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UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, DC 20549-1004


FORM 10-Q




|  | 
|- | 
|þ | 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)


OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended September 30, 2004


OR




|  | 
|- | 
|o | 

TRANSITION REPORT PURSUANT TO SECTION 13


OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from

to
.


Commission file No. 1-14787


DELPHI CORPORATION




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

(248) 813-2000




o þ


þ o












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Explanatory Note








2



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DELPHI CORPORATION


INDEX


|                                                 |  |                                                                                                               |    |      |    | 
|------------------------------------------------ |  | ------------------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|                                                 |  |                                                                                                               |    | Page |   
|                                                 |  |                                                                                                               |    |      |   
|Part I  Financial
    Information              
|                                                
|Item 1.                                          |  | Financial Statements (Unaudited)                                                                              |    |      |    | 
|                                                 |  | Consolidated Statements of Operations for
    the Three and Nine Months Ended September 30, 2004 and
    2003 |    |      | 4  | 
|                                                 |  | Consolidated Balance Sheets at
    September 30, 2004 and December 31, 2003                                   |    |      | 5  | 
|                                                 |  | Consolidated Statements of Cash Flows for
    the Nine Months Ended September 30, 2004 and 2003               |    |      | 6  | 
|                                                 |  | Notes to Consolidated Financial
    Statements                                                                |    |      | 7  | 
|                                                
|Item 2.                                          |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                     |    |      | 24 | 
|                                                
|Item 3.                                          |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                |    |      | 33 | 
|                                                
|Item 4.                                          |  | Controls and Procedures                                                                                       |    |      | 33 | 
|Part II  Other
    Information                 
|                                                
|Item 1.                                          |  | Legal Proceedings                                                                                             |    |      | 35 | 
|                                                
|Item 2.                                          |  | Unregistered Sales of Equity Securities and
    Use of Proceeds                                               |    |      | 35 | 
|                                                
|Item 6.                                          |  | Exhibits                                                                                                      |    |      | 36 | 
|Signature                                        |  |                                                                                                               | 37 |     
|Certification Pursuant to Section 302           
|Certification Pursuant to Section 302           
|Certification Pursuant to 18 U.S.C. Section 1350
|Certification Pursuant to 18 U.S.C. Section 1350



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PART I. FINANCIAL INFORMATION





ITEM 1. FINANCIAL STATEMENTS





DELPHI CORPORATION


CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)


|                                                                                   |                                             |                                         |      |       |                   |   |      |              |       |   |              |        |        |   |      |        |        | 
|---------------------------------------------------------------------------------- | ------------------------------------------- | --------------------------------------- | ---- | ----- | ----------------- | - | ---- | ------------ | ----- | - | ------------ | ------ | ------ | - | ---- | ------ | ------ | 
|                                                                                   |                                             | Three Months Ended                      |      |       | Nine Months Ended |  
|                                                                                   |                                             | September 30,                           |      |       | September 30,     |  
|                                                                                   |                                             |                                         |      |       |                   |  
|                                                                                   |                                             | 2004                                    |      |       | 2003              |   |      | 2004         |       |   | 2003         |       
|                                                                                   |                                             |                                         |      |       |                   |   |      |              |       |   |              |       
|                                                                                   |                                             | (As Restated                            |      |       | (As Restated      |   |      | (As Restated |       |   | (As Restated |       
|                                                                                   |                                             | See Note 2)                             |      |       | See Note 2)       |   |      | See Note 2)  |       |   | See Note 2)  |       
|                                                                                   |                                             | (in millions, except per share amounts) |     
|Net sales:                                                                         |                                             |                                         |      |       |                   |   |      |              |       |   |              |        |        |   |      |       
|                                                                                   | General Motors and affiliates               |                                         | $    | 3,496 |                   |   | $    | 3,926        |       |   | $            | 11,818 |        |   | $    | 12,795 |       
|                                                                                   | Other customers                             |                                         |      | 3,146 |                   |   |      | 2,632        |       |   |              | 9,771  |        |   |      | 8,031  |       
|                                                                                   |                                             |                                         |      |       |                   |   |      |              |       |   |              |       
|                                                                                   |                                             | Total net sales                         |      |       | 6,642             |   |      |              | 6,558 |   |              |        | 21,589 |   |      |        | 20,826 | 
|                                                                                   |                                             |                                         |      |       |                   |   |      |              |       |   |              |       
|Operating expenses:                                                                |                                             |                                         |      |       |                   |   |      |              |       |   |              |        |        |   |      |       
|                                                                                   | Cost of sales, excluding items listed below |                                         |      | 6,065 |                   |   |      | 5,956        |       |   |              | 19,236 |        |   |      | 18,486 |       
|                                                                                   | Selling, general and administrative         |                                         |      | 383   |                   |   |      | 377          |       |   |              | 1,171  |        |   |      | 1,159  |       
|                                                                                   | Depreciation and amortization               |                                         |      | 293   |                   |   |      | 324          |       |   |              | 858    |        |   |      | 842    |       
|                                                                                   | Employee and product line charges           |                                         |      | 9     |                   |   |      | 348          |       |   |              | 79     |        |   |      | 348    |       
|                                                                                   |                                             |                                         |      |       |                   |   |      |              |       |   |              |       
|                                                                                   |                                             | Total operating expenses                |      |       | 6,750             |   |      |              | 7,005 |   |              |        | 21,344 |   |      |        | 20,835 | 
|                                                                                   |                                             |                                         |      |       |                   |   |      |              |       |   |              |       
|Operating (loss) income                                                            |                                             |                                         | (108 | )     |                   |   | (447 | )            |       |   | 245          |        |        |   | (9   | )     
|                                                                                   | Interest expense                            |                                         |      | (58   | )                 |   |      | (51          | )     |   |              | (175   | )      |   |      | (148   | )     
|                                                                                   | Other income (expense), net                 |                                         |      | 8     |                   |   |      | 2            |       |   |              | (3     | )      |   |      | (1     | )     
|                                                                                   |                                             |                                         |      |       |                   |   |      |              |       |   |              |       
|(Loss) income before income taxes, minority interest expense and
    equity income |                                             |                                         | (158 | )     |                   |   | (496 | )            |       |   | 67           |        |        |   | (158 | )     
|                                                                                   | Income tax benefit (expense)                |                                         |      | 33    |                   |   |      | 184          |       |   |              | (7     | )      |   |      | 68     |       
|                                                                                   | Minority interest, net of tax               |                                         |      | (10   | )                 |   |      | (11          | )     |   |              | (36    | )      |   |      | (33    | )     
|                                                                                   | Equity income                               |                                         |      | 16    |                   |   |      | 20           |       |   |              | 63     |        |   |      | 50     |       
|                                                                                   |                                             |                                         |      |       |                   |   |      |              |       |   |              |       
|Net (loss) income                                                                  |                                             | $                                       | (119 | )     |                   | $ | (303 | )            |       | $ | 87           |        |        | $ | (73  | )     
|                                                                                   |                                             |                                         |      |       |                   |   |      |              |       |   |              |       
|(Loss) earnings per share                                                          |                                             |                                         |      |       |                   |   |      |              |       |   |              |        |        |   |      |       
|                                                                                   | Basic and diluted                           |                                         | $    | (0.21 | )                 |   | $    | (0.54        | )     |   | $            | 0.16   |        |   | $    | (0.13  | )     
|                                                                                   |                                             |                                         |      |       |                   |   |      |              |       |   |              |       



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DELPHI CORPORATION


CONSOLIDATED BALANCE SHEETS


|                                           |                                                                                                                |                                                   |                            |        |              |        |        |        |       |        | 
|------------------------------------------ | -------------------------------------------------------------------------------------------------------------- | ------------------------------------------------- | -------------------------- | ------ | ------------ | ------ | ------ | ------ | ----- | ------ | 
|                                           |                                                                                                                | September 30,                                     |                            |        |             
|                                           |                                                                                                                | 2004                                              |                            |        | December 31, |       
|                                           |                                                                                                                | (Unaudited)                                       |                            |        | 2003         |       
|                                           |                                                                                                                |                                                   |                            |        |              |       
|                                           |                                                                                                                | (As Restated                                      |                            |        | (As Restated |       
|                                           |                                                                                                                | See Note 2)                                       |                            |        | See Note 2)  |       
|                                           |                                                                                                                | (in millions)                                     |                           
|ASSETS                                    
|Current assets:                            |                                                                                                                |                                                   |                            |        |              |        |        |       
|                                           | Cash and cash equivalents                                                                                      |                                                   | $                          | 918    |              |        | $      | 893    |      
|                                           | Accounts receivable, net:                                                                                      |                                                   |                            |        |              |        |        |        |      
|                                           |                                                                                                                | General Motors and affiliates                     |                            |        | 2,550        |        |        |        | 2,327 |       
|                                           |                                                                                                                | Other customers                                   |                            |        | 1,397        |        |        |        | 1,501 |       
|                                           | Retained interest in receivables, net                                                                          |                                                   |                            | 857    |              |        |        | 717    |      
|                                           | Inventories, net:                                                                                              |                                                   |                            |        |              |        |        |        |      
|                                           |                                                                                                                | Productive material, work-in-process and supplies |                            |        | 1,442        |        |        |        | 1,318 |       
|                                           |                                                                                                                | Finished goods                                    |                            |        | 504          |        |        |        | 478   |       
|                                           | Deferred income taxes                                                                                          |                                                   |                            | 343    |              |        |        | 367    |      
|                                           | Prepaid expenses and other                                                                                     |                                                   |                            | 283    |              |        |        | 269    |      
|                                           |                                                                                                                |                                                   |                            |        |              |       
|                                           |                                                                                                                |                                                   | Total current assets       |        |              | 8,294  |        |        |       | 7,870  | 
|Long-term assets:                          |                                                                                                                |                                                   |                            |        |              |        |        |       
|                                           | Property, net                                                                                                  |                                                   |                            | 6,109  |              |        |        | 6,399  |      
|                                           | Deferred income taxes                                                                                          |                                                   |                            | 4,136  |              |        |        | 3,961  |      
|                                           | Goodwill                                                                                                       |                                                   |                            | 787    |              |        |        | 773    |      
|                                           | Other intangible asset                                                                                         |                                                   |                            | 45     |              |        |        | 81     |      
|                                           | Pension intangible assets                                                                                      |                                                   |                            | 1,167  |              |        |        | 1,167  |      
|                                           | Other                                                                                                          |                                                   |                            | 860    |              |        |        | 815    |      
|                                           |                                                                                                                |                                                   |                            |        |              |       
|                                           |                                                                                                                |                                                   | Total assets               |        | $            | 21,398 |        |        | $     | 21,066 | 
|                                           |                                                                                                                |                                                   |                            |        |              |       
|                                          
|LIABILITIES AND STOCKHOLDERS EQUITY      
|Current liabilities:                       |                                                                                                                |                                                   |                            |        |              |        |        |       
|                                           | Notes payable and current portion of long-term debt                                                            |                                                   | $                          | 911    |              |        | $      | 892    |      
|                                           | Accounts payable                                                                                               |                                                   |                            | 3,408  |              |        |        | 3,133  |      
|                                           | Accrued liabilities                                                                                            |                                                   |                            | 2,832  |              |        |        | 2,684  |      
|                                           |                                                                                                                |                                                   |                            |        |              |       
|                                           |                                                                                                                |                                                   | Total current liabilities  |        |              | 7,151  |        |        |       | 6,709  | 
|Long-term liabilities:                     |                                                                                                                |                                                   |                            |        |              |        |        |       
|                                           | Long-term debt                                                                                                 |                                                   |                            | 2,068  |              |        |        | 2,152  |      
|                                           | Junior subordinated notes due to Delphi Trust I and II                                                         |                                                   |                            | 412    |              |        |        | 412    |      
|                                           | Pension benefits                                                                                               |                                                   |                            | 3,072  |              |        |        | 3,577  |      
|                                           | Postretirement benefits other than pensions                                                                    |                                                   |                            | 6,223  |              |        |        | 5,697  |      
|                                           | Other                                                                                                          |                                                   |                            | 830    |              |        |        | 905    |      
|                                           |                                                                                                                |                                                   |                            |        |              |       
|                                           |                                                                                                                |                                                   | Total liabilities          |        |              | 19,756 |        |        |       | 19,452 | 
|                                           |                                                                                                                |                                                   |                            |        |              |       
|Commitments and contingencies (Note 11)    |                                                                                                                |                                                   |                            |        |              |        |        |       
|Minority interest                          |                                                                                                                |                                                   | 185                        |        |              |        | 168    |       
|Stockholders equity:                      |                                                                                                                |                                                   |                            |        |              |        |        |       
|                                           | Common stock, $0.01 par value, 1,350 million shares
    authorized, 565 million shares issued in 2004 and 2003 |                                                   |                            | 6      |              |        |        | 6      |      
|                                           | Additional paid-in capital                                                                                     |                                                   |                            | 2,657  |              |        |        | 2,660  |      
|                                           | Retained earnings                                                                                              |                                                   |                            | 966    |              |        |        | 997    |      
|                                           | Minimum pension liability                                                                                      |                                                   |                            | (2,006 | )            |        |        | (2,006 | )    
|                                           | Accumulated other comprehensive loss, excluding minimum pension
    liability                                  |                                                   |                            | (105   | )            |        |        | (136   | )    
|                                           | Treasury stock, at cost (3.8 million and 4.7 million
    shares in 2004 and 2003, respectively)                |                                                   |                            | (61    | )            |        |        | (75    | )    
|                                           |                                                                                                                |                                                   |                            |        |              |       
|                                           |                                                                                                                |                                                   | Total stockholders equity |        |              | 1,457  |        |        |       | 1,446  | 
|                                           |                                                                                                                |                                                   |                            |        |              |       
|Total liabilities and stockholders equity |                                                                                                                | $                                                 | 21,398                     |        |              | $      | 21,066 |       
|                                           |                                                                                                                |                                                   |                            |        |              |       



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DELPHI CORPORATION


CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


|                                             |                                                                                              |                                                                |                                           |      |              |      |   |       |      |      |  
|-------------------------------------------- | -------------------------------------------------------------------------------------------- | -------------------------------------------------------------- | ----------------------------------------- | ---- | ------------ | ---- | - | ----- | ---- | ---- | -
|                                             |                                                                                              | Nine Months Ended                                              |                                          
|                                             |                                                                                              | September 30,                                                  |                                          
|                                             |                                                                                              |                                                                |                                          
|                                             |                                                                                              | 2004                                                           |                                           |      | 2003         |     
|                                             |                                                                                              |                                                                |                                           |      |              |     
|                                             |                                                                                              | (As Restated                                                   |                                           |      | (As Restated |     
|                                             |                                                                                              | See Note 2)                                                    |                                           |      | See Note 2)  |     
|                                             |                                                                                              | (in millions)                                                  |                                          
|Cash flows from operating activities:        |                                                                                              |                                                                |                                           |      |              |      |   |      
|                                             | Net income (loss)                                                                            |                                                                | $                                         | 87   |              |      | $ | (73   | )   
|                                             | Adjustments to reconcile net income (loss) to net cash provided
    by operating activities: |                                                                |                                           |      |              |      |   |       |     
|                                             |                                                                                              | Depreciation and amortization                                  |                                           |      | 858          |      |   |       | 842  |     
|                                             |                                                                                              | Deferred income taxes                                          |                                           |      | (140         | )    |   |       | (181 | )   
|                                             |                                                                                              | Employee and product line charges                              |                                           |      | 79           |      |   |       | 348  |     
|                                             |                                                                                              | Equity income                                                  |                                           |      | (63          | )    |   |       | (50  | )   
|Changes in operating assets and liabilities: |                                                                                              |                                                                |                                           |      |              |      |   |      
|                                             |                                                                                              | Accounts receivable and retained interests in receivables, net |                                           |      | (319         | )    |   |       | (672 | )   
|                                             |                                                                                              | Inventories, net                                               |                                           |      | (146         | )    |   |       | 30   |     
|                                             |                                                                                              | Prepaid expenses and other                                     |                                           |      | 56           |      |   |       | 2    |     
|                                             |                                                                                              | Accounts payable                                               |                                           |      | 277          |      |   |       | 115  |     
|                                             |                                                                                              | Employee and product line charge obligations                   |                                           |      | (261         | )    |   |       | (46  | )   
|                                             |                                                                                              | Accrued and other long-term liabilities                        |                                           |      | 319          |      |   |       | 268  |     
|                                             |                                                                                              | Other                                                          |                                           |      | 80           |      |   |       | 35   |     
|                                             |                                                                                              |                                                                |                                           |      |              |     
|                                             |                                                                                              |                                                                | Net cash provided by operating activities |      |              | 827  |   |       |      | 618  |  
|                                             |                                                                                              |                                                                |                                           |      |              |     
|Cash flows from investing activities:        |                                                                                              |                                                                |                                           |      |              |      |   |      
|                                             | Capital expenditures                                                                         |                                                                |                                           | (633 | )            |      |   | (763  | )   
|                                             | Proceeds from sale of property                                                               |                                                                |                                           | 17   |              |      |   | 29    |     
|                                             | Cost of acquisition, net of cash acquired                                                    |                                                                |                                           | (17  | )            |      |   |      |     
|                                             | Other                                                                                        |                                                                |                                           | 35   |              |      |   | 56    |     
|                                             |                                                                                              |                                                                |                                           |      |              |     
|                                             |                                                                                              |                                                                | Net cash used in investing activities     |      |              | (598 | ) |       |      | (678 | )
|                                             |                                                                                              |                                                                |                                           |      |              |     
|Cash flows from financing activities:        |                                                                                              |                                                                |                                           |      |              |      |   |      
|                                             | Net proceeds from issuance of debt securities                                                |                                                                |                                           |     |              |      |   | 492   |     
|                                             | Repayment of debt securities                                                                 |                                                                |                                           | (500 | )            |      |   |      |     
|                                             | Net proceeds from (repayments of) borrowings under credit
    facilities and other debt      |                                                                |                                           | 438  |              |      |   | (593  | )   
|                                             | Dividend payments                                                                            |                                                                |                                           | (118 | )            |      |   | (119  | )   
|                                             | Issuances of treasury stock                                                                  |                                                                |                                           | 2    |              |      |   | 1     |     
|                                             | Other                                                                                        |                                                                |                                           | (22  | )            |      |   | (27   | )   
|                                             |                                                                                              |                                                                |                                           |      |              |     
|                                             |                                                                                              |                                                                | Net cash used in financing activities     |      |              | (200 | ) |       |      | (246 | )
|                                             |                                                                                              |                                                                |                                           |      |              |     
|                                             | Effect of exchange rate fluctuations on cash and cash equivalents                            |                                                                |                                           | (4   | )            |      |   | 23    |     
|                                             |                                                                                              |                                                                |                                           |      |              |     
|                                             | Increase (decrease) in cash and cash equivalents                                             |                                                                |                                           | 25   |              |      |   | (283  | )   
|                                             | Cash and cash equivalents at beginning of period                                             |                                                                |                                           | 893  |              |      |   | 1,028 |     
|                                             |                                                                                              |                                                                |                                           |      |              |     
|                                             | Cash and cash equivalents at end of period                                                   |                                                                | $                                         | 918  |              |      | $ | 745   |     
|                                             |                                                                                              |                                                                |                                           |      |              |     



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DELPHI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)




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

General




Earnings Per Share


|                                    |  |                |         |  |               |  |         |      |  |  |         |  |  |  |         | 
|----------------------------------- |  | -------------- | ------- |  | ------------- |  | ------- | ---- |  |  | ------- |  |  |  | ------- | 
|                                    |  | Three Months   |         |  | Nine Months   | 
|                                    |  | Ended          |         |  | Ended         | 
|                                    |  | September 30,  |         |  | September 30, | 
|                                    |  |                |         |  |               | 
|                                    |  | 2004           |         |  | 2003          |  |         | 2004 |  |  | 2003    | 
|                                    |  |                |         |  |               |  |         |      |  |  |         | 
|                                    |  | (in thousands) |        
|Weighted average shares outstanding |  |                | 561,188 |  |               |  | 560,296 |      |  |  | 560,808 |  |  |  | 560,052 | 
|Effect of dilutive securities       |  |                |        |  |               |  |        |      |  |  | 2,009   |  |  |  |        | 
|                                    |  |                |         |  |               |  |         |      |  |  |         | 
|Diluted shares outstanding          |  |                | 561,188 |  |               |  | 560,296 |      |  |  | 562,817 |  |  |  | 560,052 | 
|                                    |  |                |         |  |               |  |         |      |  |  |         | 



|                         |  |                |        |  |               |  |        |      |  |  |        |  |  |  |        | 
|------------------------ |  | -------------- | ------ |  | ------------- |  | ------ | ---- |  |  | ------ |  |  |  | ------ | 
|                         |  | Three Months   |        |  | Nine Months   | 
|                         |  | Ended          |        |  | Ended         | 
|                         |  | September 30,  |        |  | September 30, | 
|                         |  |                |        |  |               | 
|                         |  | 2004           |        |  | 2003          |  |        | 2004 |  |  | 2003   | 
|                         |  |                |        |  |               |  |        |      |  |  |        | 
|                         |  | (in thousands) |       
|Anti-dilutive securities |  |                | 91,414 |  |               |  | 96,224 |      |  |  | 72,546 |  |  |  | 96,002 | 
|                         |  |                |        |  |               |  |        |      |  |  |        | 



Stock-Based Compensation


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|                                                                                                                                            |                                 |                                         |      |       |               |   |      |       |   |   |      |      |  |   |     |       |  
|------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------- | --------------------------------------- | ---- | ----- | ------------- | - | ---- | ----- | - | - | ---- | ---- |  | - | --- | ----- | -
|                                                                                                                                            |                                 | Three Months                            |      |       | Nine Months   |  
|                                                                                                                                            |                                 | Ended                                   |      |       | Ended         |  
|                                                                                                                                            |                                 | September 30,                           |      |       | September 30, |  
|                                                                                                                                            |                                 |                                         |      |       |               |  
|                                                                                                                                            |                                 | 2004                                    |      |       | 2003          |   |      | 2004  |   |   | 2003 |     
|                                                                                                                                            |                                 |                                         |      |       |               |   |      |       |   |   |      |     
|                                                                                                                                            |                                 | (in millions, except per share amounts) |     
|Net (loss) income, as reported                                                                                                              |                                 | $                                       | (119 | )     |               | $ | (303 | )     |   | $ | 87   |      |  | $ | (73 | )    
|Add: Stock-based compensation expense recognized, net of related
    tax effects                                                            |                                 |                                         | 3    |       |               |   | 2    |       |   |   | 8    |      |  |   | 5   |      
|Less: Total stock-based employee compensation expense determined
    under fair value method for all awards, net of related tax
    effects |                                 |                                         | (7   | )     |               |   | (7   | )     |   |   | (17  | )    |  |   | (17 | )    
|                                                                                                                                            |                                 |                                         |      |       |               |   |      |       |   |   |      |     
|Pro forma net (loss) income                                                                                                                 |                                 | $                                       | (123 | )     |               | $ | (308 | )     |   | $ | 78   |      |  | $ | (85 | )    
|                                                                                                                                            |                                 |                                         |      |       |               |   |      |       |   |   |      |     
|(Loss) earnings per share:                                                                                                                  |                                 |                                         |      |       |               |   |      |       |   |   |      |      |  |   |     |      
|                                                                                                                                            | Basic and diluted  as reported |                                         | $    | (0.21 | )             |   | $    | (0.54 | ) |   | $    | 0.16 |  |   | $   | (0.13 | )
|                                                                                                                                            |                                 |                                         |      |       |               |   |      |       |   |   |      |     
|                                                                                                                                            | Basic and diluted  pro forma   |                                         | $    | (0.22 | )             |   | $    | (0.55 | ) |   | $    | 0.14 |  |   | $   | (0.15 | )
|                                                                                                                                            |                                 |                                         |      |       |               |   |      |       |   |   |      |     



Reclassifications




|   |            
|-- | -----------
|2. | RESTATEMENT







8



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##### Table of Contents







|                                |             |                                                    |      |   |      |   |      |   |    |  
|------------------------------- | ----------- | -------------------------------------------------- | ---- | - | ---- | - | ---- | - | -- | -
|                                |             | Three Months                                       |     
|                                |             | Ended                                              |     
|                                |             | September 30,                                      |     
|                                |             |                                                    |     
|                                |             | 2004                                               |      |   | 2003 |  
|                                |             |                                                    |      |   |      |  
|                                |             | (in millions)                                      |     
|As originally reported net loss |             | $                                                  | (114 | ) |      | $ | (353 | )
|                                | Adjustments |                                                    |      |   |      |   |      |   |   
|                                |             | Information technology service provider rebates(a) |      |   | 2    |   |      |   | 6  |  
|                                |             | Non-IT supplier rebates(a)                         |      |   | (3   | ) |      |   | 1  |  
|                                |             | Deferred expense recognition for IT services(b)    |      |   |     |   |      |   | 3  |  
|                                |             | Indirect material dispositions(c)                  |      |   | 2    |   |      |   | 41 |  
|                                |             | Warranty settlements with former parent company(d) |      |   | 4    |   |      |   | 24 |  
|                                |             | Period-end accruals and out of period items(e)     |      |   | 2    |   |      |   | (8 | )
|                                |             | Other(f)                                           |      |   | (9   | ) |      |   | 12 |  
|                                |             |                                                    |      |   |      |  
|Total                           |             |                                                    | (2   | ) |      |   | 79   |  
|Related tax effects             |             |                                                    | (3   | ) |      |   | (29  | )
|                                |             |                                                    |      |   |      |  
|Total adjustments, net of tax   |             |                                                    | (5   | ) |      |   | 50   |  
|                                |             |                                                    |      |   |      |  
|Net loss, as restated           |             | $                                                  | (119 | ) |      | $ | (303 | )
|                                |             |                                                    |      |   |      |  

|                                         |             |                                                    |     |   |      |   |      |   |     |  
|---------------------------------------- | ----------- | -------------------------------------------------- | --- | - | ---- | - | ---- | - | --- | -
|                                         |             | Nine Months                                        |    
|                                         |             | Ended                                              |    
|                                         |             | September 30,                                      |    
|                                         |             |                                                    |    
|                                         |             | 2004                                               |     |   | 2003 |  
|                                         |             |                                                    |     |   |      |  
|                                         |             | (in millions)                                      |    
|As originally reported net income (loss) |             | $                                                  | 66  |   |      | $ | (138 | )
|                                         | Adjustments |                                                    |     |   |      |   |      |   |    
|                                         |             | Information technology service provider rebates(a) |     |   | 9    |   |      |   | 11  |  
|                                         |             | Non-IT supplier rebates(a)                         |     |   | 1    |   |      |   | 2   |  
|                                         |             | Deferred expense recognition for IT services(b)    |     |   | 3    |   |      |   | 17  |  
|                                         |             | Indirect material dispositions(c)                  |     |   | 3    |   |      |   | 42  |  
|                                         |             | Warranty settlements with former parent company(d) |     |   | 13   |   |      |   | 23  |  
|                                         |             | Period-end accruals and out of period items(e)     |     |   | 15   |   |      |   | (10 | )
|                                         |             | Other(f)                                           |     |   | (13  | ) |      |   | 19  |  
|                                         |             |                                                    |     |   |      |  
|Total                                    |             |                                                    | 31  |   |      |   | 104  |  
|Related tax effects                      |             |                                                    | (10 | ) |      |   | (39  | )
|                                         |             |                                                    |     |   |      |  
|Total adjustments, net of tax            |             |                                                    | 21  |   |      |   | 65   |  
|                                         |             |                                                    |     |   |      |  
|Net income (loss), as restated           |             | $                                                  | 87  |   |      | $ | (73  | )
|                                         |             |                                                    |     |   |      |  

9



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##### Table of Contents







|    |  |                                                                        
|--- |  | -----------------------------------------------------------------------
|(a) |  | Information technology service provider and non-IT
    supplier rebates





|    |  |                                             
|--- |  | --------------------------------------------
|(b) |  | Deferred expense recognition for IT services





|    |  |                               
|--- |  | ------------------------------
|(c) |  | Indirect material dispositions





|    |  |                                                
|--- |  | -----------------------------------------------
|(d) |  | Warranty settlements with former parent company





|    |  |                                                  
|--- |  | -------------------------------------------------
|(e) |  | Period-end Accruals and Out-of-period Adjustments





|    |  |      
|--- |  | -----
|(f) |  | Other



10



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##### Table of Contents





CONSOLIDATED STATEMENTS OF OPERATIONS


|                                                                              |                                             |                                |      |       |                                |   |               |          |       |   |             |       |       |   |      |       |       | 
|----------------------------------------------------------------------------- | ------------------------------------------- | ------------------------------ | ---- | ----- | ------------------------------ | - | ------------- | -------- | ----- | - | ----------- | ----- | ----- | - | ---- | ----- | ----- | 
|                                                                              |                                             | Three Months Ended             |      |       | Three Months Ended             |  
|                                                                              |                                             | September 30, 2004             |      |       | September 30, 2003             |  
|                                                                              |                                             |                                |      |       |                                |  
|                                                                              |                                             | As Originally                  |      |       |                                |   | As Originally |          |       |  
|                                                                              |                                             | Reported                       |      |       | As Restated                    |   |               | Reported |       |   | As Restated |      
|                                                                              |                                             |                                |      |       |                                |   |               |          |       |   |             |      
|                                                                              |                                             | (in millions, except per share |      |       | (in millions, except per share |  
|                                                                              |                                             | amounts)                       |      |       | amounts)                       |  
|Net sales:                                                                    |                                             |                                |      |       |                                |   |               |          |       |   |             |       |       |   |      |      
|                                                                              | General Motors and affiliates               |                                | $    | 3,495 |                                |   | $             | 3,496    |       |   | $           | 3,927 |       |   | $    | 3,926 |      
|                                                                              | Other customers                             |                                |      | 3,155 |                                |   |               | 3,146    |       |   |             | 2,636 |       |   |      | 2,632 |      
|                                                                              |                                             |                                |      |       |                                |   |               |          |       |   |             |      
|                                                                              |                                             | Total net sales                |      |       | 6,650                          |   |               |          | 6,642 |   |             |       | 6,563 |   |      |       | 6,558 | 
|                                                                              |                                             |                                |      |       |                                |   |               |          |       |   |             |      
|Operating expenses:                                                           |                                             |                                |      |       |                                |   |               |          |       |   |             |       |       |   |      |      
|                                                                              | Cost of sales, excluding items listed below |                                |      | 6,089 |                                |   |               | 6,065    |       |   |             | 6,041 |       |   |      | 5,956 |      
|                                                                              | Selling, general and administrative         |                                |      | 374   |                                |   |               | 383      |       |   |             | 376   |       |   |      | 377   |      
|                                                                              | Depreciation and amortization               |                                |      | 292   |                                |   |               | 293      |       |   |             | 326   |       |   |      | 324   |      
|                                                                              | Employee and product line charges           |                                |      | 9     |                                |   |               | 9        |       |   |             | 348   |       |   |      | 348   |      
|                                                                              |                                             |                                |      |       |                                |   |               |          |       |   |             |      
|                                                                              |                                             | Total operating expenses       |      |       | 6,764                          |   |               |          | 6,750 |   |             |       | 7,091 |   |      |       | 7,005 | 
|                                                                              |                                             |                                |      |       |                                |   |               |          |       |   |             |      
|Operating loss                                                                |                                             |                                | (114 | )     |                                |   | (108          | )        |       |   | (528        | )     |       |   | (447 | )    
|                                                                              | Interest expense                            |                                |      | (54   | )                              |   |               | (58      | )     |   |             | (48   | )     |   |      | (51   | )    
|                                                                              | Other income (expense), net                 |                                |      | 7     |                                |   |               | 8        |       |   |             | 1     |       |   |      | 2     |      
|                                                                              |                                             |                                |      |       |                                |   |               |          |       |   |             |      
|Loss before income taxes, minority interest expense and
    equity
    income |                                             |                                | (161 | )     |                                |   | (158          | )        |       |   | (575        | )     |       |   | (496 | )    
|                                                                              | Income tax benefit                          |                                |      | 41    |                                |   |               | 33       |       |   |             | 213   |       |   |      | 184   |      
|                                                                              | Minority interest, net of tax               |                                |      | (10   | )                              |   |               | (10      | )     |   |             | (11   | )     |   |      | (11   | )    
|                                                                              | Equity income                               |                                |      | 16    |                                |   |               | 16       |       |   |             | 20    |       |   |      | 20    |      
|                                                                              |                                             |                                |      |       |                                |   |               |          |       |   |             |      
|Net loss                                                                      |                                             | $                              | (114 | )     |                                | $ | (119          | )        |       | $ | (353        | )     |       | $ | (303 | )    
|                                                                              |                                             |                                |      |       |                                |   |               |          |       |   |             |      
|Loss per share                                                                |                                             |                                |      |       |                                |   |               |          |       |   |             |       |       |   |      |      
|                                                                              | Basic and diluted                           |                                | $    | (0.20 | )                              |   | $             | (0.21    | )     |   | $           | (0.63 | )     |   | $    | (0.54 | )    
|                                                                              |                                             |                                |      |       |                                |   |               |          |       |   |             |      

11



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##### Table of Contents



|                                                                                   |                                             |                                |     |        |                                |   |               |          |        |   |             |        |        |   |      |        |        | 
|---------------------------------------------------------------------------------- | ------------------------------------------- | ------------------------------ | --- | ------ | ------------------------------ | - | ------------- | -------- | ------ | - | ----------- | ------ | ------ | - | ---- | ------ | ------ | 
|                                                                                   |                                             | Nine Months Ended              |     |        | Nine Months Ended              |  
|                                                                                   |                                             | September 30, 2004             |     |        | September 30, 2003             |  
|                                                                                   |                                             |                                |     |        |                                |  
|                                                                                   |                                             | As Originally                  |     |        |                                |   | As Originally |          |        |  
|                                                                                   |                                             | Reported                       |     |        | As Restated                    |   |               | Reported |        |   | As Restated |       
|                                                                                   |                                             |                                |     |        |                                |   |               |          |        |   |             |       
|                                                                                   |                                             | (in millions, except per share |     |        | (in millions, except per share |  
|                                                                                   |                                             | amounts)                       |     |        | amounts)                       |  
|Net sales:                                                                         |                                             |                                |     |        |                                |   |               |          |        |   |             |        |        |   |      |       
|                                                                                   | General Motors and affiliates               |                                | $   | 11,819 |                                |   | $             | 11,818   |        |   | $           | 12,795 |        |   | $    | 12,795 |       
|                                                                                   | Other customers                             |                                |     | 9,791  |                                |   |               | 9,771    |        |   |             | 8,044  |        |   |      | 8,031  |       
|                                                                                   |                                             |                                |     |        |                                |   |               |          |        |   |             |       
|                                                                                   |                                             | Total net sales                |     |        | 21,610                         |   |               |          | 21,589 |   |             |        | 20,839 |   |      |        | 20,826 | 
|                                                                                   |                                             |                                |     |        |                                |   |               |          |        |   |             |       
|Operating expenses:                                                                |                                             |                                |     |        |                                |   |               |          |        |   |             |        |        |   |      |       
|                                                                                   | Cost of sales, excluding items listed below |                                |     | 19,303 |                                |   |               | 19,236   |        |   |             | 18,593 |        |   |      | 18,486 |       
|                                                                                   | Selling, general and administrative         |                                |     | 1,179  |                                |   |               | 1,171    |        |   |             | 1,187  |        |   |      | 1,159  |       
|                                                                                   | Depreciation and amortization               |                                |     | 853    |                                |   |               | 858      |        |   |             | 839    |        |   |      | 842    |       
|                                                                                   | Employee and product line charges           |                                |     | 79     |                                |   |               | 79       |        |   |             | 348    |        |   |      | 348    |       
|                                                                                   |                                             |                                |     |        |                                |   |               |          |        |   |             |       
|                                                                                   |                                             | Total operating expenses       |     |        | 21,414                         |   |               |          | 21,344 |   |             |        | 20,967 |   |      |        | 20,835 | 
|                                                                                   |                                             |                                |     |        |                                |   |               |          |        |   |             |       
|Operating income (loss)                                                            |                                             |                                | 196 |        |                                |   | 245           |          |        |   | (128        | )      |        |   | (9   | )     
|                                                                                   | Interest expense                            |                                |     | (165   | )                              |   |               | (175     | )      |   |             | (138   | )      |   |      | (148   | )     
|                                                                                   | Other income (expense), net                 |                                |     | 2      |                                |   |               | (3       | )      |   |             | (2     | )      |   |      | (1     | )     
|                                                                                   |                                             |                                |     |        |                                |   |               |          |        |   |             |       
|Income (loss) before income taxes, minority interest expense and
    equity income |                                             |                                | 33  |        |                                |   | 67            |          |        |   | (268        | )      |        |   | (158 | )     
|                                                                                   | Income tax benefit (expense)                |                                |     | 6      |                                |   |               | (7       | )      |   |             | 112    |        |   |      | 68     |       
|                                                                                   | Minority interest, net of tax               |                                |     | (36    | )                              |   |               | (36      | )      |   |             | (32    | )      |   |      | (33    | )     
|                                                                                   | Equity income                               |                                |     | 63     |                                |   |               | 63       |        |   |             | 50     |        |   |      | 50     |       
|                                                                                   |                                             |                                |     |        |                                |   |               |          |        |   |             |       
|Net income (loss)                                                                  |                                             | $                              | 66  |        |                                | $ | 87            |          |        | $ | (138        | )      |        | $ | (73  | )     
|                                                                                   |                                             |                                |     |        |                                |   |               |          |        |   |             |       
|Earnings (loss) per share                                                          |                                             |                                |     |        |                                |   |               |          |        |   |             |        |        |   |      |       
|                                                                                   | Basic and diluted                           |                                | $   | 0.12   |                                |   | $             | 0.16     |        |   | $           | (0.25  | )      |   | $    | (0.13  | )     
|                                                                                   |                                             |                                |     |        |                                |   |               |          |        |   |             |       

12



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##### Table of Contents



CONSOLIDATED BALANCE SHEETS


|                                           |                                                                                                                |                                                   |                            |        |                   |        |            |          |       |        |             |        |       |        |        |        |       |        | 
|------------------------------------------ | -------------------------------------------------------------------------------------------------------------- | ------------------------------------------------- | -------------------------- | ------ | ----------------- | ------ | ---------- | -------- | ----- | ------ | ----------- | ------ | ----- | ------ | ------ | ------ | ----- | ------ | 
|                                           |                                                                                                                | September 30, 2004                                |                            |        | December 31, 2003 |       
|                                           |                                                                                                                |                                                   |                            |        |                   |       
|                                           |                                                                                                                | As                                                |                            |        |                   |        | As         |          |       |       
|                                           |                                                                                                                | Originally                                        |                            |        |                   |        | Originally |          |       |       
|                                           |                                                                                                                | Reported                                          |                            |        | As Restated       |        |            | Reported |       |        | As Restated |       
|                                           |                                                                                                                |                                                   |                            |        |                   |        |            |          |       |        |             |       
|                                           |                                                                                                                | (in millions)                                     |                            |        | (in millions)     |       
|ASSETS                                    
|Current assets:                            |                                                                                                                |                                                   |                            |        |                   |        |            |          |       |        |             |        |       |        |        |       
|                                           | Cash and cash equivalents                                                                                      |                                                   | $                          | 902    |                   |        | $          | 918      |       |        | $           | 880    |       |        | $      | 893    |      
|                                           | Accounts receivable, net:                                                                                      |                                                   |                            |        |                   |        |            |          |       |        |             |        |       |        |        |        |      
|                                           |                                                                                                                | General Motors and affiliates                     |                            |        | 2,550             |        |            |          | 2,550 |        |             |        | 2,326 |        |        |        | 2,327 |       
|                                           |                                                                                                                | Other customers                                   |                            |        | 1,365             |        |            |          | 1,397 |        |             |        | 1,438 |        |        |        | 1,501 |       
|                                           | Retained interest in receivables, net                                                                          |                                                   |                            | 857    |                   |        |            | 857      |       |        |             | 717    |       |        |        | 717    |      
|                                           | Inventories, net:                                                                                              |                                                   |                            |        |                   |        |            |          |       |        |             |        |       |        |        |        |      
|                                           |                                                                                                                | Productive material, work-in-process and supplies |                            |        | 1,638             |        |            |          | 1,442 |        |             |        | 1,518 |        |        |        | 1,318 |       
|                                           | Finished goods                                                                                                 |                                                   |                            | 504    |                   |        |            | 504      |       |        |             | 478    |       |        |        | 478    |      
|                                           | Deferred income taxes                                                                                          |                                                   |                            | 335    |                   |        |            | 343      |       |        |             | 420    |       |        |        | 367    |      
|                                           | Prepaid expenses and other                                                                                     |                                                   |                            | 278    |                   |        |            | 283      |       |        |             | 269    |       |        |        | 269    |      
|                                           |                                                                                                                |                                                   |                            |        |                   |        |            |          |       |        |             |       
|                                           |                                                                                                                |                                                   | Total current assets       |        |                   | 8,429  |            |          |       | 8,294  |             |        |       | 8,046  |        |        |       | 7,870  | 
|Long-term assets:                          |                                                                                                                |                                                   |                            |        |                   |        |            |          |       |        |             |        |       |        |        |       
|                                           | Property, net                                                                                                  |                                                   |                            | 5,896  |                   |        |            | 6,109    |       |        |             | 6,167  |       |        |        | 6,399  |      
|                                           | Deferred income taxes                                                                                          |                                                   |                            | 4,036  |                   |        |            | 4,136    |       |        |             | 3,835  |       |        |        | 3,961  |      
|                                           | Goodwill                                                                                                       |                                                   |                            | 787    |                   |        |            | 787      |       |        |             | 776    |       |        |        | 773    |      
|                                           | Other intangible asset                                                                                         |                                                   |                            | 45     |                   |        |            | 45       |       |        |             | 79     |       |        |        | 81     |      
|                                           | Pension intangible assets                                                                                      |                                                   |                            | 1,167  |                   |        |            | 1,167    |       |        |             | 1,167  |       |        |        | 1,167  |      
|                                           | Other                                                                                                          |                                                   |                            | 870    |                   |        |            | 860      |       |        |             | 834    |       |        |        | 815    |      
|                                           |                                                                                                                |                                                   |                            |        |                   |        |            |          |       |        |             |       
|                                           |                                                                                                                |                                                   | Total assets               |        | $                 | 21,230 |            |          | $     | 21,398 |             |        | $     | 20,904 |        |        | $     | 21,066 | 
|                                           |                                                                                                                |                                                   |                            |        |                   |        |            |          |       |        |             |       
|                                          
|LIABILITIES AND STOCKHOLDERS EQUITY      
|Current liabilities:                       |                                                                                                                |                                                   |                            |        |                   |        |            |          |       |        |             |        |       |        |        |       
|                                           | Notes payable and current portion of long-term debt                                                            |                                                   | $                          | 788    |                   |        | $          | 911      |       |        | $           | 801    |       |        | $      | 892    |      
|                                           | Accounts payable                                                                                               |                                                   |                            | 3,426  |                   |        |            | 3,408    |       |        |             | 3,158  |       |        |        | 3,133  |      
|                                           | Accrued liabilities                                                                                            |                                                   |                            | 2,432  |                   |        |            | 2,832    |       |        |             | 2,232  |       |        |        | 2,684  |      
|                                           |                                                                                                                |                                                   |                            |        |                   |        |            |          |       |        |             |       
|                                           |                                                                                                                |                                                   | Total current liabilities  |        |                   | 6,646  |            |          |       | 7,151  |             |        |       | 6,191  |        |        |       | 6,709  | 
|Long-term liabilities:                     |                                                                                                                |                                                   |                            |        |                   |        |            |          |       |        |             |        |       |        |        |       
|                                           | Long-term debt                                                                                                 |                                                   |                            | 2,044  |                   |        |            | 2,068    |       |        |             | 2,022  |       |        |        | 2,152  |      
|                                           | Junior subordinated notes due to Delphi Trust I and II                                                         |                                                   |                            | 412    |                   |        |            | 412      |       |        |             | 412    |       |        |        | 412    |      
|                                           | Pension benefits                                                                                               |                                                   |                            | 3,080  |                   |        |            | 3,072    |       |        |             | 3,574  |       |        |        | 3,577  |      
|                                           | Postretirement benefits other than pensions                                                                    |                                                   |                            | 6,223  |                   |        |            | 6,223    |       |        |             | 5,697  |       |        |        | 5,697  |      
|                                           | Other                                                                                                          |                                                   |                            | 1,110  |                   |        |            | 830      |       |        |             | 1,271  |       |        |        | 905    |      
|                                           |                                                                                                                |                                                   |                            |        |                   |        |            |          |       |        |             |       
|                                           |                                                                                                                |                                                   | Total liabilities          |        |                   | 19,515 |            |          |       | 19,756 |             |        |       | 19,167 |        |        |       | 19,452 | 
|                                           |                                                                                                                |                                                   |                            |        |                   |        |            |          |       |        |             |       
|Commitments and contingencies (Note 11)    |                                                                                                                |                                                   |                            |        |                   |        |            |          |       |        |             |        |       |        |        |       
|Minority interests                         |                                                                                                                |                                                   | 185                        |        |                   |        | 185        |          |       |        | 167         |        |       |        | 168    |       
|Stockholders equity:                      |                                                                                                                |                                                   |                            |        |                   |        |            |          |       |        |             |        |       |        |        |       
|                                           | Common stock, $0.01 par value, 1,350 million shares
    authorized, 565 million shares issued in 2004 and 2003 |                                                   |                            | 6      |                   |        |            | 6        |       |        |             | 6      |       |        |        | 6      |      
|                                           | Additional paid-in capital                                                                                     |                                                   |                            | 2,664  |                   |        |            | 2,657    |       |        |             | 2,667  |       |        |        | 2,660  |      
|                                           | Retained earnings                                                                                              |                                                   |                            | 1,190  |                   |        |            | 966      |       |        |             | 1,241  |       |        |        | 997    |      
|                                           | Minimum pension liability                                                                                      |                                                   |                            | (2,118 | )                 |        |            | (2,006   | )     |        |             | (2,118 | )     |        |        | (2,006 | )    
|                                           | Accumulated other comprehensive loss, excluding minimum pension
    liability                                  |                                                   |                            | (151   | )                 |        |            | (105     | )     |        |             | (151   | )     |        |        | (136   | )    
|                                           | Treasury stock, at cost (3.8 million and 4.7 million
    shares in 2004 and 2003)                              |                                                   |                            | (61    | )                 |        |            | (61      | )     |        |             | (75    | )     |        |        | (75    | )    
|                                           |                                                                                                                |                                                   |                            |        |                   |        |            |          |       |        |             |       
|                                           |                                                                                                                |                                                   | Total stockholders equity |        |                   | 1,530  |            |          |       | 1,457  |             |        |       | 1,570  |        |        |       | 1,446  | 
|                                           |                                                                                                                |                                                   |                            |        |                   |        |            |          |       |        |             |       
|Total liabilities and stockholders equity |                                                                                                                | $                                                 | 21,230                     |        |                   | $      | 21,398     |          |       | $      | 20,904      |        |       | $      | 21,066 |       
|                                           |                                                                                                                |                                                   |                            |        |                   |        |            |          |       |        |             |       

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CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                     |  |                    |      |   |                    |   |               |          |  |   |             |   |  |   |       |  
|---------------------------------------------------- |  | ------------------ | ---- | - | ------------------ | - | ------------- | -------- |  | - | ----------- | - |  | - | ----- | -
|                                                     |  | Nine Months Ended  |      |   | Nine Months Ended  |  
|                                                     |  | September 30, 2004 |      |   | September 30, 2003 |  
|                                                     |  |                    |      |   |                    |  
|                                                     |  | As Originally      |      |   |                    |   | As Originally |          |  |  
|                                                     |  | Reported           |      |   | As Restated        |   |               | Reported |  |   | As Restated |  
|                                                     |  |                    |      |   |                    |   |               |          |  |   |             |  
|                                                     |  | (in millions)      |      |   | (in millions)      |  
|Cash and cash equivalents at beginning of period     |  | $                  | 880  |   |                    | $ | 893           |          |  | $ | 1,014       |   |  | $ | 1,028 |  
|Cash flows provided by operating activities          |  |                    | 786  |   |                    |   | 827           |          |  |   | 536         |   |  |   | 618   |  
|Cash flows used in investing activities              |  |                    | (611 | ) |                    |   | (598          | )        |  |   | (668        | ) |  |   | (678  | )
|Cash flows used in financing activities              |  |                    | (149 | ) |                    |   | (200          | )        |  |   | (174        | ) |  |   | (246  | )
|Effect of exchange rate changes on cash              |  |                    | (4   | ) |                    |   | (4            | )        |  |   | 23          |   |  |   | 23    |  
|                                                     |  |                    |      |   |                    |   |               |          |  |   |             |  
|Net increase (decrease) in cash and cash equivalents |  |                    | 22   |   |                    |   | 25            |          |  |   | (283        | ) |  |   | (283  | )
|                                                     |  |                    |      |   |                    |   |               |          |  |   |             |  
|Cash and cash equivalents at end of period           |  | $                  | 902  |   |                    | $ | 918           |          |  | $ | 731         |   |  | $ | 745   |  
|                                                     |  |                    |      |   |                    |   |               |          |  |   |             |  





|   |                                  
|-- | ---------------------------------
|3. | EMPLOYEE AND PRODUCT LINE CHARGES







|                                  |                                            |                |     |      |            |   |   |       |  |   |     |      |     
|--------------------------------- | ------------------------------------------ | -------------- | --- | ---- | ---------- | - | - | ----- |  | - | --- | ---- | ----
|Employee and Product Line Charges |                                            | Employee Costs |     |      | Exit Costs |   |   | Total | 
|                                  |                                            |                |     |      |            |   |   |       | 
|Balance at January 1, 2004        |                                            | $              | 246 |      |            | $ | 5 |       |  | $ | 251 |     
|                                  | 2004 Charges                               |                |     | 79   |            |   |   |      |  |   |     | 79   |     
|                                  | Usage during the first nine months of 2004 |                |     | (266 | )          |   |   |      |  |   |     | (266 | )(a)
|                                  |                                            |                |     |      |            |   |   |       | 
|Balance at September 30, 2004     |                                            | $              | 59  |      |            | $ | 5 |       |  | $ | 64  | (b) 
|                                  |                                            |                |     |      |            |   |   |       | 

14



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|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | The total cash paid for the nine months ended September 30,
    2004 was $261 million, as shown on our consolidated
    Statement of Cash Flows. Our total usage for the three and nine
    months ended September 30, 2004 was $47 million and
    $266 million, respectively with $0 million and
    $6 million of non-cash special termination pension and
    postretirement benefits for the three and nine months ended
    September 30, 2004, respectively. In addition, we incurred
    $17 million and $83 million of cash costs associated
    with the 2004 Charges for the three and nine months ended
    September 30, 2004, respectively, which were recorded in
    cost of sales.
|   
|(b) |  | This amount is included in accrued liabilities in the
    accompanying consolidated balance sheet.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 





|   |                     
|-- | --------------------
|4. | ASSET SECURITIZATION

U.S. Program






15



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|                                                                          |  |                    |      |   |                    |   |        |  
|------------------------------------------------------------------------- |  | ------------------ | ---- | - | ------------------ | - | ------ | -
|                                                                          |  | Three Months       |      |   | Nine Months        |  
|                                                                          |  | Ended              |      |   | Ended              |  
|                                                                          |  | September 30, 2004 |      |   | September 30, 2004 |  
|                                                                          |  |                    |      |   |                    |  
|                                                                          |  | (in millions)      |     
|Undivided interests sold at beginning of period                           |  | $                  | 600  |   |                    | $ | 323    |  
|Proceeds from new securitizations (sale of undivided interests)           |  |                    | 425  |   |                    |   | 2,110  |  
|Collections related to undivided interests sold(a)                        |  |                    | (906 | ) |                    |   | (2,850 | )
|Collections reinvested through sale of additional undivided
    interests |  |                    | 206  |   |                    |   | 742    |  
|                                                                          |  |                    |      |   |                    |  
|Undivided interests sold                                                  |  | $                  | 325  |   |                    | $ | 325    |  
|                                                                          |  |                    |      |   |                    |  






|    |                                                                                                                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Of the collections received on the undivided interests sold, for
    the three months ended September 30, 2004,
    $700 million was remitted to the Conduits and
    $206 million was reinvested; and for the nine months ended
    September 30, 2004, $2,108 million was remitted to the
    Conduits and $742 million was reinvested.

European
Program










|   |             
|-- | ------------
|5. | ACQUISITIONS



16



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##### Table of Contents







|   |           
|-- | ----------
|6. | WARRANTIES





|                                               |                                                                             |               |     |     |  
|---------------------------------------------- | --------------------------------------------------------------------------- | ------------- | --- | --- | -
|                                               |                                                                             | September 30, |    
|                                               |                                                                             | 2004          |    
|                                               |                                                                             |               |    
|                                               |                                                                             | (in millions) |    
|Beginning accrual balance at December 31, 2003 |                                                                             | $             | 258 |    
|                                               | Provision for estimated warranties accrued during the nine-month
    period |               |     | 78  |  
|                                               | Accruals for pre-existing warranties (including changes in
    estimates)   |               |     | 1   |  
|                                               | Settlements made during the nine-month period (in cash or in
    kind)      |               |     | (80 | )
|                                               | Foreign currency translation                                                |               |     | 1   |  
|                                               |                                                                             |               |    
|Ending accrual balance at September 30, 2004   |                                                                             | $             | 258 |    
|                                               |                                                                             |               |    





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



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|                                   |                           |                                  |      |                      |                                 |   |      |                  |                      |   |          |     |  |      |     |     |      |   |      |      |  |   |      |     |  |   |     |     |  |   |     |     | 
|---------------------------------- | ------------------------- | -------------------------------- | ---- | -------------------- | ------------------------------- | - | ---- | ---------------- | -------------------- | - | -------- | --- |  | ---- | --- | --- | ---- | - | ---- | ---- |  | - | ---- | --- |  | - | --- | --- |  | - | --- | --- | 
|                                   |                           |                                  |      | Other Postretirement |                                 |   |      |                  | Other Postretirement |  
|                                   |                           | Pension Benefits                 |      |                      | Benefits                        |   |      | Pension Benefits |                      |   | Benefits |    
|                                   |                           |                                  |      |                      |                                 |   |      |                  |                      |   |          |    
|                                   |                           | Three Months Ended September 30, |      |                      | Nine Months Ended September 30, |  
|                                   |                           |                                  |      |                      |                                 |  
|                                   |                           | 2004                             |      |                      | 2003                            |   |      | 2004             |                      |   | 2003     |     |  | 2004 |     |     | 2003 |   |      | 2004 |  |   | 2003 |    
|                                   |                           |                                  |      |                      |                                 |   |      |                  |                      |   |          |     |  |      |     |     |      |   |      |      |  |   |      |    
|                                   |                           | (in millions)                    |     
|Service cost                       |                           | $                                | 71   |                      |                                 | $ | 65   |                  |                      | $ | 43       |     |  | $    | 42  |     |      | $ | 213  |      |  | $ | 195  |     |  | $ | 132 |     |  | $ | 126 |    
|Interest cost                      |                           |                                  | 175  |                      |                                 |   | 161  |                  |                      |   | 123      |     |  |      | 115 |     |      |   | 524  |      |  |   | 483  |     |  |   | 374 |     |  |   | 345 |    
|Expected return on plan assets     |                           |                                  | (181 | )                    |                                 |   | (162 | )                |                      |   |         |     |  |      |    |     |      |   | (542 | )    |  |   | (486 | )   |  |   |    |     |  |   |    |    
|Amortization of prior service cost |                           |                                  | 34   |                      |                                 |   | 23   |                  |                      |   | (2       | )   |  |      |    |     |      |   | 104  |      |  |   | 69   |     |  |   | (4  | )   |  |   |    |    
|Amortization of net loss           |                           |                                  | 35   |                      |                                 |   | 27   |                  |                      |   | 28       |     |  |      | 18  |     |      |   | 106  |      |  |   | 81   |     |  |   | 92  |     |  |   | 54  |    
|Special termination benefits       |                           |                                  |     |                      |                                 |   |     |                  |                      |   |         |     |  |      |    |     |      |   | 5    |      |  |   |     |     |  |   | 1   |     |  |   |    |    
|                                   |                           |                                  |      |                      |                                 |   |      |                  |                      |   |          |     |  |      |     |     |      |   |      |      |  |   |      |    
|                                   | Net periodic benefit cost |                                  | $    | 134                  |                                 |   | $    | 114              |                      |   | $        | 192 |  |      | $   | 175 |      |   | $    | 410  |  |   | $    | 342 |  |   | $   | 595 |  |   | $   | 525 | 
|                                   |                           |                                  |      |                      |                                 |   |      |                  |                      |   |          |     |  |      |     |     |      |   |      |      |  |   |      |    









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





18



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##### Table of Contents







|   |                     
|-- | --------------------
|9. | STOCKHOLDERS EQUITY



|                                                            |                                                                                         |                                                      |     |   |            |   |   |          |  |                   |          |    |   |           |     |          |       |   |               |       |  |   |        |    |  |   |     |    |  |   |       |      |     | 
|----------------------------------------------------------- | --------------------------------------------------------------------------------------- | ---------------------------------------------------- | --- | - | ---------- | - | - | -------- |  | ----------------- | -------- | -- | - | --------- | --- | -------- | ----- | - | ------------- | ----- |  | - | ------ | -- |  | - | --- | -- |  | - | ----- | ---- | --- | 
|                                                            |                                                                                         |                                                      |     |   |            |   |   |          |  | Accumulated Other |          |    |   |           |    
|                                                            |                                                                                         |                                                      |     |   |            |   |   |          |  | Comprehensive     |          |    |   |           |    
|                                                            |                                                                                         |                                                      |     |   |            |   |   |          |  | Loss              |          |    |   |           |    
|                                                            |                                                                                         |                                                      |     |   |            |   |   |          |  |                   |          |    |  
|                                                            |                                                                                         | Common Stock                                         |     |   | Additional |   |   |          |  | Minimum           |          |    |   |           |     |          | Total |  
|                                                            |                                                                                         |                                                      |     |   | Paid-in    |   |   | Retained |  |                   | Pension  |    |   |           |     | Treasury |       |   | Stockholders |      
|                                                            |                                                                                         | Shares                                               |     |   | Amount     |   |   | Capital  |  |                   | Earnings |    |   | Liability |     |          | Other |   |               | Stock |  |   | Equity |   
|                                                            |                                                                                         |                                                      |     |   |            |   |   |          |  |                   |          |    |   |           |     |          |       |   |               |       |  |   |        |   
|                                                            |                                                                                         | (in millions)                                        |    
|Balance at January 1, 2004 (As restated, see
    Note 2)    |                                                                                         |                                                      | 565 |   |            | $ | 6 |          |  | $                 | 2,660    |    |   | $         | 997 |          |       | $ | (2,006        | )     |  | $ | (136   | )  |  | $ | (75 | )  |  | $ | 1,446 |     
|                                                            | Net income (As restated, see Note 2)                                                    |                                                      |     |  |            |   |   |         |  |                   |          |   |   |           |     | 87       |       |   |               |      |  |   |        |   |  |   |     |   |  |   |       | 87   |    
|                                                            | Currency translation adjustments and other (As restated, see
    Note 2)                |                                                      |     |  |            |   |   |         |  |                   |          |   |   |           |     |         |       |   |               |      |  |   |        | 24 |  |   |     |   |  |   |       | 24   |    
|                                                            | Net change in unrecognized gain on derivative instruments (As
    restated, see Note 2) |                                                      |     |  |            |   |   |         |  |                   |          |   |   |           |     |         |       |   |               |      |  |   |        | 7  |  |   |     |   |  |   |       | 7    |    
|                                                            | Minimum pension liability adjustment                                                    |                                                      |     |  |            |   |   |         |  |                   |          |   |   |           |     |         |       |   |               |      |  |   |        |   |  |   |     |   |  |   |       |     |    
|                                                            |                                                                                         |                                                      |     |   |            |   |   |          |  |                   |          |    |   |           |     |          |       |   |               |       |  |   |        |   
|                                                            |                                                                                         | Total comprehensive income (As restated, see Note 2) |     |   |            |   |   |          |  |                   |          |    |   |           |     |          |       |   |               |       |  |   |        |    |  |   |     |    |  |   |       |      | 118 | 
|                                                            | Shares issued for employee benefit plans, net                                           |                                                      |     |  |            |   |   |         |  |                   |          | (3 | ) |           |     |         |       |   |               |      |  |   |        |   |  |   |     | 14 |  |   |       | 11   |    
|                                                            | Dividends                                                                               |                                                      |     |  |            |   |   |         |  |                   |          |   |   |           |     | (118     | )     |   |               |      |  |   |        |   |  |   |     |   |  |   |       | (118 | )  
|                                                            |                                                                                         |                                                      |     |   |            |   |   |          |  |                   |          |    |   |           |     |          |       |   |               |       |  |   |        |   
|Balance at September 30, 2004 (As restated, see
    Note 2) |                                                                                         |                                                      | 565 |   |            | $ | 6 |          |  | $                 | 2,657    |    |   | $         | 966 |          |       | $ | (2,006        | )     |  | $ | (105   | )  |  | $ | (61 | )  |  | $ | 1,457 |     
|                                                            |                                                                                         |                                                      |     |   |            |   |   |          |  |                   |          |    |   |           |     |          |       |   |               |       |  |   |        |   



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



19



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|                            |                                |                 |   |       |               |  |   |               |        |  |               |       |       |               |   |        |         |   |   |        |        | 
|--------------------------- | ------------------------------ | --------------- | - | ----- | ------------- |  | - | ------------- | ------ |  | ------------- | ----- | ----- | ------------- | - | ------ | ------- | - | - | ------ | ------ | 
|                            |                                | Dynamics,       |   |       |               |  |   |               |        |  |              
|                            |                                | Propulsion,     |   |       | Electrical,   |  |   | Automotive    |        |  |               |       |      
|                            |                                | Thermal &       |   |       | Electronics & |  |   | Holdings      |        |  |               |       |      
|                            |                                | Interior        |   |       | Safety        |  |   | Group         |        |  | Other(a)      |       |       | Total         |  
|                            |                                |                 |   |       |               |  |   |               |        |  |               |       |       |               |  
|                            |                                | (in millions)   |   |       | (in millions) |  |   | (in millions) |        |  | (in millions) |       |       | (in millions) |  
|For the Three Months Ended: |                                |                 |   |       |               |  |   |               |        |  |               |       |       |               |   |        |         |   |   |       
|September 30, 2004          |                                |                 |   |       |               |  |   |               |        |  |               |       |       |               |   |        |         |   |   |       
|                            | Net sales to GM and affiliates |                 | $ | 1,779 |               |  | $ | 1,399         |        |  | $             | 318   |       |               | $ |       |         |   | $ | 3,496  |       
|                            | Net sales to other customers   |                 |   | 1,246 |               |  |   | 1,799         |        |  |               | 101   |       |               |   |       |         |   |   | 3,146  |       
|                            | Inter-sector net sales         |                 |   | 210   |               |  |   | 78            |        |  |               | 162   |       |               |   | (450   | )       |   |   |       |       
|                            |                                |                 |   |       |               |  |   |               |        |  |               |       |       |               |  
|                            |                                | Total net sales |   | $     | 3,235         |  |   | $             | 3,276  |  |               | $     | 581   |               |   | $      | (450    | ) |   | $      | 6,642  | 
|                            |                                |                 |   |       |               |  |   |               |        |  |               |       |       |               |  
|                            | Sector operating (loss) income |                 | $ | (94   | )(b)          |  | $ | 186           | (b)    |  | $             | (160  | )(b)  |               | $ | (14    | )(b)    |   | $ | (82    | )(b)  
|September 30, 2003(c)       |                                |                 |   |       |               |  |   |               |        |  |               |       |       |               |   |        |         |   |   |       
|                            | Net sales to GM and affiliates |                 | $ | 1,989 |               |  | $ | 1,522         |        |  | $             | 416   |       |               | $ | (1     | )       |   | $ | 3,926  |       
|                            | Net sales to other customers   |                 |   | 1,113 |               |  |   | 1,433         |        |  |               | 86    |       |               |   |       |         |   |   | 2,632  |       
|                            | Inter-sector net sales         |                 |   | 189   |               |  |   | 96            |        |  |               | 182   |       |               |   | (467   | )       |   |   |       |       
|                            |                                |                 |   |       |               |  |   |               |        |  |               |       |       |               |  
|                            |                                | Total net sales |   | $     | 3,291         |  |   | $             | 3,051  |  |               | $     | 684   |               |   | $      | (468    | ) |   | $      | 6,558  | 
|                            |                                |                 |   |       |               |  |   |               |        |  |               |       |       |               |  
|                            | Sector operating income (loss) |                 | $ | 28    | (d)           |  | $ | 184           | (d)    |  | $             | (156  | )(d)  |               | $ | (6     | )(d)    |   | $ | 50     | (d)   
|For the Nine Months Ended:  |                                |                 |   |       |               |  |   |               |        |  |               |       |       |               |   |        |         |   |   |       
|September 30, 2004          |                                |                 |   |       |               |  |   |               |        |  |               |       |       |               |   |        |         |   |   |       
|                            | Net sales to GM and affiliates |                 | $ | 6,065 |               |  | $ | 4,602         |        |  | $             | 1,151 |       |               | $ |       |         |   | $ | 11,818 |       
|                            | Net sales to other customers   |                 |   | 3,961 |               |  |   | 5,517         |        |  |               | 293   |       |               |   |       |         |   |   | 9,771  |       
|                            | Inter-sector net sales         |                 |   | 664   |               |  |   | 293           |        |  |               | 561   |       |               |   | (1,518 | )       |   |   |       |       
|                            |                                |                 |   |       |               |  |   |               |        |  |               |       |       |               |  
|                            |                                | Total net sales |   | $     | 10,690        |  |   | $             | 10,412 |  |               | $     | 2,005 |               |   | $      | (1,518  | ) |   | $      | 21,589 | 
|                            |                                |                 |   |       |               |  |   |               |        |  |               |       |       |               |  
|                            | Sector operating income (loss) |                 | $ | 85    | (e)           |  | $ | 793           | (e)    |  | $             | (416  | )(e)  |               | $ | (55    | )(e)    |   | $ | 407    | (e)   
|September 30, 2003(c)       |                                |                 |   |       |               |  |   |               |        |  |               |       |       |               |   |        |         |   |   |       
|                            | Net sales to GM and affiliates |                 | $ | 6,504 |               |  | $ | 4,910         |        |  | $             | 1,381 |       |               | $ |       |         |   | $ | 12,795 |       
|                            | Net sales to other customers   |                 |   | 3,447 |               |  |   | 4,296         |        |  |               | 287   |       |               |   | 1      |         |   |   | 8,031  |       
|                            | Inter-sector net sales         |                 |   | 604   |               |  |   | 313           |        |  |               | 603   |       |               |   | (1,520 | )       |   |   |       |       
|                            |                                |                 |   |       |               |  |   |               |        |  |               |       |       |               |  
|                            |                                | Total net sales |   | $     | 10,555        |  |   | $             | 9,519  |  |               | $     | 2,271 |               |   | $      | (1,519  | ) |   | $      | 20,826 | 
|                            |                                |                 |   |       |               |  |   |               |        |  |               |       |       |               |  
|                            | Sector operating income (loss) |                 | $ | 316   | (d)           |  | $ | 708           | (d)    |  | $             | (448  | )(d)  |               | $ | (88    | )(d)(f) |   | $ | 488    | (d)(f)

20



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|    |  |                                                                                                                                                                                                                                              
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Other includes activity not allocated to the product sectors and
    elimination of inter-sector transactions.                                                                                                                               
|   
|(b) |  | Excludes the Third Quarter 2004 Charges of $9 million for
    Dynamics, Propulsion, Thermal & Interior,
    $13 million for Electrical, Electronics & Safety,
    and $4 million for Automotive Holdings Group.                              
|   
|(c) |  | As originally disclosed, amounts have been reclassified from
    prior presentation to conform to our present sector alignment.                                                                                                              
|   
|(d) |  | Excludes the Third Quarter 2003 Charges of $76 million for
    Dynamics, Propulsion, Thermal & Interior,
    $103 million for Electrical, Electronics & Safety,
    $292 million for Automotive Holdings Group and
    $26 million for Other.
|   
|(e) |  | Excludes the 2004 Charges of $65 million for Dynamics,
    Propulsion, Thermal & Interior, $57 million for
    Electrical, Electronics & Safety, $33 million for
    Automotive Holdings Group and $7 million for Other.                     
|   
|(f) |  | Includes the second quarter 2003 legal settlement with a former
    supplier of $38 million.                                                                                                                                                 



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

Ongoing SEC Investigation






Shareholder Lawsuits




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Ordinary Business Litigation










22



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



23



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

Restatement






Executive Summary










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Results of Operations






| |                                                                                       
| | --------------------------------------------------------------------------------------
| | Three Months Ended September 30, 2004 versus Three
    Months Ended September 30, 2003

Net Sales.


|                                         |                        |               |       |       |      |   |       |       | 
|---------------------------------------- | ---------------------- | ------------- | ----- | ----- | ---- | - | ----- | ----- | 
|                                         |                        | Three Months  |      
|                                         |                        | Ended         |      
|                                         |                        | September 30, |      
|                                         |                        |               |      
|Product Sector                           |                        | 2004          |       |       | 2003 |  
|                                         |                        |               |       |       |      |  
|                                         |                        | (in millions) |      
|Dynamics, Propulsion, Thermal & Interior |                        | $             | 3,235 |       |      | $ | 3,291 |      
|Electrical, Electronics & Safety         |                        |               | 3,276 |       |      |   | 3,051 |      
|Automotive Holdings Group                |                        |               | 581   |       |      |   | 684   |      
|Other                                    |                        |               | (450  | )     |      |   | (468  | )    
|                                         |                        |               |       |       |      |  
|                                         | Consolidated net sales |               | $     | 6,642 |      |   | $     | 6,558 | 
|                                         |                        |               |       |       |      |  



Gross Margin.


Selling, General and Administrative.


Depreciation and Amortization.


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Employee and Product Line Charges.


Operating loss.




|                                         |                      |               |      |      |      |   |      |      |  
|---------------------------------------- | -------------------- | ------------- | ---- | ---- | ---- | - | ---- | ---- | -
|                                         |                      | Three Months  |     
|                                         |                      | Ended         |     
|                                         |                      | September 30, |     
|                                         |                      |               |     
|Product Sector                           |                      | 2004          |      |      | 2003 |  
|                                         |                      |               |      |      |      |  
|                                         |                      | (in millions) |     
|Dynamics, Propulsion, Thermal & Interior |                      | $             | (94  | )    |      | $ | 28   |     
|Electrical, Electronics & Safety         |                      |               | 186  |      |      |   | 184  |     
|Automotive Holdings Group                |                      |               | (160 | )    |      |   | (156 | )   
|Other                                    |                      |               | (14  | )    |      |   | (6   | )   
|                                         |                      |               |      |      |      |  
|                                         | Subtotal             |               |      | (82  | )    |   |      | 50   |  
|Third Quarter 2004 Charges(a)            |                      |               | (26  | )    |      |   |     |     
|2003 Charges(b)                          |                      |               |     |      |      |   | (497 | )   
|                                         |                      |               |      |      |      |  
|                                         | Total operating loss |               | $    | (108 | )    |   | $    | (447 | )
|                                         |                      |               |      |      |      |  






|    |                                                                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Represents the Third Quarter 2004 Charges of $9 million for
    Dynamics, Propulsion, Thermal & Interior,
    $13 million for Electrical, Electronics & Safety,
    and $4 million for Automotive Holdings Group.



|    |  |                                                                                                                                                                                                                                                
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) |  | Represents the Third Quarter 2003 Charges of $76 million
    for Dynamics, Propulsion, Thermal & Interior,
    $103 million for Electrical, Electronics & Safety,
    $292 million for Automotive Holdings Group and
    $26 million for Other.



Taxes.




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| |                                                                                     
| | ------------------------------------------------------------------------------------
| | Nine Months Ended September 30, 2004 versus Nine
    Months Ended September 30, 2003

Net Sales.


|                                         |                        |                   |        |        |      |   |        |        | 
|---------------------------------------- | ---------------------- | ----------------- | ------ | ------ | ---- | - | ------ | ------ | 
|                                         |                        | Nine Months Ended |       
|                                         |                        | September 30,     |       
|                                         |                        |                   |       
|Product Sector                           |                        | 2004              |        |        | 2003 |  
|                                         |                        |                   |        |        |      |  
|                                         |                        | (in millions)     |       
|Dynamics, Propulsion, Thermal & Interior |                        | $                 | 10,690 |        |      | $ | 10,555 |       
|Electrical, Electronics & Safety         |                        |                   | 10,412 |        |      |   | 9,519  |       
|Automotive Holdings Group                |                        |                   | 2,005  |        |      |   | 2,271  |       
|Other                                    |                        |                   | (1,518 | )      |      |   | (1,519 | )     
|                                         |                        |                   |        |        |      |  
|                                         | Consolidated net sales |                   | $      | 21,589 |      |   | $      | 20,826 | 
|                                         |                        |                   |        |        |      |  



Gross Margin.


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Selling, General and Administrative.


Depreciation and Amortization.


Employee and Product Line Charges.






|                                  |                                            |                |     |      |            |   |   |       |  |   |     |      |     
|--------------------------------- | ------------------------------------------ | -------------- | --- | ---- | ---------- | - | - | ----- |  | - | --- | ---- | ----
|Employee and Product Line Charges |                                            | Employee Costs |     |      | Exit Costs |   |   | Total | 
|                                  |                                            |                |     |      |            |   |   |       | 
|Balance at January 1, 2004        |                                            | $              | 246 |      |            | $ | 5 |       |  | $ | 251 |     
|                                  | 2004 Charges                               |                |     | 79   |            |   |   |      |  |   |     | 79   |     
|                                  | Usage during the first nine months of 2004 |                |     | (266 | )          |   |   |      |  |   |     | (266 | )(a)
|                                  |                                            |                |     |      |            |   |   |       | 
|Balance at September 30, 2004     |                                            | $              | 59  |      |            | $ | 5 |       |  | $ | 64  | (b) 
|                                  |                                            |                |     |      |            |   |   |       | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The total cash paid for the nine months ended September 30,
    2004 was $261 million, as shown on our consolidated
    Statement of Cash Flows. Our total usage for the three and nine
    months ended September 30, 2004 was $47 million and
    $266 million, respectively with $0 and $6 million of
    non-cash special termination pension and postretirement benefits
    for the three and nine months ended September 30, 2004,
    respectively. In addition, we incurred $17 million and
    $83 million of cash costs associated with the 2004 Charges
    for the three and nine months ended September 30, 2004,
    respectively, which were recorded in cost of sales.



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

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Operating Income.


|                                         |                               |               |      |     |      |   |      |     |  
|---------------------------------------- | ----------------------------- | ------------- | ---- | --- | ---- | - | ---- | --- | -
|                                         |                               | Nine Months   |     
|                                         |                               | Ended         |     
|                                         |                               | September 30, |     
|                                         |                               |               |     
|Product Sector                           |                               | 2004          |      |     | 2003 |  
|                                         |                               |               |      |     |      |  
|                                         |                               | (in millions) |     
|Dynamics, Propulsion, Thermal & Interior |                               | $             | 85   |     |      | $ | 316  |    
|Electrical, Electronics & Safety         |                               |               | 793  |     |      |   | 708  |    
|Automotive Holdings Group                |                               |               | (416 | )   |      |   | (448 | )  
|Other                                    |                               |               | (55  | )   |      |   | (88  | )  
|                                         |                               |               |      |     |      |  
|                                         | Subtotal                      |               |      | 407 |      |   |      | 488 |  
|2004 Charges(a)                          |                               |               | (162 | )   |      |   |     |    
|2003 Charges(b)                          |                               |               |     |     |      |   | (497 | )  
|                                         |                               |               |      |     |      |  
|                                         | Total operating income (loss) |               | $    | 245 |      |   | $    | (9  | )
|                                         |                               |               |      |     |      |  






|    |                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Represents the 2004 Charges of $65 million for Dynamics,
    Propulsion, Thermal & Interior, $57 million for
    Electrical, Electronics & Safety, $33 million for
    Automotive Holdings Group and $7 million for Other.



|    |  |                                                                                                                                                                                                                              
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) |  | Represents the 2003 Charges of $76 million for Dynamics,
    Propulsion, Thermal & Interior, $103 million for
    Electrical, Electronics & Safety, $292 million for
    Automotive Holdings Group and $26 million for Other.



Taxes.




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Liquidity and Capital Resources






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







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





| |                             
| | ----------------------------
| | Other Financing Transactions



30



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








| |                            
| | ---------------------------
| | Customer Financing Programs



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





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

Operating Activities.


Investing Activities.


Financing Activities.


Dividends.


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Outlook




Forward-Looking Statements









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








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



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PART II. OTHER INFORMATION







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










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



| |                                                                          
| | -------------------------------------------------------------------------
| | Purchase of Equity Securities by the Issuer and Affiliated
    Purchasers



|                                             |  |                  |           |     |                    |                     |      |                    |                    |  |                    |  |  |  |            | 
|-------------------------------------------- |  | ---------------- | --------- | --- | ------------------ | ------------------- | ---- | ------------------ | ------------------ |  | ------------------ |  |  |  | ---------- | 
|                                             |  |                  |           |     |                    | Total Number of     |      |                    | Maximum Number     | 
|                                             |  |                  |           |     |                    | Shares Purchased as |      |                    | of Shares that May | 
|                                             |  |                  |           |     |                    | Part of Publicly    |      |                    | Yet Be Purchased   | 
|                                             |  | Total Number of  |           |     | Average Price Paid |                     |      | Announced Plans or |                    |  | Under the Plans or | 
|Period                                       |  | Shares Purchased |           |     | Per Share          |                     |      | Programs(a)        |                    |  | Programs(a)        | 
|                                             |  |                  |           |     |                    |                     |      |                    |                    |  |                    | 
|July 1, 2004 through July 31, 2004           |  |                  | 1,495,271 | (b) |                    | $                   | 9.95 |                    |                    |  |                   |  |  |  | 19,000,000 | 
|August 1, 2004 through August 31, 2004       |  |                  | 1,008,000 | (b) |                    | $                   | 9.41 |                    |                    |  |                   |  |  |  | 19,000,000 | 
|September 1, 2004 through September 30, 2004 |  |                  | 789,108   | (b) |                    | $                   | 9.07 |                    |                    |  |                   |  |  |  | 19,000,000 | 
|                                             |  |                  |           |     |                    |                     |      |                    |                    |  |                    | 
|Total                                        |  |                  | 3,292,379 |     |                    | $                   | 9.56 |                    |                    |  |                   |  |  |  | 19,000,000 | 
|                                             |  |                  |           |     |                    |                     |      |                    |                    |  |                    | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | As part of Delphis stock repurchase program in January of
    2004, the Board of Directors authorized the repurchase of up to
    an aggregate of 19 million shares of our common stock
    through the first quarter of 2005 to fund obligations for our
    stock options and other awards issued under its equity based
    compensation plan. To date no repurchases have been made
    pursuant to that plan.



|    |  |                                                                                                                                                                                                                                                                                                     
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) |  | Primarily includes open-market purchases by the trustee of
    Delphis 401(k) plans to fund investments by employees in
    our common stock, one of the investment options available under
    such plans. Also includes minimal shares repurchased from
    employees departing from the company.

35



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

|        |    |              |  |                                                                                                                                                                                                                                                                           
|------- | -- | ------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |             
|Number  |    | Exhibit Name
|        |    |             
|        | 3  | (a)          |  | Amended and Restated Certificate of Incorporation of Delphi
    Automotive Systems Corporation, incorporated by reference to
    Exhibit 3(a) to Delphis Quarterly Report on
    Form 10-Q for the quarter ended June 30, 2002.                                          
|       
|        | 3  | (b)          |  | Certificate of Ownership and Merger, dated March 13, 2002,
    Merging Delphi Corporation into Delphi Automotive Systems
    Corporation, incorporated by reference to Exhibit 3(b) to
    Delphis Quarterly Report on Form 10-Q for the quarter
    ended June 30, 2002.
|       
|        | 3  | (c)          |  | By-laws of Delphi Automotive Systems Corporation, incorporated
    by reference to Exhibit 3.2 to Delphis Registration
    Statement on Form S-1 (Registration No. 333-67333).                                                                                           
|       
|        | 31 | (a)          |  | Certification Pursuant to Exchange Act
    Rules 13a-14(a)/15d-14(a), adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                              
|       
|        | 31 | (b)          |  | Certification Pursuant to Exchange Act
    Rules 13a-14(a)/15d-14(a), adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                              
|       
|        | 32 | (a)          |  | Certification Pursuant to 18 U.S.C. Section 1350,
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.                                                                                                                                              
|       
|        | 32 | (b)          |  | Certification Pursuant to 18 U.S.C. Section 1350,
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.                                                                                                                                              

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SIGNATURE




|              |  |                                                                                                
|------------- |  | -----------------------------------------------------------------------------------------------
|              |  | Delphi Corporation-----------------------------------------------
    (Registrant)             
|             
|June 30, 2005 |  | /s/ John D. Sheehan                                                                            
|              |  |                                                                                                
|              |  | John D. Sheehan
    Acting Chief Financial Officer,
    Chief Accounting Officer and Controller

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EXHIBIT INDEX


|        |    |              |  |                                                                                                                                             
|------- | -- | ------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |             
|Number  |    | Exhibit Name
|        |    |             
|        | 31 | (a)          |  | Certification Pursuant to Exchange Act
    Rules 13a-14(a)/15d-14(a), adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.
|       
|        | 31 | (b)          |  | Certification Pursuant to Exchange Act
    Rules 13a-14(a)/15d-14(a), adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.
|       
|        | 32 | (a)          |  | Certification Pursuant to 18 U.S.C. Section 1350,
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.                
|       
|        | 32 | (b)          |  | Certification Pursuant to 18 U.S.C. Section 1350,
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.