##### Table of Contents









UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, DC 20549-1004


FORM 10-Q


|  |  |                                                                                            
|- |  | -------------------------------------------------------------------------------------------
|þ |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
|  |  | For the quarterly period ended June 30, 2005                                               
|  |  | OR                                                                                         
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OF THE
    SECURITIES EXCHANGE ACT OF 1934        
|  |  | For the transition period
    from                   to                   .                

Commission file No. 1-14787


DELPHI CORPORATION




|                                                                   |  |                                     
|------------------------------------------------------------------ |  | ------------------------------------
|Delaware                                                           |  | 38-3430473                          
|(State or other jurisdiction of
    incorporation or organization) |  | (IRS employer identification number)
|                                                                  
|5725 Delphi Drive, Troy, Michigan                                  |  | 48098                               
|(Address of principal executive offices)                           |  | (Zip code)                          

(248) 813-2000




þ o


þ o












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DELPHI CORPORATION


INDEX


|                                   |  |                                                                                                         |    |      |    | 
|---------------------------------- |  | ------------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|                                   |  |                                                                                                         |    | Page |   
|                                   |  |                                                                                                         |    |      |   
|Part I  Financial
    Information
|Item 1.                            |  | Financial Statements (Unaudited)                                                                        |    |      |    | 
|                                   |  | Consolidated Statements of Operations for
    the Three and Six Months Ended June 30, 2005 and
    2004 |    |      | 3  | 
|                                   |  | Consolidated Balance Sheets at
    June 30, 2005 and December 31, 2004                                  |    |      | 4  | 
|                                   |  | Consolidated Statements of Cash Flows for
    the Six Months Ended June 30, 2005 and 2004               |    |      | 5  | 
|                                   |  | Notes to Consolidated Financial
    Statements                                                          |    |      | 6  | 
|Item 2.                            |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations               |    |      | 18 | 
|Item 3.                            |  | Quantitative and Qualitative Disclosures
    About Market Risk                                          |    |      | 37 | 
|Item 4.                            |  | Controls and Procedures                                                                                 |    |      | 37 | 
|Part II  Other
    Information   
|Item 1.                            |  | Legal Proceedings                                                                                       |    |      | 38 | 
|Item 2.                            |  | Unregistered Sales of Equity Securities and
    Use of Proceeds                                         |    |      | 38 | 
|Item 5.                            |  | Other Information                                                                                       |    |      | 38 | 
|Item 6.                            |  | Exhibits                                                                                                |    |      | 39 | 
|Signature                          |  |                                                                                                         | 41 |     
|Section 302 Certification         
|Section 302 Certification         
|Section 906 Certification         
|Section 906 Certification         



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##### Table of Contents






PART I. FINANCIAL INFORMATION





ITEM 1. FINANCIAL STATEMENTS


DELPHI CORPORATION





CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)


|                                                                            |                                             |                                         |      |       |                  |   |     |       |       |   |      |        |        |   |     |        |        | 
|--------------------------------------------------------------------------- | ------------------------------------------- | --------------------------------------- | ---- | ----- | ---------------- | - | --- | ----- | ----- | - | ---- | ------ | ------ | - | --- | ------ | ------ | 
|                                                                            |                                             | Three Months Ended                      |      |       | Six Months Ended |  
|                                                                            |                                             | June 30,                                |      |       | June 30,         |  
|                                                                            |                                             |                                         |      |       |                  |  
|                                                                            |                                             | 2005                                    |      |       | 2004             |   |     | 2005  |       |   | 2004 |       
|                                                                            |                                             |                                         |      |       |                  |   |     |       |       |   |      |       
|                                                                            |                                             | (in millions, except per share amounts) |     
|Net sales:                                                                  |                                             |                                         |      |       |                  |   |     |       |       |   |      |        |        |   |     |       
|                                                                            | General Motors and affiliates               |                                         | $    | 3,407 |                  |   | $   | 4,133 |       |   | $    | 6,806  |        |   | $   | 8,322  |       
|                                                                            | Other customers                             |                                         |      | 3,616 |                  |   |     | 3,409 |       |   |      | 7,079  |        |   |     | 6,625  |       
|                                                                            |                                             |                                         |      |       |                  |   |     |       |       |   |      |       
|                                                                            |                                             | Total net sales                         |      |       | 7,023            |   |     |       | 7,542 |   |      |        | 13,885 |   |     |        | 14,947 | 
|                                                                            |                                             |                                         |      |       |                  |   |     |       |       |   |      |       
|Operating expenses:                                                         |                                             |                                         |      |       |                  |   |     |       |       |   |      |        |        |   |     |       
|                                                                            | Cost of sales, excluding items listed below |                                         |      | 6,606 |                  |   |     | 6,607 |       |   |      | 13,106 |        |   |     | 13,171 |       
|                                                                            | Selling, general and administrative         |                                         |      | 412   |                  |   |     | 410   |       |   |      | 806    |        |   |     | 788    |       
|                                                                            | Depreciation and amortization               |                                         |      | 289   |                  |   |     | 283   |       |   |      | 581    |        |   |     | 565    |       
|                                                                            | Employee and product line charges           |                                         |      |      |                  |   |     | 32    |       |   |      |       |        |   |     | 70     |       
|                                                                            |                                             |                                         |      |       |                  |   |     |       |       |   |      |       
|                                                                            |                                             | Total operating expenses                |      |       | 7,307            |   |     |       | 7,332 |   |      |        | 14,493 |   |     |        | 14,594 | 
|                                                                            |                                             |                                         |      |       |                  |   |     |       |       |   |      |       
|Operating (loss) income                                                     |                                             |                                         | (284 | )     |                  |   | 210 |       |       |   | (608 | )      |        |   | 353 |       
|                                                                            | Interest expense                            |                                         |      | (67   | )                |   |     | (55   | )     |   |      | (121   | )      |   |     | (117   | )     
|                                                                            | Other income (expense), net                 |                                         |      | 22    |                  |   |     | (5    | )     |   |      | 27     |        |   |     | (11    | )     
|                                                                            |                                             |                                         |      |       |                  |   |     |       |       |   |      |       
|(Loss) income before income taxes, minority interest, and equity
    income |                                             |                                         | (329 | )     |                  |   | 150 |       |       |   | (702 | )      |        |   | 225 |       
|                                                                            | Income tax expense                          |                                         |      | (20   | )                |   |     | (17   | )     |   |      | (57    | )      |   |     | (40    | )     
|                                                                            | Minority interest, net of tax               |                                         |      | (8    | )                |   |     | (15   | )     |   |      | (16    | )      |   |     | (26    | )     
|                                                                            | Equity income                               |                                         |      | 19    |                  |   |     | 25    |       |   |      | 34     |        |   |     | 47     |       
|                                                                            |                                             |                                         |      |       |                  |   |     |       |       |   |      |       
|Net (loss) income                                                           |                                             | $                                       | (338 | )     |                  | $ | 143 |       |       | $ | (741 | )      |        | $ | 206 |       
|                                                                            |                                             |                                         |      |       |                  |   |     |       |       |   |      |       
|(Loss) earnings per share                                                   |                                             |                                         |      |       |                  |   |     |       |       |   |      |        |        |   |     |       
|                                                                            | Basic and diluted                           |                                         | $    | (0.60 | )                |   | $   | 0.25  |       |   | $    | (1.33  | )      |   | $   | 0.37   |       
|                                                                            |                                             |                                         |      |       |                  |   |     |       |       |   |      |       



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DELPHI CORPORATION





CONSOLIDATED BALANCE SHEETS


|                                            |                                                                                                                |                                                   |                             |        |              |        |        |        |       |        |  
|------------------------------------------- | -------------------------------------------------------------------------------------------------------------- | ------------------------------------------------- | --------------------------- | ------ | ------------ | ------ | ------ | ------ | ----- | ------ | -
|                                            |                                                                                                                | June 30,                                          |                             |        |             
|                                            |                                                                                                                | 2005                                              |                             |        | December 31, |       
|                                            |                                                                                                                | (Unaudited)                                       |                             |        | 2004         |       
|                                            |                                                                                                                |                                                   |                             |        |              |       
|                                            |                                                                                                                | (in millions)                                     |                            
|ASSETS                                     
|Current assets:                             |                                                                                                                |                                                   |                             |        |              |        |        |       
|                                            | Cash and cash equivalents                                                                                      |                                                   | $                           | 988    |              |        | $      | 964    |      
|                                            | Accounts receivable, net:                                                                                      |                                                   |                             |        |              |        |        |        |      
|                                            |                                                                                                                | General Motors and affiliates                     |                             |        | 2,266        |        |        |        | 2,182 |       
|                                            |                                                                                                                | Other customers                                   |                             |        | 2,461        |        |        |        | 1,476 |       
|                                            | Retained interest in receivables, net                                                                          |                                                   |                             |       |              |        |        | 726    |      
|                                            | Inventories, net:                                                                                              |                                                   |                             |        |              |        |        |        |      
|                                            |                                                                                                                | Productive material, work-in-process and supplies |                             |        | 1,326        |        |        |        | 1,413 |       
|                                            |                                                                                                                | Finished goods                                    |                             |        | 543          |        |        |        | 545   |       
|                                            | Deferred income taxes                                                                                          |                                                   |                             | 42     |              |        |        | 39     |      
|                                            | Prepaid expenses and other                                                                                     |                                                   |                             | 325    |              |        |        | 354    |      
|                                            |                                                                                                                |                                                   |                             |        |              |       
|                                            |                                                                                                                |                                                   | Total current assets        |        |              | 7,951  |        |        |       | 7,699  |  
|Long-term assets:                           |                                                                                                                |                                                   |                             |        |              |        |        |       
|                                            | Property, net                                                                                                  |                                                   |                             | 5,721  |              |        |        | 5,946  |      
|                                            | Deferred income taxes                                                                                          |                                                   |                             | 132    |              |        |        | 130    |      
|                                            | Goodwill                                                                                                       |                                                   |                             | 753    |              |        |        | 798    |      
|                                            | Other intangible assets                                                                                        |                                                   |                             | 59     |              |        |        | 80     |      
|                                            | Pension intangible assets                                                                                      |                                                   |                             | 1,044  |              |        |        | 1,044  |      
|                                            | Other                                                                                                          |                                                   |                             | 851    |              |        |        | 896    |      
|                                            |                                                                                                                |                                                   |                             |        |              |       
|                                            |                                                                                                                |                                                   | Total assets                |        | $            | 16,511 |        |        | $     | 16,593 |  
|                                            |                                                                                                                |                                                   |                             |        |              |       
|                                           
|LIABILITIES AND STOCKHOLDERS DEFICIT      
|Current liabilities:                        |                                                                                                                |                                                   |                             |        |              |        |        |       
|                                            | Notes payable and current portion of long-term debt                                                            |                                                   | $                           | 971    |              |        | $      | 507    |      
|                                            | Accounts payable                                                                                               |                                                   |                             | 3,568  |              |        |        | 3,504  |      
|                                            | Accrued liabilities                                                                                            |                                                   |                             | 3,156  |              |        |        | 2,694  |      
|                                            |                                                                                                                |                                                   |                             |        |              |       
|                                            |                                                                                                                |                                                   | Total current liabilities   |        |              | 7,695  |        |        |       | 6,705  |  
|Long-term liabilities:                      |                                                                                                                |                                                   |                             |        |              |        |        |       
|                                            | Long-term debt                                                                                                 |                                                   |                             | 2,542  |              |        |        | 2,061  |      
|                                            | Junior subordinated notes due to Delphi Trust I and II                                                         |                                                   |                             | 412    |              |        |        | 412    |      
|                                            | Pension benefits                                                                                               |                                                   |                             | 2,740  |              |        |        | 3,523  |      
|                                            | Postretirement benefits other than pensions                                                                    |                                                   |                             | 6,598  |              |        |        | 6,297  |      
|                                            | Other                                                                                                          |                                                   |                             | 916    |              |        |        | 936    |      
|                                            |                                                                                                                |                                                   |                             |        |              |       
|                                            |                                                                                                                |                                                   | Total liabilities           |        |              | 20,903 |        |        |       | 19,934 |  
|                                            |                                                                                                                |                                                   |                             |        |              |       
|Commitments and contingencies (Note 11)     |                                                                                                                |                                                   |                             |        |              |        |        |       
|Minority interest                           |                                                                                                                |                                                   | 165                         |        |              |        | 198    |       
|Stockholders deficit:                      |                                                                                                                |                                                   |                             |        |              |        |        |       
|                                            | Common stock, $0.01 par value, 1,350 million shares
    authorized, 565 million shares issued in 2005 and 2004 |                                                   |                             | 6      |              |        |        | 6      |      
|                                            | Additional paid-in capital                                                                                     |                                                   |                             | 2,670  |              |        |        | 2,661  |      
|                                            | Accumulated deficit                                                                                            |                                                   |                             | (4,679 | )            |        |        | (3,913 | )    
|                                            | Minimum pension liability                                                                                      |                                                   |                             | (2,460 | )            |        |        | (2,469 | )    
|                                            | Accumulated other comprehensive income (loss), excluding minimum
    pension liability                         |                                                   |                             | (36    | )            |        |        | 237    |      
|                                            | Treasury stock, at cost (3.6 million and 3.8 million
    shares in 2005 and 2004, respectively)                |                                                   |                             | (58    | )            |        |        | (61    | )    
|                                            |                                                                                                                |                                                   |                             |        |              |       
|                                            |                                                                                                                |                                                   | Total stockholders deficit |        |              | (4,557 | )      |        |       | (3,539 | )
|                                            |                                                                                                                |                                                   |                             |        |              |       
|Total liabilities and stockholders deficit |                                                                                                                | $                                                 | 16,511                      |        |              | $      | 16,593 |       
|                                            |                                                                                                                |                                                   |                             |        |              |       



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DELPHI CORPORATION





CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


|                                      |                                                                                                   |                                                                |                                                     |      |      |      |   |      |      |      |  
|------------------------------------- | ------------------------------------------------------------------------------------------------- | -------------------------------------------------------------- | --------------------------------------------------- | ---- | ---- | ---- | - | ---- | ---- | ---- | -
|                                      |                                                                                                   | Six Months Ended                                               |                                                    
|                                      |                                                                                                   | June 30,                                                       |                                                    
|                                      |                                                                                                   |                                                                |                                                    
|                                      |                                                                                                   | 2005                                                           |                                                     |      | 2004 |     
|                                      |                                                                                                   |                                                                |                                                     |      |      |     
|                                      |                                                                                                   | (in millions)                                                  |                                                    
|Cash flows from operating activities: |                                                                                                   |                                                                |                                                     |      |      |      |   |     
|                                      | Net (loss) income                                                                                 |                                                                | $                                                   | (741 | )    |      | $ | 206  |     
|                                      | Adjustments to reconcile net (loss) income to net cash provided
    by operating activities:      |                                                                |                                                     |      |      |      |   |      |     
|                                      |                                                                                                   | Depreciation and amortization                                  |                                                     |      | 581  |      |   |      | 565  |     
|                                      |                                                                                                   | Deferred income taxes                                          |                                                     |      | (14  | )    |   |      | (101 | )   
|                                      |                                                                                                   | Employee and product line charges                              |                                                     |      |     |      |   |      | 70   |     
|                                      |                                                                                                   | Pension and other postretirement benefit expenses              |                                                     |      | 772  |      |   |      | 719  |     
|                                      |                                                                                                   | Equity income                                                  |                                                     |      | (34  | )    |   |      | (47  | )   
|                                      | Changes in operating assets and liabilities:                                                      |                                                                |                                                     |      |      |      |   |      |     
|                                      |                                                                                                   | Accounts receivable and retained interests in receivables, net |                                                     |      | 200  |      |   |      | (167 | )   
|                                      |                                                                                                   | Inventories, net                                               |                                                     |      | 90   |      |   |      | (101 | )   
|                                      |                                                                                                   | Prepaid expenses and other                                     |                                                     |      | 83   |      |   |      | 66   |     
|                                      |                                                                                                   | Accounts payable                                               |                                                     |      | 67   |      |   |      | 158  |     
|                                      |                                                                                                   | Employee and product line charge obligations                   |                                                     |      | (44  | )    |   |      | (215 | )   
|                                      |                                                                                                   | Accrued and other long-term liabilities                        |                                                     |      | (102 | )    |   |      | (7   | )   
|                                      |                                                                                                   | Pension contributions                                          |                                                     |      | (625 | )    |   |      | (600 | )   
|                                      |                                                                                                   | Other                                                          |                                                     |      | (9   | )    |   |      | 43   |     
|                                      |                                                                                                   |                                                                |                                                     |      |      |     
|                                      |                                                                                                   |                                                                | Net cash provided by operating activities           |      |      | 224  |   |      |      | 589  |  
|                                      |                                                                                                   |                                                                |                                                     |      |      |     
|Cash flows from investing activities: |                                                                                                   |                                                                |                                                     |      |      |      |   |     
|                                      | Capital expenditures                                                                              |                                                                |                                                     | (555 | )    |      |   | (430 | )   
|                                      | Proceeds from sale of property                                                                    |                                                                |                                                     | 43   |      |      |   | 31   |     
|                                      | Other                                                                                             |                                                                |                                                     | 37   |      |      |   | 14   |     
|                                      |                                                                                                   |                                                                |                                                     |      |      |     
|                                      |                                                                                                   |                                                                | Net cash used in investing activities               |      |      | (475 | ) |      |      | (385 | )
|                                      |                                                                                                   |                                                                |                                                     |      |      |     
|Cash flows from financing activities: |                                                                                                   |                                                                |                                                     |      |      |      |   |     
|                                      | Repayment of debt securities                                                                      |                                                                |                                                     |     |      |      |   | (500 | )   
|                                      | Net proceeds from term loan facility                                                              |                                                                |                                                     | 983  |      |      |   |     |     
|                                      | Net (repayments of) proceeds from borrowings under revolving
    credit facilities and other debt |                                                                |                                                     | (554 | )    |      |   | 194  |     
|                                      | Dividend payments                                                                                 |                                                                |                                                     | (56  | )    |      |   | (79  | )   
|                                      | Issuances of treasury stock                                                                       |                                                                |                                                     |     |      |      |   | 2    |     
|                                      | Other                                                                                             |                                                                |                                                     | (57  | )    |      |   | (19  | )   
|                                      |                                                                                                   |                                                                |                                                     |      |      |     
|                                      |                                                                                                   |                                                                | Net cash provided by (used in) financing activities |      |      | 316  |   |      |      | (402 | )
|                                      |                                                                                                   |                                                                |                                                     |      |      |     
|                                      | Effect of exchange rate fluctuations on cash and cash equivalents                                 |                                                                |                                                     | (41  | )    |      |   | (14  | )   
|                                      |                                                                                                   |                                                                |                                                     |      |      |     
|                                      | Increase (decrease) in cash and cash equivalents                                                  |                                                                |                                                     | 24   |      |      |   | (212 | )   
|                                      | Cash and cash equivalents at beginning of period                                                  |                                                                |                                                     | 964  |      |      |   | 893  |     
|                                      |                                                                                                   |                                                                |                                                     |      |      |     
|                                      | Cash and cash equivalents at end of period                                                        |                                                                | $                                                   | 988  |      |      | $ | 681  |     
|                                      |                                                                                                   |                                                                |                                                     |      |      |     



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DELPHI CORPORATION





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)




|   |                      
|-- | ---------------------
|1. | BASIS OF PRESENTATION

General




Earnings Per Share




|                                    |  |                |         |  |                |  |         |      |  |  |         |  |  |  |         | 
|----------------------------------- |  | -------------- | ------- |  | -------------- |  | ------- | ---- |  |  | ------- |  |  |  | ------- | 
|                                    |  | Three Months   |         |  | Six Months     | 
|                                    |  | Ended June 30, |         |  | Ended June 30, | 
|                                    |  |                |         |  |                | 
|                                    |  | 2005           |         |  | 2004           |  |         | 2005 |  |  | 2004    | 
|                                    |  |                |         |  |                |  |         |      |  |  |         | 
|                                    |  | (in thousands) |        
|Weighted average shares outstanding |  |                | 561,417 |  |                |  | 560,893 |      |  |  | 558,330 |  |  |  | 560,617 | 
|Effect of dilutive securities       |  |                |        |  |                |  | 1,539   |      |  |  |        |  |  |  | 1,541   | 
|                                    |  |                |         |  |                |  |         |      |  |  |         | 
|Diluted shares outstanding          |  |                | 561,417 |  |                |  | 562,432 |      |  |  | 558,330 |  |  |  | 562,158 | 
|                                    |  |                |         |  |                |  |         |      |  |  |         | 



|                         |  |                |        |  |                |  |        |      |  |  |        |  |  |  |        | 
|------------------------ |  | -------------- | ------ |  | -------------- |  | ------ | ---- |  |  | ------ |  |  |  | ------ | 
|                         |  | Three Months   |        |  | Six Months     | 
|                         |  | Ended June 30, |        |  | Ended June 30, | 
|                         |  |                |        |  |                | 
|                         |  | 2005           |        |  | 2004           |  |        | 2005 |  |  | 2004   | 
|                         |  |                |        |  |                |  |        |      |  |  |        | 
|                         |  | (in thousands) |       
|Anti-dilutive securities |  |                | 88,804 |  |                |  | 72,579 |      |  |  | 88,971 |  |  |  | 72,815 | 
|                         |  |                |        |  |                |  |        |      |  |  |        | 



Stock-Based Compensation


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|                                                                                                                                            |                                 |                                         |      |       |                |   |     |      |  |   |      |       |   |   |     |      | 
|------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------- | --------------------------------------- | ---- | ----- | -------------- | - | --- | ---- |  | - | ---- | ----- | - | - | --- | ---- | 
|                                                                                                                                            |                                 | Three Months                            |      |       | Six Months     |  
|                                                                                                                                            |                                 | Ended June 30,                          |      |       | Ended June 30, |  
|                                                                                                                                            |                                 |                                         |      |       |                |  
|                                                                                                                                            |                                 | 2005                                    |      |       | 2004           |   |     | 2005 |  |   | 2004 |      
|                                                                                                                                            |                                 |                                         |      |       |                |   |     |      |  |   |      |      
|                                                                                                                                            |                                 | (in millions, except per share amounts) |     
|Net (loss) income, as reported                                                                                                              |                                 | $                                       | (338 | )     |                | $ | 143 |      |  | $ | (741 | )     |   | $ | 206 |     
|Add: Stock-based compensation expense recognized, net of related
    tax effects                                                            |                                 |                                         | 10   |       |                |   | 3   |      |  |   | 13   |       |   |   | 5   |     
|Less: Total stock-based employee compensation expense determined
    under fair value method for all awards, net of related tax
    effects |                                 |                                         | (14  | )     |                |   | (6  | )    |  |   | (19  | )     |   |   | (10 | )   
|                                                                                                                                            |                                 |                                         |      |       |                |   |     |      |  |   |      |      
|Pro forma net (loss) income                                                                                                                 |                                 | $                                       | (342 | )     |                | $ | 140 |      |  | $ | (747 | )     |   | $ | 201 |     
|                                                                                                                                            |                                 |                                         |      |       |                |   |     |      |  |   |      |      
|(Loss) earnings per share:                                                                                                                  |                                 |                                         |      |       |                |   |     |      |  |   |      |       |   |   |     |     
|                                                                                                                                            | Basic and diluted  as reported |                                         | $    | (0.60 | )              |   | $   | 0.25 |  |   | $    | (1.33 | ) |   | $   | 0.37 | 
|                                                                                                                                            |                                 |                                         |      |       |                |   |     |      |  |   |      |      
|                                                                                                                                            | Basic and diluted  pro forma   |                                         | $    | (0.61 | )              |   | $   | 0.25 |  |   | $    | (1.34 | ) |   | $   | 0.36 | 
|                                                                                                                                            |                                 |                                         |      |       |                |   |     |      |  |   |      |      



Retention Payments


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##### Table of Contents



Reclassifications




|   |                                                                     
|-- | --------------------------------------------------------------------
|2. | EMPLOYEE AND PRODUCT LINE CHARGES AND ONGOING ATTRITION
    PROGRAMS



| |                                                
| | -----------------------------------------------
| | 2004 and 2003 Employee and Product Line Charges







|                                  |                                             |               |     |     |       |   |    |       |   |   |     |     |  
|--------------------------------- | ------------------------------------------- | ------------- | --- | --- | ----- | - | -- | ----- | - | - | --- | --- | -
|                                  |                                             | Employee      |     |     | Exit  |   |    |      
|Employee and Product Line Charges |                                             | Costs         |     |     | Costs |   |    | Total |  
|                                  |                                             |               |     |     |       |   |    |       |  
|                                  |                                             | (in millions) |    
|Balance at January 1, 2005        |                                             | $             | 124 |     |       | $ | 16 |       |   | $ | 140 |    
|                                  | Charges during the first six months of 2005 |               |     |    |       |   |    |      |   |   |     |    |  
|                                  | Usage during the first six months of 2005   |               |     | (42 | )     |   |    | (2    | ) |   |     | (44 | )
|                                  |                                             |               |     |     |       |   |    |       |  
|Balance at June 30, 2005          |                                             | $             | 82  |     |       | $ | 14 |       |   | $ | 96  | (a)
|                                  |                                             |               |     |     |       |   |    |       |  






|    |                                                                                                   
|--- | --------------------------------------------------------------------------------------------------
|(a) | This amount is included in accrued liabilities in the
    accompanying consolidated balance sheet.





| |                           
| | --------------------------
| | Ongoing Attrition Programs



8



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|   |                     
|-- | --------------------
|3. | ASSET SECURITIZATION



| |             
| | ------------
| | U.S. Program







9



---



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| |                 
| | ----------------
| | European Program






|   |         
|-- | --------
|4. | PROPERTY





|   |           
|-- | ----------
|5. | WARRANTIES





|                                     |                                                                           |               |     |     |      |   |     |     |  
|------------------------------------ | ------------------------------------------------------------------------- | ------------- | --- | --- | ---- | - | --- | --- | -
|                                     |                                                                           | June 30,      |    
|                                     |                                                                           |               |    
|                                     |                                                                           | 2005          |     |     | 2004 |  
|                                     |                                                                           |               |     |     |      |  
|                                     |                                                                           | (in millions) |    
|Accrual balance at beginning of year |                                                                           | $             | 274 |     |      | $ | 258 |    
|                                     | Provision for estimated warranties accrued during the period              |               |     | 60  |      |   |     | 52  |  
|                                     | Accruals for pre-existing warranties (including changes in
    estimates) |               |     | (1  | )    |   |     | 5   |  
|                                     | Settlements made during the period (in cash or in kind)                   |               |     | (85 | )    |   |     | (53 | )
|                                     | Foreign currency translation                                              |               |     | (7  | )    |   |     | (2  | )
|                                     |                                                                           |               |     |     |      |  
|Accrual balance at end of period     |                                                                           | $             | 241 |     |      | $ | 260 |    
|                                     |                                                                           |               |     |     |      |  



10



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|   |     
|-- | ----
|6. | DEBT













11



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|   |                                          
|-- | -----------------------------------------
|7. | PENSION AND OTHER POSTRETIREMENT BENEFITS





12



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|                                   |                           |                             |      |       |                           |   |      |          |       |   |                |     |  |      |     |     |      |   |      |      |  |   |      |     |  |   |     |     |  |   |     |     | 
|---------------------------------- | ------------------------- | --------------------------- | ---- | ----- | ------------------------- | - | ---- | -------- | ----- | - | -------------- | --- |  | ---- | --- | --- | ---- | - | ---- | ---- |  | - | ---- | --- |  | - | --- | --- |  | - | --- | --- | 
|                                   |                           |                             |      | Other |                           |   |      |          | Other |  
|                                   |                           | Pension                     |      |       | Postretirement            |   |      | Pension  |       |   | Postretirement |    
|                                   |                           | Benefits                    |      |       | Benefits                  |   |      | Benefits |       |   | Benefits       |    
|                                   |                           |                             |      |       |                           |   |      |          |       |   |                |    
|                                   |                           | Three Months Ended June 30, |      |       | Six Months Ended June 30, |  
|                                   |                           |                             |      |       |                           |  
|                                   |                           | 2005                        |      |       | 2004                      |   |      | 2005     |       |   | 2004           |     |  | 2005 |     |     | 2004 |   |      | 2005 |  |   | 2004 |    
|                                   |                           |                             |      |       |                           |   |      |          |       |   |                |     |  |      |     |     |      |   |      |      |  |   |      |    
|                                   |                           | (in millions)               |     
|Service cost                       |                           | $                           | 73   |       |                           | $ | 71   |          |       | $ | 43             |     |  | $    | 44  |     |      | $ | 146  |      |  | $ | 142  |     |  | $ | 90  |     |  | $ | 89  |    
|Interest cost                      |                           |                             | 181  |       |                           |   | 174  |          |       |   | 130            |     |  |      | 123 |     |      |   | 362  |      |  |   | 349  |     |  |   | 271 |     |  |   | 251 |    
|Expected return on plan assets     |                           |                             | (197 | )     |                           |   | (180 | )        |       |   |               |     |  |      |    |     |      |   | (394 | )    |  |   | (361 | )   |  |   |    |     |  |   |    |    
|Amortization of prior service cost |                           |                             | 35   |       |                           |   | 35   |          |       |   | (27            | )   |  |      | (1  | )   |      |   | 70   |      |  |   | 70   |     |  |   | (28 | )   |  |   | (2  | )  
|Amortization of net loss           |                           |                             | 53   |       |                           |   | 36   |          |       |   | 54             |     |  |      | 29  |     |      |   | 106  |      |  |   | 71   |     |  |   | 103 |     |  |   | 64  |    
|Special termination benefits       |                           |                             | 2    |       |                           |   | 2    |          |       |   | 1              |     |  |      |    |     |      |   | 2    |      |  |   | 5    |     |  |   | 3   |     |  |   | 1   |    
|                                   |                           |                             |      |       |                           |   |      |          |       |   |                |     |  |      |     |     |      |   |      |      |  |   |      |    
|                                   | Net periodic benefit cost |                             | $    | 147   |                           |   | $    | 138      |       |   | $              | 201 |  |      | $   | 195 |      |   | $    | 292  |  |   | $    | 276 |  |   | $   | 439 |  |   | $   | 403 | 
|                                   |                           |                             |      |       |                           |   |      |          |       |   |                |     |  |      |     |     |      |   |      |      |  |   |      |    





|   |                                   
|-- | ----------------------------------
|8. | DERIVATIVES AND HEDGING ACTIVITIES





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|   |                      
|-- | ---------------------
|9. | STOCKHOLDERS DEFICIT



|                           |                                                           |                          |     |   |            |   |   |             |  |                    |         |   |  |           |        |          |       |   |               |       |  |   |         |      |      |   |     |   |  |   |        |      |        |  
|-------------------------- | --------------------------------------------------------- | ------------------------ | --- | - | ---------- | - | - | ----------- |  | ------------------ | ------- | - |  | --------- | ------ | -------- | ----- | - | ------------- | ----- |  | - | ------- | ---- | ---- | - | --- | - |  | - | ------ | ---- | ------ | -
|                           |                                                           |                          |     |   |            |   |   |             |  | Accumulated Other  |         |   |  |           |       
|                           |                                                           |                          |     |   |            |   |   |             |  | Comprehensive Loss |         |   |  |           |       
|                           |                                                           |                          |     |   |            |   |   |             |  |                    |         |   | 
|                           |                                                           | Common Stock             |     |   | Additional |   |   |             |  | Minimum            |         |   |  |           |        |          | Total |  
|                           |                                                           |                          |     |   | Paid-In    |   |   | Accumulated |  |                    | Pension |   |  |           |        | Treasury |       |   | Stockholders |      
|                           |                                                           | Shares                   |     |   | Amount     |   |   | Capital     |  |                    | Deficit |   |  | Liability |        |          | Other |   |               | Stock |  |   | Deficit |     
|                           |                                                           |                          |     |   |            |   |   |             |  |                    |         |   |  |           |        |          |       |   |               |       |  |   |         |     
|                           |                                                           | (in millions)            |    
|Balance at January 1, 2005 |                                                           |                          | 565 |   |            | $ | 6 |             |  | $                  | 2,661   |   |  | $         | (3,913 | )        |       | $ | (2,469        | )     |  | $ | 237     |      |      | $ | (61 | ) |  | $ | (3,539 | )   
|                           | Net loss                                                  |                          |     |  |            |   |   |            |  |                    |         |  |  |           |        | (741     | )     |   |               |      |  |   |         |     |      |   |     |  |  |   |        | (741 | )     
|                           | Currency translation adjustments and other                |                          |     |  |            |   |   |            |  |                    |         |  |  |           |        |         |       |   |               | 9     |  |   |         | (250 | )(a) |   |     |  |  |   |        | (241 | )     
|                           | Net change in unrecognized gain on derivative instruments |                          |     |  |            |   |   |            |  |                    |         |  |  |           |        |         |       |   |               |      |  |   |         | (23  | )    |   |     |  |  |   |        | (23  | )     
|                           |                                                           |                          |     |   |            |   |   |             |  |                    |         |   |  |           |        |          |       |   |               |       |  |   |         |     
|                           |                                                           | Total comprehensive loss |     |   |            |   |   |             |  |                    |         |   |  |           |        |          |       |   |               |       |  |   |         |      |      |   |     |   |  |   |        |      | (1,005 | )
|                           | Shares issued for employee benefit plans, net             |                          |     |  |            |   |   |            |  |                    |         | 9 |  |           |        |         |       |   |               |      |  |   |         |     |      |   |     | 3 |  |   |        | 12   |       
|                           | Dividends                                                 |                          |     |  |            |   |   |            |  |                    |         |  |  |           |        | (25      | )     |   |               |      |  |   |         |     |      |   |     |  |  |   |        | (25  | )     
|                           |                                                           |                          |     |   |            |   |   |             |  |                    |         |   |  |           |        |          |       |   |               |       |  |   |         |     
|Balance at June 30, 2005   |                                                           |                          | 565 |   |            | $ | 6 |             |  | $                  | 2,670   |   |  | $         | (4,679 | )        |       | $ | (2,460        | )     |  | $ | (36     | )    |      | $ | (58 | ) |  | $ | (4,557 | )   
|                           |                                                           |                          |     |   |            |   |   |             |  |                    |         |   |  |           |        |          |       |   |               |       |  |   |         |     






|    |                                                                                                                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Other includes the reversal of unrealized gains of
    $14 million from other comprehensive income due to the sale
    of our investment in Akebono Brake Industry Company, which was
    accounted for as an available-for-sale marketable security. This
    sale resulted in the recognition of a realized gain of
    $18 million in other income.



|    |                  
|--- | -----------------
|10. | SEGMENT REPORTING



14



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|                            |                                |                 |   |       |               |  |   |            |       |  |          |      |      |       |   |      |      |   |   |       |       | 
|--------------------------- | ------------------------------ | --------------- | - | ----- | ------------- |  | - | ---------- | ----- |  | -------- | ---- | ---- | ----- | - | ---- | ---- | - | - | ----- | ----- | 
|                            |                                | Dynamics,       |   |       |               |  |   |            |       |  |         
|                            |                                | Propulsion,     |   |       | Electrical,   |  |   | Automotive |       |  |          |      |     
|                            |                                | Thermal &       |   |       | Electronics & |  |   | Holdings   |       |  |          |      |     
|                            |                                | Interior        |   |       | Safety        |  |   | Group      |       |  | Other(a) |      |      | Total |  
|                            |                                |                 |   |       |               |  |   |            |       |  |          |      |      |       |  
|                            |                                | (in millions)   |  
|For the Three Months Ended: |                                |                 |   |       |               |  |   |            |       |  |          |      |      |       |   |      |      |   |   |      
|June 30, 2005               |                                |                 |   |       |               |  |   |            |       |  |          |      |      |       |   |      |      |   |   |      
|                            | Net sales to GM and affiliates |                 | $ | 1,688 |               |  | $ | 1,354      |       |  | $        | 367  |      |       | $ | (2   | )    |   | $ | 3,407 |      
|                            | Net sales to other customers   |                 |   | 1,407 |               |  |   | 2,082      |       |  |          | 103  |      |       |   | 24   |      |   |   | 3,616 |      
|                            | Inter-sector net sales         |                 |   | 206   |               |  |   | 81         |       |  |          | 157  |      |       |   | (444 | )    |   |   |      |      
|                            |                                |                 |   |       |               |  |   |            |       |  |          |      |      |       |  
|                            |                                | Total net sales |   | $     | 3,301         |  |   | $          | 3,517 |  |          | $    | 627  |       |   | $    | (422 | ) |   | $     | 7,023 | 
|                            |                                |                 |   |       |               |  |   |            |       |  |          |      |      |       |  
|                            | Sector operating income (loss) |                 | $ | (157  | )             |  | $ | 171        |       |  | $        | (268 | )    |       | $ | (30  | )    |   | $ | (284  | )    
|June 30, 2004(b)            |                                |                 |   |       |               |  |   |            |       |  |          |      |      |       |   |      |      |   |   |      
|                            | Net sales to GM and affiliates |                 | $ | 2,035 |               |  | $ | 1,611      |       |  | $        | 487  |      |       | $ |     |      |   | $ | 4,133 |      
|                            | Net sales to other customers   |                 |   | 1,359 |               |  |   | 1,931      |       |  |          | 119  |      |       |   |     |      |   |   | 3,409 |      
|                            | Inter-sector net sales         |                 |   | 212   |               |  |   | 96         |       |  |          | 213  |      |       |   | (521 | )    |   |   |      |      
|                            |                                |                 |   |       |               |  |   |            |       |  |          |      |      |       |  
|                            |                                | Total net sales |   | $     | 3,606         |  |   | $          | 3,638 |  |          | $    | 819  |       |   | $    | (521 | ) |   | $     | 7,542 | 
|                            |                                |                 |   |       |               |  |   |            |       |  |          |      |      |       |  
|                            | Sector operating income (loss) |                 | $ | 105   | (c)           |  | $ | 324        | (c)   |  | $        | (151 | )(c) |       | $ | (22  | )(c) |   | $ | 256   | (c)  

|                          |                                |                 |   |       |               |  |   |            |       |  |          |      |       |       |   |        |        |   |   |       |        | 
|------------------------- | ------------------------------ | --------------- | - | ----- | ------------- |  | - | ---------- | ----- |  | -------- | ---- | ----- | ----- | - | ------ | ------ | - | - | ----- | ------ | 
|                          |                                | Dynamics,       |   |       |               |  |   |            |       |  |         
|                          |                                | Propulsion,     |   |       | Electrical,   |  |   | Automotive |       |  |          |      |      
|                          |                                | Thermal &       |   |       | Electronics & |  |   | Holdings   |       |  |          |      |      
|                          |                                | Interior        |   |       | Safety        |  |   | Group      |       |  | Other(a) |      |       | Total |  
|                          |                                |                 |   |       |               |  |   |            |       |  |          |      |       |       |  
|                          |                                | (in millions)   |  
|For the Six Months Ended: |                                |                 |   |       |               |  |   |            |       |  |          |      |       |       |   |        |        |   |   |      
|June 30, 2005             |                                |                 |   |       |               |  |   |            |       |  |          |      |       |       |   |        |        |   |   |      
|                          | Net sales to GM and affiliates |                 | $ | 3,365 |               |  | $ | 2,722      |       |  | $        | 745  |       |       | $ | (26    | )      |   | $ | 6,806 |       
|                          | Net sales to other customers   |                 |   | 2,732 |               |  |   | 4,090      |       |  |          | 214  |       |       |   | 43     |        |   |   | 7,079 |       
|                          | Inter-sector net sales         |                 |   | 416   |               |  |   | 174        |       |  |          | 323  |       |       |   | (913   | )      |   |   |      |       
|                          |                                |                 |   |       |               |  |   |            |       |  |          |      |       |       |  
|                          |                                | Total net sales |   | $     | 6,513         |  |   | $          | 6,986 |  |          | $    | 1,282 |       |   | $      | (896   | ) |   | $     | 13,885 | 
|                          |                                |                 |   |       |               |  |   |            |       |  |          |      |       |       |  
|                          | Sector operating income (loss) |                 | $ | (340  | )             |  | $ | 340        |       |  | $        | (527 | )     |       | $ | (81    | )      |   | $ | (608  | )     
|June 30, 2004(b)          |                                |                 |   |       |               |  |   |            |       |  |          |      |       |       |   |        |        |   |   |      
|                          | Net sales to GM and affiliates |                 | $ | 4,093 |               |  | $ | 3,238      |       |  | $        | 991  |       |       | $ |       |        |   | $ | 8,322 |       
|                          | Net sales to other customers   |                 |   | 2,655 |               |  |   | 3,731      |       |  |          | 239  |       |       |   |       |        |   |   | 6,625 |       
|                          | Inter-sector net sales         |                 |   | 411   |               |  |   | 218        |       |  |          | 439  |       |       |   | (1,068 | )      |   |   |      |       
|                          |                                |                 |   |       |               |  |   |            |       |  |          |      |       |       |  
|                          |                                | Total net sales |   | $     | 7,159         |  |   | $          | 7,187 |  |          | $    | 1,669 |       |   | $      | (1,068 | ) |   | $     | 14,947 | 
|                          |                                |                 |   |       |               |  |   |            |       |  |          |      |       |       |  
|                          | Sector operating income (loss) |                 | $ | 215   | (d)           |  | $ | 611        | (d)   |  | $        | (296 | )(d)  |       | $ | (41    | )(d)   |   | $ | 489   | (d)   






|    |  |                                                                                                                            
|--- |  | ---------------------------------------------------------------------------------------------------------------------------
|(a) |  | Other includes activity not allocated to the product sectors and
    elimination of inter-sector transactions.             
|   
|(b) |  | As previously disclosed, amounts have been reclassified from
    prior presentation to conform to our new sector alignment.

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|    |  |                                                                                                                                                                                                                                       
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(c) |  | Excludes Second Quarter 2004 Charges of $11 million for
    Dynamics, Propulsion, Thermal & Interior,
    $24 million for Electrical, Electronics & Safety,
    $8 million for Automotive Holdings Group and
    $3 million for Other.
|   
|(d) |  | Excludes the 2004 Charges of $42 million for Dynamics,
    Propulsion, Thermal & Interior, $44 million for
    Electrical, Electronics & Safety, $43 million for
    Automotive Holdings Group and $7 million for Other.              



|    |                              
|--- | -----------------------------
|11. | COMMITMENTS AND CONTINGENCIES



| |                          
| | -------------------------
| | Ongoing SEC Investigation





| |                     
| | --------------------
| | Shareholder Lawsuits









16



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| |                             
| | ----------------------------
| | Ordinary Business Litigation













17



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|    |                  
|--- | -----------------
|12. | SUBSEQUENT EVENTS














|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
    CONDITION AND RESULTS OF OPERATIONS

Executive Summary




18



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19



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Results of Operations






| |                                                                             
| | ----------------------------------------------------------------------------
| | Three Months Ended June 30, 2005 versus Three Months
    Ended June 30, 2004

Net Sales.


|                                         |                        |                    |       |       |         |   |       |       | 
|---------------------------------------- | ---------------------- | ------------------ | ----- | ----- | ------- | - | ----- | ----- | 
|                                         |                        | Three Months Ended |      
|                                         |                        | June 30,           |      
|                                         |                        |                    |      
|Product Sector                           |                        | 2005               |       |       | 2004(a) |  
|                                         |                        |                    |       |       |         |  
|                                         |                        | (in millions)      |      
|Dynamics, Propulsion, Thermal & Interior |                        | $                  | 3,301 |       |         | $ | 3,606 |      
|Electrical, Electronics & Safety         |                        |                    | 3,517 |       |         |   | 3,638 |      
|Automotive Holdings Group                |                        |                    | 627   |       |         |   | 819   |      
|Other(b)                                 |                        |                    | (422  | )     |         |   | (521  | )    
|                                         |                        |                    |       |       |         |  
|                                         | Consolidated net sales |                    | $     | 7,023 |         |   | $     | 7,542 | 
|                                         |                        |                    |       |       |         |  






|    |                                                                                                                                                                                                                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The 2004 data has been reclassified to conform to the
    realignment of our business sectors by moving three additional
    manufacturing operations into the companys Automotive
    Holdings Group (AHG) effective January 1, 2005,
    to accelerate efforts to bring these sites back to profitability
    or resolve issues at these operations through other actions.



|    |  |                                                                                                                
|--- |  | ---------------------------------------------------------------------------------------------------------------
|(b) |  | Other includes activity not allocated to the product sectors and
    eliminations of inter-sector transactions.



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Gross Margin.


Selling, General and Administrative.


Depreciation and Amortization.


Employee and Product Line Charges.


Operating Results.


|                                         |                               |                |      |      |      |   |      |     | 
|---------------------------------------- | ----------------------------- | -------------- | ---- | ---- | ---- | - | ---- | --- | 
|                                         |                               | Three Months   |     
|                                         |                               | Ended June 30, |     
|                                         |                               |                |     
|Product Sector                           |                               | 2005           |      |      | 2004 |  
|                                         |                               |                |      |      |      |  
|                                         |                               | (in millions)  |     
|Dynamics, Propulsion, Thermal & Interior |                               | $              | (157 | )    |      | $ | 105  |    
|Electrical, Electronics & Safety         |                               |                | 171  |      |      |   | 324  |    
|Automotive Holdings Group                |                               |                | (268 | )    |      |   | (151 | )  
|Other(a)                                 |                               |                | (30  | )    |      |   | (22  | )  
|                                         |                               |                |      |      |      |  
|                                         | Subtotal                      |                |      | (284 | )    |   |      | 256 | 
|Second Quarter 2004 Charges(b)           |                               |                |     |      |      |   | (46  | )  
|                                         |                               |                |      |      |      |  
|                                         | Total operating (loss) income |                | $    | (284 | )    |   | $    | 210 | 
|                                         |                               |                |      |      |      |  






|    |  |                                                                                                                
|--- |  | ---------------------------------------------------------------------------------------------------------------
|(a) |  | Other includes activity not allocated to the product sectors and
    eliminations of inter-sector transactions.

22



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|    |  |                                                                                                                                                                                                                                             
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) |  | Represents the Second Quarter 2004 Charges of $11 million
    for Dynamics, Propulsion, Thermal & Interior,
    $24 million for Electrical, Electronics & Safety,
    $8 million for Automotive Holdings Group and
    $3 million for Other.



Other Income and Expense.


Taxes.




| |                                                                         
| | ------------------------------------------------------------------------
| | Six Months Ended June 30, 2005 versus Six Months
    Ended June 30, 2004

Net Sales.


|                                         |                        |                  |       |        |          |   |        |        | 
|---------------------------------------- | ---------------------- | ---------------- | ----- | ------ | -------- | - | ------ | ------ | 
|                                         |                        | Six Months Ended |      
|                                         |                        | June 30,         |      
|                                         |                        |                  |      
|Product Sector                           |                        | 2005             |       |        | 2004 (a) |  
|                                         |                        |                  |       |        |          |  
|                                         |                        | (in millions)    |      
|Dynamics, Propulsion, Thermal & Interior |                        | $                | 6,513 |        |          | $ | 7,159  |       
|Electrical, Electronics & Safety         |                        |                  | 6,986 |        |          |   | 7,187  |       
|Automotive Holdings Group                |                        |                  | 1,282 |        |          |   | 1,669  |       
|Other(b)                                 |                        |                  | (896  | )      |          |   | (1,068 | )     
|                                         |                        |                  |       |        |          |  
|                                         | Consolidated net sales |                  | $     | 13,885 |          |   | $      | 14,947 | 






|    |  |                                                                                                                                                                                                                                                                                                                                                                                
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | The 2004 data has been reclassified to conform to the
    realignment of our business sectors by moving three additional
    manufacturing operations into the companys Automotive
    Holdings Group (AHG) effective January 1, 2005,
    to accelerate efforts to bring these sites back to profitability
    or resolve issues at these operations through other actions.
|   
|(b) |  | Other includes activity not allocated to the product sectors and
    eliminations of inter-sector transactions.                                                                                                                                                                                                                                                                

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Gross Margin.


Selling, General and Administrative.


Depreciation and Amortization.


Employee and Product Line Charges.




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|                                  |                                             |                |     |     |            |   |    |       |   |   |     |     |  
|--------------------------------- | ------------------------------------------- | -------------- | --- | --- | ---------- | - | -- | ----- | - | - | --- | --- | -
|Employee and Product Line Charges |                                             | Employee Costs |     |     | Exit Costs |   |    | Total |  
|                                  |                                             |                |     |     |            |   |    |       |  
|                                  |                                             | (in millions)  |    
|Balance at January 1, 2005        |                                             | $              | 124 |     |            | $ | 16 |       |   | $ | 140 |    
|                                  | Charges during the first six months of 2005 |                |     |    |            |   |    |      |   |   |     |    |  
|                                  | Usage during the first six months of 2005   |                |     | (42 | )          |   |    | (2    | ) |   |     | (44 | )
|                                  |                                             |                |     |     |            |   |    |       |  
|Balance at June 30, 2005          |                                             | $              | 82  |     |            | $ | 14 |       |   | $ | 96  | (a)
|                                  |                                             |                |     |     |            |   |    |       |  






|    |  |                                                                                                   
|--- |  | --------------------------------------------------------------------------------------------------
|(a) |  | This amount is included in accrued liabilities in the
    accompanying consolidated balance sheet.



Ongoing Attrition Programs.


Operating Results.


|                                         |                               |                |      |      |      |   |      |     | 
|---------------------------------------- | ----------------------------- | -------------- | ---- | ---- | ---- | - | ---- | --- | 
|                                         |                               | Six Months     |     
|                                         |                               | Ended June 30, |     
|                                         |                               |                |     
|Product Sector                           |                               | 2005           |      |      | 2004 |  
|                                         |                               |                |      |      |      |  
|                                         |                               | (in millions)  |     
|Dynamics, Propulsion, Thermal & Interior |                               | $              | (340 | )    |      | $ | 215  |    
|Electrical, Electronics & Safety         |                               |                | 340  |      |      |   | 611  |    
|Automotive Holdings Group                |                               |                | (527 | )    |      |   | (296 | )  
|Other(a)                                 |                               |                | (81  | )    |      |   | (41  | )  
|                                         |                               |                |      |      |      |  
|                                         | Subtotal                      |                |      | (608 | )    |   |      | 489 | 
|2004 Charges(b)                          |                               |                |     |      |      |   | (136 | )  
|                                         |                               |                |      |      |      |  
|                                         | Total operating (loss) income |                | $    | (608 | )    |   | $    | 353 | 
|                                         |                               |                |      |      |      |  






|    |  |                                                                                                                                                                                                                           
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Other includes activity not allocated to the product sectors and
    eliminations of inter-sector transactions.                                                                                                           
|   
|(b) |  | Represents the 2004 Charges of $42 million for Dynamics,
    Propulsion, Thermal & Interior, $44 million for
    Electrical, Electronics & Safety, $43 million for
    Automotive Holdings Group and $7 million for Other.

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Other Income and Expense.


Taxes.


Liquidity and Capital Resources




| |                              
| | -----------------------------
| | Overview of Capital Structure





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




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| |                                     
| | ------------------------------------
| | Bonds and Trust Preferred Securities



1 4 1 4






| |                            
| | ---------------------------
| | Available Credit Facilities



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| |                             
| | ----------------------------
| | Other Financial Transactions












30



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| |               
| | --------------
| | Credit Ratings





| |           
| | ----------
| | Cash Flows

Operating Activities.


Investing Activities.


Financing Activities.


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Dividends.


Outlook








32



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Ongoing SEC Investigation




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Shareholder Lawsuits










Inflation




Environmental Matters




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Forward-Looking Statements




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|        |                                                           
|------- | ----------------------------------------------------------
|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK








|        |                        
|------- | -----------------------
|ITEM 4. | CONTROLS AND PROCEDURES





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PART II. OTHER INFORMATION







|        |                  
|------- | -----------------
|ITEM 1. | LEGAL PROCEEDINGS










|        |                                                                
|------- | ---------------------------------------------------------------
|ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
    PROCEEDS

Purchase of Equity Securities by the Issuer and Affiliated
Purchasers




|                                     |  |                 |       |     |            |                        |      |                      |                     |  |                    |  |  |  |            | 
|------------------------------------ |  | --------------- | ----- | --- | ---------- | ---------------------- | ---- | -------------------- | ------------------- |  | ------------------ |  |  |  | ---------- | 
|                                     |  |                 |       |     |            |                        |      | Maximum Number of    |                    
|                                     |  |                 |       |     |            | Total Number of Shares |      |                      | Shares that May Yet | 
|                                     |  | Total Number of |       |     | Average    |                        |      | Purchased as Part of |                     |  | Be Purchased Under | 
|                                     |  | Shares          |       |     | Price Paid |                        |      | Publicly Announced   |                     |  | the Plans or       | 
|Period                               |  | Purchased       |       |     | Per Share  |                        |      | Plans or Programs(a) |                     |  | Programs(a)        | 
|                                     |  |                 |       |     |            |                        |      |                      |                     |  |                    | 
|April 1, 2005 through April 30, 2005 |  |                 |      |     |            | $                      |     |                      |                     |  |                   |  |  |  | 19,000,000 | 
|May 1, 2005 through May 31, 2005     |  |                 |      |     |            | $                      |     |                      |                     |  |                   |  |  |  | 19,000,000 | 
|June 1, 2005 through June 30, 2005   |  |                 | 2,158 | (b) |            | $                      | 8.93 |                      |                     |  |                   |  |  |  | 19,000,000 | 
|                                     |  |                 |       |     |            |                        |      |                      |                     |  |                    | 
|Total                                |  |                 | 2,158 |     |            | $                      | 8.93 |                      |                     |  |                   |  |  |  | 19,000,000 | 
|                                     |  |                 |       |     |            |                        |      |                      |                     |  |                    | 






|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | As part of Delphis stock repurchase program, in February
    2005, the Board of Directors authorized the repurchase of up to
    an aggregate of 19 million shares of our common stock
    through the first quarter of 2006 to fund obligations for our
    stock options and other awards issued under its equity based
    compensation plan. To date no repurchases have been made
    pursuant to that plan.
|   
|(b) |  | Relates to shares that were returned as a result of the clawback
    provision in our incentive compensation plan. These shares were
    returned from the January 2, 2005 distribution of the 2002
    special retention restricted stock units.                                                                                                                                                                 






|        |                  
|------- | -----------------
|ITEM 5. | OTHER INFORMATION

Annual Meeting






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|        |         
|------- | --------
|ITEM 6. | EXHIBITS

|        |    |              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------- | -- | ------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |             
|Number  |    | Exhibit Name
|        |    |             
|        | 3  | (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)          |  | 364-Day Sixth Amended and Restated Competitive Advance and
    Revolving Credit Facility, dated as of June 18, 2004, among
    Delphi and the lenders named therein, incorporated by reference
    to Exhibit 10 (a) to Delphis Quarterly Report on
    Form 10-Q for the quarter ended June 30, 2004 and
    amended by First Amendment and Waiver to 364-Day Sixth Amended
    and Restated Competitive Advance and Revolving Credit Facility
    dated as of March 28, 2005, which is incorporated by
    reference to Exhibit 99 (a) to Delphis Report on
    Form 8-K filed on April 1, 2005.      
|        | 10 | (b)          |  | Five Year Second Amended and Restated Competitive Advance and
    Revolving Credit Facility, dated as of June 18, 2004, among
    Delphi and the lenders named therein, incorporated by reference
    to Exhibit 10 (b) to Delphis Quarterly Report on
    Form 10-Q for the quarter ended June 30, 2004 and
    amended by First Amendment and Waiver to Five Year Second
    Amended and Restated Competitive Advance and Revolving Credit
    Facility dated as of March 28, 2005, which is incorporated
    by reference to Exhibit 99 (b) to Delphis Report
    on Form 8-K filed on April 1, 2005.
|        | 10 | (c)          |  | Amendment to Rights Agreement dated May 11, 2005
    incorporated by reference to Exhibit 99 (a) to
    Delphis Report on Form 8-K filed on May 17, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | 10 | (d)          |  | Standstill Agreement dated May 10, 2005 incorporated by
    reference to Exhibit 99 (b) to Delphis Report on
    Form 8-K filed on May 17, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        | 10 | (e)          |  | 2005 Executive Retirement Incentive Program Agreement dated
    May 13, 2005 incorporated by reference to Exhibit 99
    (a) to Delphis Report on Form 8-K filed on
    May 18, 2005.*                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | 10 | (f)          |  | Special Separation Agreement & Release dated
    May 13, 2005 incorporated by reference to Exhibit 99
    (b) to Delphis Report on Form 8-K filed on
    May 18, 2005.*                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 10 | (g)          |  | Five Year Third Amended and Restated Credit Agreement dated as
    of June 14, 2005 incorporated by reference to
    Exhibit 99 (a) to Delphis Report on
    Form 8-K filed on June 15, 2005.                                                                                                                                                                                                                                                                                                                                                                                                            
|        | 10 | (h)          |  | Special Retention Agreement with Mr. Rodney ONeal
    dated June 24, 2005 incorporated by reference to
    Exhibit 99 (a) to Delphis Report on
    Form 8-K filed on June 24, 2005.*                                                                                                                                                                                                                                                                                                                                                                                                                    
|        | 10 | (i)          |  | Master Sale and Purchase Agreement between Johnson Controls,
    Inc. and Delphi Corporation dated June 30, 2005
    incorporated by reference to Exhibit 99 (a) to
    Delphis Report on Form 8-K filed on July 1, 2005.                                                                                                                                                                                                                                                                                                                                                                                
|        | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                              

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|        |    |              |  |                                                                                                                             
|------- | -- | ------------ |  | ----------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |             
|Number  |    | Exhibit Name
|        |    |             
|        | 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.

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SIGNATURE




|               |  |                                        
|-------------- |  | ---------------------------------------
|               |  | Delphi Corporation(Registrant)         
|              
|              
|August 8, 2005 |  | /s/ John D. Sheehan                    
|               |  |                                        
|               |  | John D. Sheehan,                       
|               |  | Acting Chief Financial Officer,        
|               |  | Chief Accounting Officer and Controller

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EXHIBIT INDEX


|        |    |             |  |                                                                                                                                             
|------- | -- | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|No.     |    | Description
|        |    |            
|        | 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.