##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

Washington, DC 20549-1004




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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 March 31,
	2002                                           
|  
|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



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Delphi Corporation

(Exact name of registrant as specified in its
charter)


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

(248) 813-2000

(Registrants telephone number, including
area code)


Delphi Automotive Systems
Corporation

(Former name, former address and former fiscal
year, if changed since last report)


Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the
past
90 days.     Yes þ          No o

As of March 31, 2002, there were 560,892,982
outstanding shares of the registrants $0.01 par value
common stock.



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TABLE OF CONTENTS



|                                                                                              |  |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|INDEX                                                                                        
|PART I. FINANCIAL INFORMATION                                                                
|Item 1. Financial Statements                                                                 
|CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)                                            
|CONSOLIDATED BALANCE SHEETS                                                                  
|CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)                                            
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)                                       
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|PART II. OTHER INFORMATION                                                                   
|SIGNATURE                                                                                    
|EXHIBIT INDEX                                                                                
|Press Release dated April 17, 2002                                                           



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##### Table of Contents



DELPHI CORPORATION






INDEX


|                                |  |                                                                                                       |    |      |    | 
|------------------------------- |  | ----------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|                                |  |                                                                                                       |    | Page |   
|                                |  |                                                                                                       |    |      |   
|PART I  FINANCIAL
	INFORMATION
|Item 1.                         |  | Financial Statements                                                                                  |    |      |    | 
|                                |  | Consolidated Statements of Operations (Unaudited)
	for the Three Months Ended March 31, 2002 and 2001 |    |      | 2  | 
|                                |  | Consolidated Balance Sheets at March 31,
	2002 (Unaudited) and December 31, 2001                      |    |      | 3  | 
|                                |  | Consolidated Statements of Cash Flows (Unaudited)
	for the Three Months Ended March 31, 2002 and 2001 |    |      | 4  | 
|                                |  | Notes to Consolidated Financial Statements
	(Unaudited)                                               |    |      | 5  | 
|Item 2.                         |  | Managements Discussion and Analysis of
	Financial Condition and Results of Operations                |    |      | 12 | 
|Item 3.                         |  | Quantitative and Qualitative Disclosures About
	Market Risk                                           |    |      | 20 | 
|PART II  OTHER
	INFORMATION   
|Item 1.                         |  | Legal Proceedings                                                                                     |    |      | 20 | 
|Item 6.                         |  | Exhibits and Reports on Form 8-K                                                                      |    |      | 20 | 
|Signature                       |  |                                                                                                       | 21 |     

1



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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       |      
|                                          |                                             | March 31,                |      
|                                          |                                             |                          |      
|                                          |                                             | 2002                     |       |       | 2001  |  
|                                          |                                             |                          |       |       |       |  
|                                          |                                             |                         
|                                          |                                             | (in millions, except     |      
|                                          |                                             | per share amounts)       |      
|Net sales:                                |                                             |                          |       |       |       |   |       |      
|                                          | General Motors and affiliates               |                          | $     | 4,484 |       |   | $     | 4,366 |      
|                                          | Other customers                             |                          |       | 2,204 |       |   |       | 2,169 |      
|                                          |                                             |                          |       |       |       |  
|                                          |                                             | Total net sales          |       |       | 6,688 |   |       |       | 6,535 | 
|                                          |                                             |                          |       |       |       |  
|Less operating expenses:                  |                                             |                          |       |       |       |   |       |      
|                                          | Cost of sales, excluding items listed below |                          |       | 5,889 |       |   |       | 5,901 |      
|                                          | Selling, general and administrative         |                          |       | 362   |       |   |       | 378   |      
|                                          | Depreciation and amortization               |                          |       | 244   |       |   |       | 317   |      
|                                          | Restructuring (Note 2)                      |                          |       | 225   |       |   |       | 536   |      
|                                          |                                             |                          |       |       |       |  
|                                          |                                             | Total operating expenses |       |       | 6,720 |   |       |       | 7,132 | 
|                                          |                                             |                          |       |       |       |  
|Operating loss                            |                                             |                          | (32   | )     |       |   | (597  | )    
|Less interest expense                     |                                             |                          | 48    |       |       |   | 56    |      
|Other income (expense), net               |                                             |                          | 10    |       |       |   | (3    | )    
|                                          |                                             |                          |       |       |       |  
|Loss before income taxes                  |                                             |                          | (70   | )     |       |   | (656  | )    
|Income tax benefit                        |                                             |                          | (19   | )     |       |   | (227  | )    
|                                          |                                             |                          |       |       |       |  
|Net loss                                  |                                             | $                        | (51   | )     |       | $ | (429  | )    
|                                          |                                             |                          |       |       |       |  
|Loss per share (Note 1) Basic and diluted |                                             | $                        | (0.09 | )     |       | $ | (0.77 | )    
|                                          |                                             |                          |       |       |       |  

See notes to consolidated financial statements.

2



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DELPHI CORPORATION






CONSOLIDATED BALANCE SHEETS


|                                           |                                                                                                               |                               |                            |       |              |        |        |       |       |        | 
|------------------------------------------ | ------------------------------------------------------------------------------------------------------------- | ----------------------------- | -------------------------- | ----- | ------------ | ------ | ------ | ----- | ----- | ------ | 
|                                           |                                                                                                               | March 31,                     |                            |       |             
|                                           |                                                                                                               | 2002                          |                            |       | December 31, |       
|                                           |                                                                                                               | (Unaudited)                   |                            |       | 2001         |       
|                                           |                                                                                                               |                               |                            |       |              |       
|                                           |                                                                                                               |                              
|                                           |                                                                                                               | (in millions)                 |                           
|ASSETS                                    
|Current assets:                            |                                                                                                               |                               |                            |       |              |        |        |      
|                                           | Cash and cash equivalents                                                                                     |                               | $                          | 697   |              |        | $      | 757   |      
|                                           | Accounts receivable, net:                                                                                     |                               |                            |       |              |        |        |       |      
|                                           |                                                                                                               | General Motors and affiliates |                            |       | 3,211        |        |        |       | 2,829 |       
|                                           |                                                                                                               | Other customers               |                            |       | 1,919        |        |        |       | 1,778 |       
|                                           | Inventories, net (Note 4)                                                                                     |                               |                            | 1,593 |              |        |        | 1,621 |      
|                                           | Deferred income taxes                                                                                         |                               |                            | 308   |              |        |        | 319   |      
|                                           | Prepaid expenses and other                                                                                    |                               |                            | 220   |              |        |        | 194   |      
|                                           |                                                                                                               |                               |                            |       |              |       
|                                           |                                                                                                               |                               | Total current assets       |       |              | 7,948  |        |       |       | 7,498  | 
|Long-term assets:                          |                                                                                                               |                               |                            |       |              |        |        |      
|                                           | Property, net                                                                                                 |                               |                            | 5,646 |              |        |        | 5,724 |      
|                                           | Deferred income taxes                                                                                         |                               |                            | 3,198 |              |        |        | 3,152 |      
|                                           | Goodwill, net                                                                                                 |                               |                            | 664   |              |        |        | 630   |      
|                                           | Other                                                                                                         |                               |                            | 1,574 |              |        |        | 1,598 |      
|                                           |                                                                                                               |                               |                            |       |              |       
|Total assets                               |                                                                                                               | $                             | 19,030                     |       |              | $      | 18,602 |      
|                                           |                                                                                                               |                               |                            |       |              |       
|LIABILITIES AND STOCKHOLDERS
	EQUITY     
|Current liabilities:                       |                                                                                                               |                               |                            |       |              |        |        |      
|                                           | Notes payable and current portion of long-term
	debt                                                          |                               | $                          | 1,225 |              |        | $      | 1,270 |      
|                                           | Accounts payable                                                                                              |                               |                            | 3,042 |              |        |        | 2,779 |      
|                                           | Restructuring obligations (Note 2)                                                                            |                               |                            | 146   |              |        |        | 121   |      
|                                           | Accrued liabilities                                                                                           |                               |                            | 1,760 |              |        |        | 1,680 |      
|                                           |                                                                                                               |                               |                            |       |              |       
|                                           |                                                                                                               |                               | Total current liabilities  |       |              | 6,173  |        |       |       | 5,850  | 
|Long-term liabilities:                     |                                                                                                               |                               |                            |       |              |        |        |      
|                                           | Long-term debt                                                                                                |                               |                            | 2,078 |              |        |        | 2,083 |      
|                                           | Pension benefits                                                                                              |                               |                            | 2,215 |              |        |        | 2,146 |      
|                                           | Postretirement benefits other than pensions                                                                   |                               |                            | 4,825 |              |        |        | 4,702 |      
|                                           | Other                                                                                                         |                               |                            | 1,518 |              |        |        | 1,509 |      
|                                           |                                                                                                               |                               |                            |       |              |       
|                                           |                                                                                                               |                               | Total liabilities          |       |              | 16,809 |        |       |       | 16,290 | 
|                                           |                                                                                                               |                               |                            |       |              |       
|Stockholders equity (Note 6):             |                                                                                                               |                               |                            |       |              |        |        |      
|                                           | Common stock, $0.01 par value,
	1,350 million shares authorized, 565 million shares
	issued in 2002 and 2001. |                               |                            | 6     |              |        |        | 6     |      
|                                           | Additional paid-in capital                                                                                    |                               |                            | 2,447 |              |        |        | 2,450 |      
|                                           | Retained earnings                                                                                             |                               |                            | 1,253 |              |        |        | 1,343 |      
|                                           | Minimum pension liability                                                                                     |                               |                            | (830  | )            |        |        | (830  | )    
|                                           | Accumulated other comprehensive loss, excluding
	minimum pension liability                                    |                               |                            | (577  | )            |        |        | (567  | )    
|                                           | Treasury stock, at cost (4.1 million and
	4.8 million shares in 2002 and 2001, respectively)                  |                               |                            | (78   | )            |        |        | (90   | )    
|                                           |                                                                                                               |                               |                            |       |              |       
|                                           |                                                                                                               |                               | Total stockholders equity |       |              | 2,221  |        |       |       | 2,312  | 
|                                           |                                                                                                               |                               |                            |       |              |       
|Total liabilities and stockholders equity |                                                                                                               | $                             | 19,030                     |       |              | $      | 18,602 |      
|                                           |                                                                                                               |                               |                            |       |              |       

See notes to consolidated financial statements.

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DELPHI CORPORATION






CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)


|                                      |                                                                                      |                                                                    |                                                      |      |      |      |   |      |      |      |  
|------------------------------------- | ------------------------------------------------------------------------------------ | ------------------------------------------------------------------ | ---------------------------------------------------- | ---- | ---- | ---- | - | ---- | ---- | ---- | -
|                                      |                                                                                      |                                                                   
|                                      |                                                                                      | Three Months Ended                                                 |                                                     
|                                      |                                                                                      | March 31,                                                          |                                                     
|                                      |                                                                                      |                                                                    |                                                     
|                                      |                                                                                      | 2002                                                               |                                                      |      | 2001 |     
|                                      |                                                                                      |                                                                    |                                                      |      |      |     
|                                      |                                                                                      |                                                                   
|                                      |                                                                                      | (in millions)                                                      |                                                     
|Cash flows from operating activities: |                                                                                      |                                                                    |                                                      |      |      |      |   |     
|                                      | Net loss                                                                             |                                                                    | $                                                    | (51  | )    |      | $ | (429 | )   
|                                      | Adjustments to reconcile net loss to net cash
	provided by operating activities:     |                                                                    |                                                      |      |      |      |   |      |     
|                                      |                                                                                      | Depreciation and amortization, excluding
	amortization of goodwill |                                                      |      | 244  |      |   |      | 311  |     
|                                      |                                                                                      | Amortization of goodwill                                           |                                                      |      |     |      |   |      | 6    |     
|                                      |                                                                                      | Deferred income taxes                                              |                                                      |      | (37  | )    |   |      | (235 | )   
|                                      |                                                                                      | Restructuring                                                      |                                                      |      | 225  |      |   |      | 536  |     
|                                      | Changes in operating assets and liabilities:                                         |                                                                    |                                                      |      |      |      |   |      |     
|                                      |                                                                                      | Accounts receivable, net                                           |                                                      |      | (523 | )    |   |      | 209  |     
|                                      |                                                                                      | Inventories, net                                                   |                                                      |      | 23   |      |   |      | (11  | )   
|                                      |                                                                                      | Prepaid expenses and other                                         |                                                      |      | (31  | )    |   |      | 53   |     
|                                      |                                                                                      | Accounts payable                                                   |                                                      |      | 263  |      |   |      | 23   |     
|                                      |                                                                                      | Restructuring obligations                                          |                                                      |      | (174 | )    |   |      | (50  | )   
|                                      |                                                                                      | Accrued liabilities                                                |                                                      |      | 87   |      |   |      | (215 | )   
|                                      |                                                                                      | Other long-term liabilities                                        |                                                      |      | 181  |      |   |      | 104  |     
|                                      |                                                                                      | Other                                                              |                                                      |      | 13   |      |   |      | (6   | )   
|                                      |                                                                                      |                                                                    |                                                      |      |      |     
|                                      |                                                                                      |                                                                    | Net cash provided by operating activities            |      |      | 220  |   |      |      | 296  |  
|                                      |                                                                                      |                                                                    |                                                      |      |      |     
|Cash flows from investing activities: |                                                                                      |                                                                    |                                                      |      |      |      |   |     
|                                      | Capital expenditures                                                                 |                                                                    |                                                      | (209 | )    |      |   | (194 | )   
|                                      | Cost of acquisitions, net of cash acquired                                           |                                                                    |                                                      |     |      |      |   | (263 | )   
|                                      | Other                                                                                |                                                                    |                                                      | 16   |      |      |   | 37   |     
|                                      |                                                                                      |                                                                    |                                                      |      |      |     
|                                      |                                                                                      |                                                                    | Net cash used in investing activities                |      |      | (193 | ) |      |      | (420 | )
|                                      |                                                                                      |                                                                    |                                                      |      |      |     
|Cash flows from financing activities: |                                                                                      |                                                                    |                                                      |      |      |      |   |     
|                                      | Net proceeds from (repayments of) borrowings
	under credit facilities and other debt |                                                                    |                                                      | (50  | )    |      |   | 185  |     
|                                      | Dividend payments                                                                    |                                                                    |                                                      | (39  | )    |      |   | (39  | )   
|                                      | Issuance of treasury stock, net                                                      |                                                                    |                                                      | 9    |      |      |   |     |     
|                                      |                                                                                      |                                                                    |                                                      |      |      |     
|                                      |                                                                                      |                                                                    | Net cash (used in) provided by financing
	activities |      |      | (80  | ) |      |      | 146  |  
|                                      |                                                                                      |                                                                    |                                                      |      |      |     
|                                      | Effect of exchange rate fluctuations on cash and
	cash equivalents                   |                                                                    |                                                      | (7   | )    |      |   | (78  | )   
|                                      |                                                                                      |                                                                    |                                                      |      |      |     
|                                      | Decrease in cash and cash equivalents                                                |                                                                    |                                                      | (60  | )    |      |   | (56  | )   
|                                      | Cash and cash equivalents at beginning of period                                     |                                                                    |                                                      | 757  |      |      |   | 760  |     
|                                      |                                                                                      |                                                                    |                                                      |      |      |     
|                                      | Cash and cash equivalents at end of period                                           |                                                                    | $                                                    | 697  |      |      | $ | 704  |     
|                                      |                                                                                      |                                                                    |                                                      |      |      |     

See notes to consolidated financial statements.

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DELPHI CORPORATION






NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


1. Basis of Presentation

General
Delphi Corporation, formerly Delphi Automotive Systems
Corporation (Delphi), is a world-leading supplier of
vehicle electronics, transportation components, integrated
systems and modules. The consolidated financial statements and
notes thereto included in this report should be read in
conjunction with our consolidated financial statements and notes
thereto included in our 2001 Annual Report on Form 10-K
filed with the Securities and Exchange Commission. The
consolidated financial statements include the accounts of Delphi
and its wholly owned and majority-owned subsidiaries.

All significant intercompany transactions and
balances between consolidated Delphi businesses have been
eliminated. In the opinion of management, all adjustments,
consisting of only normal recurring items, which are necessary
for a fair presentation have been included. The results for
interim periods are not necessarily indicative of results which
may be expected from any other interim period or for the full
year and may not necessarily reflect the consolidated results of
operations, financial position and cash flows of Delphi in the
future.

Certain prior period amounts have been
reclassified to conform to current period presentation.

Earnings Per
Share Basic earnings per
share amounts were computed using weighted average shares
outstanding for each respective period. Diluted earnings per
share also reflect the weighted average impact from the date of
issuance of all potentially dilutive securities, unless
inclusion would have had an antidilutive effect. Actual weighted
average shares outstanding used in calculating basic and diluted
earnings per share were:

|                                    |  |                    |         |  |      |  |         | 
|----------------------------------- |  | ------------------ | ------- |  | ---- |  | ------- | 
|                                    |  |                   
|                                    |  | Three Months Ended |        
|                                    |  | March 31,          |        
|                                    |  |                    |        
|                                    |  | 2002               |         |  | 2001 | 
|                                    |  |                    |         |  |      | 
|                                    |  |                   
|                                    |  | (in thousands)     |        
|Weighted average shares outstanding |  |                    | 560,448 |  |      |  | 559,835 | 
|Effect of dilutive securities       |  |                    |        |  |      |  |        | 
|                                    |  |                    |         |  |      | 
|Diluted shares outstanding          |  |                    | 560,448 |  |      |  | 559,835 | 
|                                    |  |                    |         |  |      | 

The Board of Directors declared a dividend on
Delphi common stock of $0.07 per share on March 13,
2002, payable on April 22, 2002, to holders of record on
March 25, 2002.

Goodwill and Other Intangible
Assets Effective
January 1, 2002, we adopted Statement of Financial
Accounting Standards (SFAS) No. 142
Goodwill and Other Intangible Assets and stopped the
amortization of purchased goodwill. We also reevaluated our
intangible assets and determined that their remaining useful
lives remained appropriate. At March 31, 2002, our
unamortized purchased goodwill balance was approximately
$664 million, principally in the Dynamics and Propulsion
Sector. We completed the impairment tests of goodwill as of
January 1, 2002 as required by SFAS No. 142. In doing
so we determined that our goodwill is not impaired; therefore
there was no transitional impairment charge to be recorded. For
the three months ended March 31, 2001, our reported net
loss and basic and diluted loss per share was
$(429) million and $(0.77), respectively. Adjusted for the
non-amortization provisions of SFAS No. 142, our reported
net loss and basic and diluted earnings per share would have
been $(424) million and $(0.76), respectively, resulting in
an increase in earnings of $5 million or $0.01 per
share for the first quarter. The after-tax impact in 2002 of the
non-amortization provisions of SFAS No. 142 are expected to
be $6 million ($0.01 per share), $8 million
($0.01 per share), $9 million ($0.02 per share)
and $28 million ($0.05 per share) for the second
quarter, third quarter, fourth quarter, and full year,
respectively.

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DELPHI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)  (Continued)

2. Restructuring, Impairment and Product
Line Charges

2001
Restructuring Actions

In the first quarter of 2001, Delphi approved
restructuring plans to sell, close or consolidate nine plants,
downsize the workforce at more than 40 other facilities and exit
selected products by the first quarter of 2002. We also recorded
an impairment loss related to certain long-lived assets at
impacted sites and certain investments in joint ventures. As a
result of these actions, we recorded a total charge of
$617 million ($404 million after-tax) in the first
quarter of 2001.

The restructuring plans resulted in a charge of
$536 million that included $492 million of employee
costs (including postemployment benefits and special termination
pension and postretirement benefits) and $44 million in
other exit costs (principally lease termination and contract
cancellation payments). The plans entailed the elimination of
approximately 11,500 positions worldwide, comprised of 5,600
U.S. hourly employees, 2,000 U.S. salaried employees, and 3,900
employees in non-U.S. locations. Under the restructuring plans,
we ultimately eliminated 11,440 positions and incurred costs of
$530 million. For the U.S. hourly workforce, we reduced
5,400 positions against a plan of 5,600 positions. This
shortfall occurred during the first quarter of 2002, due to
minor variances in the execution of our restructuring plans. We
eliminated 4,040 non-U.S. positions, slightly above the planned
3,900 positions and we eliminated 2,000 U.S. salaried employee
positions as planned. Cash paid for restructuring was
$449 million, with $405 million for employee costs and
$44 million for other exit costs. At March 31, 2002, we
have a remaining accrual of $8 million for these plans
related to fixed salary continuation payments for certain of our
separated salaried employees that will be paid in cash in the
second quarter of 2002, bringing the total cash portion of the
charge to $457 million. We also had $73 million of
non-cash charges, principally for special termination pension
and postretirement benefits. The cash outflows for the first
quarter of 2002 were $106 million, with $84 million
for employee costs and $22 million for other exit costs.
Upon completion of our plans, in the first quarter of 2002, we
reversed $6 million of the original $536 million
charge on the Restructuring line in our Statement of Operations.
The $6 million is a result of the minor shortfall in head
count noted previously, as well as slight favorable variances in
the costs actually incurred under the various initiatives. This
reversal, when netted against the 2002 restructuring charge
explained below, resulted in $225 million
($150 million after-tax) of net restructuring expenses in
the first quarter of 2002.

In the first quarter of 2001, we evaluated the
carrying value of the long-lived assets at each site impacted by
the restructuring plans for impairment, and recorded impairment
losses of $63 million. The impairment losses, primarily
related to machinery and equipment held for use in the Safety,
Thermal and Electrical Architecture sector, were recorded in
depreciation and amortization.

In addition, in the first quarter of 2001, we
recorded impairment charges of $18 million related to
permanent declines in the value of our investments in certain
joint ventures, included in other income (expense), net.

2002
Restructuring Actions

In the first quarter of 2002, Delphi approved
further restructuring plans to eliminate 6,100 positions from
our global workforce, as we downsize more than 25 selected
facilities in the United States and Europe and exit certain
other activities within the next twelve months.

The restructuring charge totaled
$231 million with $222 million of employee costs
(including postemployment benefits and special termination
pension benefits) and $9 million in other exit costs (lease
cancellation costs and contract cancellation fees). This charge,
when netted against the $6 million reversal noted above, results
in a net restructuring charge of $225 million ($150 million
after-tax) in the first quarter of 2002. The plans entail the
elimination of approximately 6,100 positions worldwide,
comprised of 3,100 U.S. employees and 3,000 employees in
non-U.S. locations. Employees at impacted locations have been
informed

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DELPHI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)  (Continued)

of the restructuring initiatives and the benefits
available to them under applicable benefit plans or related
contractual provisions. Affected employees will leave Delphi
using a mixture of voluntary or involuntary separation programs,
early retirements, social plan programs, and layoffs. We expect
to pay approximately $200 million in cash related to the
restructuring programs with the remaining $31 million for
non-cash special termination pension benefits. During the first
quarter of 2002, we paid $62 million, with $60 million
related to employee costs and $2 million related to exit
costs. As of March 31, 2002, approximately 900 U.S.
employees and 2,400 non-U.S. employees have been separated under
the plans. Approximately 14,740 positions have been eliminated
under the 2001 and 2002 programs through March 31, 2002.

Generator
Product Line

In the fourth quarter of 2001, we entered into a
non-binding letter of intent, subject to entering into
definitive agreements as well as successful resolution of union
and customer concerns, with Delco Remy International to sell our
generator product line, part of our Dynamics & Propulsion
sector, and consequently classified the related assets as held
for sale. As a result, we recorded a charge of $194 million
($125 million after-tax). Our generator product line had
annual sales of approximately $500 million in 2001.

During the first quarter of 2002, we had
successful discussions with Delco Remy International and the
product lines largest customer surrounding the sale of
this product line. We are engaged in discussions with the
largest affected union regarding the consummation of the
potential sale of this product line. If we are unsuccessful, for
any reason, we intend to quickly wind down the product line.
Based upon changes in the expected terms of the transaction
during the quarter, we accrued to cost of sales an additional
$37 million ($24 million after-tax), to record
additional estimated redundant workforce costs, which are
contractually required. We expect the redundant workforce to
grow due to the disposal of this product line, and we expect to
negotiate a resolution of their employment status by late 2002.
Such resolution, which will affect the final cost for this
transaction, could include retirements, transfers to other
facilities, paid separations, continued redundant status and/or
the return of work to those operations. At this time, we expect
some workers to retire, and the remainder to transfer to other
facilities. Although the exact length of the period workers are
redundant will vary by location, we have estimated that the
median redundant period will be through December 31, 2002.

This $37 million charge, when added to the
charge recorded in the fourth quarter of 2001, brings the total
expected loss associated with the sale of this product line to
$231 million ($149 million after-tax), including
$69 million for estimated contractually required redundant
workforce payments related to our unionized U.S. manufacturing
operations through 2002. We expect to pay all of this amount in
cash, in addition to $6 million paid in the first quarter
of 2002. These amounts are based upon our best estimates with
respect to timing of the transaction and ultimate resolution of
the contractually required payments. Due to the significance of
the estimates involved, the final provision for sale or wind
down of the product line could differ from the recorded amounts.

3. Acquisition

In March 2001, Delphi acquired substantially all
of the assets and assumed certain liabilities of Eaton
Corporations Vehicle Switch/ Electronics Division, now
Delphi Mechatronic Systems, for approximately $0.3 billion.
Delphi Mechatronic Systems is a global producer of
electromechanical switches, mechatronic modules and body
electronics for the light vehicle industry. Delphi Mechatronic
Systems technology, complemented by our extensive
electrical and electronic integration capabilities, will enable
us to offer customers new solutions in modular cockpits, doors
and overhead systems. The Delphi Mechatronic Systems acquisition
supports our goals of enhancing our technology, diversifying our
customer base and geographic footprint, and leveraging our
system integration capabilities. The acquisition has been
accounted for using the purchase method of accounting and
therefore the purchase price has been allocated to assets
acquired and liabilities assumed based on estimated fair values.
The pro forma effect of this acquisition would not be

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DELPHI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)  (Continued)

significantly different from reported results.
The $146 million excess consideration given over the
estimated fair value of net assets acquired was recorded as
goodwill. In addition, we recorded $10 million of
intangible assets, primarily patents and related technology,
which will be amortized over 5 years. The purchase price
and related allocation were finalized in the first quarter of
2002 resulting in an increase in goodwill of approximately
$34 million. The increase was primarily attributable to
adjustments to the fair value of assets and liabilities acquired
and finalization of our integration plans.

4. Inventories, Net

Inventories, net consisted of:

|                                                                            |                           |               |       |       |              |   |       |       | 
|--------------------------------------------------------------------------- | ------------------------- | ------------- | ----- | ----- | ------------ | - | ----- | ----- | 
|                                                                            |                           | March 31,     |       |       | December 31, |  
|                                                                            |                           | 2002          |       |       | 2001         |  
|                                                                            |                           |               |       |       |              |  
|                                                                            |                           |              
|                                                                            |                           | (in millions) |      
|Productive material, work-in-process and supplies                           |                           | $             | 1,500 |       |              | $ | 1,563 |      
|Finished goods                                                              |                           |               | 348   |       |              |   | 313   |      
|                                                                            |                           |               |       |       |              |  
|                                                                            | Total inventories at FIFO |               |       | 1,848 |              |   |       | 1,876 | 
|Less allowance to adjust the carrying value of
	certain inventories to LIFO |                           |               | (255  | )     |              |   | (255  | )    
|                                                                            |                           |               |       |       |              |  
|                                                                            | Total inventories, net    |               | $     | 1,593 |              |   | $     | 1,621 | 
|                                                                            |                           |               |       |       |              |  

5. Derivatives and Hedging
Activities

Delphi is exposed to market risk, such as
fluctuations in currency exchange rates, commodity prices and
changes in interest rates. To manage the volatility relating to
these exposures, we aggregate the exposures on a consolidated
basis to take advantage of natural offsets. For exposures that
are not offset within our operations, we periodically enter into
various derivative transactions pursuant to our risk management
policies. Designation is performed on a transaction basis to
support hedge accounting. The changes in fair value of these
hedging instruments are offset in part or in whole by
corresponding changes in the fair value or cash flows of the
underlying exposures being hedged. We assess the initial and
ongoing effectiveness of our hedging relationships in accordance
with our documented policy. We do not hold or issue derivative
financial instruments for trading purposes.

Delphi has currency exchange exposure from buying
and selling in currencies other than the local currencies of our
operating units. The primary purpose of our currency hedging
activities is to manage the volatility associated with
forecasted currency purchases and sales. Principal currencies
hedged include the Mexican peso, Canadian dollar, euro, British
pound, Japanese yen, Singapore dollar, and Brazilian real. We
primarily utilize forward exchange contracts with maturities of
less than 24 months, which qualify as cash flow hedges.

Delphi has exposure to the prices of commodities
in the procurement of certain raw materials. The primary purpose
of our commodity price hedging activities is to manage the
volatility associated with these forecasted inventory purchases.
We primarily utilize swaps and options with maturities of less
than 24 months, which qualify as cash flow hedges. These
instruments are intended to offset the effect of changes in
commodity prices on forecasted inventory purchases.

In order to manage the interest rate risk
associated with our debt portfolio, we periodically enter into
derivative transactions to manage our exposure to changes in
interest rates, although we do not have any outstanding at
March 31, 2002.

Gains and losses on derivatives qualifying as
cash flow hedges are recorded in other comprehensive income
(OCI) to the extent that hedges are effective until the
underlying transactions are recognized in

8



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DELPHI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)  (Continued)

earnings. Net gains included in OCI as of
March 31, 2002 were $26 million after-tax
($40 million pre-tax). Of this pre-tax total, a gain of
approximately $34 million is expected to be included in
cost of sales within the next 12 months and a gain of
approximately $3 million is expected to be included in
subsequent periods. A loss of approximately $3 million is
expected to be included in depreciation and amortization expense
over the lives of the related fixed assets and a gain of
approximately $6 million is expected to be included in
interest expense over the term of the related debt. The
unrealized amounts in OCI will fluctuate based on changes in the
fair value of open contracts at each reporting period. Due to
unusually pronounced production volume reductions, we
discontinued several cash flow hedges during the quarter ended
March 31, 2001, which resulted in the immediate recognition
of $6 million of income included in cost of sales. Cash
flow hedges are discontinued when it is probable that the
original forecasted transactions will not occur. The amount
included in cost of sales related to hedge ineffectiveness and
the time value of options was not material.

6. Stockholders Equity

Changes in stockholders equity for the
three months ended March 31, 2002 were:

|                           |                                                                        |                          |     |   |            |   |   |               |  |       |               |    |   |               |       |     |               |   |        |        |   |   |     |    |  |   |       |     |     |  
|-------------------------- | ---------------------------------------------------------------------- | ------------------------ | --- | - | ---------- | - | - | ------------- |  | ----- | ------------- | -- | - | ------------- | ----- | --- | ------------- | - | ------ | ------ | - | - | --- | -- |  | - | ----- | --- | --- | -
|                           |                                                                        |                          |     |   |            |   |   | Accumulated   |  |       |               |    |  
|                           |                                                                        | Common Stock             |     |   | Additional |   |   |               |  | Other |               |    |   |               | Total |    
|                           |                                                                        |                          |     |   | Paid-in    |   |   | Retained      |  |       | Comprehensive |    |   | Treasury      |       |     | Stockholders |  
|                           |                                                                        | Shares                   |     |   | Amount     |   |   | Capital       |  |       | Earnings      |    |   | Income (Loss) |       |     | Stock         |   |        | Equity |  
|                           |                                                                        |                          |     |   |            |   |   |               |  |       |               |    |   |               |       |     |               |   |        |        |  
|                           |                                                                        |                          |     |   |            |   |   | (in millions) |  |       |               |    |   |               |      
|Balance at January 1, 2002 |                                                                        |                          | 565 |   |            | $ | 6 |               |  | $     | 2,450         |    |   | $             | 1,343 |     |               | $ | (1,397 | )      |   | $ | (90 | )  |  | $ | 2,312 |    
|                           | Net loss                                                               |                          |     |  |            |   |   |              |  |       |               |   |   |               |       | (51 | )             |   |        |       |   |   |     |   |  |   |       | (51 | )  
|                           | Currency translation adjustments, net of tax                           |                          |     |  |            |   |   |              |  |       |               |   |   |               |       |    |               |   |        | (34    | ) |   |     |   |  |   |       | (34 | )  
|                           | Net change in unrecognized gain on derivative
	instruments, net of tax |                          |     |  |            |   |   |              |  |       |               |   |   |               |       |    |               |   |        | 24     |   |   |     |   |  |   |       | 24  |    
|                           |                                                                        |                          |     |   |            |   |   |               |  |       |               |    |   |               |       |     |               |   |        |        |  
|                           |                                                                        | Total comprehensive loss |     |   |            |   |   |               |  |       |               |    |   |               |       |     |               |   |        |        |   |   |     |    |  |   |       |     | (61 | )
|                           | Net shares issued for employee benefit plans                           |                          |     |  |            |   |   |              |  |       |               | (3 | ) |               |       |    |               |   |        |       |   |   |     | 12 |  |   |       | 9   |    
|                           | Dividends                                                              |                          |     |  |            |   |   |              |  |       |               |   |   |               |       | (39 | )             |   |        |       |   |   |     |   |  |   |       | (39 | )  
|                           |                                                                        |                          |     |   |            |   |   |               |  |       |               |    |   |               |       |     |               |   |        |        |  
|Balance at March 31, 2002  |                                                                        |                          | 565 |   |            | $ | 6 |               |  | $     | 2,447         |    |   | $             | 1,253 |     |               | $ | (1,407 | )      |   | $ | (78 | )  |  | $ | 2,221 |    
|                           |                                                                        |                          |     |   |            |   |   |               |  |       |               |    |   |               |       |     |               |   |        |        |  

9



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DELPHI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)  (Continued)

7. Segment Reporting

Selected information regarding Delphis
product sectors follows:

|                            |                                |                                    |                 |               |               |     |   |       |           |            |              |     |            |            |   |       |          |        |   |       |     |         |   |      |     |         |   |       |     |        | 
|--------------------------- | ------------------------------ | ---------------------------------- | --------------- | ------------- | ------------- | --- | - | ----- | --------- | ---------- | ------------ | --- | ---------- | ---------- | - | ----- | -------- | ------ | - | ----- | --- | ------- | - | ---- | --- | ------- | - | ----- | --- | ------ | 
|                            |                                |                                    |                 |               |               |     |   |       |           |           
|                            |                                | Electronics & Mobile Communication |                 |               |               |     |   |       |           |            |             
|                            |                                |                                    |                 |               |               |     |   |       |           |            |             
|                            |                                |                                    |                 | Other         |               |     |   |       | Safety,   |            |              |     |            |            |   |      
|                            |                                |                                    |                 | Electronics & |               |     |   |       | Thermal & |            |              |     |            |            |   |      
|                            |                                | Mobile                             |                 |               | Mobile        |     |   |       |           | Electrical |              |     | Dynamics & |            |   |       |          |       
|                            |                                | MultiMedia(a)                      |                 |               | Communication |     |   | Total |           |            | Architecture |     |            | Propulsion |   |       | Other(b) |        |   | Total |    
|                            |                                |                                    |                 |               |               |     |   |       |           |            |              |     |            |            |   |       |          |        |   |       |    
|                            |                                |                                   
|                            |                                | (in millions)                      |                
|For the Three Months Ended: |                                |                                    |                 |               |               |     |   |       |           |            |              |     |            |            |   |       |          |        |   |       |     |         |   |      |     |         |   |      
|March 31, 2002              |                                |                                    |                 |               |               |     |   |       |           |            |              |     |            |            |   |       |          |        |   |       |     |         |   |      |     |         |   |      
|                            | Net sales to GM and affiliates |                                    | $               | 67            |               |     | $ | 713   |           |            | $            | 780 |            |            | $ | 1,410 |          |        | $ | 1,993 |     |         | $ | 301  |     |         | $ | 4,484 |    
|                            | Net sales to other customers   |                                    |                 | 19            |               |     |   | 265   |           |            |              | 284 |            |            |   | 844   |          |        |   | 923   |     |         |   | 153  |     |         |   | 2,204 |    
|                            | Inter-sector net sales         |                                    |                 |              |               |     |   | 166   |           |            |              | 166 |            |            |   | 93    |          |        |   | 296   |     |         |   | (555 | )   |         |   |      |    
|                            |                                |                                    |                 |               |               |     |   |       |           |            |              |     |            |            |   |       |          |        |   |       |    
|                            |                                |                                    | Total net sales |               | $             | 86  |   |       | $         | 1,144      |              |     | $          | 1,230      |   |       | $        | 2,347  |   |       | $   | 3,212   |   |      | $   | (101    | ) |       | $   | 6,688  | 
|                            |                                |                                    |                 |               |               |     |   |       |           |            |              |     |            |            |   |       |          |        |   |       |    
|                            |                                | Operating income (loss)            |                 | $             | (6            | )   |   | $     | 111       | (c)        |              | $   | 105        | (c)        |   | $     | 135      | (c)    |   | $     | 8   | (c)     |   | $    | (18 | )(c)    |   | $     | 230 | (c)   
|                            |                                |                                    |                 |               |               |     |   |       |           |            |              |     |            |            |   |       |          |        |   |       |    
|March 31, 2001              |                                |                                    |                 |               |               |     |   |       |           |            |              |     |            |            |   |       |          |        |   |       |     |         |   |      |     |         |   |      
|                            | Net sales to GM and affiliates |                                    | $               | 101           |               |     | $ | 672   |           |            | $            | 773 |            |            | $ | 1,317 |          |        | $ | 1,927 |     |         | $ | 349  |     |         | $ | 4,366 |    
|                            | Net sales to other customers   |                                    |                 | 10            |               |     |   | 262   |           |            |              | 272 |            |            |   | 814   |          |        |   | 943   |     |         |   | 140  |     |         |   | 2,169 |    
|                            | Inter-sector net sales         |                                    |                 |              |               |     |   | 157   |           |            |              | 157 |            |            |   | 117   |          |        |   | 307   |     |         |   | (581 | )   |         |   |      |    
|                            |                                |                                    |                 |               |               |     |   |       |           |            |              |     |            |            |   |       |          |        |   |       |    
|                            |                                |                                    | Total net sales |               | $             | 111 |   |       | $         | 1,091      |              |     | $          | 1,202      |   |       | $        | 2,248  |   |       | $   | 3,177   |   |      | $   | (92     | ) |       | $   | 6,535  | 
|                            |                                |                                    |                 |               |               |     |   |       |           |            |              |     |            |            |   |       |          |        |   |       |    
|                            |                                | Operating income (loss)            |                 | $             | (3            | )   |   | $     | 69        | (d)(e)     |              | $   | 66         | (d)(e)     |   | $     | 50       | (d)(e) |   | $     | (97 | )(d)(e) |   | $    | (11 | )(d)(e) |   | $     | 8   | (d)(e)
|                            |                                |                                    |                 |               |               |     |   |       |           |            |              |     |            |            |   |       |          |        |   |       |    



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Information for the Mobile MultiMedia business
	line within the Electronics & Mobile Communication sector is
	separately disclosed due to the strategic importance of this
	high-tech business line and its usefulness in understanding
	sector net sales and operating results. Mobile MultiMedia
	develops products designed to bring the Internet, telematics,
	entertainment and mobile communication technologies into
	vehicles.
|   
|(b) | Other includes activity not allocated to the
	product sectors and elimination of inter-sector transactions.                                                                                                                                                                                                                                                                                                                           
|   
|(c) | Excludes the 2002 net restructuring and product
	line charges of $262 million with $20 million for
	Electronics & Mobile Communication, $101 million for Safety,
	Thermal & Electrical Architecture, $126 million for
	Dynamics & Propulsion and $15 million for Other.                                                                                                                                                               
|   
|(d) | Excludes the 2001 restructuring and asset
	impairment charges of $599 million with $78 million for
	Electronics & Mobile Communication, $214 million for Safety,
	Thermal & Electrical Architecture, $280 million for
	Dynamics & Propulsion and $27 million for Other.                                                                                                                                                               
|   
|(e) | Effective January 1, 2002, we adopted SFAS
	No. 142 Goodwill and Other Intangible Assets
	and stopped amortization of purchased goodwill. Accordingly, the
	first quarter 2001 excludes goodwill amortization of $6 million
	with $1 million for Electronics & Mobile Communication,
	$1 million for Safety, Thermal & Electrical
	Architecture, $3 million for Dynamics & Propulsion and
	$1 million for Other.                    

8. Commitments and
Contingencies

Delphi is from time to time subject to various
legal actions and claims incidental to its business, including
those arising out of alleged defects, breach of contracts,
product warranties, intellectual property matters,
employment-related matters and environmental matters. With
respect to environmental matters, Delphi has received notices
that it is a potentially responsible party (PRP) in
proceedings at various sites, including the Tremont City
Landfill Site located in Tremont, Ohio. With respect to warranty
matters, as previously disclosed, a few customers have advised
Delphi that they intend to pursue warranty claims vigorously.

10



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DELPHI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)  (Continued)

Accordingly, although we cannot assure you that
the future costs of warranty claims by our customers will not be
material, we believe our established reserves are adequate to
cover potential warranty claims. However, the final amounts
determined to be due related to these matters could differ
materially from our recorded estimates.

Litigation is subject to many uncertainties, and
the outcome of individual litigated matters is not predictable
with assurance. After discussions with counsel, it is the
opinion of management that the outcome of such matters will not
have a material adverse impact on the consolidated financial
position, results of operations or cash flows of Delphi.

In November 2000, a federal district court jury
awarded a former supplier to Delphi approximately
$32 million in connection with a commercial dispute. Delphi
and the supplier filed post trial motions seeking a directed
verdict, and Delphi also sought a new trial. In February 2001,
the district court denied all parties motions. Both
parties have filed notices of appeal and briefs with the Ninth
Circuit Court of Appeals. We plan to vigorously appeal the
district courts judgment. While legal proceedings are
subject to inherent uncertainty, we believe we have valid
grounds for appeal, and it is possible that the existing
judgment could be substantially altered or eliminated by the
appellate court. Consequently, in the opinion of management and
counsel, it is not possible to estimate the outcome of such
uncertainty at this time. Delphi will record a provision for any
legal judgment, if and at the time that management and counsel
conclude a loss is probable.

In the normal course of business, we extend
credit on open account to our customers. From time to time, we
also invest in joint ventures with a variety of business
partners. Although Delphi is affected by the financial well
being of the automotive industry as a whole, we believe that our
risk associated with trade receivables and recoverability of
investments in our joint ventures is mitigated by our customer
base and ongoing control procedures to monitor the
creditworthiness of customers and viability of joint venture
business partners. As part of our ongoing procedures, we
regularly review our joint venture investments for potential
impairments or permanent declines in value, and record reserves
for any such impairment when appropriate.

In November 2000, one customer/business partner
entered into corporate reorganization proceedings in Korea. As a
result of the reorganization, this customer/ business
partners obligations to its suppliers prior to November
2000 were legally frozen. The terms and conditions of repayment
for these frozen amounts will be determined by the
reorganization plan. In addition, in September 2001 this
customer/ business partner entered into a non-binding memorandum
of understanding with a third party relating to forming a new
company, which would purchase selected assets and businesses of
this customer/ business partner and would assume a portion of
the liabilities, but which also proposes to pay less than the
full value to the suppliers. Delphis consolidated balance
sheet as of March 31, 2002 includes approximately $16
million of accounts receivable from this customer/business
partner, primarily in the U.S. and Europe, related to shipments
prior to November 2000. We are actively seeking repayment of
these amounts, which we continue to believe are collectible. At
March 31, 2002, we also have investments, generally through
a 50% non-controlling voting interest, in several joint ventures
which sell to this customer/business partner. At March 31,
2002, we have investments of approximately $113 million in
these joint ventures. Total receivables of the joint ventures
due from this customer/ business partner were $199 million
at March 31, 2002. We are continuing to work with the joint
ventures to facilitate their ongoing operations and continue to
believe that our investments as of March 31, 2002 are
recoverable and intend to pursue the full amount of such
recovery. However, due to assertions by the customer/ business
partner that it cannot pay supplier claims in full and the
significant uncertainty surrounding the outcome of the
reorganization as well as the memorandum of understanding
discussed above, the impact on our future results of operations
and financial condition could differ materially from currently
recorded estimates.

11



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|        |                                                                                       
|------- | --------------------------------------------------------------------------------------
|Item 2. | Managements Discussion and Analysis
	of Financial Condition and Results of Operations

Overview

While industry conditions in the North American
automotive market began to stabilize during the first quarter of
2002, other major automotive markets in which we operate
remained weak. During the first quarter of 2002, we completed
the implementation of the global restructuring plans that were
approved in the first quarter of 2001. We believe our progress
in 2001, coupled with the additional actions completed in and
planned for 2002, should prepare Delphi for upcoming challenges
with a stronger portfolio and continued operations at a lower
breakeven point.

During the first quarter of 2002, Delphis
Board of Directors approved the change of the company name to
Delphi Corporation, along with a new branding strategy designed
to appeal to traditional automotive customers and potential new
market customers. We remain very focused on our automotive
business but removing the Automotive Systems
description from our name reinforces our commitment to other
markets, in addition to automotive.

Results of Operations

The following managements discussion and
analysis of financial condition and results of operations
(MD&A) should be read in conjunction with the
MD&A included in our Annual Report on Form 10-K for the
year ended December 31, 2001.

Three Months
Ended March 31, 2002 versus Three Months Ended
March 31, 2001

Net Sales.Consolidated net sales by product
sector and in total for the three months ended March 31,
2002 and 2001 were:

|                                          |                                          |                                          |       |       |       |  |       |       |       | 
|----------------------------------------- | ---------------------------------------- | ---------------------------------------- | ----- | ----- | ----- |  | ----- | ----- | ----- | 
|                                          |                                          |                                         
|                                          |                                          | Three Months Ended                       |      
|                                          |                                          | March 31,                                |      
|                                          |                                          |                                          |      
|Product Sector                            |                                          | 2002                                     |       |       | 2001  | 
|                                          |                                          |                                          |       |       |       | 
|                                          |                                          |                                         
|                                          |                                          | (in millions)                            |      
|Electronics & Mobile Communication        |                                          |                                          |       |       |       |  |       |      
|                                          |                                          | Mobile MultiMedia                        |       | $     | 86    |  |       | $     | 111   | 
|                                          |                                          | Other Electronics & Mobile Communication |       |       | 1,144 |  |       |       | 1,091 | 
|                                          |                                          |                                          |       |       |       | 
|                                          | Total Electronics & Mobile Communication |                                          |       | 1,230 |       |  |       | 1,202 |      
|Safety, Thermal & Electrical Architecture |                                          |                                          | 2,347 |       |       |  | 2,248 |      
|Dynamics & Propulsion                     |                                          |                                          | 3,212 |       |       |  | 3,177 |      
|Other                                     |                                          |                                          | (101  | )     |       |  | (92   | )    
|                                          |                                          |                                          |       |       |       | 
|                                          | Consolidated net sales                   |                                          | $     | 6,688 |       |  | $     | 6,535 |      
|                                          |                                          |                                          |       |       |       | 

Consolidated net sales for the first quarter of
2002 were $6.7 billion compared to $6.5 billion for
the same period of 2001. The increase primarily reflects
stabilization of North American production schedules. Net sales
to GM increased by $118 million, principally due to
increased production volume in North America, partially offset
by other major automotive markets which remained weak. Our
non-GM sales increased by $35 million principally due to
the acquisition of Delphi Mechatronic Systems at the end of the
first quarter of 2001, increased penetration for Mobile
MultiMedia and higher volumes for non-automotive and aftermarket
customers, partially offset by currency exchange factors,
particularly the euro, and price decreases. As a percent of our
total revenue for the first quarter of 2002 our non-GM sales
were 33%. Our net sales also were impacted by continued price
pressures that resulted in price reductions of approximately
$120 million, or 1.8% for the first quarter of 2002
compared to approximately $138 million or 2.1% for the
comparable period of 2001.

Gross Margin.Our
gross margin was 11.9% for the first quarter of 2002 compared to
gross margin of 9.7% for the comparable period of 2001. During
the first quarter of 2002, we recorded a charge of
$37 million related to our generator product line; this
charge is explained below. Excluding this charge, our gross
margin was 12.5%. The improvement reflects greater efficiencies
resulting from stabilization of customer build

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schedules and savings realized from our 2001
restructuring plans, partially offset by higher wages and
increased U.S. pension and healthcare expenses.


Selling, General and Administrative.Selling, general and administrative
expenses of $362 million, 5.4% of first quarter 2002 total
net sales, decreased by $16 million or 4.2% from the first
quarter of 2001. The decrease primarily results from aggressive
cost reduction efforts partially offset by $5 million of
incremental selling, general and administrative expenses related
to Delphi Mechatronic Systems acquired at the end of the first
quarter of 2001.

Depreciation and Amortization.Depreciation and amortization in 2002
was consistent with 2001 amounts, adjusted for the
$63 million long-lived asset impairment charge included in
depreciation and amortization in the first quarter of 2001, and
$6 million of goodwill amortization in the first quarter of
2001.

Restructuring.In
the first quarter of 2002, Delphi approved further restructuring
plans to eliminate 6,100 positions from our global workforce, as
we downsize more than 25 selected facilities in the United
States and Europe and exit certain other activities within the
next twelve months. Approximately 14,740 positions have been
eliminated under the 2001 and 2002 programs through
March 31, 2002.

The restructuring charge totaled
$231 million with $222 million of employee costs
(including postemployment benefits and special termination
pension benefits) and $9 million in other exit costs (lease
cancellation costs and contract cancellation fees). This charge,
when netted against the $6 million reversal noted below
results in a net restructuring charge of $225 million
($150 million after-tax) in the first quarter of 2002. The
plans entail the elimination of approximately 6,100 positions
worldwide, comprised of 3,100 U.S. employees and 3,000 employees
in non-U.S. locations. Employees at impacted locations have been
informed of the restructuring initiatives and the benefits
available to them under applicable benefit plans or related
contractual provisions. Affected employees will leave Delphi
using a mixture of voluntary or involuntary separation programs,
early retirements, social plan programs, and layoffs. We expect
to pay approximately $200 million in cash related to the
restructuring programs with the remaining $31 million for
non-cash special termination pension benefits. During the first
quarter of 2002, we paid $60 million related to employee
costs and $2 million related to exit costs. As of
March 31, 2002, approximately 900 U.S. employees and 2,400
non-U.S. employees have been separated under the plans. We
expect an additional 400 to 700 employees to separate during the
second quarter, with the remainder during the second half of
2002 and the first quarter in 2003. We expect to begin to
realize savings related to the 2002 restructuring actions during
the second half of 2002 with estimated ongoing savings expected
to grow in early 2004 to more than $125 million
(after-tax). These savings are expected to be realized as
reductions to cost of sales and selling, general and
administrative expenses.

The first quarter 2001 restructuring plans
resulted in a charge of $536 million that included
$492 million of employee costs (including postemployment
benefits and special termination pension and postretirement
benefits) and $44 million in other exit costs (principally lease
termination and contract cancellation payments). The plans
entailed the elimination of approximately 11,500 positions
worldwide, comprised of 5,600 U.S. hourly employees, 2,000 U.S.
salaried employees, and 3,900 employees in non-U.S. locations.
Under the restructuring plans, we ultimately eliminated 11,440
positions and incurred costs of $530 million. For the U.S.
hourly workforce, we reduced 5,400 positions against a plan of
5,600 positions. This shortfall occurred during the first
quarter of 2002, due to minor variances in the execution of our
restructuring plans. We eliminated 4,040 non-U.S. positions,
slightly above the planned 3,900 positions and we eliminated
2,000 U.S. salaried employee positions as planned. Cash paid for
restructuring was $449 million, with $405 million for
employee costs and $44 million for other exit costs. At
March 31, 2002, we have a remaining accrual of
$8 million for these plans related to fixed salary
continuation payments for certain of our separated salaried
employees that will be paid in cash in the second quarter of
2002, bringing the total cash portion of the charge to
$457 million. We also had $73 million of non-cash
charges, principally for special termination pension and
postretirement benefits. The cash outflows for the first quarter
of 2002 were $106 million, with $84 million for
employee costs and $22 million for other exit costs. Upon
completion of our plans, in the first quarter of 2002, we
reversed $6 million of the original $536 million
charge on the Restructuring line in our Statement of Operations.
The $6 million is a result of the minor shortfall in head
count noted previously, as well as slight

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favorable variances in the costs actually
incurred under the various initiatives. This reversal, when
netted against the 2002 restructuring charge explained below,
resulted in $225 million ($150 million after-tax) of
net restructuring expenses in the first quarter of 2002.


Following is a summary of our restructuring
actions (in millions):

|                                        |  |                |      |   |            |   |     |            |  |   |       |   |  |   |      |  
|--------------------------------------- |  | -------------- | ---- | - | ---------- | - | --- | ---------- |  | - | ----- | - |  | - | ---- | -
|                                        |  |                |      |   |            |  
|                                        |  | Employee Costs |      |   |            |   |    
|                                        |  |                |      |   | Other Cash |   |     |           
|Restructuring Actions                   |  | Cash           |      |   | Non Cash   |   |     | Exit Costs |  |   | Total |  
|                                        |  |                |      |   |            |   |     |            |  |   |       |  
|First Quarter 2001 Restructuring Charge |  | $              | 419  |   |            | $ | 73  |            |  | $ | 44    |   |  | $ | 536  |  
|Usage                                   |  |                | (321 | ) |            |   | (72 | )          |  |   | (22   | ) |  |   | (415 | )
|                                        |  |                |      |   |            |   |     |            |  |   |       |  
|Balance at December 31, 2001            |  |                | 98   |   |            |   | 1   |            |  |   | 22    |   |  |   | 121  |  
|                                        |  |                |      |   |            |   |     |            |  |   |       |  
|Usage                                   |  |                | (84  | ) |            |   | (1  | )          |  |   | (22   | ) |  |   | (107 | )
|Adjustments due to change in estimate   |  |                | (6   | ) |            |   |    |            |  |   |      |   |  |   | (6   | )
|                                        |  |                |      |   |            |   |     |            |  |   |       |  
|Balance at March 31, 2002(a)            |  | $              | 8    |   |            | $ |    |            |  | $ |      |   |  | $ | 8    |  
|                                        |  |                |      |   |            |   |     |            |  |   |       |  
|First Quarter 2002 Restructuring Charge |  | $              | 191  |   |            | $ | 31  |            |  | $ | 9     |   |  | $ | 231  |  
|Usage                                   |  |                | (60  | ) |            |   | (31 | )          |  |   | (2    | ) |  |   | (93  | )
|                                        |  |                |      |   |            |   |     |            |  |   |       |  
|Balance at March 31, 2002               |  | $              | 131  |   |            | $ |    |            |  | $ | 7     |   |  | $ | 138  |  
|                                        |  |                |      |   |            |   |     |            |  |   |       |  



---



|    |                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Represents fixed salaried continuation payments
	for separated salaried employees that will be paid in cash in
	the second quarter of 2002.

The net restructuring charge recorded in the
first quarter of 2002 was $225 million, reflecting a
provision of $231 million, and a reversal of the 2001
charge of $6 million. At March 31, 2002, total
restructuring obligations were $146 million. In addition to
the restructuring charge explained above, our Statement of
Operations and Statement of Cash Flows include amounts related
to our generator product line. While not recorded on the
Restructuring line in the Statement of Operations, our plans for
disposal include similar charges, as explained below. In total,
the first quarter 2002 charges for restructuring and planned
disposal of our generators product line decreased earnings by a
net $262 million ($174 million after-tax) and used
$68 million of net cash flow. The total cash flow usage
will be $237 million.

During the first quarter of 2002, we had
successful discussions with Delco Remy International and the
product lines largest customer surrounding the sale of
this product line. We are engaged in discussions with the
largest affected union regarding the consummation of the
potential sale of this product line. If we are unsuccessful, for
any reason, we intend to quickly wind down the product line.
Based upon changes in the expected terms of the transaction
during the quarter, we accrued to cost of sales an additional
$37 million ($24 million after-tax), to record
additional estimated redundant workforce costs, which are
contractually required. We expect the redundant workforce to
grow due to the disposal of this product line, and we expect to
negotiate a resolution of their employment status by late 2002.
Such resolution, which will affect the final cost for this
transaction, could include retirements, transfers to other
facilities, paid separations, continued redundant status and/or
the return of work to those operations. At this time, we expect
some workers to retire, and the remainder to transfer to other
facilities. Although the exact length of the period workers are
redundant will vary by location, we have estimated that the
median redundant period will be through December 31, 2002.

This $37 million charge, when added to the
charge recorded in the fourth quarter of 2001, brings the total
expected loss associated with the sale of this product line to
$231 million ($149 million after-tax), including $69
million for estimated contractually required redundant workforce
payments related to our unionized U.S. manufacturing operations
through 2002. We expect to pay all of this amount in cash, in
addition to $6 million paid in the first quarter of 2002.
These amounts are based upon our best estimates with respect to
timing of the transaction and ultimate resolution of the
contractually required payments. Due to the significance of the
estimates involved, the final provision for sale or wind down of
the product line could differ from the recorded amounts.

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Operating Income (Loss).Operating loss was $(32) million for
the first quarter of 2002 compared to operating loss of $(597)
million for the first quarter of 2001. To facilitate analysis of
our operating income by product sector, we have excluded the
2002 net restructuring and product line charges of
$262 million, and 2001 charges of $536 million for
restructuring actions, $63 million for asset impairments, and
$6 million for goodwill amortization from the information
presented below:

|                                          |                                          |                                          |     |     |            |   |     |    |    |  
|----------------------------------------- | ---------------------------------------- | ---------------------------------------- | --- | --- | ---------- | - | --- | -- | -- | -
|                                          |                                          |                                         
|                                          |                                          | Three Months Ended                       |    
|                                          |                                          | March 31,                                |    
|                                          |                                          |                                          |    
|Product Sector                            |                                          | 2002(a)                                  |     |     | 2001(b)(c) |  
|                                          |                                          |                                          |     |     |            |  
|                                          |                                          |                                         
|                                          |                                          | (in millions)                            |    
|Electronics & Mobile Communication        |                                          |                                          |     |     |            |   |     |   
|                                          |                                          | Mobile MultiMedia                        |     | $   | (6         | ) |     | $  | (3 | )
|                                          |                                          | Other Electronics & Mobile Communication |     |     | 111        |   |     |    | 69 |  
|                                          |                                          |                                          |     |     |            |  
|                                          | Total Electronics & Mobile Communication |                                          |     | 105 |            |   |     | 66 |   
|Safety, Thermal & Electrical Architecture |                                          |                                          | 135 |     |            |   | 50  |   
|Dynamics & Propulsion                     |                                          |                                          | 8   |     |            |   | (97 | ) 
|Other                                     |                                          |                                          | (18 | )   |            |   | (11 | ) 
|                                          |                                          |                                          |     |     |            |  
|                                          | Total operating income                   |                                          | $   | 230 |            |   | $   | 8  |   
|                                          |                                          |                                          |     |     |            |  



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Excludes the first quarter 2002 net restructuring
	and product line charges of $262 million with
	$20 million for Electronics & Mobile Communication,
	$101 million for Safety, Thermal & Electrical
	Architecture, $126 million for Dynamics & Propulsion
	and $15 million for Other.                                                                                                                            
|   
|(b) | Excludes the first quarter 2001 restructuring and
	asset impairment charges of $599 million with
	$78 million for Electronics & Mobile Communication,
	$214 million for Safety, Thermal & Electrical
	Architecture, $280 million for Dynamics & Propulsion
	and $27 million for Other.                                                                                                                            
|   
|(c) | Effective January 1, 2002, we adopted SFAS
	No. 142 Goodwill and Other Intangible Assets
	and stopped amortization of purchased goodwill. Accordingly, the
	first quarter 2001 excludes goodwill amortization of
	$6 million with $1 million for Electronics &
	Mobile Communication, $1 million for Safety, Thermal &
	Electrical Architecture, $3 million for Dynamics &
	Propulsion and $1 million for Other.

The increase in operating income by sector from
first quarter 2001 primarily reflects increased North American
production volumes, improved efficiencies resulting from the
stabilization of customer build schedules, and savings realized
from our first quarter 2001 restructuring plans, offset by
increased employee-related costs. Mobile Multimedia reported an
operating loss of $(6) million reflective of the ongoing high
level of investment in engineering and research and development
related to the start-up of this high-tech business.

Taxes.Our effective
tax rate for the first quarter of 2002 was 27% compared to 35%
for the comparable period of 2001. These rates reflect our
inability to fully tax effect the restructuring initiatives in
certain jurisdictions. Our effective tax rate excluding the net
restructuring and product line charges in 2002 and restructuring
and impairment charges in 2001 was 36% for the three months
ended March 31, 2002 and 2001.

Net Income (Loss).Our net loss was $(51) million for the
first quarter of 2002 as compared to net loss of $(429) million
for the first quarter of 2001. Excluding the 2002 restructuring
and product line charges of $174 million after-tax, net
income would have been $123 million compared to net loss of
$(20) million, which excludes first quarter 2001 restructuring
and impairment charges of $404 million after-tax and
goodwill amortization of $5 million after-tax.

Earnings (Loss) Per Share.Basic and diluted loss per share was
$(0.09) for the first quarter of 2002 compared to basic and
diluted loss per share of $(0.77), for the first quarter 2001.
Excluding the 2002 restructuring and product line charges of
$174 million after-tax, basic and diluted earnings per
share would have been $0.22 compared to basic and diluted loss
per share of $(0.04), which excludes first quarter 2001
restructuring and impairment charges of $404 million
after-tax and $5 million goodwill amortization after-tax.

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Liquidity and Capital Resources



| |          
| | ---------
| | Liquidity

Our net liquidity, measured as cash and cash
equivalents less total debt, was $(2.6) billion at both
March 31, 2002 and December 31, 2001. The ratio of our
total debt to total capital, which consists of total debt plus
stockholders equity, was 59.8% at March 31, 2002 and
59.2% at December 31, 2001. The change in our ratio of
total debt to total capital was primarily due to the net loss
resulting from the 2002 restructuring and product line charges.

During the first quarter of 2002, we made
payments of $84 million related to employee costs and
$22 million in other exit costs for the remainder of the
2001 restructuring charge. Of the $262 million net
restructuring and product line charges in 2002, we expect to pay
approximately $237 million in cash. During the three months
ended March 31, 2002, we paid $60 million related to
employee costs, $2 million in other exit costs and
$6 million related to our generators product line. We
expect to pay up to an additional $80 million during the
second quarter of 2002 and the remainder during the second half
of 2002 and the first quarter of 2003.

Requirements for working capital, acquisitions,
capital expenditures, dividends, repayment of debt securities,
separation related obligations and restructuring obligations are
expected to be funded from operations, supplemented as needed by
short-term or long-term borrowings available under our
commercial paper programs, our credit facilities and other
available financing sources as necessary.

Debt
Capitalization and Available Financing Sources

Delphi has two financing arrangements with a
syndicate of lenders providing for an aggregate of
$3.0 billion in available revolving credit facilities (the
Credit Facilities), subject to certain limitations.
The terms of the Credit Facilities provide for a five-year
revolving credit line in the amount of $1.5 billion, which
expires June 2005, and a 364-day revolving credit line in the
amount of $1.5 billion, which expires in June 2002. Delphi
plans to renew the 364-day revolving credit line in June, as
well as consider renewal of the five-year facility if market
conditions are favorable. As of March 31, 2002, there were
no amounts outstanding under the Credit Facilities. Utilizing
the Credit Facilities as back up, Delphi maintains
$2.5 billion of worldwide commercial paper programs, under
which $1.0 billion was outstanding as of March 31,
2002. Delphi also has approximately $165 million available
under uncommitted lines of credit. As of March 31, 2002,
there were no amounts outstanding under uncommitted lines of
credit.

Delphi leases certain property, primarily land
and buildings, under leases commonly known as synthetic
operating leases. These leases, which are accounted for as
operating leases, provide us tax treatment equivalent to
ownership, and also give us the option to purchase these
properties upon expiration of the lease. In aggregate, our
purchase price, if we chose to exercise such options,
approximates $144 million. These leases also require us to
guarantee a minimum value of $128 million upon expiration
of the leases. At March 31, 2002, the fair value of these
properties exceeds the minimum value guaranteed.

We have guaranteed the borrowings of one venture
and one landlord for approximately $15 million and
$10 million, respectively. We have no financial commitments
(such as lines of credit, standby lines of credit, standby
repurchase obligations nor have we guaranteed such items) to or
on behalf of entities that are excluded from our consolidated
financial statements. As of March 31, 2002, there have been
no material changes to our unsecured debt and leasing
arrangements as described in our Annual Report on Form 10-K
for the year ended December 31, 2001.

Delphi currently has a credit rating of BBB/ Baa2
with a stable outlook, which was reaffirmed by the rating
agencies in December 2001. If we are unexpectedly downgraded to
BBB- or Baa3, we believe we would continue to have access to
sufficient liquidity; however, our cost of borrowing may
increase. Although our access to the commercial paper market
likely would be limited, we believe our outstanding commercial
paper could be refinanced using a combination of funding
available from our $3.0 billion Credit Facilities,
described above, uncommitted lines of credit, term debt or
customer receivable based financing, such as factoring. We
believe that our receivables are of a quality that would allow
access to this market. Our Credit Facilities also

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contain certain affirmative and negative
covenants including among others, requirements for certain
leverage and indebtedness ratios. We were in compliance with
such covenants as of March 31, 2002.


Cash
Flows

Operating Activities.Net cash provided by operating
activities totaled $0.2 billion for the three months ended
March 31, 2002 compared to net cash provided by operating
activities of $0.3 billion for the three months ended
March 31, 2001. Cash provided by operating activities in
the first quarter of 2002 resulted primarily from improved
operating results. Cash provided by operating activities in the
first quarter of 2001 resulted from improved collections of
accounts receivable, primarily from GM and its affiliates.

Investing Activities.Cash flows used in investing
activities totaled $0.2 billion and $0.4 billion for the
three months ended March 31, 2002 and 2001, respectively.
The use of cash in the first quarter of 2002 reflects capital
expenditures related to ongoing operations. The use of cash in
the first quarter of 2001 primarily reflects the acquisition of
Delphi Mechatronic Systems for approximately $0.3 billion,
as well as capital expenditures related to ongoing operations.

Financing Activities.Net cash (used in) provided by
financing activities was $(0.1) billion and $0.1 billion
for the three months ended March 31, 2002 and 2001,
respectively. Cash used in financing activities during the first
quarter of 2002 represented payments of short-term debt. Cash
provided by financing activities during the first quarter of
2001 represented borrowings to finance the acquisition of Delphi
Mechatronic Systems, partially offset by payments of short-term
debt.

Dividends.The Board
of Directors declared a dividend on Delphi common stock of $0.07
per share on March 13, 2002, payable on April 22, 2002
to holders of record on March 25, 2002. The dividend
declared on December 5, 2001 was paid on January 16,
2002.

Outlook

Production schedules for our largest customer in
North America, our largest market, were approximately 11% higher
in the first quarter of 2002 than in the comparable period in
2001. However, increased North American production was partially
offset by other major automotive markets, which remained weak,
and a weaker euro, limiting our sales increase to 2% in the
first quarter of 2002 compared to the first quarter of 2001. We
are hopeful that North American production schedules will remain
firm, however, we are cautious that this stability will be
somewhat offset by continued softness in other major automotive
markets. Additionally, we continue to prepare for a softening of
U.S. vehicle demand as zero-percent interest and other
aggressive incentive programs are phased down. In light of the
recent increases in North American production we anticipate our
2002 sales will be approximately $26.2 billion, without
reflecting planned divestitures, slightly increased as compared
to our estimate provided in December 2001.

Delphi continues to implement productivity
improvements and streamline activities designed to reduce
overhead and improve manufacturing processes. In addition, we
have announced further plans to streamline our portfolio, reduce
excess capacity and operating costs, and respond to global
industry conditions and increased employee related costs such as
U.S. health care and pensions and wages in non-U.S. locations.
We intend that these actions will continue to reduce our
manufacturing and selling, general and administrative costs, but
cannot assure you that such actions will be effective or
sufficient to offset the impact of adverse market conditions.

In addition to conditions in our market and the
economy as a whole, we depend on GM as a customer. GM accounted
for 67% of our net sales for the first quarter of 2002. Our
sales to GM have declined since our separation from GM in 1999;
principally reflecting reduced GM vehicle production in North
America, the impact of customer driven price reductions, the
elimination of non-profitable businesses and a weaker euro as
well as GMs diversification of its supply base. As a
percent of our total revenue for the three months ended
March 31, 2002, our non-GM sales were 33% consistent with
the comparable period in 2001. We also exited some businesses as
part of our portfolio review process. Reflecting these and other
factors we expect our sales to GM to further decline over time.
If we are unable to compete effectively for new business with
GMs other

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suppliers, our revenues may decline. In
connection with our separation from GM in 1999, we entered into
the Supply Agreement with GM affording us certain bidding rights
on new GM products. Such rights under the Supply Agreement
expired on January 1, 2002. Accordingly, we now bid for
GMs automotive parts business on the same basis as our
competitors. To compete effectively, we will need to continue to
satisfy GMs pricing, service, technology and increasingly
stringent quality and reliability requirements, which, because
we are GMs largest supplier, particularly affect us. For
these reasons, we cannot provide any assurance as to the amount
of our future business with GM. While we intend to continue to
focus on retaining and winning GMs business, we cannot
assure you that we will succeed in doing so. Additionally, our
revenues may be affected by increases or decreases in GMs
business or market share. We are currently projecting our sales
beyond 2002 to grow modestly assuming projected production
levels, with non-GM sales increasing and GM sales decreasing.


We face an inherent business risk of exposure to
product liability and warranty claims in the event that our
products fail to perform as expected and such failure of our
products results, or is alleged to result, in bodily injury
and/or property damage. We cannot assure you that we will not
experience any material warranty or product liability losses in
the future or that we will not incur significant costs to defend
such claims. In addition, if any of our products are or are
alleged to be defective, we may be required to participate in a
recall involving such products. Each vehicle manufacturer has
its own policy regarding product recalls and other product
liability actions relating to its suppliers. However, as
suppliers become more integrally involved in the vehicle design
process and assume more of the vehicle assembly functions,
vehicle manufacturers are increasingly looking to their
suppliers for contribution when faced with product liability
claims. A successful claim brought against us in excess of our
available insurance coverage or a requirement to participate in
a product recall may have a material adverse effect on our
business. Vehicle manufacturers are also increasingly requiring
their outside suppliers to guarantee or warrant their products
and bear the costs of repair and replacement of such products
under new vehicle warranties. Depending on the terms under which
we supply products to a vehicle manufacturer, a vehicle
manufacturer may hold us responsible for some or all of the
repair or replacement costs of defective products under new
vehicle warranties, when the product supplied did not perform as
represented. Accordingly, although we cannot assure you that the
future costs of warranty claims by our customers will not be
material, we believe our established reserves are adequate to
cover potential warranty claims. However, the final amounts
determined to be due related to these matters could differ
materially from our recorded estimates.

In the normal course of business, we extend
credit on open account to our customers. From time to time, we
also invest in joint ventures with a variety of business
partners. Although Delphi is affected by the financial well
being of the automotive industry as a whole, we believe that our
risk associated with trade receivables and recoverability of
investments in our joint ventures is mitigated by our customer
base and ongoing control procedures to monitor the
credit-worthiness of customers and viability of joint venture
business partners. As part of our ongoing procedures, we
regularly review our joint venture investments for potential
impairments or permanent declines in value and record reserves
for any such impairment when appropriate.

In November 2000, one customer/business partner
entered into corporate reorganization proceedings in Korea. As a
result of the reorganization, this customer/business
partners obligations to its suppliers prior to November
2000 were legally frozen. The terms and conditions of repayment
for these frozen amounts will be determined by the
reorganization plan. In addition, in September 2001 this
customer/business partner entered into a non-binding memorandum
of understanding with a third party relating to forming a new
company, which would purchase selected assets and businesses of
this customer/business partner and would assume a portion of the
liabilities, but which also proposes to pay less than the full
value to the suppliers. Delphis consolidated balance sheet
as of March 31, 2002 includes approximately $16 million of
accounts receivable from this customer/business partner,
primarily in the U.S. and Europe, related to shipments prior to
November 2000. We are actively seeking repayment of these
amounts, which we continue to believe are collectible. At
March 31, 2002, we also have investments, generally through
a 50% non-controlling voting interest, in several joint ventures
which sell to this customer/business partner. At March 31,
2002, we have investments of approximately $113 million in
these joint ventures. Total receivables of the joint ventures
due from this customer/business partner were $199 million
at March 31, 2002. We are continuing to work with the joint
ventures to facilitate their ongoing operations and continue to
believe that our investments as of

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March 31, 2002 are recoverable and intend to
pursue the full amount of such recovery. However, due to
assertions by the customer/business partner that it cannot pay
supplier claims in full and the significant uncertainty
surrounding the outcome of the reorganization as well as the
memorandum of understanding discussed above, the impact on our
future results of operations and financial condition could
differ materially from currently recorded estimates.


Environmental Matters

Delphi is subject to complex laws governing the
protection of the environment and requiring investigation and
cleanup of environmental contamination. We are in various stages
of investigation and cleanup at our manufacturing sites where
contamination has been discovered. In addition, Delphi has
received notices that it is a potentially responsible party
(PRP) in proceedings at various sites, including the
Tremont City Landfill Site located in Tremont, Ohio. The Tremont
City Landfill Site proceeding, which is alleged to concern
ground water contamination, is in the early stages of
investigation and involves multiple other PRPs. Accordingly, the
ultimate cost, if any, to remediate the site, and Delphis
share of such costs cannot be estimated at this time. Delphi is
cooperating with the EPA and the other PRPs to address this
matter and has reserved approximately $1 million for
Delphis share of the expected investigation costs. We may
be named as a PRP at other sites in the future, including with
respect to divested and acquired businesses. When it has been
possible to provide reasonable estimates of our liability with
respect to environmental sites, provisions have been made in
accordance with generally accepted accounting principles. We
cannot assure you that environmental requirements will not
change or become more stringent over time or that our eventual
environmental cleanup costs and liabilities will not exceed the
amount of our current reserve.

New Accounting Pronouncement

In August 2001, the FASB issued SFAS
No. 143, Accounting for Asset Retirement
Obligations. This statement requires recognition of a
liability for any legal obligations associated with the
retirement of a tangible long-lived asset. Any such liability
will be recorded at fair value when incurred and generally
results in an increase to the carrying amount of the related
long-lived asset. This statement will be effective for Delphi
for the year ending December 31, 2003. The adoption of this
statement will not have a material effect on our results of
operations or financial position.

Forward-Looking Statements

The Private Securities Litigation Reform Act of
1995 provides a safe harbor for forward-looking statements made
by us or on our behalf. Delphi and its representatives may
periodically make written or oral statements that are
forward-looking, including statements included in
this report and other filings with the Securities and Exchange
Commission and in reports to our stockholders. All statements
contained or incorporated in this report which address operating
performance, events or developments that we expect or anticipate
may occur in the future (including statements relating to future
sales or earnings expectations, savings expected as a result of
global restructurings or other initiatives, portfolio
restructuring plans, volume growth, awarded sales contracts and
earnings per share expectations or statements expressing general
optimism about future operating results) are forward-looking
statements. These statements are made on the basis of
managements views and assumptions; as a result, there can
be no assurance that managements expectations will
necessarily come to pass. Principal important factors, risks and
uncertainties which may cause actual results to differ from
those expressed in forward-looking statements set forth in this
10-Q include: our ability to increase non-GM sales and achieve
the labor benefits expected from our separation from GM; our
ability to retain GM business; potential increases in our
warranty costs; our ability to successfully implement our global
restructuring plans, including our planned 2002 portfolio
restructuring; our ability to successfully implement our new
markets initiative and achieve the benefits anticipated by such
strategy; changes in the economic conditions or political
environment in the markets in which we operate; the impact of
possible terrorist attacks which could exacerbate other risk to
our business such as incremental costs, slowed automobile
production or interruptions in the transportation system;
currency exchange rate fluctuations; financial or market
declines of our customers or significant business partners;
labor disruptions or material

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shortages; the level of competition in the
automotive industry; the cyclical nature of the automobile
industry, including significant downturns in the automobile
production rate; costs relating to legal and administrative
proceedings; changes in laws or regulations affecting our
business; our ability to realize cost savings expected to offset
price reductions; our ability to make pension and other
postretirement payments at levels anticipated by management; our
ability to successfully exit non-performing businesses and
absorb contingent liabilities related to divestitures; our
ability to complete and integrate acquisitions; changes in
technology and technological risks; our ability to protect and
assert patent and other intellectual property rights; our
ability to provide high quality products at competitive prices,
to develop new products to meet changing consumer preferences
and to meet changing vehicle manufacturers supply requirements
on a timely, cost effective basis; and other factors, risks and
uncertainties discussed in the our Annual Report on
Form 10-K for the year ended December 31, 2001 and
other filings with the Securities and Exchange Commission.
Delphi does not intend or assume any obligation to update any of
these forward-looking statements.


Item
3.Quantitative and Qualitative
Disclosures About Market Risk

There have been no material changes to our
exposures to market risk since December 31, 2001.






PART II.     OTHER
INFORMATION


Item 1.Legal
Proceedings

There have been no material developments in legal
proceedings involving Delphi or its subsidiaries since those
reported in Delphis Annual Report on Form 10-K for
the year ended December 31, 2001.

We are involved in routine litigation incidental
to the conduct of our business. We do not believe that any of
the litigation to which we are currently a party will have a
material adverse effect on our business or financial condition.

Item
6.     Exhibits and Reports on
Form 8-K

(a) Exhibits

|        |        |  |              |                                                                                                                                                                                                                                                                               
|------- | ------ |  | ------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |  |             
|Number  |        |  | Exhibit Name
|        |        |  |             
|        | (3)(a) |  |              | Amended and Restated Certificate of Incorporation
	of Delphi Automotive Systems Corporation, incorporated by
	reference to Exhibit 3.1 to Delphis Registration
	Statement on Form S-1 (Registration No. 333-67333)
	(hereafter referred to as the Registration
	Statement).
|        | (3)(b) |  |              | By-laws of Delphi Automotive Systems Corporation,
	incorporated by reference to Exhibit 3.2 to the
	Registration Statement                                                                                                                                                    
|        | 99     |  |              | Press Release dated April 17, 2002 regarding
	quarterly earnings                                                                                                                                                                                                              

(b) Reports on Form 8-K

January 17, 2002, Form 8-K reporting
under Item 5. Other Events the filing of a
press release regarding Delphis 2001 earnings.

March 15, 2002, Form 8-K reporting
under Item 5. Other Events the filing of a
press release announcing Delphis name change.

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SIGNATURE


Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto duly
authorized.



| |                                         
| | ----------------------------------------
| | DELPHI CORPORATION                      
| |                                         
| | (Registrant)                            
|
| | /s/ PAUL R. FREE                        
| |                                         
| | Paul R. Free                            
| | Chief Accounting Officer and
	Controller

April 17, 2002

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EXHIBIT INDEX


|        |    |  |              |                                                                 
|------- | -- |  | ------------ | ----------------------------------------------------------------
|Exhibit |    |  |             
|Number  |    |  | Exhibit Name
|        |    |  |             
|        | 99 |  |              | Press Release dated April 17, 2002 regarding
	quarterly earnings