diff --git a/lib/compress.js b/lib/compress.js
index e9e72ce6..aaadcd10 100644
--- a/lib/compress.js
+++ b/lib/compress.js
@@ -3867,7 +3867,7 @@ merge(Compressor.prototype, {
             }
         }
         if (fn instanceof AST_Function) {
-            var def, scope;
+            var def, scope, value;
             if (compressor.option("inline")
                 && !fn.uses_arguments
                 && !fn.uses_eval
@@ -3876,23 +3876,13 @@ merge(Compressor.prototype, {
                     : compressor.option("unused")
                         && (def = exp.definition()).references.length == 1
                         && !recursive_ref(compressor, def))
+                && !self.has_pure_annotation(compressor)
                 && !fn.contains_this()
                 && (scope = can_flatten_args(fn))
-                && !self.has_pure_annotation(compressor)) {
-                var value;
-                if (stat instanceof AST_Return) {
-                    value = stat.value;
-                } else if (stat instanceof AST_SimpleStatement) {
-                    value = make_node(AST_UnaryPrefix, stat, {
-                        operator: "void",
-                        expression: stat.body
-                    });
-                }
-                if (value) {
-                    var expressions = flatten_args(fn, scope);
-                    expressions.push(value);
-                    return make_sequence(self, expressions).optimize(compressor);
-                }
+                && (value = flatten_body(stat))) {
+                var expressions = flatten_args(fn, scope);
+                expressions.push(value);
+                return make_sequence(self, expressions).optimize(compressor);
             }
             if (compressor.option("side_effects") && all(fn.body, is_empty)) {
                 var args = self.args.concat(make_node(AST_Undefined, self));
@@ -3957,11 +3947,26 @@ merge(Compressor.prototype, {
             for (i = len, len = self.args.length; i < len; i++) {
                 expressions.push(self.args[i]);
             }
-            if (decls.length) scope.body.push(make_node(AST_Var, fn, {
-                definitions: decls
-            }));
+            if (decls.length) {
+                for (i = 0; compressor.parent(i) !== scope;) i++;
+                i = scope.body.indexOf(compressor.parent(i - 1)) + 1;
+                scope.body.splice(i, 0, make_node(AST_Var, fn, {
+                    definitions: decls
+                }));
+            }
             return expressions;
         }
+
+        function flatten_body(stat) {
+            if (stat instanceof AST_Return) {
+                return stat.value;
+            } else if (stat instanceof AST_SimpleStatement) {
+                return make_node(AST_UnaryPrefix, stat, {
+                    operator: "void",
+                    expression: stat.body
+                });
+            }
+        }
     });
 
     OPT(AST_New, function(self, compressor){
diff --git a/test/compress/functions.js b/test/compress/functions.js
index 7b5318c4..a36509af 100644
--- a/test/compress/functions.js
+++ b/test/compress/functions.js
@@ -767,8 +767,8 @@ issue_2476: {
     expect: {
         for (var sum = 0, i = 0; i < 10; i++)
             sum += (x = i, y = i + 1, z = 3 * i, x < y ? x * y + z : x * z - y);
-        console.log(sum);
         var x, y, z;
+        console.log(sum);
     }
     expect_stdout: "465"
 }