##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549-1004


FORM 10-Q

| |  |                                                                                           
| |  | ------------------------------------------------------------------------------------------
| |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE ,
	SECURITIES EXCHANGE ACT OF 1934
|
| |  | For the quarterly period ended March 31, 2001                                             
| |  | OR                                                                                        
| |  | 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 AUTOMOTIVE SYSTEMS CORPORATION

(Exact name of registrant as specified in its
charter)


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

(248) 813-2000

(Registrants telephone number, including
area code)


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

As of March 31, 2001, there were 559,887,906 outstanding
shares of the registrants $0.01 par value common
stock.



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TABLE OF CONTENTS



|                                                                                              |                                                   |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------- | ------------------------------------------------- |  |  |  |  |  |  | 
|INDEX                                                                                        
|ITEM 1. FINANCIAL STATEMENTS                                                                 
|                                                                                              | CONSOLIDATED STATEMENTS OF INCOME (Unaudited)    
|                                                                                              | CONSOLIDATED BALANCE SHEETS                      
|                                                                                              | CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)                                       
|ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|ITEM 1. LEGAL PROCEEDINGS                                                                    
|ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURE                                                                                    
|2001 First Quarter Financial Results                                                         



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DELPHI AUTOMOTIVE SYSTEMS CORPORATION






INDEX


|          |  |                                                                                                       |    |      |    | 
|--------- |  | ----------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|          |  |                                                                                                       |    | Page
|          |  |                                                                                                       |    |     
|          |  | Part I  Financial Information                                                                        |    |      |    | 
|Item 1.   |  | Financial Statements                                                                                  |    |      |    | 
|         
|         
|         
|         
|          |  | Consolidated Statements of Income (Unaudited) for the Three
	Months
	Ended March 31, 2001 and 2000    |    |      | 3  | 
|         
|         
|         
|         
|          |  | Consolidated Balance Sheets at March 31, 2001 (Unaudited)
	and
	December 31, 2000                     |    |      | 4  | 
|         
|         
|         
|         
|          |  | Consolidated Statements of Cash Flows (Unaudited)
	for the Three Months ended March 31, 2001 and 2000 |    |      | 5  | 
|         
|         
|         
|         
|          |  | Notes to Consolidated Financial Statements (Unaudited)                                                |    |      | 6  | 
|         
|         
|         
|         
|Item 2.   |  | Managements Discussion and Analysis of Financial Condition
	and Results of Operations                |    |      | 12 | 
|         
|         
|         
|         
|Item 3.   |  | Quantitative and Qualitative Disclosures About Market Risk                                            |    |      | 17 | 
|          |  | Part II  Other Information                                                                           |    |      |    | 
|         
|         
|         
|         
|Item 1.   |  | Legal Proceedings                                                                                     |    |      | 18 | 
|         
|         
|         
|         
|Item 6.   |  | Exhibits and Reports on Form 8-K                                                                      |    |      | 18 | 
|         
|         
|         
|         
|Signature |  |                                                                                                       | 19 |     

2



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##### Table of Contents



PART I.  FINANCIAL INFORMATION






ITEM 1.  FINANCIAL STATEMENTS


DELPHI AUTOMOTIVE SYSTEMS CORPORATION






CONSOLIDATED STATEMENTS OF INCOME (Unaudited)


|                                                     |                                                                   |                          |       |       |       |   |      |       |       | 
|---------------------------------------------------- | ----------------------------------------------------------------- | ------------------------ | ----- | ----- | ----- | - | ---- | ----- | ----- | 
|                                                     |                                                                   |                         
|                                                     |                                                                   | Three Months Ended      
|                                                     |                                                                   | March 31,               
|                                                     |                                                                   |                         
|                                                     |                                                                   | 2001                     |       | 2000 
|                                                     |                                                                   |                          |       |      
|                                                     |                                                                   |                         
|                                                     |                                                                   | (in millions, except per
|                                                     |                                                                   | share amounts)          
|                                                    
|                                                    
|                                                    
|                                                    
|Net sales:                                           |                                                                   |                          |       |       |       |   |      |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | General Motors and affiliates                                     |                          | $     | 4,366 |       |   | $    | 5,570 |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Other customers                                                   |                          |       | 2,169 |       |   |      | 2,234 |      
|                                                     |                                                                   |                          |       |       |       |   |      |      
|                                                     |                                                                   | Total net sales          |       |       | 6,535 |   |      |       | 7,804 | 
|                                                     |                                                                   |                          |       |       |       |   |      |      
|Less operating expenses:                             |                                                                   |                          |       |       |       |   |      |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Cost of sales, excluding items listed below                       |                          |       | 5,901 |       |   |      | 6,596 |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Selling, general and administrative                               |                          |       | 378   |       |   |      | 459   |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Depreciation and amortization                                     |                          |       | 317   |       |   |      | 232   |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Restructuring (Note 2)                                            |                          |       | 536   |       |   |      |      |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Acquisition-related in-process research and development
	(Note 3) |                          |       |      |       |   |      | 51    |      
|                                                     |                                                                   |                          |       |       |       |   |      |      
|                                                     |                                                                   | Total operating expenses |       |       | 7,132 |   |      |       | 7,338 | 
|                                                     |                                                                   |                          |       |       |       |   |      |      
|Operating (loss) income                              |                                                                   |                          | (597  | )     |       |   | 466  |      
|                                                    
|                                                    
|                                                    
|                                                    
|Less interest expense                                |                                                                   |                          | 56    |       |       |   | 40   |      
|                                                    
|                                                    
|                                                    
|                                                    
|Other (expense) income, net                          |                                                                   |                          | (3    | )     |       |   | 34   |      
|                                                     |                                                                   |                          |       |       |       |   |      |      
|(Loss) income before income taxes                    |                                                                   |                          | (656  | )     |       |   | 460  |      
|                                                    
|                                                    
|                                                    
|                                                    
|Income tax (benefit) expense                         |                                                                   |                          | (227  | )     |       |   | 170  |      
|                                                     |                                                                   |                          |       |       |       |   |      |      
|Net (loss) income                                    |                                                                   | $                        | (429  | )     |       | $ | 290  |      
|                                                     |                                                                   |                          |       |       |       |   |      |      
|(Loss) earnings per share (Note 1) Basic and diluted |                                                                   | $                        | (0.77 | )     |       | $ | 0.51 |      
|                                                     |                                                                   |                          |       |       |       |   |      |      

See notes to consolidated financial statements.

3



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##### Table of Contents



DELPHI AUTOMOTIVE SYSTEMS CORPORATION






CONSOLIDATED BALANCE SHEETS


|                                           |                                                                                                             |                               |                            |              |       |        |        |       |       |        | 
|------------------------------------------ | ----------------------------------------------------------------------------------------------------------- | ----------------------------- | -------------------------- | ------------ | ----- | ------ | ------ | ----- | ----- | ------ | 
|                                           |                                                                                                             | March 31,                     |                            |             
|                                           |                                                                                                             | 2001                          |                            | December 31,
|                                           |                                                                                                             | (Unaudited)                   |                            | 2000        
|                                           |                                                                                                             |                               |                            |             
|                                           |                                                                                                             |                              
|                                           |                                                                                                             | (in millions)                
|                                          
|                                          
|                                          
|                                          
|ASSETS                                     |                                                                                                             |                               |                            |              |       |        |        |      
|                                          
|                                          
|                                          
|                                          
|Current assets:                            |                                                                                                             |                               |                            |              |       |        |        |      
|                                          
|                                          
|                                          
|                                          
|                                           | Cash and cash equivalents                                                                                   |                               | $                          | 704          |       |        | $      | 760   |      
|                                          
|                                          
|                                          
|                                          
|                                           | Accounts receivable, net:                                                                                   |                               |                            |              |       |        |        |       |      
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                                                             | General Motors and affiliates |                            |              | 3,178 |        |        |       | 3,308 |       
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                                                             | Other customers               |                            |              | 1,978 |        |        |       | 2,050 |       
|                                          
|                                          
|                                          
|                                          
|                                           | Inventories, net (Note 4)                                                                                   |                               |                            | 1,724        |       |        |        | 1,707 |      
|                                          
|                                          
|                                          
|                                          
|                                           | Deferred income taxes                                                                                       |                               |                            | 756          |       |        |        | 569   |      
|                                          
|                                          
|                                          
|                                          
|                                           | Prepaid expenses and other                                                                                  |                               |                            | 152          |       |        |        | 209   |      
|                                           |                                                                                                             |                               |                            |              |       |        |        |      
|                                           |                                                                                                             |                               | Total current assets       |              |       | 8,492  |        |       |       | 8,603  | 
|                                          
|                                          
|                                          
|                                          
|Long-term assets:                          |                                                                                                             |                               |                            |              |       |        |        |      
|                                          
|                                          
|                                          
|                                          
|                                           | Property, net                                                                                               |                               |                            | 5,545        |       |        |        | 5,718 |      
|                                          
|                                          
|                                          
|                                          
|                                           | Deferred income taxes                                                                                       |                               |                            | 2,083        |       |        |        | 2,043 |      
|                                          
|                                          
|                                          
|                                          
|                                           | Other                                                                                                       |                               |                            | 2,435        |       |        |        | 2,157 |      
|                                           |                                                                                                             |                               |                            |              |       |        |        |      
|Total assets                               |                                                                                                             | $                             | 18,555                     |              |       | $      | 18,521 |      
|                                           |                                                                                                             |                               |                            |              |       |        |        |      
|                                          
|LIABILITIES AND STOCKHOLDERS EQUITY       |                                                                                                             |                               |                            |              |       |        |        |      
|                                          
|                                          
|                                          
|                                          
|Current liabilities:                       |                                                                                                             |                               |                            |              |       |        |        |      
|                                          
|                                          
|                                          
|                                          
|                                           | Notes payable and current portion of long-term debt                                                         |                               | $                          | 1,477        |       |        | $      | 1,559 |      
|                                          
|                                          
|                                          
|                                          
|                                           | Accounts payable                                                                                            |                               |                            | 2,895        |       |        |        | 2,871 |      
|                                          
|                                          
|                                          
|                                          
|                                           | Restructuring obligations (Note 2)                                                                          |                               |                            | 486          |       |        |        |      |      
|                                          
|                                          
|                                          
|                                          
|                                           | Accrued liabilities                                                                                         |                               |                            | 1,597        |       |        |        | 1,813 |      
|                                           |                                                                                                             |                               |                            |              |       |        |        |      
|                                           |                                                                                                             |                               | Total current liabilities  |              |       | 6,455  |        |       |       | 6,243  | 
|                                          
|                                          
|                                          
|                                          
|Long-term liabilities:                     |                                                                                                             |                               |                            |              |       |        |        |      
|                                          
|                                          
|                                          
|                                          
|                                           | Long-term debt                                                                                              |                               |                            | 1,891        |       |        |        | 1,623 |      
|                                          
|                                          
|                                          
|                                          
|                                           | Postretirement benefits other than pensions                                                                 |                               |                            | 4,679        |       |        |        | 4,573 |      
|                                          
|                                          
|                                          
|                                          
|                                           | Other                                                                                                       |                               |                            | 2,308        |       |        |        | 2,316 |      
|                                           |                                                                                                             |                               |                            |              |       |        |        |      
|                                           |                                                                                                             |                               | Total liabilities          |              |       | 15,333 |        |       |       | 14,755 | 
|                                           |                                                                                                             |                               |                            |              |       |        |        |      
|Stockholders equity (Note 6):             |                                                                                                             |                               |                            |              |       |        |        |      
|                                          
|                                          
|                                          
|                                          
|                                           | Common stock, $0.01 par value, 1,350 million shares
	authorized, 565 million shares issued in 2001 and 2000 |                               |                            | 6            |       |        |        | 6     |      
|                                          
|                                          
|                                          
|                                          
|                                           | Additional paid-in capital                                                                                  |                               |                            | 2,450        |       |        |        | 2,450 |      
|                                          
|                                          
|                                          
|                                          
|                                           | Retained earnings                                                                                           |                               |                            | 1,401        |       |        |        | 1,869 |      
|                                          
|                                          
|                                          
|                                          
|                                           | Other comprehensive income                                                                                  |                               |                            | (541         | )     |        |        | (463  | )    
|                                          
|                                          
|                                          
|                                          
|                                           | Treasury stock, at cost (5.1 million and 5.2 million
	shares in 2001 and 2000, respectively)                |                               |                            | (94          | )     |        |        | (96   | )    
|                                           |                                                                                                             |                               |                            |              |       |        |        |      
|                                           |                                                                                                             |                               | Total stockholders equity |              |       | 3,222  |        |       |       | 3,766  | 
|                                           |                                                                                                             |                               |                            |              |       |        |        |      
|Total liabilities and stockholders equity |                                                                                                             | $                             | 18,555                     |              |       | $      | 18,521 |      
|                                           |                                                                                                             |                               |                            |              |       |        |        |      

See notes to consolidated financial statements.

4



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##### Table of Contents



DELPHI AUTOMOTIVE SYSTEMS CORPORATION






CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


|                                                                  |                                                                                                      |                                                         |                                                     |      |      |      |       |       |        |        |  
|----------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------- | ------------------------------------------------------- | --------------------------------------------------- | ---- | ---- | ---- | ----- | ----- | ------ | ------ | -
|                                                                  |                                                                                                      |                                                        
|                                                                  |                                                                                                      | Three Months Ended                                     
|                                                                  |                                                                                                      | March 31,                                              
|                                                                  |                                                                                                      |                                                        
|                                                                  |                                                                                                      | 2001                                                    |                                                     | 2000
|                                                                  |                                                                                                      |                                                         |                                                     |     
|                                                                  |                                                                                                      |                                                        
|                                                                  |                                                                                                      | (in millions)                                          
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Cash flows from operating activities:                             |                                                                                                      |                                                         |                                                     |      |      |      |       |      
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Net (loss) income                                                                                    |                                                         | $                                                   | (429 | )    |      | $     | 290   |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Adjustments to reconcile net (loss) income to net cash provided
	by (used in) operating activities:  |                                                         |                                                     |      |      |      |       |       |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  |                                                                                                      | Depreciation and amortization                           |                                                     |      | 317  |      |       |       | 232    |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  |                                                                                                      | Acquisition-related in-process research and development |                                                     |      |     |      |       |       | 51     |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Changes in operating assets and liabilities:                                                         |                                                         |                                                     |      |      |      |       |       |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  |                                                                                                      | Accounts receivable, net                                |                                                     |      | 209  |      |       |       | (295   | )     
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  |                                                                                                      | Inventories, net                                        |                                                     |      | (11  | )    |       |       | 71     |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  |                                                                                                      | Prepaid expenses and other                              |                                                     |      | 53   |      |       |       | 70     |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  |                                                                                                      | Deferred income taxes                                   |                                                     |      | (235 | )    |       |       | 121    |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  |                                                                                                      | Accounts payable                                        |                                                     |      | 23   |      |       |       | 98     |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  |                                                                                                      | Restructuring obligations                               |                                                     |      | 486  |      |       |       |       |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  |                                                                                                      | Accrued liabilities                                     |                                                     |      | (215 | )    |       |       | (1,314 | )     
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  |                                                                                                      | Other long-term liabilities                             |                                                     |      | 104  |      |       |       | 160    |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  |                                                                                                      | Other                                                   |                                                     |      | (6   | )    |       |       | (4     | )     
|                                                                  |                                                                                                      |                                                         |                                                     |      |      |      |       |      
|                                                                  |                                                                                                      |                                                         | Net cash provided by (used in) operating activities |      |      | 296  |       |       |        | (520   | )
|                                                                  |                                                                                                      |                                                         |                                                     |      |      |      |       |      
|Cash flows from investing activities:                             |                                                                                                      |                                                         |                                                     |      |      |      |       |      
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Capital expenditures                                                                                 |                                                         |                                                     | (194 | )    |      |       | (275  | )     
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Cost of acquisitions, net of cash acquired                                                           |                                                         |                                                     | (263 | )    |      |       | (897  | )     
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Other                                                                                                |                                                         |                                                     | 37   |      |      |       | (28   | )     
|                                                                  |                                                                                                      |                                                         |                                                     |      |      |      |       |      
|                                                                  |                                                                                                      |                                                         | Net cash used in investing activities               |      |      | (420 | )     |       |        | (1,200 | )
|                                                                  |                                                                                                      |                                                         |                                                     |      |      |      |       |      
|Cash flows from financing activities:                             |                                                                                                      |                                                         |                                                     |      |      |      |       |      
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Net proceeds from issuance of debt securities and borrowings
	under credit facilities and other debt |                                                         |                                                     | 185  |      |      |       | 1,155 |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Dividend payments                                                                                    |                                                         |                                                     | (39  | )    |      |       | (39   | )     
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Purchase of treasury stock                                                                           |                                                         |                                                     |     |      |      |       | (7    | )     
|                                                                  |                                                                                                      |                                                         |                                                     |      |      |      |       |      
|                                                                  |                                                                                                      |                                                         | Net cash provided by financing activities           |      |      | 146  |       |       |        | 1,109  |  
|                                                                  |                                                                                                      |                                                         |                                                     |      |      |      |       |      
|Effect of exchange rate fluctuations on cash and cash equivalents |                                                                                                      |                                                         | (78                                                 | )    |      |      | (19   | )    
|                                                                  |                                                                                                      |                                                         |                                                     |      |      |      |       |      
|Decrease in cash and cash equivalents                             |                                                                                                      |                                                         | (56                                                 | )    |      |      | (630  | )    
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Cash and cash equivalents at beginning of period                  |                                                                                                      |                                                         | 760                                                 |      |      |      | 1,546 |      
|                                                                  |                                                                                                      |                                                         |                                                     |      |      |      |       |      
|Cash and cash equivalents at end of period                        |                                                                                                      | $                                                       | 704                                                 |      |      | $    | 916   |      
|                                                                  |                                                                                                      |                                                         |                                                     |      |      |      |       |      

See notes to consolidated financial statements.

5



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##### Table of Contents



DELPHI AUTOMOTIVE SYSTEMS CORPORATION






NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


1.  BASIS OF PRESENTATION

General  Delphi Automotive Systems
Corporation (Delphi) is a world-leading supplier of
vehicle electronics, transportation components, integrated
systems and modules. The consolidated financial statements and
notes thereto included in this report should be read in
conjunction with our consolidated financial statements and notes
thereto included in our 2000 Annual Report on
Form 10-K filed with the Securities and Exchange
Commission. The consolidated financial statements include the
accounts of Delphi and its wholly owned and majority owned
subsidiaries.

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

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

Earnings Per Share  Basic earnings per
share amounts were computed using weighted average shares
outstanding for each respective period. Diluted earnings per
share also reflect the weighted average impact from the date of
issuance of all potentially dilutive securities during the
periods presented, except for the three months ended
March 31, 2001, where such inclusion would have had an
antidilutive effect. Actual weighted average shares outstanding
used in calculating basic and diluted earnings per share were:

|                                    |                            |                    |         |         |  |  |         |         | 
|----------------------------------- | -------------------------- | ------------------ | ------- | ------- |  |  | ------- | ------- | 
|                                    |                            |                   
|                                    |                            | Three Months Ended
|                                    |                            | March 31,         
|                                    |                            |                   
|                                    |                            | 2001               |         | 2000   
|                                    |                            |                    |         |        
|                                    |                            |                   
|                                    |                            | (in thousands)    
|                                   
|                                   
|                                   
|                                   
|Weighted average shares outstanding |                            |                    | 559,835 |         |  |  | 562,546 |        
|                                   
|                                   
|                                   
|                                   
|Effect of dilutive securities       |                            |                    |        |         |  |  | 2,976   |        
|                                    |                            |                    |         |         |  |  |         |        
|                                    | Diluted shares outstanding |                    |         | 559,835 |  |  |         | 565,522 | 
|                                    |                            |                    |         |         |  |  |         |        

The Board of Directors declared a dividend on Delphi common
stock of $0.07 per share on March 7, 2001, payable on
April 16, 2001 to holders of record on March 19, 2001.
The dividend declared on December 6, 2000 was paid on
January 18, 2001.

2.  RESTRUCTURING AND IMPAIRMENT CHARGES

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

The restructuring charge of $536 million includes
$492 million of employee costs (including postemployment
benefits and special termination pension benefits) and
$44 million in other exit costs (principally lease
termination and contract cancellation payments). The plans
entail the elimination of approximately 11,500 positions
worldwide, comprised of 5,600 U.S. hourly employees, 2,000 U.S.
salaried employees, and 3,900 employees in non-U.S. locations.
Employees at impacted locations have been informed of the
restructuring initiatives and benefits available to them under
applicable benefit plans or related contractual provisions have
been communicated. Affected employees will leave Delphi using a
mixture of voluntary and involuntary separation programs, early
retirements, social plan programs and layoffs. Excluding special
termination pension benefits, we expect to pay approximately
$450 million in cash related to the restructuring plans.
During the first quarter of 2001, we paid $49 million
related to

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We have evaluated the carrying value of the long-lived assets at
each impacted site for impairment. The carrying value of a
long-lived asset is considered impaired when the anticipated
separately identifiable undiscounted cash flows from that asset
are less than the carrying value of the asset. We recorded
impairment losses of $63 million in depreciation and
amortization, primarily related to machinery and equipment held
for use in the Safety, Thermal and Electrical Architecture
sector. The impairment losses were determined based on the
amount by which the carrying value exceeded the fair market
value of the asset. Fair market value was determined primarily
using the anticipated discounted cash flows.

In addition, we recorded impairment charges of $18 million
related to permanent declines in the value of our investments in
certain joint ventures. These charges, included in other
expense, primarily related to certain Korean joint ventures as
more fully explained in Note 8.

3.  ACQUISITIONS

Delphi Mechatronic
Systems

On March 30, 2001, Delphi acquired substantially all of the
assets and assumed certain liabilities of Eaton
Corporations Vehicle Switch/ Electronics Division, now
Delphi Mechatronic Systems, for approximately $0.3 billion.
The acquisition was funded with short-term borrowings under
Delphis existing commercial paper program as well as
uncommitted lines of credit, which we expect to refinance on a
long-term basis. The purchase price is subject to adjustment for
certain post-closing events including governmental approval of
the transfer of certain assets in Poland. Delphi Mechatronic
Systems is a global producer of electromechanical switches,
mechatronic modules and body electronics for the light vehicle
industry with 2000 sales of $320 million, primarily in
North America. Delphi Mechatronic Systems technology,
complemented by our extensive electrical and electronic
integration capabilities, will enable us to offer customers new
solutions in modular cockpits, doors and overhead systems. The
Delphi Mechatronic Systems acquisition supports our goals of
enhancing our technology, diversifying our customer base and
geographic footprint, and leveraging our system integration
capabilities. The acquisition is accounted for using the
purchase method of accounting and therefore, the purchase price
will be allocated to assets acquired and liabilities assumed
based on estimated fair values. The final purchase price
allocation has not been determined. As the transaction closed on
March 30, 2001, there was no impact on our first quarter
2001 results of operations.

Delphi Diesel Systems

In January 2000, Delphi purchased Lucas Diesel Systems, now
Delphi Diesel Systems, for $0.8 billion, net of cash
acquired. Delphi Diesel Systems is one of the worlds
largest producers of diesel fuel-injection systems for light,
medium and heavy-duty vehicles. The acquisition was accounted
for using the purchase method of accounting and, therefore, the
purchase price was allocated to assets acquired and liabilities
assumed based on estimated fair values. The results of
operations of Delphi Diesel Systems are included in our
consolidated financial statements from the acquisition date. The
$345 million excess of the consideration given over the
estimated fair value of net assets acquired has been recorded as
goodwill and is being amortized over 20 years. In
conjunction with the acquisition of Delphi Diesel Systems during
the first quarter of 2000, we recognized a one-time, non-cash
charge to earnings of $51 million ($32 million
after-tax) resulting from acquisition-related in-process
research and development that had not reached technological
feasibility and had no alternative use.

Delphi Lockheed
Automotive

In February 2000, Delphi purchased Automotive Products
Distribution Services, now Delphi Lockheed Automotive, for
$63 million. Delphi Lockheed Automotive is a leading
European distributor of automotive aftermarket products for
passenger cars and commercial vehicles.

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The pro forma effects of these acquisitions would not be
significantly different from reported results.

4.  INVENTORIES, NET

Inventory, net consisted of:

|                                                                            |                           |               |       |              |  |   |       |       | 
|--------------------------------------------------------------------------- | ------------------------- | ------------- | ----- | ------------ |  | - | ----- | ----- | 
|                                                                            |                           | March 31,     |       | December 31,
|                                                                            |                           | 2001          |       | 2000        
|                                                                            |                           |               |       |             
|                                                                            |                           |              
|                                                                            |                           | (in millions)
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Productive material, work-in-process and supplies                           |                           | $             | 1,712 |              |  | $ | 1,689 |      
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Finished goods                                                              |                           |               | 308   |              |  |   | 314   |      
|                                                                            |                           |               |       |              |  |   |       |      
|                                                                            | Total inventories at FIFO |               |       | 2,020        |  |   |       | 2,003 | 
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Less allowance to adjust the carrying value of certain
	inventories to LIFO |                           |               | (296  | )            |  |   | (296  | )    
|                                                                            |                           |               |       |              |  |   |       |      
|                                                                            | Total inventories, net    |               | $     | 1,724        |  |   | $     | 1,707 | 
|                                                                            |                           |               |       |              |  |   |       |      

5.  DERIVATIVES AND HEDGING ACTIVITIES

Effective January 1, 2001, Delphi adopted Statement of
Financial Accounting Standards (SFAS) No. 133,
Accounting for Derivative Instruments and Hedging
Activities, as amended, which requires that all derivative
instruments be reported on the balance sheet at fair value and
establishes criteria for designation and effectiveness of
transactions entered into for hedging purposes. The cumulative
effect of adopting SFAS No. 133 was to increase other
comprehensive income (OCI) by $14 million,
after-tax. The effect on net income was not significant,
primarily because the hedges in place as of January 1, 2001
qualified for hedge accounting treatment and were highly
effective.

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

Delphi has foreign currency exchange exposure from buying and
selling in currencies other than the local currencies of our
operating units. The primary purpose of our foreign currency
hedging activities is to manage the volatility associated with
forecasted foreign currency purchases and sales. Principal
currencies hedged include the Mexican peso, Canadian dollar,
European euro, Japanese yen, Singapore dollar, and Brazilian
real. We primarily utilize forward exchange contracts with
maturities of less than 18 months, which qualify as cash
flow hedges.

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

In order to manage the interest rate risk associated with our
debt portfolio, we enter into derivative transactions to manage
our exposure to changes in interest rates. Our interest rate
derivatives mature within the next six months and qualify as
cash flow hedges.

Gains and losses on derivatives qualifying as cash flow hedges
are recorded in OCI to the extent that hedges are effective
until the underlying transactions are recognized in earnings.
Net gains included in OCI as of March 31, 2001, including
the transition adjustment, were $9 million after-tax
($14 million

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In 2000, we entered into certain commodity derivative
instruments to protect against commodity price changes related
to forecasted inventory purchases. Although these derivatives
are effective as economic hedges of our commodity price
exposures, due to differences in pricing terms between the
derivative instruments and the forecasted purchases, the SFAS
No. 133 effectiveness threshold was not met. The change in
fair value of these instruments was included in cost of sales as
of March 31, 2001, but was not significant. These contracts
settle during 2001. We have changed the pricing terms of the
related commodity purchases such that future hedges are expected
to qualify for hedge accounting.

6.  STOCKHOLDERS EQUITY

Changes in stockholders equity for the three months ended
March 31, 2001 were:

|                           |                                                                        |                            |     |            |  |          |   |               |  |          |       |               |  |        |       |      |   |   |      |     |   |   |     |   |  |   |       |      |      |  
|-------------------------- | ---------------------------------------------------------------------- | -------------------------- | --- | ---------- |  | -------- | - | ------------- |  | -------- | ----- | ------------- |  | ------ | ----- | ---- | - | - | ---- | --- | - | - | --- | - |  | - | ----- | ---- | ---- | -
|                           |                                                                        |                            |     |            |  |          |   |               |  |          |       |              
|                           |                                                                        | Common Stock               |     | Additional |  |          |   | Other         |  |          |       | Total        
|                           |                                                                        |                            |     | Paid-in    |  | Retained |   | Comprehensive |  | Treasury |       | Stockholders
|                           |                                                                        | Shares                     |     | Amount     |  | Capital  |   | Earnings      |  | Income   |       | Stock         |  | Equity
|                           |                                                                        |                            |     |            |  |          |   |               |  |          |       |               |  |       
|                           |                                                                        |                           
|                           |                                                                        | (in millions)             
|                          
|                          
|                          
|                          
|Balance at January 1, 2001 |                                                                        |                            | 565 |            |  | $        | 6 |               |  | $        | 2,450 |               |  | $      | 1,869 |      |   | $ | (463 | )   |   | $ | (96 | ) |  | $ | 3,766 |     
|                          
|                          
|                          
|                          
|                           | Net loss                                                               |                            |     |            |  |          |   |               |  |          |       |               |  |        |       | (429 | ) |   |      |     |   |   |     |   |  |   |       | (429 | )   
|                          
|                          
|                          
|                          
|                           | Foreign currency translation adjustments, net of tax                   |                            |     |            |  |          |   |               |  |          |       |               |  |        |       |      |   |   |      | (87 | ) |   |     |   |  |   |       | (87  | )   
|                          
|                          
|                          
|                          
|                           | Cumulative effect of accounting change, net of tax (Note 5)            |                            |     |            |  |          |   |               |  |          |       |               |  |        |       |      |   |   |      | 14  |   |   |     |   |  |   |       | 14   |     
|                          
|                          
|                          
|                          
|                           | Net change in unrecognized gain on derivative instruments, net
	of tax |                            |     |            |  |          |   |               |  |          |       |               |  |        |       |      |   |   |      | (5  | ) |   |     |   |  |   |       | (5   | )   
|                           |                                                                        |                            |     |            |  |          |   |               |  |          |       |               |  |        |       |      |   |   |      |     |   |   |     |   |  |   |       |     
|                           |                                                                        | Total comprehensive income |     |            |  |          |   |               |  |          |       |               |  |        |       |      |   |   |      |     |   |   |     |   |  |   |       |      | (507 | )
|                          
|                          
|                          
|                          
|                           | Net shares reacquired for employee benefit plans                       |                            |     |            |  |          |   |               |  |          |       |               |  |        |       |      |   |   |      |     |   |   |     | 2 |  |   |       | 2    |     
|                          
|                          
|                          
|                          
|                           | Dividends                                                              |                            |     |            |  |          |   |               |  |          |       |               |  |        |       | (39  | ) |   |      |     |   |   |     |   |  |   |       | (39  | )   
|                           |                                                                        |                            |     |            |  |          |   |               |  |          |       |               |  |        |       |      |   |   |      |     |   |   |     |   |  |   |       |     
|Balance at March 31, 2001  |                                                                        |                            | 565 |            |  | $        | 6 |               |  | $        | 2,450 |               |  | $      | 1,401 |      |   | $ | (541 | )   |   | $ | (94 | ) |  | $ | 3,222 |     
|                           |                                                                        |                            |     |            |  |          |   |               |  |          |       |               |  |        |       |      |   |   |      |     |   |   |     |   |  |   |       |     

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7.  SEGMENT REPORTING

Selected information regarding Delphis product sectors
follows:

|                            |                                |                                     |   |               |     |       |   |              |       |            |   |          |       |       |   |       |       |  |   |       |       |  |   |      |      |   |   |       |       | 
|--------------------------- | ------------------------------ | ----------------------------------- | - | ------------- | --- | ----- | - | ------------ | ----- | ---------- | - | -------- | ----- | ----- | - | ----- | ----- |  | - | ----- | ----- |  | - | ---- | ---- | - | - | ----- | ----- | 
|                            |                                |                                     |   |               |     |       |   |              |       |           
|                            |                                | Electronics & Mobile Communications |   |               |     |       |   |              |       |           
|                            |                                |                                     |   |               |     |       |   |              |       |           
|                            |                                |                                     |   | Other         |     |       |   | Safety,      |       |            |   |          |       |      
|                            |                                |                                     |   | Electronics & |     |       |   | Thermal &    |       |            |   |          |       |      
|                            |                                | Mobile                              |   | Mobile        |     |       |   | Electrical   |       | Dynamics & |   |          |       |      
|                            |                                | MultiMedia(a)                       |   | Communication |     | Total |   | Architecture |       | Propulsion |   | Other(b) |       | Total
|                            |                                |                                     |   |               |     |       |   |              |       |            |   |          |       |      
|                            |                                |                                    
|                            |                                | (in millions)                      
|                           
|                           
|                           
|                           
|For the Three Months Ended: |                                |                                     |   |               |     |       |   |              |       |            |   |          |       |       |   |       |       |  |   |       |       |  |   |     
|March 31, 2001              |                                |                                     |   |               |     |       |   |              |       |            |   |          |       |       |   |       |       |  |   |       |       |  |   |      |      |   |   |      
|                           
|                           
|                           
|                           
|                            | Net sales to GM and affiliates |                                     | $ | 101           |     |       | $ | 705          |       |            | $ | 806      |       |       | $ | 1,388 |       |  | $ | 2,172 |       |  | $ |     |      |   | $ | 4,366 |      
|                           
|                           
|                           
|                           
|                            | Net sales to other customers   |                                     |   | 10            |     |       |   | 267          |       |            |   | 277      |       |       |   | 829   |       |  |   | 956   |       |  |   | 107  |      |   |   | 2,169 |      
|                           
|                           
|                           
|                           
|                            | Inter-sector net sales         |                                     |   |              |     |       |   | 123          |       |            |   | 123      |       |       |   | 31    |       |  |   | 50    |       |  |   | (204 | )    |   |   |      |      
|                            |                                |                                     |   |               |     |       |   |              |       |            |   |          |       |       |   |       |       |  |   |       |       |  |   |      |      |   |   |      
|                            |                                | Total net sales                     |   | $             | 111 |       |   | $            | 1,095 |            |   | $        | 1,206 |       |   | $     | 2,248 |  |   | $     | 3,178 |  |   | $    | (97  | ) |   | $     | 6,535 | 
|                            |                                |                                     |   |               |     |       |   |              |       |            |   |          |       |       |   |       |       |  |   |       |       |  |   |      |      |   |   |      
|                            | Operating income (loss)        |                                     | $ | (3            | )   |       | $ | 67           | (c)   |            | $ | 64       | (c)   |       | $ | 49    | (c)   |  | $ | (100  | )(c)  |  | $ | (11  | )(c) |   | $ | 2     | (c)  
|                            |                                |                                     |   |               |     |       |   |              |       |            |   |          |       |       |   |       |       |  |   |       |       |  |   |      |      |   |   |      
|March 31, 2000              |                                |                                     |   |               |     |       |   |              |       |            |   |          |       |       |   |       |       |  |   |       |       |  |   |      |      |   |   |      
|                           
|                           
|                           
|                           
|                            | Net sales to GM and affiliates |                                     | $ | 30            |     |       | $ | 993          |       |            | $ | 1,023    |       |       | $ | 1,812 |       |  | $ | 2,734 |       |  | $ | 1    |      |   | $ | 5,570 |      
|                           
|                           
|                           
|                           
|                            | Net sales to other customers   |                                     |   | 2             |     |       |   | 259          |       |            |   | 261      |       |       |   | 846   |       |  |   | 1,041 |       |  |   | 86   |      |   |   | 2,234 |      
|                           
|                           
|                           
|                           
|                            | Inter-sector net sales         |                                     |   |              |     |       |   | 108          |       |            |   | 108      |       |       |   | 34    |       |  |   | 46    |       |  |   | (188 | )    |   |   |      |      
|                            |                                |                                     |   |               |     |       |   |              |       |            |   |          |       |       |   |       |       |  |   |       |       |  |   |      |      |   |   |      
|                            |                                | Total net sales                     |   | $             | 32  |       |   | $            | 1,360 |            |   | $        | 1,392 |       |   | $     | 2,692 |  |   | $     | 3,821 |  |   | $    | (101 | ) |   | $     | 7,804 | 
|                            |                                |                                     |   |               |     |       |   |              |       |            |   |          |       |       |   |       |       |  |   |       |       |  |   |      |      |   |   |      
|                            | Operating income (loss)        |                                     | $ | (8            | )   |       | $ | 149          |       |            | $ | 141      |       |       | $ | 207   |       |  | $ | 184   | (d)   |  | $ | (15  | )    |   | $ | 517   | (d)  
|                            |                                |                                     |   |               |     |       |   |              |       |            |   |          |       |       |   |       |       |  |   |       |       |  |   |      |      |   |   |      



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Information for the Mobile MultiMedia business line within the
	Electronics & Mobile Communication sector is separately
	disclosed due to the strategic importance of this high-tech
	business line and its usefulness in understanding sector net
	sales and operating results. Mobile Multimedia develops products
	designed to bring the internet, telematics, entertainment and
	mobile communication technologies into vehicles.
|   
|(b) | Other includes activity not allocated to the product sectors and
	elimination of inter-sector transactions.                                                                                                                                                                                                                                                                                                                          
|   
|(c) | Excludes restructuring and asset impairment charges of
	$78 million for Electronics & Mobile Communication,
	$214 million for Safety, Thermal & Electrical
	Architecture, $280 million for Dynamics & Propulsion
	and $27 million for Other.                                                                                                                                                                                         
|   
|(d) | Excludes the one-time, non-cash charge of $51 million
	resulting from acquisition-related in-process research and
	development.                                                                                                                                                                                                                                                                                                      

8.  COMMITMENTS AND CONTINGENCIES

Delphi is from time to time subject to various legal actions and
claims incidental to its business, including those arising out
of alleged defects, breach of contracts, product warranties,
employment-related matters and environmental matters. A few
customers have advised Delphi that they intend to pursue
warranty claims to a greater extent than previously. In
particular, although we settled certain pre-Separation warranty
claims with General Motors (GM) in September 2000,
GM has asserted higher levels of pre-Separation warranty claims.
We are challenging these claims. Accordingly, we cannot assure
you that the future costs of warranty claims by GM or other
customers will not be material. Although the outcome of these
discussions is not predictable with assurance, we believe our
established reserves are adequate to cover

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

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

In the normal course of business, we extend credit on open
account to our customers. From time to time, we also invest in
joint ventures with a variety of business partners. Although
Delphi is affected by the financial well-being of the automotive
industry as a whole, we believe that the credit risk associated
with trade receivables and investments in our joint ventures is
mitigated by our customer base and ongoing control procedures to
monitor the credit-worthiness of customers and business partners.

In November 2000, one customer/business partner entered into
corporate reorganization proceedings in Korea. As a result of
the reorganization, this customer/ business partners
obligations to its suppliers prior to November 2000 were legally
frozen. The terms and conditions of repayment for these frozen
amounts will be determined by the reorganization plan.
Delphis balance sheet as of March 31, 2001 includes
approximately $25 million of accounts receivable from this
customer/ business partner, primarily in the U.S. and Europe,
related to shipments prior to November 2000. In accordance with
the reorganization process, we submitted our claims for payment,
most of which were initially denied. We are actively seeking to
reinstate these claims, which we believe are valid.

Delphi also has investments of approximately $111 million
in Korean joint ventures that have significant sales to this
customer/business partner. During the first quarter of 2001, we
recognized a permanent decline in the value of these investments
of approximately $12 million. We are continuing to work
with the joint ventures to facilitate their ongoing operations
and believe that our investments as of March 31, 2001 are
recoverable. However, due to the significant uncertainty
surrounding the outcome of the reorganization discussed above,
the impact on our future results of operations and financial
condition could differ significantly from recorded estimates.

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ITEM 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL


CONDITION AND RESULTS OF OPERATIONS


Overview

In the first quarter of 2001, low vehicle production volumes in
North America, our largest market, presented a challenging
operating environment for Delphi. Reflecting a need to reduce
our long-term structural costs and to address approximately
$900 million of businesses under portfolio review, we took
certain specific actions in the first quarter of 2001 to reduce
our structural costs including the implementation of global
restructuring plans that are discussed in more detail below. We
also diversified our product base through the acquisition of
Eaton Corporations Vehicle Switch/ Electronics Division,
now Delphi Mechatronic Systems, for approximately
$0.3 billion. In a soft vehicle production environment, we
believe the keys to our success are to reduce our costs, address
our under-performing businesses and continue to aggressively
diversify and grow our customer base.

Global Restructuring Plans and Impairment Charges

As a result of uncertain industry conditions and the decision to
more rapidly implement Delphis long-term portfolio plans,
on March 29, 2001, Delphi announced global restructuring
plans designed to reduce structural costs, improve the earnings
power of Delphis portfolio of businesses and streamline
structure. The plans include intentions to sell, close or
consolidate nine plants, downsize the work force at more than 40
other facilities, and exit selected under-performing and
non-core products. The restructuring plans are expected to
reduce Delphi worldwide employment by approximately 11,500
positions. The plans include exiting businesses across all
sectors with sales totaling approximately $900 million,
representing approximately 20% of the $4 billion to
$5 billion of businesses that have been under
managements portfolio review. The actions comprising the
restructuring plans will take place within the next
12 months. In connection with the restructuring plans, we
recognized restructuring charges of approximately
$536 million in the first quarter of 2001. Delphi expects
to begin to realize the benefits of our restructuring actions in
the second half of 2001 and in even greater measure in 2002 and
beyond.

We also recorded asset impairment charges of $63 million
related to long-lived assets at the sites impacted by the
restructuring plans. In addition, we recorded impairment charges
of $18 million related to permanent declines in the value
of certain joint ventures. These investment impairment charges,
included in other expense, primarily related to certain Korean
joint ventures as more fully explained in Outlook.

As a result of these actions, we recorded total charges of
$617 million ($404 million after-tax).

Results of Operations

The following managements discussion and analysis of
financial condition and results of operations
(MD&A) should be read in conjunction with the
MD&A included in our Annual Report on Form 10-K for the
year ended December 31, 2000.

Three Months Ended
March 31, 2001 versus Three Months Ended March 31,
2000

Net Sales.Consolidated net sales and changes in net
sales by product sector and in total for the three months ended
March 31, 2001 and 2000 were:

|                                          |                                          |                                          |       |       |       |        |       |       |       |  |      |        |      |  
|----------------------------------------- | ---------------------------------------- | ---------------------------------------- | ----- | ----- | ----- | ------ | ----- | ----- | ----- |  | ---- | ------ | ---- | -
|                                          |                                          |                                          |       |      
|                                          |                                          | Three Months Ended                       |       |      
|                                          |                                          | March 31,                                |       |      
|                                          |                                          |                                          |       |      
|Product Sector                            |                                          | 2001                                     |       | 2000  |       | Change
|                                          |                                          |                                          |       |       |       |       
|                                          |                                          |                                         
|                                          |                                          | (in millions)                           
|Electronics & Mobile Communication        |                                          |                                          |       |       |       |        |       |       |       |  |      |       
|                                         
|                                         
|                                         
|                                         
|                                          | Mobile MultiMedia                        |                                          | $     | 111   |       |        | $     | 32    |       |  | $    | 79     |     
|                                         
|                                         
|                                         
|                                         
|                                          | Other Electronics & Mobile Communication |                                          |       | 1,095 |       |        |       | 1,360 |       |  |      | (265   | )   
|                                          |                                          |                                          |       |       |       |        |       |       |       |  |      |       
|                                          |                                          | Total Electronics & Mobile Communication |       |       | 1,206 |        |       |       | 1,392 |  |      |        | (186 | )
|                                         
|                                         
|                                         
|                                         
|                                         
|Safety, Thermal & Electrical Architecture |                                          |                                          | 2,248 |       |       |        | 2,692 |       |       |  | (444 | )     
|                                         
|                                         
|                                         
|                                         
|Dynamics & Propulsion                     |                                          |                                          | 3,178 |       |       |        | 3,821 |       |       |  | (643 | )     
|                                         
|                                         
|                                         
|                                         
|Other                                     |                                          |                                          | (97   | )     |       |        | (101  | )     |       |  | 4    |       
|                                          |                                          |                                          |       |       |       |        |       |       |       |  |      |       
|                                          | Consolidated net sales                   |                                          | $     | 6,535 |       |        | $     | 7,804 |       |  | $    | (1,269 | )   
|                                          |                                          |                                          |       |       |       |        |       |       |       |  |      |       

12



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Consolidated net sales for the first quarter of 2001 were
$6.5 billion compared to $7.8 billion for the same
period of 2000. Our reduced sales primarily reflect weak North
American vehicle production schedules, further softening of U.S.
aftermarket demand and year over year weaknesses in the European
euro. Net sales to General Motors (GM) declined by
$1.2 billion, principally due to reduced production volumes
in North America and our ongoing elimination of marginally
profitable and unprofitable product lines. Our non-GM sales
decreased by $65 million, principally due to the soft North
American vehicle market. Our net sales were also impacted by
continued price pressures that resulted in price reductions of
approximately $138 million, or 2.1% for the first quarter
of 2001. Mobile MultiMedia continued to generate strong sales
growth, increasing first quarter net sales from $32 million
in 2000 to $111 million in 2001, a 247% increase.

Gross Margin.Our gross margin was 9.7% for the first
quarter of 2001 compared to gross margin of 15.5% for the
comparable period of 2000. The decline reflects the negative
impact of inefficiencies resulting from uneven customer build
schedules, overall lower production volumes, customer-driven
price reductions and less favorable mix content per vehicle.

Selling, General and Administrative.Selling, general and
administrative expenses of $378 million, 5.8% of first
quarter 2001 total net sales, decreased by $81 million or
18% from the first quarter of 2000. The decrease primarily
results from aggressive cost reduction efforts.

Depreciation and Amortization.The increase in
depreciation and amortization, compared to 2000 amounts,
primarily represents long-lived asset write-downs of
$63 million recorded as part of the global restructuring
plans and the impact of ongoing capital expenditures. We
anticipate the restructuring plans and our expected lower 2001
spending levels will slightly reduce, but not significantly
change, our depreciation and amortization expense trend.

Restructuring.In the first quarter of 2001, Delphi
approved global restructuring plans which include
$492 million of employee costs (including postemployment
benefits and special termination pension benefits) and
$44 million in other exit costs (principally lease
termination and contract cancellation payments). Excluding
special termination pension benefits, we expect to pay
approximately $450 million in cash related to the
restructuring plans. During the first quarter of 2001, we paid
$49 million related to employee costs and $1 million
in other exit costs.

The plans entail the elimination of approximately 11,500
positions worldwide (5% percent of our global workforce),
comprised of 5,600 U.S. hourly employees (10% of U.S. hourly
employees), 2,000 U.S. salaried employees (11% of U.S. salaried
employees), and 3,900 employees in non-U.S. locations. As part
of the plans, Delphi will close plants located in Ande, France;
Betim, Minas Gerais, Brazil; Piracicaba, Brazil; Bochum,
Germany; Casoli, Italy; Southampton, UK; Fort Defiance, Arizona;
Robertsdale, Alabama; and Saginaw, Michigan. The plans also
entail downsizing our workforce in more than 40 other facilities
and exiting certain selected products. Employees at impacted
locations have been informed of the restructuring initiatives
and benefits available to them under applicable benefit plans or
related contractual provisions have been communicated. Affected
employees will leave Delphi using a mixture of voluntary and
involuntary separation programs, early retirements, social plan
programs and layoffs. As of March 31, 2001, approximately
2,000 employees had been separated under the plans. We expect to
begin to realize savings related to these headcount reductions
during the second half of 2001 with estimated ongoing annual net
savings growing in 2002 and 2003 to more than $300 million
(after-tax) by late-2003. These savings are expected to be
realized as reductions in cost of sales and selling, general and
administrative expense.

Acquisition-Related In-Process Research and Development.In conjunction with the acquisition of Delphi Diesel Systems
in the first quarter of 2000, we recognized a one-time, non-cash
charge to earnings of $51 million ($32 million
after-tax) resulting from acquisition-related in-process
research and development that had not reached technological
feasibility and had no alternative use.

Operating (Loss) Income.Operating loss was
$(597) million for the first quarter of 2001 compared to
operating income of $466 million for the first quarter of
2000. To facilitate analysis of our operating income by product
sector, we have excluded the 2001 restructuring charges of
$536 million and the asset

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|                                          |                                          |                                          |      |          |    |  |     |     |     | 
|----------------------------------------- | ---------------------------------------- | ---------------------------------------- | ---- | -------- | -- |  | --- | --- | --- | 
|                                          |                                          |                                         
|                                          |                                          | Three Months Ended                      
|                                          |                                          | March 31,                               
|                                          |                                          |                                         
|Product Sector                            |                                          | 2001 (a)                                 |      | 2000 (b)
|                                          |                                          |                                          |      |         
|                                          |                                          |                                         
|                                          |                                          | (in millions)                           
|Electronics & Mobile Communication        |                                          |                                          |      |          |    |  |     |    
|                                         
|                                         
|                                         
|                                         
|                                          | Mobile MultiMedia                        |                                          | $    | (3       | )  |  | $   | (8  | )  
|                                         
|                                         
|                                         
|                                         
|                                          | Other Electronics & Mobile Communication |                                          |      | 67       |    |  |     | 149 |    
|                                          |                                          |                                          |      |          |    |  |     |    
|                                          |                                          | Total Electronics & Mobile Communication |      |          | 64 |  |     |     | 141 | 
|                                         
|                                         
|                                         
|                                         
|Safety, Thermal & Electrical Architecture |                                          |                                          | 49   |          |    |  | 207 |    
|                                         
|                                         
|                                         
|                                         
|Dynamics & Propulsion                     |                                          |                                          | (100 | )        |    |  | 184 |    
|                                         
|                                         
|                                         
|                                         
|Other                                     |                                          |                                          | (11  | )        |    |  | (15 | )  
|                                          |                                          |                                          |      |          |    |  |     |    
|                                          |                                          | Total operating income                   |      | $        | 2  |  |     | $   | 517 | 
|                                          |                                          |                                          |      |          |    |  |     |    



| |     |                                                                                                                                                                                                                                              
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | Excludes restructuring and asset impairment
	charges of $78 million for Electronics & Mobile
	Communication, $214 million for Safety, Thermal &
	Electrical Architecture, $280  million for
	Dynamics & Propulsion and $27 million for Other.
|
| | (b) | Excludes the one-time, non-cash charge of
	$51 million resulting from acquisition-related in-process
	research and development for Dynamics & Propulsion.                                                                                    

The decrease in operating income by sector from 2000 primarily
reflects much lower production volumes, inefficiencies resulting
from uneven customer build schedules in North America and less
favorable mix content per vehicle. Mobile MultiMedia continued
to report an operating loss, reflective of the ongoing high
level of investment in engineering and research and development
related to the significant future book of business of this
high-tech business line.

Taxes.Our effective tax rate for the first quarter of
2001 was 36% excluding the restructuring and impairment charges
compared to 37% for the comparable period of 2000. The decrease
reflects the impact of tax planning initiatives. Our effective
tax rate including the restructuring and impairment charges was
35%, reflecting the inability to fully tax impact the
restructuring initiatives in a few smaller jurisdictions.

Net (Loss) Income.Our net loss was $(429) million
for the first quarter of 2001 as compared to net income of
$290 million for the first quarter of 2000. Excluding
restructuring and impairment charges of $617 million
($404 million after-tax), net loss for the first quarter
2001 would have been $(25) million compared to $322 million of
net income in the first quarter of 2000, which excludes the
one-time, non-cash charge of $51 million ($32 million
after-tax) resulting from acquisition-related in-process
research and development.

Earnings Per Share.Basic and diluted loss per share was
$(0.77) for the first quarter of 2001 compared to basic and
diluted earnings per share of $0.51 for the first quarter of
2000. Excluding restructuring and impairment charges of
$617 million ($404 million after-tax), loss per share
for the first quarter of 2001 would have been $(0.04) per share
compared to $0.57 earnings per share in the first quarter of
2000, which excludes the one-time, non-cash charge of
$51 million ($32 million after-tax) resulting from
acquisition-related in-process research and development.

Liquidity and Capital Resources

Liquidity

Our net liquidity, measured as cash and cash equivalents less
total debt, was $(2.7) billion at March 31, 2001
compared to $(2.4) billion at December 31, 2000. The
ratio of our total debt to total capital, which consists of
total debt plus stockholders equity, was 51.1% at
March 31, 2001 and 45.8% at December 31, 2000. The
change in our net liquidity was principally due to the
incremental borrowings to finance the Delphi Mechatronic Systems
acquisition. The change in our ratio of total debt to total
capital

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We expect to pay approximately $450 million in cash related
to the restructuring plans. During the first quarter of 2001, we
paid $49 million related to employee costs and
$1 million in other exit costs. We expect to pay an
additional $200 million to $300 million during 2001,
including up to $175 million in the second quarter, and the
remainder in 2002. Requirements for working capital,
acquisitions, capital expenditures, dividends, repayment of debt
securities, separation related obligations and restructuring
obligations are expected to be funded from operations,
supplemented as needed by short-term or long-term borrowings
available under our commercial paper programs, our credit
facilities and other available financing sources as necessary.

Debt Capitalization and
Available Financing Sources

Delphi has two financing arrangements with a syndicate of
lenders providing for an aggregate of $3.0 billion in
available revolving credit facilities (the Credit
Facilities), subject to certain limitations. The terms of
the Credit Facilities provide for a five-year revolving credit
line in the amount of $1.5 billion, which expires
June 2005, and a 364-day revolving credit line in the
amount of $1.5 billion, which expires June 2001 but is
expected to be renewed. As of March 31, 2001, we had no
amounts outstanding under our Credit Facilities. Utilizing the
Credit Facilities as back-up, Delphi implemented
$2.5 billion of worldwide commercial paper programs, under
which $1.3 billion was outstanding as of March 31,
2001. Delphi also has approximately $240 million available
under uncommitted lines of credit, of which $100 million
was outstanding as of March 31, 2001.

In connection with our 1999 public offering of long-term debt
securities totaling $1.5 billion, Delphi registered,
pursuant to a shelf registration statement filed with the
Securities and Exchange Commission, an additional
$1.0 billion of securities which may become available for
offer and issuance. Depending on market as well as business
conditions, we may issue a portion of the additional securities
remaining under this registered shelf by accessing the long-term
debt market to replace certain short-term borrowings. We give no
assurance at this time that an offering under the shelf
registration statement will occur.

Cash Flows

Operating Activities.Net cash provided by operating
activities totaled $0.3 billion for the three months ended
March 31, 2001 compared to net cash used in operating
activities of $0.5 billion for the three months ended
March 31, 2000. Cash provided by operating activities in
the first quarter of 2001 resulted from improved collections of
accounts receivable primarily from GM and affiliates. The use of
cash in the first quarter of 2000 included a $0.6 billion
voluntary contribution to our hourly pension plan and advances
to GM of $0.7 billion related to amounts for retirements
above the estimate used in generating the initial allocation of
pension and postretirement benefits.

Investing Activities.Cash flows used in investing
activities totaled $0.4 billion and $1.2 billion for
the three months ended March 31, 2001 and 2000,
respectively. The use of cash in the first quarter of 2001
primarily reflects the acquisition of Delphi Mechatronic Systems
for approximately $0.3 billion, which was funded with
short-term borrowings under Delphis commercial paper
program as well as uncommitted lines of credit. The cash use
also reflects capital expenditures related to ongoing
operations. The use of cash in the first quarter of 2000
reflects the acquisitions of Delphi Diesel Systems and Delphi
Lockheed Automotive for $0.9 billion and capital
expenditures related to ongoing operations.

Financing Activities.Net cash provided by financing
activities was $0.1 billion compared to $1.1 billion
for the three months ended March 31, 2001 and 2000,
respectively. Cash provided by financing activities during the
first quarter of 2001 represented borrowings to finance the
acquisition of Delphi Mechatronic Systems, partially offset by
payments of short-term debt. At an appropriate time, Delphi
intends to refinance the borrowings related to the Delphi
Mechatronic Systems acquisition on a long-term basis. The cash
provided by financing activities for the first quarter of 2000
included borrowings under our commercial paper program used to
fund pension contributions and to make advances to GM for
pension and other postretirement benefits.

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Dividends.The Board of Directors declared a dividend on
Delphi common stock of $0.07 per share on March 7, 2001,
payable on April 16, 2001 to holders of record on
March 19, 2001. The dividend declared on December 6,
2000 was paid on January 18, 2001.

Outlook

Our customers production schedules during the first three
months of 2001 in North America, our largest market, have been
approximately 20% lower than first quarter 2000 production
volumes. In view of this lower production, as well as the weaker
U.S. aftermarket, our sales decreased by 16% during the first
quarter of 2001. In light of the current market conditions,
lower industry volumes and other factors, orders from our North
American vehicle customers in 2001 are forecasted to be lower
than the levels in 2000. Although we remain optimistic that
sales should improve in the latter half of 2001, we expect
Delphis short-term performance to continue to be
negatively impacted by declining orders.

To mitigate these impacts, Delphi has been implementing
productivity improvements and streamlining activities designed
to reduce overhead and improve manufacturing processes. These
initiatives include: continued consolidation of divisional and
regional headquarters staffs and facilities, rationalization of
existing facilities into low cost regions where possible and
elimination of supporting infrastructure; continued use of
shared service models for support functions; utilization of
web-based systems for procurement, logistics and inventory
management; and elimination of warehouses and other inventory
storage and distribution points for greater value chain
efficiency. We intend that these actions will continue to reduce
manufacturing and selling, general and administrative costs.
Nevertheless, we currently expect sales and earnings in the
second quarter to be lower than the prior period and 2001 sales
and earnings to be lower year over year, excluding the effects
of any major portfolio actions. While we expect our business
with customers other than GM to increase over time, we also
expect GM will remain our largest customer for a significant
period of time. However, GM has stated that it intends to
increase competition for its business among its suppliers, thus
reducing its reliance on any one supplier. While we expect to
continue to compete effectively for GM business, our sales to GM
have declined since our separation from GM, and we expect our
sales to GM to further decline over time. Overall, we are
currently projecting our sales beyond 2001 to grow modestly
assuming projected production levels, with non-GM sales
increasing and GM sales decreasing.

In the first quarter of 2001, Delphi also approved plans to
sell, close or consolidate nine plants, downsize the workforce
at more than 40 other facilities and exit selected products
within the next twelve months. We also impaired certain
long-lived assets and certain investments in joint ventures. As
a result of these actions, we recorded a total charge of
$617 million ($404 million after-tax). These actions
addressed a portion of our portfolio management initiatives;
specifically the actions taken as part of the global
restructuring plans are expected to result in the exit of
approximately $900 million of marginally profitable and
unprofitable businesses.

Notwithstanding Delphis improved product quality, a few
customers have advised Delphi that they intend to pursue
warranty claims to a greater extent than previously. In
particular, although we settled certain pre-Separation warranty
claims with GM in September 2000, GM continues to assert
pre-Separation warranty claims. We are challenging these claims.
Accordingly, we cannot assure you that the future costs of
warranty claims by GM or other customers will not be material.
Although the outcome of these discussions is not predictable
with assurance, we believe our established reserves are adequate
to cover such warranty claims. However, the final amounts
determined to be due related to these matters could differ
materially from the recorded estimates.

In the normal course of business, we extend credit on open
account to our customers. From time to time, we also invest in
joint ventures with a variety of business partners. Although
Delphi is affected by the financial well-being of the automotive
industry as a whole, we believe that the credit risk associated
with trade receivables and investments in our joint ventures is
mitigated by our customer base and ongoing control procedures to
monitor the credit-worthiness of customers and business partners.

In November 2000, one customer/business partner entered
into corporate reorganization proceedings in Korea. As a result
of the reorganization, this customer/business partners
obligations to its suppliers

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Delphi also has investments of approximately $111 million
in Korean joint ventures that have significant sales to this
customer/business partner. During the first quarter of 2001, we
recognized a permanent decline in the value of these investments
of approximately $12 million, which is included in other
expense. We are continuing to work with the joint ventures to
facilitate their ongoing operations and believe that our
investments as of March 31, 2001 are recoverable. However,
due to the significant uncertainty surrounding the outcome of
the reorganization discussed above, the impact on our future
results of operations and financial condition could differ
significantly from recorded estimates.

Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a
safe harbor for forward-looking statements made by us or on our
behalf. Delphi and its representatives may periodically make
written or oral statements that are forward-looking,
including statements included in this report and other filings
with the Securities and Exchange Commission and in reports to
our stockholders. All statements which address operating
performance, events or developments that we expect or anticipate
may occur in the future (including statements relating to future
sales or earnings expectations, savings expected as a result of
global restructuring or other initiatives, volume growth,
awarded sales contracts and earnings per share expectations or
statements expressing general optimism about future operating
results) are forward-looking statements. These statements are
made on the basis of managements views and assumptions; as
a result, there can be no assurance that managements
expectations will necessarily come to pass. Principal important
factors, risks and uncertainties which may cause actual results
to differ from those expressed in forward-looking statements set
forth in this 10-Q include: our ability to increase non-GM sales
and achieve the labor benefits expected from our separation from
GM; potential increases in our warranty costs; our ability to
successfully implement our global restructuring plans; changes
in the economic conditions or political environment in the
markets in which we operate; currency exchange rate
fluctuations; financial or market declines of our customers or
significant business partners; labor disruptions or material
shortages; the level of competition in the automotive industry;
significant downturns in the automobile production rate; costs
relating to legal and administrative proceedings; changes in
laws or regulations pertaining to the automotive industry; our
ability to realize costs savings expected to offset price
reductions; our ability to make pension and other
post-retirement payments at levels anticipated by management;
our ability to successfully exit non-performing businesses and
absorb contingent liabilities related to divestitures; our
ability to complete and integrate acquisitions; changes in
technology and technological risks; our ability to protect and
assert patent and other intellectual property rights; our
ability to provide high quality products at competitive prices,
to develop new products to meet changing consumer preferences
and to meet changing vehicle manufacturers supply requirements
on a timely, cost effective basis; and other factors, risks and
uncertainties discussed in the Delphi Automotive Systems
Corporation Annual Report on Form 10-K for the year ended
December 31, 2000 and other filings with the Securities and
Exchange Commission. Delphi does not intend or assume any
obligation to update any of these forward-looking statements.






ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK


There have been no material changes to our exposures to market
risk since December 31, 2000.

17



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##### Table of Contents



PART II.  OTHER INFORMATION






ITEM 1.  LEGAL PROCEEDINGS


Except as described below, there have been no material
developments in legal proceedings involving Delphi or its
subsidiaries since those reported in Delphis Annual Report
on Form 10-K for the year ended December 31, 2000.

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

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






ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K


(a)  EXHIBITS

|        |    |              |  |                                                                 
|------- | -- | ------------ |  | ----------------------------------------------------------------
|Exhibit |    |             
|Number  |    | Exhibit Name
|        |    |             
|        | 99 |              |  | Press release dated April 19, 2001 regarding quarterly
	earnings

(b)  REPORTS ON FORM 8-K

During the quarter which this report is filed, Delphi filed the
following reports on Form 8-K:



| |                                                                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | January 17, 2001, Form 8-K reporting under
	Item 5. Other Events the filing of a press
	release regarding Delphis 2000 earnings.                                                                                                                                                                                                                                                           
|
| | March 29, 2001, Form 8-K reporting under
	Item 5. Other Events the filing of a press
	release regarding Delphis global restructuring actions to
	reduce costs, align capacity and streamline structure and under
	Item 9. Regulation FD Disclosure the
	filing of the discussion charts used during a conference call
	following the issuance of the press release referenced in
	Item 5.

18



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SIGNATURE


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



| |                                      
| | -------------------------------------
| | DELPHI AUTOMOTIVE SYSTEMS CORPORATION
| |                                      

| |             
| | ------------
| | (Registrant)

April 19, 2001

| |                               
| | ------------------------------
| | /s/ PAUL R. FREE              
| |                               
| | Paul R. Free, Chief Accounting
| | Officer and Controller        

19



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|            |  |                                      | 
|----------- |  | ------------------------------------ | 
|Exhibit No. |  | Description                         
|            |  |                                     
|99          |  | 2001 FIRST QUARTER FINANCIAL RESULTS