##### Table of Contents



UNITED STATES
 SECURITIES AND EXCHANGE
    COMMISSION
 WASHINGTON, D.C.
    20549
  FORM 10-Q
   þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended September 30, 2006ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from
    
    to
    .   Commission file number:
    1-14787
  DELPHI CORPORATION
 (Exact name of registrant as
    specified in its charter)
  Delaware

38-3430473(State or other jurisdiction of
    incorporation or organization)

(I.R.S. employer identification no.)5725 Delphi Drive, Troy,
    Michigan(Address of principal
    executive offices)

48098(Zip code)    (248) 813-2000 (Registrants
    telephone number, including area code)
  þ o
  Rule 12b-2
 þ o o
  Rule 12b-2 o þ
    WEBSITE
    ACCESS TO COMPANYS REPORTS
  www.delphi.com Form 10-K, Form 10-Q, Form 8-K,




---



##### 



DELPHI
    CORPORATION
  INDEX
  PagePart I 
    Financial InformationItem 1.


Financial
    StatementsConsolidated
    Statements of Operations for the Three and Nine Months Ended
    September 30, 2006 and 2005 (Unaudited)


3Consolidated
    Balance Sheets as of September 30, 2006 (Unaudited) and
    December 31, 2005


4Consolidated
    Statements of Cash Flows for the Nine Months Ended
    September 30, 2006 and 2005 (Unaudited)


5Consolidated
    Statements of Comprehensive Loss for the Three and Nine Months
    Ended September 30, 2006 and 2005 (Unaudited)


6Notes to
    Consolidated Financial Statements (Unaudited)


7Item 2.


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


40Executive Summary
    of Business


40Overview of
    Performance


46Consolidated
    Results of Operations


47Liquidity and
    Capital Resources


58Shareholder
    Lawsuits


64Regulatory Actions
    and Other Matters


66Environmental
    Matters


66Inflation


67Recently Issued
    Accounting Pronouncements


67Significant
    Accounting Policies and Critical Accounting Estimates


67Forward-Looking
    Statements


68Item 3.


Quantitative and
    Qualitative Disclosures About Market Risk


68Item 4.


Controls and
    Procedures


69Part II 
    Other InformationItem 1.


Legal
    Proceedings


70Item 1A.


Risk
    Factors


70Item 2.


Unregistered Sales
    of Equity Securities and Use of Proceeds


79Item 3.


Defaults Upon
    Senior Securities


79Item 6.


Exhibits


80Signatures


81Section 302 CertificationSection 302 CertificationSection 906 CertificationSection 906 Certification   2




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##### Table of Contents



PART I.
    FINANCIAL INFORMATION ITEM 1.
    FINANCIAL STATEMENTS



DELPHI
    CORPORATION

(DEBTOR-IN-POSSESSION) CONSOLIDATED
    STATEMENTS OF OPERATIONS (Unaudited)  Three Months Ended


Nine Months EndedSeptember 30,


September 30,2006


2005


2006


2005(in millions, except per share amounts)Net sales:General Motors and affiliates

$
2,598


$
2,954


$
8,884


$
9,760Other customers


3,410



3,329



11,092



10,408Total net sales


6,008



6,283



19,976



20,168Operating expenses:Cost of sales, excluding items
    listed below


6,088



6,221



19,190



19,327U.S. employee special
    attrition program charges


1,043







2,948



Selling, general and administrative


392



424



1,155



1,230Depreciation and amortization


272



331



814



912Total operating expenses


7,795



6,976



24,107



21,469Operating loss


(1,787
)


(693
)


(4,131
)


(1,301
)Interest expense (contractual
    interest expense for the three and nine months ended
    September 30, 2006 was $150 million and
    $434 million, respectively)


(116
)


(103
)


(319
)


(224
)Other income, net


8



17



31



44Loss before reorganization items,
    income taxes, minority interest, equity (loss) income, and
    cumulative effect of accounting change


(1,895
)


(779
)


(4,419
)


(1,481
)Reorganization items, net


(25
)






(58
)


Loss before income taxes, minority
    interest, equity (loss) income, and cumulative effect of
    accounting change


(1,920
)


(779
)


(4,477
)


(1,481
)Income tax expense


(46
)


(8
)


(137
)


(65
)Loss before minority interest,
    equity (loss) income, and cumulative effect of accounting change


(1,966
)


(787
)


(4,614
)


(1,546
)Minority interest, net of tax


(4
)


(11
)


(28
)


(27
)Equity (loss) income


(3
)


10



28



44Loss before cumulative effect of
    accounting change


(1,973
)


(788
)


(4,614
)


(1,529
)Cumulative effect of accounting
    change










3



Net loss

$
(1,973
)

$
(788
)

$
(4,611
)

$
(1,529
)Basic and diluted loss per shareBefore cumulative effect of
    accounting change

$
(3.51
)

$
(1.40
)

$
(8.22
)

$
(2.73
)Cumulative effect of accounting
    change

$



$



$
0.01


$
Basic and diluted loss per share

$
(3.51
)

$
(1.40
)

$
(8.21
)

$
(2.73
)Dividends declared per share

$



$



$



$
0.045    3




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##### Table of Contents



DELPHI
    CORPORATION(DEBTOR-IN-POSSESSION)
 CONSOLIDATED
    BALANCE SHEETS  September 30,2006


December 31,(Unaudited)


2005(in millions)ASSETSCurrent assets:Cash and cash equivalents

$
1,443


$
2,221Restricted cash


150



36Accounts receivable, net:General Motors and affiliates


2,564



1,920Other


2,997



2,975Inventories, net:Productive material,
    work-in-process
    and supplies


1,566



1,350Finished goods


654



524Other current assets


478



528Total current assets


9,852



9,554Long-term assets:Property, net


4,898



5,108Investments in affiliates


403



418Goodwill and other intangible
    assets, net


425



417Pension intangible assets


414



891Other


699



635Total long-term assets


6,839



7,469Total assets

$
16,691


$
17,023LIABILITIES AND
    STOCKHOLDERS DEFICITCurrent liabilities:Notes payable, current portion of
    long-term debt, and debt in default

$
3,102


$
3,117Accounts payable


2,761



2,494Accrued liabilities


2,430



1,192Total current liabilities


8,293



6,803Debtor-in-possession
    financing and other long-term debt


297



273Employee benefit plan obligations


350



310Other


958



651Liabilities subject to compromise


16,664



15,074Total liabilities


26,562



23,111Minority interest in consolidated
    subsidiaries


194



157Stockholders deficit:Common stock, $0.01 par value,
    1,350 million shares authorized, 565 million shares
    issued in 2006 and 2005


6



6Additional paid-in capital


2,764



2,744Accumulated deficit


(11,040
)


(6,429
)Minimum pension liability


(1,835
)


(2,395
)Accumulated other comprehensive
    income (loss), excluding minimum pension liability


92



(119
)Treasury stock, at cost
    (3.2 million shares in 2006 and 2005)


(52
)


(52
)Total stockholders deficit


(10,065
)


(6,245
)Total liabilities and
    stockholders deficit

$
16,691


$
17,023    4




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##### Table of Contents



DELPHI
    CORPORATION(DEBTOR-IN-POSSESSION)
 CONSOLIDATED
    STATEMENTS OF CASH FLOWS (Unaudited)  Nine Months EndedSeptember 30,2006


2005(in millions)Cash flows from operating
    activities:Net loss

$
(4,611
)

$
(1,529
)Adjustments to reconcile net loss
    to net cash provided by operating activities:Depreciation and amortization


814



912Deferred income taxes


23



19Pension and other postretirement
    benefit expenses


1,189



1,149Equity income


(28
)


(44
)Reorganization items


58



U.S employee special attrition
    program charges


2,948



Changes in operating assets and
    liabilities:Accounts receivable and retained
    interest in receivables, net


(200
)


(183
)Inventories, net


(319
)


21Other current assets


(86
)


48Accounts payable


445



(267
)Employee and product line
    obligations






(61
)Accrued and other long-term
    liabilities


(70
)


162Pension contributions and benefit
    payments


(219
)


(680
)Other postretirement benefit
    payments


(182
)


(138
)Net payments for reorganization
    items


(39
)


Other, net


55



(18
)Net cash used in operating
    activities


(222
)


(609
)Cash flows from investing
    activities:Capital expenditures


(606
)


(792
)Proceeds from sale of property


53



49Proceeds from sale of trade bank
    notes


130



111Increase in restricted cash


(110
)


(13
)Proceeds from divestitures


24



245Other, net


(6
)


3Net cash used in investing
    activities


(515
)


(397
)Cash flows from financing
    activities:Net proceeds from term loan facility






983Repayments of borrowings under term
    loan facility






(12
)Proceeds from revolving credit
    facility, net


2



1,484Repayments under cash
    overdraft.


(29
)


Net repayments under other debt
    agreements


(27
)


(601
)Dividend payments






(64
)Other, net


(19
)


(50
)Net cash (used in) provided by
    financing activities


(73
)


1,740Effect of exchange rate
    fluctuations on cash and cash equivalents


32



(32
)(Decrease) increase in cash and
    cash equivalents


(778
)


702Cash and cash equivalents at
    beginning of period


2,221



950Cash and cash equivalents at end of
    period

$
1,443


$
1,652    5




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##### Table of Contents



DELPHI
    CORPORATION(DEBTOR-IN-POSSESSION)
 CONSOLIDATED
    STATEMENTS OF COMPREHENSIVE LOSS  Three Months Ended


Nine Months EndedSeptember 30,


September 30,2006


2005


2006


2005(in millions)Net loss

$
(1,973
)

$
(788
)

$
(4,611
)

$
(1,529
)Other comprehensive (loss) income:Currency translation adjustments
    and other, net of tax


42



30



128



(211
)Net change in unrecognized gain on
    derivative instruments, net of tax


66



(4
)


68



(27
)Minimum pension liability
    adjustment, net of tax


(284
)






575



Other comprehensive (loss) income


(176
)


26



771



(238
)Comprehensive loss

$
(2,149
)

$
(762
)

$
(3,840
)

$
(1,767
)    6




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##### Table of Contents



DELPHI
    CORPORATION(DEBTOR-IN-POSSESSION)
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  1.
    BASIS OF
    PRESENTATION  General Form 10-K
  Consolidation
    Bankruptcy Filing No. 05-44481 debtors-in-possession non-U.S. subsidiaries
  90-7, (SOP 90-7), SOP 90-7
 7




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##### Table of Contents



Going Concern debtor-in-possession
  Contractual Interest Expense SOP 90-7.
  Use of Estimates
  Valuation of Long-Lived Assets
  Valuation Allowance for Deferred Tax
    Assets non-U.S. operations.
  Annual Incentive Plan
 8




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##### Table of Contents



Form 8-K
      Postemployment Benefits
  Employee Termination Benefits and Other Exit
    Costs
 9




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##### Table of Contents



Recently Issued Accounting
    Pronouncements Accounting for Uncertainty in Income Taxes, an
    interpretation of FASB Statement No. 109. Accounting
    for Income Taxes.
    Fair Value Measurements.
  Employers Accounting
    for Defined Benefit Pension and Other Postretirement Plans-an
    amendment of FASB Statements No. 87, 88, 106, and
    132(R).
  2.
    TRANSFORMATION
    PLAN AND CHAPTER 11 BANKRUPTCY   10




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##### Table of Contents



year-to-date year-to-date Accounting for the impairment or Disposal of Long-Lived
    Assets,
     11




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##### Table of Contents



Employers Accounting
    for Settlements and Curtailments of Defined Benefit Pension
    Plans and for Termination Benefits Employers Accounting for
    Postretirement Benefits Accounting for the Impairment or Disposal of Long-Lived
    Assets, Accounting
    for Costs Associated with Exit or Disposal Activities,
       12




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##### Table of Contents



Basis
    of Presentation
  Condensed Combined
    Debtors-in-Possession
    Financial Statements SOP 90-7.
  Intercompany Transactions
 13




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##### Table of Contents



CONDENSED
    COMBINED
    DEBTORS-IN-POSSESSION
    STATEMENTS OF
    OPERATIONS (Unaudited)
    (Non-filed entities, principally
    non-U.S. subsidiaries,
    excluded from consolidated Debtor group)
  Three Months


Nine MonthsEnded


EndedSeptember 30, 2006


September 30, 2006(in millions)Net sales:General Motors and affiliates

$
2,204


$
7,626Other customers


1,532



5,155Intercompany non-Debtor
    subsidiaries


147



455Total net sales


3,883



13,236Operating expenses:Cost of sales, excluding items
    listed below


4,239



13,496U.S. employee special
    attrition program charges


1,043



2,948Selling, general and administrative


260



787Depreciation and amortization


166



497Total operating expenses


5,708



17,728Operating loss


(1,825
)


(4,492
)Interest expense (contractual
    interest expense for the three and nine months ended
    September 30, 2006 was $137 million and
    $397 million, respectively)


(105
)


(283
)Other expense, net


(4
)


(8
)Loss before reorganization items,
    income tax benefit, equity (loss) income, and cumulative effect
    of accounting change


(1,934
)


(4,783
)Reorganization items, net


(17
)


(42
)Loss before income tax benefit,
    equity (loss) income, and cumulative effect of accounting change


(1,951
)


(4,825
)Income tax benefit


6



Loss before equity income, and
    cumulative effect of accounting change


(1,945
)


(4,825
)Equity (loss) income from
    non-consolidated affiliates, net of tax


(5
)


21Equity (loss) income from
    non-Debtor subsidiaries, net of tax


(23
)


190Loss before cumulative effect of
    accounting change


(1,973
)


(4,614
)Cumulative effect of accounting
    change






3Net loss

$
(1,973
)

$
(4,611
)  14




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##### Table of Contents



CONDENSED
    COMBINED
    DEBTORS-IN-POSSESSION
    BALANCE SHEET
    (Non-filed entities, principally
    non-U.S. subsidiaries,
    excluded from consolidated Debtor group)
  September 30,2006


December 31,(Unaudited)


2005(in millions)ASSETSCurrent assets:Cash and cash equivalents

$
414


$
1,361Restricted cash


105



Accounts receivable, net:General Motors and affiliates


2,253



1,654Other third parties


1,171



1,428Non-Debtor subsidiaries


290



287Notes receivable from non-Debtor
    subsidiaries


347



349Inventories, net:Productive material,
    work-in-process
    and supplies


916



820Finished goods


329



286Other current assets


323



354Total current assets


6,148



6,539Long-term assets:Property, net


2,481



2,743Investments in affiliates


361



356Investments in non-Debtor
    subsidiaries


3,444



3,131Goodwill and other intangible
    assets, net


190



181Pension intangible assets


394



871Other


310



319Total long-term assets


7,180



7,601Total assets

$
13,328


$
14,140LIABILITIES AND
    STOCKHOLDERS DEFICITCurrent liabilities not subject to
    compromise:Notes payable and secured debt in
    default

$
2,492


$
2,519Accounts payable


1,267



1,027Accounts payable to non-Debtor
    subsidiaries


344



486Accrued liabilities


1,494



410Total current liabilities


5,597



4,442Debtor-in-possession
    financing


250



250Employee benefit plan obligations
    and other


815



550Liabilities subject to compromise


16,731



15,143Total liabilities


23,393



20,385Stockholders deficit:Common stock, $0.01 par
    value, 1,350 million shares authorized, 565 million
    shares issued in 2006 and 2005


6



6Additional paid-in capital


2,764



2,744Accumulated deficit


(11,040
)


(6,429
)Minimum pension liability, Debtors
    only


(1,736
)


(2,304
)Accumulated other comprehensive
    loss, including minimum pension liability of non-Debtor
    subsidiaries


(7
)


(210
)Treasury stock, at cost
    (3.2 million shares in 2006 and 2005)


(52
)


(52
)Total stockholders deficit


(10,065
)


(6,245
)Total liabilities and
    stockholders deficit

$
13,328


$
14,140  15




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##### Table of Contents



CONDENSED
    COMBINED
    DEBTORS-IN-POSSESSION
    STATEMENT OF CASH FLOWS (Unaudited)
    (Non-filed entities, principally
    non-U.S. subsidiaries,
    excluded from consolidated Debtor group)
  Nine Months EndedSeptember 30, 2006(in millions)Cash flows from operating
    activities:Net loss

$
(4,611
)Adjustments to reconcile net loss
    to net cash used in operating activities:Depreciation and amortization


497Pension and other postretirement
    benefit expenses


1,139Equity income from
    non-consolidated affiliates


(21
)Equity income from non-Debtor
    subsidiaries, net of tax


(190
)Reorganization items


42U.S. employee special
    attrition program charges


2,948Changes in operating assets and
    liabilities:Accounts receivable, net


243Inventories, net


(141
)Other current assets


(47
)Accounts payable, accrued and
    other long-term liabilities


(88
)Pension contributions and benefit
    payments


(187
)Other postretirement benefit
    payments


(182
)Payments for reorganization items,
    net


(30
)Other, net


46Net cash used in operating
    activities


(582
)Cash flows from investing
    activities:Capital expenditures


(229
)Proceeds from sale of property


23Increase in restricted cash


(101
)Other, net


(22
)Net cash used in investing
    activities


(329
)Cash flows from financing
    activities:Proceeds from prepetition secured
    revolving credit facility, net


2Repayments under cash overdraft


(29
)Repayments of borrowings under
    other debt agreements


(9
)Net cash used in financing
    activities


(36
)Decrease in cash and cash
    equivalents


(947
)Cash and cash equivalents at
    beginning of period


1,361Cash and cash equivalents at end
    of period

$
414  16




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##### Table of Contents



3.
    SHARE-BASED
    COMPENSATION  Share-Based Payments
    Three Months  Ended


Nine Months EndedSeptember 30,


September 30,2005


2005(in millions, except per share amounts)Net loss, as reported

$
(788
)

$
(1,529
)Add: Share-based compensation
    expense recognized, net of related tax effects


5



18Less: Total share-based employee
    compensation expense determined under fair value method for all
    awards, net of related tax effects


(9
)


(28
)Pro forma net loss

$
(792
)

$
(1,539
)Loss per share:Basic and diluted  as
    reported

$
(1.40
)

$
(2.73
)Basic and diluted  pro
    forma

$
(1.41
)

$
(2.75
)   Share-Based
    Compensation Plans
     17




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##### Table of Contents



Weighted AverageStock Options


Exercise Price(in thousands)Outstanding as of
    December 31, 2005


84,565


$
13.72Exercised





$
Forfeited or expired


(6,739
)

$
15.11Outstanding as of
    September 30, 2006


77,826


$
13.60Exercisable as of
    September 30, 2006


75,739


$
13.70     Approved
    by Stockholders
  Range of

Outstanding


Weighted Average


Weighted Average


Number of


Weighted AverageExercise Prices

Stock Options


Remaining Life


Exercise Price


Stock Options Exercisable


Exercise Price(in thousands)








(in thousands)$ 8.43 - $10.00


10,589



6.5


$
8.43



10,586


$
8.43$10.01 - $20.00


46,526



4.2


$
13.49



44,442


$
13.65$20.01 - $20.97


73



2.2


$
20.66



73


$
20.6657,188






$
12.56



55,101


$
12.66   Other
    Plans
  Range of

Outstanding


Weighted Average


Weighted Average


Number of


Weighted AverageExercise Prices

Stock Options


Remaining Life


Exercise Price


Stock Options Exercisable


Exercise Price(in thousands)








(in thousands)$ 9.55 - $10.00


1



1.2


$
9.55



1


$
9.55$10.01 - $20.00


18,348



2.9


$
15.96



18,348


$
15.96$20.01 - $24.76


2,289



2.2


$
20.64



2,289


$
20.6420,638






$
16.48



20,638


$
16.48      18




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##### Table of Contents



Restricted
    Stock Units
    Weighted AverageRestricted


Grant DateStock Units


Fair Value(in thousands)Non-vested at December 31,
    2005


10,027


$
8.58Vested


(1,249
)

$
8.94Forfeited


(640
)

$
8.63Non-vested at September 30,
    2006


8,138


$
8.48     4.
    REORGANIZATION
    ITEMS  SOP 90-7
  Three Months  Ended


Nine Months EndedSeptember 30, 2006


September 30, 2006(in millions)Professional fees directly related
    to reorganization

$
41


$
108Interest income


(16
)


(47
)Gain on settlement of prepetition
    liabilities






(3
)Total Reorganization Items

$
25


$
58   
  5.
    ACQUISITIONS
    AND DIVESTITURES  Global
    Battery Product Line Sale
   19




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##### Table of Contents



Other
    Acquisitions and Divestitures
   20




---



##### Table of Contents



6.
    WEIGHTED
    AVERAGE SHARES AND DIVIDENDS      Three Months Ended


Nine Months EndedSeptember 30,


September 30,2006


2005


2006


2005(in thousands)Weighted average shares outstanding


561,782



561,702



561,782



559,462Effect of dilutive securities














Diluted shares outstanding


561,782



561,702



561,782



559,462     Three Months Ended


Nine Months EndedSeptember 30,


September 30,2006


2005


2006


2005(in thousands)Anti-dilutive securities


77,826



85,858



77,826



85,737   debtor-in-possession Form 10-K
  7.
    WARRANTIES      September 30,2006


2005(in millions)Accrual balance at beginning of
    year

$
312


$
274Provision for estimated warranties
    accrued during the period


195



126Settlements made during the period
    (in cash or in kind)


(120
)


(124
)Foreign currency translation


5



(7
)Accrual balance at end of period

$
392


$
269  21




---



##### Table of Contents



8.
    LIABILITIES
    SUBJECT TO COMPROMISE      SOP 90-7
 22




---



##### Table of Contents



:
  September 30,


December 31,2006


2005(in millions)Pension obligations

$
4,677


$
3,578Postretirement obligations other
    than pensions, including amounts payable to GM


7,866



7,331Debt and notes payable


2,055



2,062Accounts payable


770



916Junior subordinated notes


403



403Postemployment benefits for other
    than temporarily idled employees


3



148Other


890



636Total Liabilities Subject to
    Compromise

$
16,664


$
15,074   9.
    U.S. EMPLOYEE
    SPECIAL ATTRITION PROGRAM AND PENSION AND OTHER POSTRETIREMENT
    BENEFITS     23




---



##### Table of Contents



24




---



##### Table of Contents



OtherPension


PostretirementBenefits


Benefits(in millions)Change in benefit obligation:Benefit obligation at beginning of
    year

$
8,894


$
9,434Expense


495



501Benefits paid


(363
)


(205
)Impact of curtailments,
    remeasurement and other


1,182



(2,222
)Benefit obligation at
    September 30, 2006

$
10,208


$
7,508Change in plan assets:Fair value of plan assets at
    beginning of year

$
6,621


$
Actual return on plan assets


577



Delphi contributions


80



Benefits paid


(363
)


Fair value of plan assets at
    September 30, 2006

$
6,915


$
Underfunded status

$
(3,293
)

$
(7,508
)Unamortized actuarial loss


1,513



1,046Unamortized prior service cost


233



(18
)Net amount recognized in
    consolidated balance sheets

$
(1,547
)

$
(6,480
)Amounts recognized in the
    consolidated balance sheets consist of:Accrued benefit liability

$
(3,293
)

$
(6,480
)Intangible asset


233



Accumulated other comprehensive
    income (pre-tax)


1,513



Net amount recognized

$
(1,547
)

$
(6,480
)    25




---



##### Table of Contents



Employers Accounting for Postretirement Benefits
    Other than Pensions,
  non-U.S. subsidiaries non-U.S. plans
   26




---



##### Table of Contents



non-U.S. salaried
  Pension Benefits


Other Postretirement BenefitsU.S. Plans


Non-U.S. PlansThree Months Ended September 30,2006


2005


2006


2005


2006


2005(in millions)Service cost

$
60


$
73


$
11


$
8


$
46


$
44Interest cost


211



181



17



16



139



135Expected return on plan assets


(204
)


(197
)


(16
)


(16
)






Special termination benefits










1











Curtailment loss/(gain)


397















(13
)


Amortization of prior service costs


27



35



1







(25
)


(14
)Amortization of actuarial losses


33



53



6



8



78



51Net periodic benefit cost

$
524


$
145


$
20


$
16


$
225


$
216Pension Benefits


Other Postretirement BenefitsU.S. Plans


Non-U.S. PlansNine Months Ended September 30,2006


2005


2006


2005


2006


2005(in millions)Service cost

$
207


$
219


$
31


$
25


$
136


$
134Interest cost


581



543



48



48



425



406Expected return on plan assets


(614
)


(591
)


(48
)


(46
)






Special termination benefits






2



1



9







3Curtailment loss/(gain)


1,917















(20
)


Amortization of prior service costs


92



105



3



2



(74
)


(42
)Amortization of actuarial losses


148



159



19



24



234



154Net periodic benefit cost

$
2,331


$
437


$
54


$
62


$
701


$
655   10.
    DERIVATIVES
    AND HEDGING ACTIVITIES  Accounting for Derivative
    Instruments and Hedging Activities,
   27




---



##### Table of Contents



September 30,


December 31,2006


2005(in millions)Current assets

$
78


$
5Non-current assets


13



2Total assets

$
91


$
7Current liabilities

$
32


$
8Non-current liabilities


3



Total liabilities

$
35


$
8         11.
    SEGMENT
    REPORTING    
    Electronics and Safety, which includes audio, entertainment and
    communications, safety systems, body controls and security
    systems, and power electronics, as well as advanced development
    of software and silicon.
    Thermal Systems, which includes Heating, Ventilating and Air
    Conditioning (HVAC) systems, components for multiple
    transportation and other adjacent markets, and powertrain
    cooling and related technologies.
    Powertrain Systems, which includes extensive systems integration
    expertise in gasoline, diesel and fuel handling and full
    end-to-end
    systems including fuel injection, combustion, electronics
    controls, exhaust handling, and test and validation capabilities. 28




---



##### Table of Contents




    Electrical/Electronic Architecture, which includes complete
    electrical architecture and components products.
    Steering, which includes steering and halfshaft technology.
    Automotive Holdings Group, which includes various non-core
    product lines and plant sites that do not fit Delphis
    future strategic framework.          Electrical/





AutomotiveElectronics


Thermal


Powertrain


Electronic





Holdings


Corporateand Safety


Systems


Systems


Architecture


Steering


Group


and Other(a)


Total(in millions)For the Three Months
    Ended:September 30, 2006Net sales to GM and affiliates

$
327


$
320


$
368


$
388


$
347


$
709


$
139


$
2,598Net sales to other customers


745



206



733



808



197



469



252



3,410Inter-segment net sales


46



24



100



41



29



96



(336
)


Total net sales

$
1,118


$
550


$
1,201


$
1,237


$
573


$
1,274


$
55


$
6,008Depreciation & Amortization

$
70


$
15


$
68


$
43


$
26


$
30


$
20


$
272Operating (loss) income

$
13


$
(102
)

$
(133
)

$
(121
)

$
(106
)

$
(277
)

$
(1,061
)

$
(1,787
)Equity income (loss)

$
3


$
(16
)

$



$
2


$
2


$
6


$



$
(3
)September 30, 2005Net sales to GM and affiliates

$
361


$
348


$
425


$
463


$
379


$
779


$
199


$
2,954Net sales to other customers


766



173



678



750



203



466



293



3,329Inter-segment net sales


65



27



96



45



28



110



(371
)


Total net sales

$
1,192


$
548


$
1,199


$
1,258


$
610


$
1,355


$
121


$
6,283Depreciation & Amortization

$
68


$
22


$
74


$
41


$
31


$
66


$
29


$
331Operating (loss) income

$
28


$
(41
)

$
(35
)

$
12


$
(110
)

$
(372
)

$
(175
)

$
(693
)Equity (loss) income

$
(4
)

$
2


$
2


$
2


$
1


$
4


$
3


$
10   29




---



##### Table of Contents



Electrical/





AutomotiveElectronics


Thermal


Powertrain


Electronic





Holdings


Corporateand Safety


Systems


Systems


Architecture


Steering


Group


and Other(a)


Total(in millions)For the Nine Months
    Ended:September 30, 2006Net sales to GM and affiliates

$
1,058


$
1,095


$
1,305


$
1,332


$
1,212


$
2,414


$
468


$
8,884Net sales to other customers


2,459



620



2,384



2,561



662



1,601



805



11,092Inter-segment net sales


175



92



269



130



92



317



(1,075
)


Total net sales

$
3,692


$
1,807


$
3,958


$
4,023


$
1,966


$
4,332


$
198


$
19,976Depreciation & Amortization

$
199


$
52


$
197


$
127


$
75


$
100


$
64


$
814Operating (loss) income

$
186


$
(140
)

$
(191
)

$
(138
)

$
(267
)

$
(757
)

$
(2,824
)

$
(4,131
)Equity income (loss)

$
5


$
(14
)

$
7


$
12


$
4


$
13


$
1


$
28September 30, 2005Net sales to GM and affiliates

$
1,271


$
1,136


$
1,471


$
1,449


$
1,228


$
2,578


$
627


$
9,760Net sales to other customers


2,384



539



2,249



2,364



624



1,239



1,009



10,408Inter-segment net sales


214



69



329



147



96



409



(1,264
)


Total net sales

$
3,869


$
1,744


$
4,049


$
3,960


$
1,948


$
4,226


$
372


$
20,168Depreciation & Amortization

$
204


$
67


$
211


$
120


$
89


$
159


$
62


$
912Operating (loss) income

$
166


$
(93
)

$
(112
)

$
111


$
(259
)

$
(1,007
)

$
(107
)

$
(1,301
)Equity (loss) income

$
(1
)

$
6


$
13


$
9


$
4


$
12


$
1


$
44   Electrical/





AutomotiveElectronics


Thermal


Powertrain


Electronic





Holdings


Corporateand Safety


Systems


Systems


Architecture


Steering


Group


and Other(a)


Total(in millions)Balance as of:September 30, 2006Investment in affiliates

$
36


$
72


$
52


$
155


$
6


$
62


$
20


$
403Goodwill and other intangible assets

$
164


$
3


$
1


$
165


$



$



$
92


$
425Capital expenditures

$
174


$
27


$
92


$
147


$
60


$
87


$
19


$
606Segment assets

$
3,711


$
1,263


$
3,520


$
3,847


$
1,300


$
2,340


$
710


$
16,691December 31, 2005Investment in affiliates

$
35


$
113


$
45


$
150


$
2


$
55


$
18


$
418Goodwill and other intangible assets

$
153


$



$
2


$
171


$



$



$
91


$
417Capital expenditures

$
282


$
37


$
227


$
206


$
109


$
180


$
142


$
1,183Segment assets

$
3,449


$
1,229


$
3,347


$
3,494


$
1,132


$
2,192


$
2,180


$
17,023     (a)
    
    Includes $1,043 million and $2,948 million for the
    three and nine months ended September 30, 2006,
    respectively related to U.S. employee special attrition
    program charges. (Refer to Note 9, U.S. Employee
    Special Attrition Program and Pension and Other Postretirement
    Benefits).  12.
    COMMITMENTS
    AND CONTINGENCIES  Regulatory
    Actions and Other Matters
   30




---



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Shareholder
    Lawsuits
           31




---



##### Table of Contents



Environmental
    Matters
  non-U.S. Form 10-K
   32




---



##### Table of Contents



Ordinary
    Business Litigation
     33




---



##### Table of Contents



13.
    SUBSEQUENT EVENTS
    Plan
    Framework Support Agreement and Equity Purchase and Commitment
    Agreement
   34




---



##### Table of Contents



35




---



##### Table of Contents



out-of-pocket
          
    All senior secured debt would be refinanced and paid in full and
    all allowed administrative and priority claims would be paid in
    full.
    Trade and other unsecured claims and unsecured funded debt
    claims would be satisfied in full with $810 million of
    common stock (18 million out of a total of
    135.3 million shares) in the reorganized 36




---



##### Table of Contents



Delphi, at a deemed value of $45 per share, and the balance in
    cash. The framework requires that the amount of allowed trade
    and unsecured claims (other than funded debt claims) not exceed
    $1.7 billion, excluding all allowed accrued postpetition
    interest thereon, and that the amount of cash and common stock
    distributed will be reduced proportionately by the amount that
    allowed trade and other unsecured claims are less than
    $1.7 billion.  
    In exchange for GMs financial contribution to
    Delphis transformation plan, and in satisfaction of
    GMs claims against Delphi, GM would receive 7 million
    out of a total of 135.3 million shares of common stock in
    the reorganized Delphi, $2.63 billion in cash, and an
    unconditional release of any alleged estate claims against GM.
    In addition, as with other customers, certain GM claims would
    flow through the chapter 11 cases and be satisfied by the
    reorganized company in the ordinary course of business.
    All subordinated debt claims would be allowed and satisfied with
    $450 million of common stock (10 million out of a
    total of 135.3 million shares) in the reorganized Delphi,
    at a deemed value of $45 per share and the balance in cash.
    Holders of existing equity securities in Delphi would receive
    $135 million of common stock (3 million out of a total
    of 135.3 million shares) in the reorganized Delphi, at a
    deemed value of $45 per share, and rights to purchase
    56.7 million shares of common stock in the reorganized
    Delphi for $1.984 billion at a deemed exercise price of $35
    per share (subject to the rights offering becoming effective and
    other conditions).
    The PSA also reaffirms Delphis earlier commitment to the
    preservation of its salaried and hourly defined benefit pension
    plans and will include an arrangement to fund approximately
    $3.5 billion of pension obligations. Between
    $1.5 billion and $2 billion of this amount may be
    satisfied through GM taking an assignment of Delphis net
    pension obligations under applicable federal law. GM will
    receive a note in the amount of such assignment on market terms
    that will be paid in full within ten days following the
    effective date of the reorganization plan. Through this funding,
    Delphi will make up required contributions to the pension plans
    that were not made in full during the chapter 11 cases.    Replacement
    Postpetition Financing
     37




---



##### Table of Contents



debtor-in-possession.
      12-month
  debtor-in-possession
    Long-Lived
    Asset Impairment
     38




---



##### Table of Contents



39




---



##### Table of Contents



ITEM 2.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Form 10-K
 Executive
    Summary of Business      No. 05-44481 debtors-in-possession non-U.S.
    
    Obtain, through negotiations with our U.S. labor unions and GM,
    modifications to our collective bargaining agreements to
    transform to a competitive U.S. labor cost structure;
    Conclude negotiations with GM to finalize financial support for
    the legacy and labor costs we currently carry and to ascertain
    its business commitment to Delphi going forward;
    Streamline our product portfolio and focus on those core
    technologies for which we believe we have significant
    competitive and technological advantages and make the necessary
    manufacturing alignment;
    Transform our salaried workforce to ensure that our
    organizational and cost structure is competitive and aligned
    with our product portfolio and manufacturing footprint; and
    Devise a workable solution to our current pension funding
    situation, whether by extending contributions to the pension
    trusts or otherwise. 40




---



##### Table of Contents



41




---



##### Table of Contents



year-to-date year-to-date
     42




---



##### Table of Contents



out-of-pocket
 43




---



##### Table of Contents




    All senior secured debt would be refinanced and paid in full and
    all allowed administrative and priority claims would be paid in
    full.
    Trade and other unsecured claims and unsecured funded debt
    claims would be satisfied in full with $810 million of
    common stock (18 million out of a total of
    135.3 million shares) in the reorganized Delphi, at a
    deemed value of $45 per share, and the balance in cash. The
    framework requires that the amount of allowed trade and
    unsecured claims (other than funded debt claims) not exceed
    $1.7 billion, excluding all allowed accrued postpetition
    interest thereon, and that the amount of cash and common 44




---



##### Table of Contents



stock distributed will be reduced proportionately by the amount
    that allowed trade and other unsecured claims are less than
    $1.7 billion.  
    In exchange for GMs financial contribution to
    Delphis transformation plan, and in satisfaction of
    GMs claims against Delphi, GM would receive 7 million
    out of a total of 135.3 million shares of common stock in
    the reorganized Delphi, $2.63 billion in cash, and an
    unconditional release of any alleged estate claims against GM.
    In addition, as with other customers, certain GM claims would
    flow through the chapter 11 cases and be satisfied by the
    reorganized company in the ordinary course of business.
    All subordinated debt claims would be allowed and satisfied with
    $450 million of common stock (10 million out of a
    total of 135.3 million shares) in the reorganized Delphi,
    at a deemed value of $45 per share and the balance in cash.
    Holders of existing equity securities in Delphi would receive
    $135 million of common stock (3 million out of a total
    of 135.3 million shares) in the reorganized Delphi, at a
    deemed value of $45 per share, and rights to purchase
    56.7 million shares of common stock in the reorganized
    Delphi for $1.984 billion at a deemed exercise price of $35
    per share (subject to the rights offering becoming effective and
    other conditions).
    The PSA also reaffirms Delphis earlier commitment to the
    preservation of its salaried and hourly defined benefit pension
    plans and will include an arrangement to fund approximately
    $3.5 billion of pension obligations. Between $1.5 billion
    and $2 billion of this amount may be satisfied through GM
    taking an assignment of Delphis net pension obligations
    under applicable federal law. GM will receive a note in the
    amount of such assignment on market terms that will be paid in
    full within ten days following the effective date of the
    reorganization plan. Through this funding, Delphi will make up
    required contributions to the pension plans that were not made
    in full during the chapter 11 cases.     45




---



##### Table of Contents



Overview
    of Performance During the Third Quarter and First Nine Months of
    2006  Three Months Ended


Nine Months EndedSeptember 30,


September 30,2006


2005


Change


2006


2005


Change(dollars in millions)


(dollars in millions)Net sales:General Motors and affiliates

$
2,598



43
%

$
2,954



47
%

$
(356
)

$
8,884



44
%

$
9,760



48
%

$
(876
)Other customers


3,410



57
%


3,329



53
%


81



11,092



56
%


10,408



52
%


684Total net sales

$
6,008






$
6,283






$
(275
)

$
19,976






$
20,168






$
(192
)Net loss

$
(1,973
)





$
(788
)





$
(1,185
)

$
(4,611
)





$
(1,529
)





$
(3,082
)   sub-assembly
    and/or
 46




---



##### Table of Contents



Consolidated
    Results of Operations
  Three
    and Nine Months Ended September 30, 2006 versus Three and
    Nine Months Ended September 30, 2005
  Net Sales
   Three Months Ended


Nine Months EndedSeptember 30,


September 30,Product Segment

2006


2005


Change


2006


2005


Change(in millions)


(in millions)Electronics and Safety

$
1,118


$
1,192


$
(74
)

$
3,692


$
3,869


$
(177
)Powertrain Systems


1,201



1,199



2



3,958



4,049



(91
)Electrical/Electronic Architecture


1,237



1,258



(21
)


4,023



3,960



63Thermal Systems


550



548



2



1,807



1,744



63Steering


573



610



(37
)


1,966



1,948



18Automotive Holdings Group


1,274



1,355



(81
)


4,332



4,226



106Corporate and Other (a)


55



121



(66
)


198



372



(174
)Consolidated net sales

$
6,008


$
6,283


$
(275
)

$
19,976


$
20,168


$
(192
)     (a)
    
    Corporate and Other includes the expenses of corporate
    administration, other expenses and income of a non-operating or
    strategic nature, elimination of inter-segment transactions and
    charges related to U.S. employee special attrition
    programs. Additionally, Corporate and Other includes the Product
    and Service Solutions business, which is comprised of
    independent aftermarket, diesel aftermarket, original equipment
    service, consumer electronics and medical systems.  Net Sales for the Three Months Ended September 30, 2006
    versus September 30, 2005.
     47




---



##### Table of Contents



Net Sales for the Nine Months Ended September 30, 2006
    versus September 30, 2005.
      Operating Results
   Three Months Ended


Nine Months EndedSeptember 30,


September 30,Product Segment

2006


2005


Change


2006


2005


Change(in millions)


(in millions)Electronics and Safety

$
13


$
28


$
(15
)

$
186


$
166


$
20Powertrain Systems


(133
)


(35
)


(98
)


(191
)


(112
)


(79
)Electrical/Electronic Architecture


(121
)


12



(133
)


(138
)


111



(249
)Thermal Systems


(102
)


(41
)


(61
)


(140
)


(93
)


(47
)Steering


(106
)


(110
)


4



(267
)


(259
)


(8
)Automotive Holdings Group


(277
)


(372
)


95



(757
)


(1,007
)


250Corporate and Other (a)


(1,061
)


(175
)


(886
)


(2,824
)


(107
)


(2,717
)Consolidated operating loss

$
(1,787
)

$
(693
)

$
(1,094
)

$
(4,131
)

$
(1,301
)

$
(2,830
)Consolidated gross margin


(1.3
%)


1.0
%






3.9
%


4.2
%     (a)
    
    Corporate and Other includes the expenses of corporate
    administration, other expenses and income of a non-operating or
    strategic nature, elimination of inter-segment transactions and
    charges related to U.S. employee special attrition
    programs. Additionally, Corporate and Other includes the Product
    and Service Solutions business, which is comprised of
    independent aftermarket, diesel aftermarket, original equipment
    service, consumer electronics and medical systems. 48




---



##### Table of Contents



Gross Margin
 Gross Margin for the Three Months Ended September 30,
    2006 versus September 30, 2005.
  Gross Margin for the Nine Months Ended September 30,
    2006 versus September 30, 2005.
  U.S. Employee Special Attrition Program
    Charges
 U.S. Employee Special Attrition Program Charges for the
    Three and Nine Months Ended September 30, 2006 versus
    September 30, 2005.
 49




---



##### Table of Contents



Selling, General and Administrative
 Selling, General and Administrative Expenses for the Three
    Months Ended September 30, 2006 versus September 30,
    2005. year-over-year
  Selling, General and Administrative Expenses for the Nine
    Months Ended September 30, 2006 versus September 30,
    2005. year-over-year
  Depreciation and Amortization
 Depreciation and Amortization Expenses for the Three Months
    Ended September 30, 2006 versus September 30,
    2005. year-over-year
  Depreciation and Amortization Expenses for the Nine Months
    Ended September 30, 2006 versus September 30,
    2005.
  Interest Expense
 Interest Expense for the Three Months Ended
    September 30, 2006 versus September 30,
    2005. 90-7, (SOP 90-7).
  Interest Expense for the Nine Months Ended September 30,
    2006 versus September 30, 2005. SOP 90-7.
  Other Income and Expense
 Other Income and Expense for the Three Months Ended
    September 30, 2006 versus September 30,
    2005.
 50




---



##### Table of Contents



Other Income and Expense for the Nine Months Ended
    September 30, 2006 versus September 30,
    2005.
  Reorganization Items
 Reorganization Items for the Three and Nine Months Ended
    September 30, 2006 versus
    September 30, 2005.
  Taxes
 Taxes for the Three and Nine Months Ended September 30,
    2006 versus September 30, 2005. non-U.S. operations. year-over-year. non-U.S. operations non-U.S. operations
 51




---



##### Table of Contents



Results
    of Operations by Segment  Three
    and Nine Months Ended September 30, 2006 versus Three and
    Nine Months Ended September 30, 2005
  Electronics and Safety
   Three Months Ended


Nine Months EndedSeptember 30,


September 30,2006


2005


Change


2006


2005


Change(dollars in millions)


(dollars in millions)Net sales:General Motors and affiliates

$
327



29
%

$
361



30
%

$
(34
)

$
1,058



29
%

$
1,271



33
%

$
(213
)Other customers


745



67
%


766



64
%


(21
)


2,459



67
%


2,384



62
%


75Inter-segment


46



4
%


65



6
%


(19
)


175



4
%


214



5
%


(39
)Total Other and Inter-segment


791



71
%


831



70
%


(40
)


2,634



71
%


2,598



67
%


36Total net sales

$
1,118






$
1,192






$
(74
)

$
3,692






$
3,869






$
(177
)Operating income

$
13






$
28






$
(15
)

$
186






$
166






$
20Gross margin


13.7
%






13.8
%










16.0
%






14.8
%   Net Sales
      Operating Income/Loss
 52




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##### Table of Contents



Powertrain Systems
   Three Months Ended


Nine Months EndedSeptember 30,


September 30,2006


2005


Change


2006


2005


Change(dollars in millions)


(dollars in millions)Net sales:General Motors and affiliates

$
368



31
%

$
425



35
%

$
(57
)

$
1,305



33
%

$
1,471



36
%

$
(166
)Other customers


733



61
%


678



57
%


55



2,384



60
%


2,249



56
%


135Inter-segment


100



8
%


96



8
%


4



269



7
%


329



8
%


(60
)Total Other and Inter-segment


833



69
%


774



65
%


59



2,653



67
%


2,578



64
%


75Total net sales

$
1,201






$
1,199






$
2


$
3,958






$
4,049






$
(91
)Operating loss

$
(133
)





$
(35
)





$
(98
)

$
(191
)





$
(112
)





$
(79
)Gross margin


0.5
%






8.6
%










5.5
%






7.8
%   Net Sales
     53




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##### Table of Contents



Operating Income/Loss
  Electrical/Electronic Architecture
  Three Months Ended


Nine Months EndedSeptember 30,


September 30,2006


2005


Change


2006


2005


Change(dollars in millions)


(dollars in millions)Net sales:General Motors and affiliates

$
388



31
%

$
463



37
%

$
(75
)

$
1,332



33
%

$
1,449



37
%

$
(117
)Other customers


808



65
%


750



60
%


58



2,561



64
%


2,364



60
%


197Inter-segment


41



4
%


45



3
%


(4
)


130



3
%


147



3
%


(17
)Total Other and Inter-segment


849



69
%


795



63
%


54



2,691



67
%


2,511



63
%


180Total net sales

$
1,237






$
1,258






$
(21
)

$
4,023






$
3,960






$
63Operating (loss) income

$
(121
)





$
12






$
(133
)

$
(138
)





$
111






$
(249
)Gross margin


1.0
%






11.0
%










6.5
%






12.4
%   Net Sales
     54




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##### Table of Contents



Operating Income/Loss
  Thermal Systems
   Three Months Ended


Nine Months EndedSeptember 30,


September 30,2006


2005


Change


2006


2005


Change(dollars in millions)


(dollars in millions)Net sales:General Motors and affiliates

$
320



58
%

$
348



64
%

$
(28
)

$
1,095



60
%

$
1,136



65
%

$
(41
)Other customers


206



37
%


173



32
%


33



620



34
%


539



31
%


81Inter-segment


24



5
%


27



4
%


(3
)


92



6
%


69



4
%


23Total Other and Inter-segment


230



42
%


200



36
%


30



712



40
%


608



35
%


104Total net sales

$
550






$
548






$
2


$
1,807






$
1,744






$
63Operating loss

$
(102
)





$
(41
)





$
(61
)

$
(140
)





$
(93
)





$
(47
)Gross margin


(9.6
%)






2.7
%










0.4
%






4.0
%   Net Sales
     55




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##### Table of Contents



Operating Income/Loss
  Steering
   Three Months Ended


Nine Months EndedSeptember 30,


September 30,2006


2005


Change


2006


2005


Change(dollars in millions)


(dollars in millions)Net sales:General Motors and affiliates

$
347



61
%

$
379



62
%

$
(32
)

$
1,212



62
%

$
1,228



63
%

$
(16
)Other customers


197



34
%


203



33
%


(6
)


662



34
%


624



32
%


38Inter-segment


29



5
%


28



5
%


1



92



4
%


96



5
%


(4
)Total Other and Inter-segment


226



39
%


231



38
%


(5
)


754



38
%


720



37
%


34Total net sales

$
573






$
610






$
(37
)

$
1,966






$
1,948






$
18Operating loss

$
(106
)





$
(110
)





$
4


$
(267
)





$
(259
)





$
(8
)Gross margin


(7.9
%)






(6.9
%)










(4.5
%)






(3.1
%)   Net Sales
   56




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##### Table of Contents



year-over-year,
    Operating Income/Loss
  Automotive
    Holdings Group
   Three Months Ended


Nine Months EndedSeptember 30,


September 30,2006


2005


Change


2006


2005


Change(dollars in millions)


(dollars in millions)Net sales:General Motors and affiliates

$
709



56
%

$
779



57
%

$
(70
)

$
2,414



56
%

$
2,578



61
%

$
(164
)Other customers


469



37
%


466



34
%


3



1,601



37
%


1,239



29
%


362Inter-segment


96



7
%


110



9
%


(14
)


317



7
%


409



10
%


(92
)Total Other and Inter-segment


565



44
%


576



43
%


(11
)


1,918



44
%


1,648



39
%


270Total net sales

$
1,274






$
1,355






$
(81
)

$
4,332






$
4,226






$
106Operating loss

$
(277
)





$
(372
)





$
95


$
(757
)





$
(1,007
)





$
250Gross margin


(13.3
%)






(16.5
%)










(9.7
%)






(14.2
%)   Net Sales
   57




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##### Table of Contents



Operating Income/Loss Period-over-period
  Corporate
    and Other
   Net Sales
  Operating Income/Loss
 Liquidity
    and Capital Resources  Overview
    of Capital Structure
   58




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59




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##### Table of Contents



debtor-in-possession.
  12-month debtor-in-possession
    
   60




---



##### Table of Contents



September 30,


December 31,2006


2005(in millions)Long-term debt subject to
    compromise:Senior unsecured debt with
    maturities ranging from 2006 to 2029

$
1,983


$
1,983Junior subordinated notes due to
    Delphi Trust I and II due 2033


403



403Other debt


72



79Total long-term debt subject to
    compromise


2,458



2,465Short-term, other, and long-term
    debt not subject to compromise:Revolving credit facility


1,507



1,506Term loan secured debt due 2011


984



984Accounts receivable factoring


447



365European securitization


83



149Other debt


81



113Total short-term and other debt
    not subject to compromise


3,102



3,117Other long-term debt, primarily
    the DIP term loan


297



273Total debt not subject to
    compromise


3,399



3,390Total outstanding debt

$
5,857


$
5,855     Prepetition
    Indebtedness
  Form 10-K
  Bonds and Trust Preferred
    Securities. SOP 90-7,
 61




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##### Table of Contents



1 4 over-the-counter 1 4
    Prepetition Credit Facilities.
       62




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##### Table of Contents



Other
    Financing
      Credit
    Ratings, Stock Listing
  point-in-time point-in-time
  1 2 1 8 Form 10-Q, Form 10-Q 1 2 1 8
  Cash
    Flows
  Operating Activities.
  Investing Activities.
 63




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Financing Activities.
  Dividends. debtor-in-possession Form 10-K
 Shareholder
    Lawsuits         64




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and/or
     65




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Regulatory
    Actions and Other Matters   Environmental
    Matters  non-U.S. environmental
     66




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Inflation   Recently
    Issued Accounting Pronouncements   Significant
    Accounting Policies and Critical Accounting Estimates  Form 10-K
  Share-Based Payments Form 10-Q.
 67




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##### Table of Contents



Forward-Looking
    Statements  Form 10-Q, debtor-in-possession and/or and/or and/or
  ITEM 3.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   68




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ITEM 4.
    CONTROLS
    AND PROCEDURES  Disclosure
    Controls and Procedures
  Rules 13a-15(e) 15d-15(e)) Form 10-K Form 10-K
  Form 10-Q Form 10-K
  Changes
    in internal control over financial reporting
    Form 10-K
   69




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##### Table of Contents



PART II.
    OTHER INFORMATION  ITEM 1.
    LEGAL
    PROCEEDINGS  Form 10-K
   ITEM 1A.  RISK
    FACTORS



Set forth below (not necessarily in order of importance or
    probability of occurrence) are certain risks and uncertainties
    that could adversely affect our results of operations or
    financial condition and cause our actual results to differ
    materially from those expressed in forward-looking statements
    made by the Company. Although many of these risks are similar to
    those noted in our Annual Report on
    Form 10-K
    for the year ended December 31, 2005, we have updated the
    discussion to contemplate recent developments, including changes
    in our business and developments in our chapter 11 cases.
    Also refer to the Forward-Looking Statements in Part I,
    Item 2 Management Discussion and Analysis of this Quarterly
    Report.



Risk
    Factors Specifically Related to our Current Reorganization Cases
    Under Chapter 11 of the U.S. Bankruptcy Code



If We
    Are Unable To Successfully Reorganize Our Capital Structure And
    Operations And Implement Our Transformation Plan Through the
    Chapter 11 Process, The Debtors May Be Required To
    Liquidate Our Assets.



Commencing October 8, 2005, and October 14, 2005, the
    Company and certain of our U.S. subsidiaries filed
    voluntary petitions for reorganization relief under
    chapter 11 of the Bankruptcy Code. Risk factors involving
    the Chapter 11 Filings include, but are not limited to, the
    following: 
    The chapter 11 cases may adversely affect our business
    prospects
    and/or our
    ability to operate during the reorganization cases.  
    We may have difficulty continuing to obtain and maintain
    contracts, including critical supply agreements, necessary to
    continue our operations and at affordable rates with competitive
    terms.
    We may have difficulty maintaining existing customer
    relationships and winning awards for new business.
    We may not be able to further diversify our customer base and
    maintain our customer base in our non-Debtor entities, both
    during and assuming successful emergence from chapter 11.
    Debtor entity transactions outside the ordinary course of
    business are subject to the prior approval of the Court, which
    may limit our ability to respond timely to certain events or
    take advantage of certain opportunities.
    The Debtors may not be able to obtain Court approval or such
    approval may be delayed with respect to motions made in the
    chapter 11 cases.
    We may be unable to retain and motivate key executives and
    associates through the process of reorganization, and we may
    have difficulty attracting new employees.
    The Debtors may be unable to maintain satisfactory labor
    relations as they seek to negotiate changes to their existing
    collective bargaining agreements and modify certain retiree
    benefits. 70




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##### Table of Contents




    Representatives of certain of the unions representing the
    Debtors U.S. hourly employees, including the UAW and
    IUE-CWA, have indicated that they received membership
    authorization and may call for a strike by their employee
    members in the event the Debtors labor agreements are
    rejected pursuant to the Debtors pending motion before the
    Court under sections 1113 and 1114 of the Bankruptcy Code.  
    There can be no assurance as to our ability to maintain
    sufficient financing sources to fund our reorganization plan and
    meet future obligations. We are currently financing our
    operations during our reorganization cases using funds from
    operations and borrowings under our DIP financing, and overseas
    factoring and securitization. We may be unable to operate
    pursuant to the terms of our DIP financing arrangements,
    including the financial covenants and restrictions contained
    therein, or to negotiate and obtain necessary approvals,
    amendments, waivers or other types of modifications, and to
    otherwise fund and execute our business plans throughout the
    duration of the chapter 11 cases. For more information
    regarding the terms of our DIP facility during 2006 and the
    Refinanced DIP Credit Facility entered into in January 2007, and
    other uses and sources of financing, refer to Item 2.
    Managements Discussion and Analysis of Financial Condition
    and Results of Operations  Liquidity and Capital
    Resources in this Quarterly Report.
    The transactions contemplated by the EPCA and the PSA may not be
    consummated and there can be no assurance that we will be able
    to successfully develop, prosecute, confirm and consummate one
    or more plans of reorganization with respect to the
    chapter 11 cases that are acceptable to the Court and the
    Companys creditors, equity holders and other parties in
    interest. Additionally, third parties may seek and obtain Court
    approval to terminate or shorten the exclusivity period for
    Delphi to propose and confirm one or more plans of
    reorganization, to appoint a chapter 11 trustee, or to
    convert the cases to chapter 7 cases.
    Even assuming a successful emergence from chapter 11, there
    can be no assurance as to the overall long-term viability of our
    operational reorganization.    and/or
  Business
    Environment and Economic Conditions
  The
    Cyclical Nature Of Automotive Sales And Production Can Adversely
    Affect Our Business.
   71




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##### Table of Contents



Drop
    In The Market Share And Changes In Product Mix Offered By Our
    Customers Can Impact Our Revenues.
    We
    Depend On General Motors Corporation As A Customer, And We May
    Not Be Successful At Attracting New Customers.
     72




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##### Table of Contents



Contract
    Terms  Continued Pricing Pressures, VM Cost Reduction
    Initiatives And Ability Of VMs To Resource Or Cancel Vehicle
    Programs May Result In Lower Than Anticipated Margins, Or
    Losses, Which May Have A Significant Negative Impact On Our
    Business.
      Competition 
    We Operate In The Highly Competitive Automotive Supply
    Industry.
  and/or
  Certain
    Disruptions In Supply Of And Changes In the Competitive
    Environment For Raw Materials Integral To Our Products May
    Adversely Affect Our Profitability.
   73




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##### Table of Contents



10-15%
  We May
    Not Be Able To Respond Quickly Enough To Changes In Technology
    And Technological Risks, And To Develop Our Intellectual
    Property Into Commercially Viable Products.
      We May
    Not Succeed In Our Attempts To Improve Our Cost
    Structure.
   74




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##### Table of Contents



Asset
    Impairment And Other Restructuring Charges  We May
    Suffer Future Asset Impairment And Other Restructuring Charges,
    Including Write Downs of Goodwill Or Intangible
    Assets.
    We May
    Be Unable To Generate Sufficient Excess Cash Flow To Meet
    Increased U.S. Pension And OPEB Funding Obligations Upon
    Emergence.
    Employee
    Strikes and Labor Related Disruptions May Adversely Affect our
    Operations.
   75




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##### Table of Contents



We May
    Lose or Fail To Attract and Retain Key Salaried Employees and
    Management Personnel.
    Our
    Exposure To Foreign Currency Fluctuations May Affect Our
    Financial Results.
    Legal and
    Accounting Matters
  We May
    Incur Material Losses And Costs As A Result Of Product Liability
    And Warranty Claims And Intellectual Property Infringement
    Actions That May Be Brought Against Us.
  and/or
 76




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##### Table of Contents



Incurrence
    Of Significant Legal Costs May Adversely Affect Our
    Profitablity.
    Environmental
    Factors Relating To Transformation Activities.
  and/or
  Debt
  We
    Anticipate That Our Operations Will Continue To Use Rather Than
    Generate Cash And As A Result We Will Continue To Maintain
    Substantial Levels Of Debt And Debt Service That Will Further
    Divert A Significant Amount Of Cash From Our Business
    Operations
      
    requiring a substantial portion of our cash flow from operations
    to be dedicated to debt service and therefore not available to
    us for our operations, capital expenditures and future business
    opportunities;
    increasing our vulnerability to a downturn in general economic
    conditions or in our business;
    limiting our ability to adjust to changing market conditions,
    placing us at a competitive disadvantage compared to our
    competitors that have relatively less debt; and
    limiting our ability to obtain additional financing or access
    other debt in the future for capital expenditures, working
    capital or general corporate purposes. 77




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##### Table of Contents



Restrictions
    And Covenants In the Refinanced DIP Credit Facility Limit Our
    Ability To Take Certain Actions And Require Us to Satisfy
    Certain Financial Tests.
    12-month debtor-in-possession
  debtor-in-possession.
    Internal
    Controls
  Failure
    To Achieve And Maintain Effective Internal Controls In
    Accordance With Section 404 Of The Sarbanes-Oxley Act of
    2002 Could Have A Material Effect On Our Business.
  Form 10-K.
 78




---



##### Table of Contents



We
    Face Substantial Ongoing Costs Associated With Complying With
    the Requirements of Section 404 of the Sarbanes-Oxley
    Act.
    ITEM 2.
    UNREGISTERED
    SALES OF EQUITY SECURITIES AND USE OF PROCEEDS  Purchase
    of Equity Securities by the Issuer and Affiliated
    Purchasers
    ITEM 3.
    DEFAULTS
    UPON SENIOR SECURITIES  Form 10-K
 79




---



##### Table of Contents



ITEM 6.
    EXHIBITS  ExhibitNumber

Exhibit Name3
(a)

Amended and Restated Certificate
    of Incorporation of Delphi Automotive Systems Corporation,
    incorporated by reference to Exhibit 3(a) to Delphis
    Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2002.3
(b)

Certificate of Ownership and
    Merger, dated March 13, 2002, Merging Delphi Corporation
    into Delphi Automotive Systems Corporation, incorporated by
    reference to Exhibit 3(b) to Delphis Quarterly Report
    on
    Form 10-Q
    for the quarter ended June 30, 2002.3
(c)

By-laws of Delphi Automotive
    Systems Corporation, incorporated by reference to
    Exhibit 3.2 to Delphis Registration Statement on
    Form S-1
    (Registration
    No. 333-67333).10
(a)

Order Under 11 U.S.C.
    §§ 105 and 363 entered by the United States
    Bankruptcy Court for the Southern District of New York
    Authorizing the Debtors to Implement a Short-Term Annual
    Incentive Program dated July 21, 2006, incorporated by
    reference to Exhibit 99 (a) to Delphis Report on
    Form 8-K
    filed on July 27, 2006.*10
(b)

Fifth Amendment to Amended and
    Restated Credit Agreement, dated as of August 10, 2006.31
(a)

Certification Pursuant to Exchange
    Act
    Rules 13a-14(a)/15d-14(a),
    adopted pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.31
(b)

Certification Pursuant to Exchange
    Act
    Rules 13a-14(a)/15d-14(a),
    adopted pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.32
(a)

Certification Pursuant to
    18 U.S.C. Section 1350, adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.32
(b)

Certification Pursuant to
    18 U.S.C. Section 1350, adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.     *
    
    Management contract or compensatory plan or arrangement. 80




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##### Table of Contents



SIGNATURE    Delphi
    Corporation(Registrant)February 13,
    2007

/s/  Thomas
    S. TimkoThomas S. TimkoChief Accounting Officer and
    Controller  81