




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



Part I
Financial Information

Item 1.Condensed Consolidated Financial Statements

VISTEON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In millions except per share amounts)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
Net sales
$631 $747 $1,987 $1,761 
Cost of sales
(584)(648)(1,832)(1,605)
Gross margin
47 99 155 156 
Selling, general and administrative expenses
(42)(45)(131)(140)
Restructuring, net
2 (32)2 (69)
Interest expense
(2)(6)(8)(14)
Interest income
 1 2 4 
Equity in net income of non-consolidated affiliates
2 2 2 4 
Other income, net
4 3 13 10 
Income (loss) before income taxes
11 22 35 (49)
Provision for income taxes
(4)(12)(20)(19)
Net income (loss)
7 10 15 (68)
Less: Net (income) loss attributable to non-controlling interests
(2)(4)(5)(6)
Net income (loss) attributable to Visteon Corporation
$5 $6 $10 $(74)
Comprehensive income (loss)
$1 $30 $10 $(80)
 Less: Comprehensive (income) loss attributable to non-controlling interests(1)(7)(6)(9)
Comprehensive income (loss) attributable to Visteon Corporation
$ $23 $4 $(89)
Basic earnings (loss) per share attributable to Visteon Corporation
$0.18 $0.22 $0.36 $(2.65)
Diluted earnings (loss) per share attributable to Visteon Corporation
$0.18 $0.21 $0.35 $(2.65)

See accompanying notes to the condensed consolidated financial statements.
3



VISTEON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
September 30,December 31,
20212020
ASSETS
 Cash and equivalents
$397 $496 
 Restricted cash
4 4 
Accounts receivable, net
423 484 
Inventories, net
253 177 
Other current assets
156 180 
Total current assets
1,233 1,341 
Property and equipment, net
393 436 
Intangible assets, net
120 127 
Right-of-use assets
148 172 
Investments in non-consolidated affiliates
49 60 
Other non-current assets
117 135 
Total assets
$2,060 $2,271 
LIABILITIES AND EQUITY
Short-term debt
$5 $ 
Accounts payable
416 500 
Accrued employee liabilities
74 83 
Current lease liability
29 32 
Other current liabilities
187 209 
Total current liabilities
711 824 
Long-term debt, net
349 349 
Employee benefits
285 322 
Non-current lease liability
125 146 
Deferred tax liabilities
26 28 
Other non-current liabilities
71 92 
Stockholders’ equity:
Preferred stock (par value $0.01, 50 million shares authorized, none outstanding as of September 30, 2021 and December 31, 2020)
  
Common stock (par value $0.01, 250 million shares authorized, 55 million shares issued, 28 million shares outstanding as of September 30, 2021 and December 31, 2020)
1 1 
Additional paid-in capital
1,344 1,348 
Retained earnings
1,633 1,623 
Accumulated other comprehensive loss
(310)(304)
Treasury stock
(2,269)(2,281)
Total Visteon Corporation stockholders’ equity
399 387 
Non-controlling interests
94 123 
Total equity
493 510 
Total liabilities and equity
$2,060 $2,271 

See accompanying notes to the condensed consolidated financial statements.
4



VISTEON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Nine Months Ended September 30,
20212020
Operating Activities
Net income (loss)
$15 $(68)
Adjustments to reconcile net income (loss) to net cash provided from (used by) operating activities:
Depreciation and amortization
82 75 
Non-cash stock-based compensation
13 13 
Equity in net loss (income) of non-consolidated affiliates, net of dividends remitted
14 (4)
Other non-cash items
4 1 
Changes in assets and liabilities:
Accounts receivable
50 38 
Inventories
(82)5 
Accounts payable
(68)11 
Other assets and other liabilities
(40)26 
Net cash (used by) provided from operating activities
(12)97 
Investing Activities
Capital expenditures, including intangibles
(54)(83)
Contributions to equity method investments(3)(1)
Loan repayments from non-consolidated affiliates2 2 
Other5 5 
Net cash used by investing activities
(50)(77)
Financing Activities
Borrowings on revolving credit facility
 400 
Payments on revolving credit facility (400)
Repurchase of common stock
 (16)
Dividends paid to non-controlling interests
(33)(7)
Short-term debt, net6 (37)
Other1  
Net cash used by financing activities
(26)(60)
Effect of exchange rate changes on cash
(11)6 
Net decrease in cash, equivalents, and restricted cash
(99)(34)
Cash, equivalents, and restricted cash at beginning of the period
500 469 
Cash, equivalents, and restricted cash at end of the period
$401 $435 

See accompanying notes to the condensed consolidated financial statements.
5



VISTEON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In millions)
(Unaudited)
Total Visteon Corporation Stockholders' Equity
Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Stock
Total Visteon Corporation Stockholders' EquityNon-Controlling InterestsTotal Equity
December 31, 2020
$1 $1,348 $1,623 $(304)$(2,281)$387 $123 $510 
Net income (loss)
— — 16 — — 16 3 19 
Other comprehensive income (loss)
— — — (17)— (17)(1)(18)
Stock-based compensation, net
— (11)— — 9 (2)— (2)
Dividends declared to non-controlling interests
— — — — — — (3)(3)
March 31, 2021
$1 $1,337 $1,639 $(321)$(2,272)$384 $122 $506 
Net income (loss)
— — (11)— — (11)— (11)
Other comprehensive income (loss)
— — — 16 — 16 3 19 
Stock-based compensation, net
— 4 — — 1 5 — 5 
Cash dividends— — — — — — (1)(1)
Dividends declared to non-controlling interests
— — — — — — (31)(31)
June 30, 2021$1 $1,341 $1,628 $(305)$(2,271)$394 $93 $487 
Net income (loss)
— — 5 — — 5 2 7 
Other comprehensive income (loss)
— — — (5)— (5)(1)(6)
Stock-based compensation, net
— 3 — — 2 5 — 5 
September 30, 2021$1 $1,344 $1,633 $(310)$(2,269)$399 $94 $493 

Total Visteon Corporation Stockholders' Equity
Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Stock
Total Visteon Corporation Stockholders' EquityNon-Controlling InterestsTotal Equity
December 31, 2019
$1 $1,342 $1,679 $(267)$(2,275)$480 $115 $595 
Net income (loss)
— — (35)— — (35)(1)(36)
Other comprehensive income (loss)
— — — (37)— (37)— (37)
Stock-based compensation, net
— (5)— — 7 2 — 2 
Repurchase of shares of common stock— — — — (16)(16)— (16)
Cash dividends— — — — — — (7)(7)
March 31, 2020
$1 $1,337 $1,644 $(304)$(2,284)$394 $107 $501 
Net (income) loss
— — (45)— — (45)3 (42)
Other comprehensive income (loss)
— — — 5 — 5 — 5 
Stock-based compensation, net
— 4 — — — 4 — 4 
June 30, 2020
$1 $1,341 $1,599 $(299)$(2,284)$358 $110 $468 
Net (income) loss
— — 6 — — 6 4 10 
Other comprehensive income (loss)
— — — 17 — 17 3 20 
Stock-based compensation, net
— 3 — — 1 4 — 4 
September 30, 2020
$1 $1,344 $1,605 $(282)$(2,283)$385 $117 $502 

See accompanying notes to the condensed consolidated financial statements.





6



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

NOTE 1. Summary of Significant Accounting Policies

Basis of Presentation - Interim Financial Statements

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

Use of Estimates: The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect amounts reported herein. Considerable judgment is involved in making these determinations and the use of different estimates or assumptions could result in significantly different results. Management believes its assumptions and estimates are reasonable and appropriate. However, actual results could differ from those reported herein. Events and changes in circumstances arising after September 30, 2021, including those resulting from the impacts of COVID-19 and the subsequent semiconductor supply shortage, as further described in Note 14, "Commitments and Contingencies", will be reflected in management's estimates in future periods.

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

The following table provides a rollforward of changes in the allowance for doubtful accounts:
Nine Months Ended
September 30,
(In millions)20212020
Beginning balance$4 $10 
Provision1 2 
Recoveries (3)
  Write-offs charged against the allowance (4)
Ending balance$5 $5 

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.






7



NOTE 2. Non-Consolidated Affiliates

Investments in Affiliates

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

September 30,December 31,
(In millions)20212020
Yanfeng Visteon Investment Co., Ltd. ("YFVIC") (50%)
$34 $50 
Other
15 10 
Total investments in non-consolidated affiliates
$49 $60 

Variable Interest Entities
The Company evaluates whether joint ventures in which it has invested are Variable Interest Entities (“VIE”) at the start of each new venture and when a reconsideration event has occurred. The Company consolidates a VIE if it is determined to be the primary beneficiary of the VIE having both the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.
The Company determined that YFVIC is a VIE. The Company holds a variable interest in YFVIC primarily related to its ownership interests and subordinated financial support. The Company and Yangfeng Automotive Trim Systems Co. Ltd. ("YF") each own 50% of YFVIC and neither entity has the power to control the operations of YFVIC; therefore, the Company is not the primary beneficiary of YFVIC and does not consolidate the joint venture.
The Company's investments in YFVIC consists of the following:
September 30,December 31,
(In millions)20212020
Payables due to YFVIC
$11 $9 
Exposure to loss in YFVIC:
Investment in YFVIC
$34 $50 
Receivables due from YFVIC
36 53 
Subordinated loan receivable from YFVIC
 6 
    Maximum exposure to loss in YFVIC
$70 $109 
During the nine months ended 2021, YFVIC declared and made a $16 million dividend to the Company.
Equity Investments

In 2018, the Company committed to make a $15 million investment in two funds managed by venture capital firms principally focused on the automotive sector pursuant to limited partnership agreements. As a limited partner in each fund, the Company will periodically make capital contributions toward this total commitment amount. As of September 30, 2021, the Company has contributed a total of $7 million toward the aggregate investment commitments. These limited partnerships are classified as equity method investments.

NOTE 3. Restructuring Activities
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 and the related semiconductor shortage, 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.

During the third quarter of 2021, the Company released $2 million of net restructuring expense due to a change in estimate related to previous restructuring actions.
8




During the second quarter of 2021, the Company approved and recorded $2 million of net restructuring expense for various restructuring actions, primarily impacting Brazil. As of September 30, 2021, $1 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 $69 million of net restructuring expense for cash severance, retention, and termination costs for the nine months ended September 30, 2020 related to these programs. As of September 30, 2021, $12 million remains accrued related to these programs. The Company anticipates that the activities associated with the current restructuring programs will be substantially complete by the end of 2022.

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 September 30, 2021, $2 million remains accrued related to this program.

As of September 30, 2021, the Company retained restructuring reserves as part of the Company's divestiture of the majority of its global Interiors business (the "Interiors Divestiture") of $1 million associated with completed programs for the fundamental reorganization of operations at facilities in Brazil and France.

Restructuring Reserves

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

(In millions)
December 31, 2020$49 
   Expense 
   Change in estimate(1)
   Utilization(16)
   Foreign currency(1)
March 31, 2021$31 
   Expense2 
   Change in estimate(1)
   Utilization(9)
   Foreign currency 
June 30, 2021$23 
   Expense 
   Change in estimate(2)
   Utilization(4)
   Foreign currency 
September 30, 2021$17 

NOTE 4. Inventories

Inventories, net consist of the following components:
September 30,December 31,
(In millions)20212020
Raw materials
$193 $114 
Work-in-process
26 25 
Finished products
34 38 
$253 $177 
9



NOTE 5. Goodwill and Other Intangible Assets

Intangible assets, net are comprised of the following:
September 30, 2021December 31, 2020
(In millions)Estimated Weighted Average Useful Life (years)Gross IntangiblesAccumulated AmortizationNet IntangiblesGross IntangiblesAccumulated AmortizationNet Intangibles
Definite-Lived:
Developed technology10$40 $(38)$2 $41 $(38)$3 
Customer related1095 (71)24 95 (64)31 
Capitalized software development547 (9)38 44 (7)37 
Other3215 (8)7 14 (7)7 
Subtotal197 (126)71 194 (116)78 
Indefinite-Lived:
Goodwill49 — 49 49 — 49 
Total $246 $(126)$120 $243 $(116)$127 

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


NOTE 6. Other Assets

Other current assets are comprised of the following components:
September 30,December 31,
(In millions)20212020
 Recoverable taxes
$52 $52 
 Joint venture receivables
37 53 
 Contractually reimbursable engineering costs
34 31 
 Prepaid assets and deposits
24 18 
Royalty agreements4 7 
China bank notes 15 
 Other
5 4 
$156 $180 

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 $114 million and $104 million of China bank notes during the nine months ended September 30, 2021 and 2020, respectively. Remaining amounts outstanding at third-party institutions related to sold bank notes will mature by the end of the first quarter of 2022.

10



Other non-current assets are comprised of the following components:
September 30,December 31,
(In millions)20212020
Deferred tax assets$54 $55 
Contractually reimbursable engineering costs35 31 
Recoverable taxes11 21 
Royalty agreements2 8 
Joint venture notes receivable 7 
 Other
15 13 
$117 $135 
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 $10 million during the remainder of 2021, $31 million in 2022, $18 million in 2023, $6 million in 2024 and $4 million in 2025 and beyond.

NOTE 7. Other Liabilities

Other current liabilities are summarized as follows:
September 30,December 31,
(In millions)20212020
Product warranty and recall accruals
$46 $52 
Deferred income
45 46 
Non-income taxes payable18 15 
Restructuring reserves
15 39 
Royalty reserves
14 13 
Joint venture payables
11 9 
Income taxes payable
8 5 
Dividends payable to non-controlling interests
3 2 
Other
27 28 
$187 $209 

Other non-current liabilities are summarized as follows:
September 30,December 31,
(In millions)20212020
Derivative financial instruments
$18 $38 
Product warranty and recall accruals
12 12 
Deferred income
12 7 
Income tax reserves
7 6 
Royalty agreements
5 6 
 Restructuring reserves2 10 
Other
15 13 
$71 $92 

11



NOTE 8. Debt
The Company’s debt consists of the following:
September 30,December 31,
(In millions)20212020
Short-Term Debt:
Short-term borrowings$5 $ 
Long-Term Debt:
Term debt facility, net$349 $349 
Short-Term Debt
Short-term borrowings are related to affiliate borrowings and are primarily payable in Brazilian real. As of September 30, 2021, the Company has $5 million short-term borrowing and there is $191 million available capacity under affiliate credit facilities.
Long-Term Debt

As of September 30, 2021, the Company has an amended credit agreement ("Credit Agreement") which includes a $350 million Term Facility maturing March 24, 2024 and a $400 million Revolving Credit Facility which matures the earlier of (i) December 24, 2024, (ii) 90 days prior to the scheduled maturity of the Term Facility, or (iii) the date of the termination of the Company's credit agreement.

On March 19, 2020, the Company borrowed the entire amount of revolving loans available under the Revolving Credit Facility to increase its cash position and maximize its flexibility in response to unprecedented uncertainty related to the impact of COVID-19. 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. The Company has no outstanding borrowings on the Revolving Credit Facility as of September 30, 2021.

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

The Credit Agreement requires compliance with customary affirmative and negative covenants and contains customary events of default. The Revolving Credit Facility also requires that the Company maintain a total net leverage ratio no greater than 3.50:1.00. During any period when the Company’s corporate and family ratings meet investment grade ratings, certain of the negative covenants are suspended. As of September 30, 2021, the Company was in compliance with all its debt covenants. 

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

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

12



Other

The Company has a $5 million letter of credit facility, whereby the Company is required to maintain a cash collateral account equal to 103% (110% for non-U.S. dollar denominated letters) of the aggregate stated amount of issued letters of credit and must reimburse any amounts drawn under issued letters of credit. The Company had $2 million of outstanding letters of credit issued under this facility secured by restricted cash, as of September 30, 2021. Additionally, the Company had $11 million of locally issued letters of credit with less than $1 million of collateral as of September 30, 2021, to support various tax appeals, customs arrangements and other obligations at its local affiliates.

13



NOTE 9. Employee Benefit Plans
The Company's net periodic benefit costs for all defined benefit plans for the three month periods ended September 30, 2021 and 2020 were as follows:
U.S. PlansNon-U.S. Plans
(In millions)2021202020212020
Costs Recognized in Income:
Pension service cost:
Service cost
$— $— $(1)$— 
Pension financing benefits (cost):
Interest cost
$(5)$(6)$(1)$(2)
Expected return on plan assets9 10 2 2 
Amortization of losses and other
— — (1)(1)
Total pension financing benefits:4 4 — (1)
Restructuring related pension cost:
Special termination benefits
— (1)— — 
Net pension benefit (cost)$4 $3 $(1)$(1)
Pension financing benefits, net of $4 million and $3 million for the three months ended September 30, 2021 and 2020, respectively, are classified as Other income, net on the Company's condensed consolidated statements of comprehensive income.
The Company's net periodic benefit costs for all defined benefit plans for the nine month periods ended September 30, 2021 and 2020 were as follows:
U.S. PlansNon-U.S. Plans
(In millions)2021202020212020
Costs Recognized in Income:
Pension service cost:
Service cost
$ $ $(1)$(1)
Pension financing benefits (costs):
Interest cost
$(13)$(18)$(4)$(5)
Expected return on plan assets28 29 6 6 
Amortization of losses and other
(2) (2)(2)
Total pension financing benefits:13 11  (1)
Restructuring related pension cost:
Special termination benefits
 (3) (1)
Net pension benefit (cost)$13 $8 $(1)$(3)
Pension financing benefits, net of $13 million and $10 million for the nine months ended September 30, 2021 and 2020, respectively, are classified as Other income, net on the Company's condensed consolidated statements of comprehensive income.
During the nine months ended September 30, 2021, cash contributions to the Company's defined benefit plans were approximately $12 million for the U.S. plans and $5 million for the non-U.S. plans. The Company estimates that total cash contributions to its pension plans during 2021 will be $19 million.


14



NOTE 10. Income Taxes
During the three and nine month period ended September 30, 2021, the Company recorded a provision for income tax of $4 million and $20 million, respectively, which reflects income tax expense in countries where the Company is profitable; accrued withholding taxes; ongoing assessments related to the recognition and measurement of uncertain tax benefits; the inability to record a tax benefit for pretax losses and/or recognize expense for pretax income in certain jurisdictions (including the U.S.) due to valuation allowances; and other non-recurring tax items, including enacted tax law changes. Pretax losses in jurisdictions where valuation allowances are maintained and no income tax benefits are recognized totaled $48 million and $106 million for the nine month periods ended September 30, 2021 and 2020, respectively, resulting in an increase in the Company's effective tax rate in those years.
The Company's provision for income taxes in interim periods is computed by applying an estimated annual effective tax rate against income before income taxes, excluding equity in net income of non-consolidated affiliates for the period. Effective tax rates vary from period to period as separate calculations are performed for those countries where the Company's operations are profitable and whose results continue to be tax-effected and for those countries where full deferred tax valuation allowances exist and are maintained. In determining the estimated annual effective tax rate, the Company analyzes various factors, including but not limited to, forecasts of projected annual earnings, taxing jurisdictions in which the pretax income and/or pretax losses will be generated and available tax planning strategies. The changing and volatile macro-economic conditions connected with the ongoing COVID-19 pandemic including the semiconductor supply shortage and other supply chain impacts may cause fluctuations in forecasted earnings before income taxes. As such, the Company's effective tax rate could be subject to volatility as forecasted earnings before income taxes are impacted by events which cannot be predicted. The Company’s estimated annual effective tax rate is updated each quarter and may be significantly impacted by changes to the mix of forecasted earnings by tax jurisdiction. The tax impact of adjustments to the estimated annual effective tax rate are recorded in the period such estimates are revised. The Company is also required to record the tax impact of certain other non-recurring tax items, including changes in judgment about valuation allowances and uncertain tax positions, and changes in tax laws or rates, in the interim period in which they occur.

The need to maintain valuation allowances against deferred tax assets in the U.S. and other affected countries will cause variability in the Company’s quarterly and annual effective tax rates. Full valuation allowances against deferred tax assets in the U.S. and applicable foreign countries will be maintained until sufficient positive evidence exists to reduce or eliminate them. The Company evaluates its deferred income taxes quarterly to determine if valuation allowances are required or should be adjusted. This assessment considers, among other matters, the nature, frequency, and amount of recent losses, the duration of statutory carryforward periods, and tax planning strategies. In making such judgments, significant weight is given to evidence that can be objectively verified. If (i) recent improvements to financial results continue in the U.S., or (ii) recovery of the global economy after the COVID-19 pandemic including the semiconductor shortages occurs faster than expected, the Company believes it is possible that sufficient positive evidence may be available to release all, or a portion, of its U.S. valuation allowance in the next nine to 24 months.
Unrecognized Tax Benefits
Gross unrecognized tax benefits as of September 30, 2021 and December 31, 2020 were $15 million and $14 million, respectively. Of these amounts, approximately $8 million and $7 million, respectively, represent the amount of unrecognized benefits that, if recognized, would impact the effective tax rate. The gross unrecognized tax benefit differs from that which would impact the effective tax rate due to uncertain tax positions embedded in other deferred tax attributes carrying a full valuation allowance. During the nine months ended September 30, 2021, the Company recorded a $2 million increase in tax expense related to uncertain tax positions attributable to certain related party transactions. The Company records interest and penalties related to uncertain tax positions as a component of income tax expense and related amounts accrued at September 30, 2021 and December 31, 2020 was $2 million in both years.
15



With few exceptions, the Company is no longer subject to U.S. federal tax examinations for years before 2014, or state, local or non-U.S. income tax examinations for years before 2003, although U.S. net operating losses carried forward into open tax years technically remain open to adjustment. Although it is not possible to predict the timing of the resolution of all ongoing tax audits with accuracy, it is reasonably possible that certain tax proceedings in the U.S., Europe, Asia and Mexico could conclude within the next twelve months and result in a significant increase or decrease in the balance of gross unrecognized tax benefits. Given the number of years, jurisdictions, and positions subject to examination, the Company is unable to estimate the full range of possible adjustments to the balance of unrecognized tax benefits. The long-term portion of uncertain income tax positions (including interest) of $7 million is included in Other non-current liabilities on the condensed consolidated balance sheet, while $3 million is reflected as a reduction of a deferred tax asset related to a net operating loss included in Other non-current assets on the condensed consolidated balance sheet.
During 2012, Brazil tax authorities issued tax assessment notices to Visteon Sistemas Automotivos (“Sistemas”) related to the sale of its chassis business, in connection with this assessment the Company recorded a long-term tax deposit during 2013. During the third quarter of 2021, the Company received a favorable judgement related to this deposit. The Company reclassified $9 million associated with this deposit to other current assets and expects to receive settlement during the fourth quarter of 2021. The remaining deposit of approximately $2 million has been applied against other long-term labor-related tax debts pursuant to the judgement. Income tax refund claims associated with other jurisdictions, total $5 million as of September 30, 2021, and are included in Other non-current assets on the condensed consolidated balance sheets.


NOTE 11. Stockholders’ Equity and Non-controlling Interests
Non-Controlling Interests
The Company's non-controlling interests are as follows:
September 30,December 31,
(In millions)20212020
Shanghai Visteon Automotive Electronics, Co., Ltd.$44 $44 
Yanfeng Visteon Automotive Electronics Co., Ltd.29 57 
Changchun Visteon FAWAY Automotive Electronics, Co., Ltd.