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UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, DC 20549-1004


FORM 10-Q

|   |  |                                                                                            
|-- |  | -------------------------------------------------------------------------------------------
|x  |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR
    15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|  
|   |  | For the quarterly period ended June 30, 2002                                               
|  
|OR
|  
|o  |  | TRANSITION REPORT PURSUANT TO SECTION 13 OF
    THE SECURITIES EXCHANGE ACT OF 1934        

For the transition period from

to
.

Commission file No. 1-14787

DELPHI CORPORATION

(Exact name of registrant as specified in its
charter)


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

(248) 813-2000

(Registrants telephone number, including
area code)


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 June 30, 2002, there were 559,475,124
outstanding shares of the registrants $0.01 par value
common stock.



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TABLE OF CONTENTS



|                                                                                              |  |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|INDEX                                                                                        
|PART I. FINANCIAL INFORMATION                                                                
|ITEM 1. FINANCIAL STATEMENTS                                                                 
|CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)                                            
|CONSOLIDATED BALANCE SHEETS                                                                  
|CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)                                            
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)                                       
|ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|PART II. OTHER INFORMATION                                                                   
|ITEM 1. LEGAL PROCEEDINGS                                                                    
|ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURE                                                                                    
|Amended & Restated Certificate of Incorporation                                              
|Certificate of Ownership and Merger                                                          
|Extension of Consulting Agreement                                                            
|Competitive Advance & Revolving Credit Facility                                              
|Press Release dated 07/17/02                                                                 



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##### Table of Contents



DELPHI CORPORATION






INDEX


|                               |  |                                                                                                                 |    |      |    | 
|------------------------------ |  | --------------------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|                               |  |                                                                                                                 |    | Page |   
|                               |  |                                                                                                                 |    |      |   
|Part I  Financial Information
|                              
|Item 1.                        |  | Financial Statements                                                                                            |    |      |    | 
|                               |  | Consolidated Statements of Operations (Unaudited)
    for the Three and Six Months Ended June 30, 2002 and 2001 |    |      | 3  | 
|                               |  | Consolidated Balance Sheets at June 30, 2002
    (Unaudited) and December 31, 2001                              |    |      | 4  | 
|                               |  | Consolidated Statements of Cash Flows (Unaudited)
    for the Six Months Ended June 30, 2002 and 2001           |    |      | 5  | 
|                               |  | Notes to Consolidated Financial Statements
    (Unaudited)                                                      |    |      | 6  | 
|                              
|Item 2.                        |  | Managements Discussion and Analysis of
    Financial Condition and Results of Operations                       |    |      | 14 | 
|                              
|Item 3.                        |  | Quantitative and Qualitative Disclosures About
    Market Risk                                                  |    |      | 25 | 
|                              
|Part II  Other Information   
|                              
|Item 1.                        |  | Legal Proceedings                                                                                               |    |      | 26 | 
|                              
|Item 4.                        |  | Submission of Matters to a Vote of Security
    Holders                                                         |    |      | 26 | 
|                              
|Item 6.                        |  | Exhibits and Reports on Form 8-K                                                                                |    |      | 27 | 
|                              
|Signature                      |  |                                                                                                                 | 28 |     

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PART I. FINANCIAL INFORMATION







ITEM 1. FINANCIAL STATEMENTS


DELPHI CORPORATION






CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)


|                                                         |                                             |                                         |      |       |            |   |      |       |       |   |      |        |        |   |       |        |        | 
|-------------------------------------------------------- | ------------------------------------------- | --------------------------------------- | ---- | ----- | ---------- | - | ---- | ----- | ----- | - | ---- | ------ | ------ | - | ----- | ------ | ------ | 
|                                                         |                                             |                                         |      |      
|                                                         |                                             | Three Months                            |      |       | Six Months |  
|                                                         |                                             | Ended                                   |      |       | Ended      |  
|                                                         |                                             | June 30,                                |      |       | June 30,   |  
|                                                         |                                             |                                         |      |       |            |  
|                                                         |                                             | 2002                                    |      |       | 2001       |   |      | 2002  |       |   | 2001 |       
|                                                         |                                             |                                         |      |       |            |   |      |       |       |   |      |       
|                                                         |                                             |                                        
|                                                         |                                             | (in millions, except per share amounts) |     
|Net sales:                                               |                                             |                                         |      |       |            |   |      |       |       |   |      |        |        |   |       |       
|                                                         | General Motors and affiliates               |                                         | $    | 4,818 |            |   | $    | 4,724 |       |   | $    | 9,302  |        |   | $     | 9,090  |       
|                                                         | Other customers                             |                                         |      | 2,504 |            |   |      | 2,220 |       |   |      | 4,708  |        |   |       | 4,389  |       
|                                                         |                                             |                                         |      |       |            |   |      |       |       |   |      |       
|                                                         |                                             | Total net sales                         |      |       | 7,322      |   |      |       | 6,944 |   |      |        | 14,010 |   |       |        | 13,479 | 
|                                                         |                                             |                                         |      |       |            |   |      |       |       |   |      |       
|Less operating expenses:                                 |                                             |                                         |      |       |            |   |      |       |       |   |      |        |        |   |       |       
|                                                         | Cost of sales, excluding items listed below |                                         |      | 6,332 |            |   |      | 6,024 |       |   |      | 12,221 |        |   |       | 11,925 |       
|                                                         | Selling, general and administrative         |                                         |      | 361   |            |   |      | 363   |       |   |      | 723    |        |   |       | 741    |       
|                                                         | Depreciation and amortization               |                                         |      | 247   |            |   |      | 254   |       |   |      | 491    |        |   |       | 571    |       
|                                                         | Restructuring (Note 2)                      |                                         |      |      |            |   |      |      |       |   |      | 225    |        |   |       | 536    |       
|                                                         |                                             |                                         |      |       |            |   |      |       |       |   |      |       
|                                                         |                                             | Total operating expenses                |      |       | 6,940      |   |      |       | 6,641 |   |      |        | 13,660 |   |       |        | 13,773 | 
|                                                         |                                             |                                         |      |       |            |   |      |       |       |   |      |       
|Operating income (loss)                                  |                                             |                                         | 382  |       |            |   | 303  |       |       |   | 350  |        |        |   | (294  | )     
|Less interest expense                                    |                                             |                                         | 47   |       |            |   | 56   |       |       |   | 95   |        |        |   | 112   |       
|Other income, net                                        |                                             |                                         | 8    |       |            |   | 9    |       |       |   | 18   |        |        |   | 6     |       
|                                                         |                                             |                                         |      |       |            |   |      |       |       |   |      |       
|Income (loss) before income taxes                        |                                             |                                         | 343  |       |            |   | 256  |       |       |   | 273  |        |        |   | (400  | )     
|Income tax expense (benefit)                             |                                             |                                         | 123  |       |            |   | 92   |       |       |   | 104  |        |        |   | (135  | )     
|                                                         |                                             |                                         |      |       |            |   |      |       |       |   |      |       
|Net income (loss)                                        |                                             | $                                       | 220  |       |            | $ | 164  |       |       | $ | 169  |        |        | $ | (265  | )     
|                                                         |                                             |                                         |      |       |            |   |      |       |       |   |      |       
|Earnings (loss) per share (Note 1)
    Basic and diluted |                                             | $                                       | 0.39 |       |            | $ | 0.29 |       |       | $ | 0.30 |        |        | $ | (0.47 | )     
|                                                         |                                             |                                         |      |       |            |   |      |       |       |   |      |       

See notes to consolidated financial statements.

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DELPHI CORPORATION






CONSOLIDATED BALANCE SHEETS


|                                           |                                                                                                                    |                               |                            |       |              |        |        |       |       |        | 
|------------------------------------------ | ------------------------------------------------------------------------------------------------------------------ | ----------------------------- | -------------------------- | ----- | ------------ | ------ | ------ | ----- | ----- | ------ | 
|                                           |                                                                                                                    | June 30,                      |                            |       |             
|                                           |                                                                                                                    | 2002                          |                            |       | December 31, |       
|                                           |                                                                                                                    | (Unaudited)                   |                            |       | 2001         |       
|                                           |                                                                                                                    |                               |                            |       |              |       
|                                           |                                                                                                                    |                              
|                                           |                                                                                                                    | (in millions)                 |                           
|ASSETS                                     |                                                                                                                    |                               |                            |       |              |        |        |      
|Current assets:                            |                                                                                                                    |                               |                            |       |              |        |        |      
|                                           | Cash and cash equivalents                                                                                          |                               | $                          | 753   |              |        | $      | 757   |      
|                                           | Accounts receivable, net:                                                                                          |                               |                            |       |              |        |        |       |      
|                                           |                                                                                                                    | General Motors and affiliates |                            |       | 3,320        |        |        |       | 2,829 |       
|                                           |                                                                                                                    | Other customers               |                            |       | 2,104        |        |        |       | 1,778 |       
|                                           | Inventories, net (Note 4)                                                                                          |                               |                            | 1,703 |              |        |        | 1,621 |      
|                                           | Deferred income taxes                                                                                              |                               |                            | 344   |              |        |        | 319   |      
|                                           | Prepaid expenses and other                                                                                         |                               |                            | 178   |              |        |        | 194   |      
|                                           |                                                                                                                    |                               |                            |       |              |       
|                                           |                                                                                                                    |                               | Total current assets       |       |              | 8,402  |        |       |       | 7,498  | 
|Long-term assets:                          |                                                                                                                    |                               |                            |       |              |        |        |      
|                                           | Property, net                                                                                                      |                               |                            | 5,794 |              |        |        | 5,724 |      
|                                           | Deferred income taxes                                                                                              |                               |                            | 3,079 |              |        |        | 3,152 |      
|                                           | Goodwill, net                                                                                                      |                               |                            | 674   |              |        |        | 630   |      
|                                           | Other                                                                                                              |                               |                            | 1,611 |              |        |        | 1,598 |      
|                                           |                                                                                                                    |                               |                            |       |              |       
|Total assets                               |                                                                                                                    | $                             | 19,560                     |       |              | $      | 18,602 |      
|                                           |                                                                                                                    |                               |                            |       |              |       
|LIABILITIES AND STOCKHOLDERS
    EQUITY   |                                                                                                                    |                               |                            |       |              |        |        |      
|Current liabilities:                       |                                                                                                                    |                               |                            |       |              |        |        |      
|                                           | Notes payable and current portion of long-term
    debt                                                            |                               | $                          | 1,598 |              |        | $      | 1,270 |      
|                                           | Accounts payable                                                                                                   |                               |                            | 3,337 |              |        |        | 2,779 |      
|                                           | Restructuring obligations (Note 2)                                                                                 |                               |                            | 80    |              |        |        | 121   |      
|                                           | Accrued liabilities                                                                                                |                               |                            | 1,737 |              |        |        | 1,680 |      
|                                           |                                                                                                                    |                               |                            |       |              |       
|                                           |                                                                                                                    |                               | Total current liabilities  |       |              | 6,752  |        |       |       | 5,850  | 
|Long-term liabilities:                     |                                                                                                                    |                               |                            |       |              |        |        |      
|                                           | Long-term debt                                                                                                     |                               |                            | 2,064 |              |        |        | 2,083 |      
|                                           | Pension benefits                                                                                                   |                               |                            | 1,898 |              |        |        | 2,146 |      
|                                           | Postretirement benefits other than pensions                                                                        |                               |                            | 4,943 |              |        |        | 4,702 |      
|                                           | Other                                                                                                              |                               |                            | 1,464 |              |        |        | 1,509 |      
|                                           |                                                                                                                    |                               |                            |       |              |       
|                                           |                                                                                                                    |                               | Total liabilities          |       |              | 17,121 |        |       |       | 16,290 | 
|                                           |                                                                                                                    |                               |                            |       |              |       
|Stockholders equity (Note 6):             |                                                                                                                    |                               |                            |       |              |        |        |      
|                                           | Common stock, $0.01 par value,
    1,350 million shares authorized, 565 million shares
    issued in 2002 and 2001 |                               |                            | 6     |              |        |        | 6     |      
|                                           | Additional paid-in capital                                                                                         |                               |                            | 2,446 |              |        |        | 2,450 |      
|                                           | Retained earnings                                                                                                  |                               |                            | 1,434 |              |        |        | 1,343 |      
|                                           | Minimum pension liability                                                                                          |                               |                            | (830  | )            |        |        | (830  | )    
|                                           | Accumulated other comprehensive loss, excluding
    minimum pension liability                                      |                               |                            | (519  | )            |        |        | (567  | )    
|                                           | Treasury stock, at cost (5.6 million and
    4.8 million shares in 2002 and 2001, respectively)                    |                               |                            | (98   | )            |        |        | (90   | )    
|                                           |                                                                                                                    |                               |                            |       |              |       
|                                           |                                                                                                                    |                               | Total stockholders equity |       |              | 2,439  |        |       |       | 2,312  | 
|                                           |                                                                                                                    |                               |                            |       |              |       
|Total liabilities and stockholders equity |                                                                                                                    | $                             | 19,560                     |       |              | $      | 18,602 |      
|                                           |                                                                                                                    |                               |                            |       |              |       

See notes to consolidated financial statements.

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DELPHI CORPORATION






CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)


|                                      |                                                                                              |                                                                       |                                           |      |      |      |   |      |      |      |  
|------------------------------------- | -------------------------------------------------------------------------------------------- | --------------------------------------------------------------------- | ----------------------------------------- | ---- | ---- | ---- | - | ---- | ---- | ---- | -
|                                      |                                                                                              |                                                                      
|                                      |                                                                                              | Six Months                                                            |                                          
|                                      |                                                                                              | Ended                                                                 |                                          
|                                      |                                                                                              | June 30,                                                              |                                          
|                                      |                                                                                              |                                                                       |                                          
|                                      |                                                                                              | 2002                                                                  |                                           |      | 2001 |     
|                                      |                                                                                              |                                                                       |                                           |      |      |     
|                                      |                                                                                              |                                                                      
|                                      |                                                                                              | (in millions)                                                         |                                          
|Cash flows from operating activities: |                                                                                              |                                                                       |                                           |      |      |      |   |     
|                                      | Net income (loss)                                                                            |                                                                       | $                                         | 169  |      |      | $ | (265 | )   
|                                      | Adjustments to reconcile net income
    (loss) to net cash provided by operating activities: |                                                                       |                                           |      |      |      |   |      |     
|                                      |                                                                                              | Depreciation and amortization, excluding
    amortization of goodwill |                                           |      | 491  |      |   |      | 556  |     
|                                      |                                                                                              | Amortization of goodwill                                              |                                           |      |     |      |   |      | 15   |     
|                                      |                                                                                              | Deferred income taxes                                                 |                                           |      | 36   |      |   |      | (233 | )   
|                                      |                                                                                              | Restructuring                                                         |                                           |      | 225  |      |   |      | 536  |     
|                                      | Changes in operating assets and liabilities:                                                 |                                                                       |                                           |      |      |      |   |      |     
|                                      |                                                                                              | Accounts receivable, net                                              |                                           |      | (817 | )    |   |      | (25  | )   
|                                      |                                                                                              | Inventories, net                                                      |                                           |      | (87  | )    |   |      | (58  | )   
|                                      |                                                                                              | Prepaid expenses and other                                            |                                           |      | 11   |      |   |      | 94   |     
|                                      |                                                                                              | Accounts payable                                                      |                                           |      | 558  |      |   |      | 320  |     
|                                      |                                                                                              | Restructuring obligations                                             |                                           |      | (245 | )    |   |      | (142 | )   
|                                      |                                                                                              | Accrued liabilities                                                   |                                           |      | 69   |      |   |      | (176 | )   
|                                      |                                                                                              | Other long-term liabilities                                           |                                           |      | (74  | )    |   |      | 56   |     
|                                      |                                                                                              | Other                                                                 |                                           |      | (80  | )    |   |      | (28  | )   
|                                      |                                                                                              |                                                                       |                                           |      |      |     
|                                      |                                                                                              |                                                                       | Net cash provided by operating activities |      |      | 256  |   |      |      | 650  |  
|                                      |                                                                                              |                                                                       |                                           |      |      |     
|Cash flows from investing activities: |                                                                                              |                                                                       |                                           |      |      |      |   |     
|                                      | Capital expenditures                                                                         |                                                                       |                                           | (461 | )    |      |   | (503 | )   
|                                      | Cost of acquisitions, net of cash acquired                                                   |                                                                       |                                           |     |      |      |   | (313 | )   
|                                      | Other                                                                                        |                                                                       |                                           | 38   |      |      |   | (10  | )   
|                                      |                                                                                              |                                                                       |                                           |      |      |     
|                                      |                                                                                              |                                                                       | Net cash used in investing activities     |      |      | (423 | ) |      |      | (826 | )
|                                      |                                                                                              |                                                                       |                                           |      |      |     
|Cash flows from financing activities: |                                                                                              |                                                                       |                                           |      |      |      |   |     
|                                      | Net proceeds from (repayments of) borrowings
    under credit facilities and other debt      |                                                                       |                                           | 309  |      |      |   | (301 | )   
|                                      | Net proceeds from issuance of debt securities                                                |                                                                       |                                           |     |      |      |   | 498  |     
|                                      | Dividend payments                                                                            |                                                                       |                                           | (78  | )    |      |   | (78  | )   
|                                      | Issuance (purchases) of treasury stock, net                                                  |                                                                       |                                           | (12  | )    |      |   | 2    |     
|                                      |                                                                                              |                                                                       |                                           |      |      |     
|                                      |                                                                                              |                                                                       | Net cash provided by financing activities |      |      | 219  |   |      |      | 121  |  
|                                      |                                                                                              |                                                                       |                                           |      |      |     
|                                      | Effect of exchange rate fluctuations on cash and
    cash equivalents                        |                                                                       |                                           | (56  | )    |      |   | (16  | )   
|                                      |                                                                                              |                                                                       |                                           |      |      |     
|                                      | Decrease in cash and cash equivalents                                                        |                                                                       |                                           | (4   | )    |      |   | (71  | )   
|                                      | Cash and cash equivalents at beginning of period                                             |                                                                       |                                           | 757  |      |      |   | 760  |     
|                                      |                                                                                              |                                                                       |                                           |      |      |     
|                                      | Cash and cash equivalents at end of period                                                   |                                                                       | $                                         | 753  |      |      | $ | 689  |     
|                                      |                                                                                              |                                                                       |                                           |      |      |     

See notes to consolidated financial statements.

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DELPHI CORPORATION






NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


1. BASIS OF PRESENTATION

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

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

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

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

|                                    |  |                    |         |  |                  |  |         |      |  |  |         |  |  |  |         | 
|----------------------------------- |  | ------------------ | ------- |  | ---------------- |  | ------- | ---- |  |  | ------- |  |  |  | ------- | 
|                                    |  |                    |         | 
|                                    |  | Three Months Ended |         |  | Six Months Ended | 
|                                    |  | June 30,           |         |  | June 30,         | 
|                                    |  |                    |         |  |                  | 
|                                    |  | 2002               |         |  | 2001             |  |         | 2002 |  |  | 2001    | 
|                                    |  |                    |         |  |                  |  |         |      |  |  |         | 
|                                    |  |                   
|                                    |  | (in thousands)     |        
|Weighted average shares outstanding |  |                    | 560,650 |  |                  |  | 559,907 |      |  |  | 560,550 |  |  |  | 559,871 | 
|Effect of dilutive securities       |  |                    | 8,238   |  |                  |  | 5,210   |      |  |  | 7,626   |  |  |  |        | 
|                                    |  |                    |         |  |                  |  |         |      |  |  |         | 
|Diluted shares outstanding          |  |                    | 568,888 |  |                  |  | 565,117 |      |  |  | 568,176 |  |  |  | 559,871 | 
|                                    |  |                    |         |  |                  |  |         |      |  |  |         | 

The Board of Directors declared a dividend on
Delphi common stock of $0.07 per share on June 27, 2002,
payable on August 5, 2002, to holders of record on
July 8, 2002. The dividend declared on March 13, 2002
was paid on April 22, 2002.

The Board of Directors has authorized the
repurchase of up to 22.5 million shares of Delphi common
stock to fund stock options and other employee benefit plans.
During the second quarter of 2002 we repurchased approximately
1.7 million shares in the open market to offset the effect of
shares issued under those plans and to provide for a more
consistent number of shares outstanding. We are authorized to
repurchase up to 13 million additional shares during the
second half of 2002.

Goodwill and Other Intangible
Assets Effective
January 1, 2002, we adopted Statement of Financial
Accounting Standards (SFAS) No. 142
Goodwill and Other Intangible Assets and stopped the
amortization of purchased goodwill. We also reevaluated our
intangible assets and determined that their remaining useful
lives remained appropriate. At June 30, 2002, our
unamortized purchased goodwill balance was approximately
$674 million, principally in the Dynamics and Propulsion
Sector. We completed the impairment tests of goodwill as of
January 1, 2002 as required by SFAS No. 142. In doing
so we determined that our goodwill is not impaired; therefore
there was no transitional impairment charge to be recorded. For
the three and six months ended June 30, 2001, our reported
net income (loss) and basic and diluted earnings (loss) per
share was $164 million and $0.29 and $(265) million and
$(0.47), respectively. Adjusted for the non-amortization
provisions of SFAS No. 142, our reported net income
(loss) and basic and diluted earnings (loss) per share
would have been $171 million and $0.30 and $(253)

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million and $(0.45) for the three and six months
ended June 30, 2001, respectively. The after-tax impact of
the non-amortization provisions of SFAS No. 142 as compared
to 2001 reported net income are expected to be $7 million
($0.01 per share), $9 million ($0.02 per share) and
$28 million ($0.05 per share) for the third quarter, fourth
quarter, and full year, respectively.


2. RESTRUCTURING, IMPAIRMENT AND PRODUCT
LINE CHARGES

2002
Restructuring Actions

In the first quarter of 2002, Delphi approved
further restructuring plans to eliminate 6,100 positions from
our global workforce, downsize more than 25 selected facilities
in the United States and Europe, and exit certain other
activities by the end of the first quarter of 2003.

The restructuring charge totaled
$231 million with $222 million of employee costs
(including postemployment benefits and special termination
pension benefits) and $9 million in other exit costs (lease
cancellation costs and contract cancellation fees). This charge,
when netted against the $6 million reversal noted below for the
2001 restructuring reserve, resulted in a net restructuring
charge of $225 million ($150 million after-tax) in the
first quarter of 2002. The plans entail the elimination of
approximately 6,100 positions worldwide, comprised of 3,100 U.S.
employees and 3,000 employees in non-U.S. locations. Employees
at impacted locations have been informed of the restructuring
initiatives and the benefits available to them under applicable
benefit plans or related contractual provisions. Affected
employees have left or will leave Delphi using a mixture of
voluntary or involuntary separation programs, early retirements,
social plan programs, and layoffs. We expect to pay
approximately $200 million in cash related to the
restructuring programs with the remaining $31 million for
non-cash special termination pension benefits. During the three
months ended June 30, 2002, we paid $58 million
related to employee costs. During the six months ended
June 30, 2002, we paid $120 million, with
$118 million related to employee costs and $2 million
related to exit costs. As of June 30, 2002, approximately
2,000 U.S. employees and 2,550 non-U.S. employees have been
separated under the plans. Through June 30, 2002, approximately
15,990 positions have been eliminated under the 2001 and 2002
programs.

2001
Restructuring Actions

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

The restructuring plans resulted in a charge of
$536 million that included $492 million of employee
costs (including postemployment benefits and special termination
pension and postretirement benefits) and $44 million in
other exit costs (principally lease termination and contract
cancellation payments). The plans entailed the elimination of
approximately 11,500 positions worldwide, comprised of 5,600
U.S. hourly employees, 2,000 U.S. salaried employees, and 3,900
employees in non-U.S. locations. Under the restructuring plans,
we ultimately eliminated 11,440 positions and incurred costs of
$530 million. For the U.S. hourly workforce, we reduced
5,400 positions against a plan of 5,600 positions. This
shortfall occurred during the first quarter of 2002, due to
minor variances in the execution of our restructuring plans. We
eliminated 4,040 non-U.S. positions, slightly above the planned
3,900 positions, and we eliminated 2,000 U.S. salaried employee
positions as planned. Through June 30, 2002, total cash
paid for restructuring was $457 million, with
$413 million for employee costs and $44 million for
other exit costs. We also had $73 million of non-cash
charges, principally for special termination pension and
postretirement benefits. Upon completion of our plans, in the
first quarter of 2002, we reversed $6 million of the
original $536 million charge on the Restructuring line in
our Statement of Operations. The $6 million is a result of
the minor shortfall in head count noted previously, as well as
slight favorable variances in the costs actually incurred under
the various initiatives. This reversal was netted against the
2002 restructuring charge explained above.

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

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

Generator
Product Line

In December 2000, we announced that our generator
product line was part of our portfolio of businesses under
review. As of the fourth quarter 2001, we had entered into a
non-binding letter of intent to sell this product line and
expected to consummate the potential sale during the first half
of 2002. Recently, we announced we would not complete the
transaction as previously anticipated, and, accordingly began
the process to wind down the product line. This process affects
a number of parties, including our customers, employees and
suppliers. We have commenced discussions with these affected
parties. We expect these discussions to continue during the
second half of 2002. As a result of our decision to wind down
this product line, we have reviewed our current estimates with
respect to wind down related costs, including redundant work
force costs and determined, based upon our current expectations
that our reserves for these items are adequate. These amounts
are based upon our best estimates with respect to timing of the
wind down process and ultimate resolution of contractually
required payments. Due to the significance of the estimates
involved, the final costs for the wind down of the product line
could materially differ from the recorded amounts.

We expect the redundant workforce to grow as a
result of the wind down process, and we expect to resolve their
employment status by late in 2003, concurrent with the
expiration of our labor contracts. Such resolution, which will
affect the final cost for the wind down, could include
retirements, transfers to other facilities, paid separations,
continued redundant status and/or replacement work.

As required by SFAS No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets, we have
reclassified the generator product line as held and used from
available for sale. No additional adjustments were required as
the result of this reclassification.

The total recorded loss associated with the wind
down of this product line was $231 million
($149 million after-tax), of which $194 million
($125 million after-tax) was recorded in the fourth quarter
of 2001 and $37 million ($24 million after-tax) was
recorded in the first quarter of 2002. We expect to pay
$75 million of the $231 million in cash, primarily for
estimated contractually required redundant workforce payments
related to our unionized U.S. manufacturing operations. We have
paid $11 million in the first six months of 2002.

3. ACQUISITIONS

Delphi
Connection Systems-Specialty Electronics

In June 2001, Delphi purchased Specialty
Electronics, Inc., now Delphi Connection Systems-Specialty
Electronics, for approximately $22 million. The acquisition
was accounted for under the purchase method of accounting. The
pro forma effect of this acquisition would not be significantly
different from reported results. Delphi Connection
Systems-Specialty Electronics is a provider of electronic
connector products and customized interconnect solutions to the
telecommunications, computer, industrial electronics, medical
and automotive markets, which complements Delphis
strategic expansion into new markets.

Delphi
Mechatronic Systems

In March 2001, Delphi acquired substantially all
the assets and assumed certain liabilities of Eaton
Corporations Vehicle Switch/ Electronics Division, now
Delphi Mechatronic Systems, for approximately $0.3 billion.
Delphi Mechatronic Systems is a global producer of
electromechanical switches, mechatronic

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modules and body electronics for the light
vehicle industry. Delphi Mechatronic Systems technology,
complemented by our extensive electrical and electronic
integration capabilities, will enable us to offer customers new
solutions in modular cockpits, doors and overhead systems. The
Delphi Mechatronic Systems acquisition supports our goals of
enhancing our technology, diversifying our customer base and
geographic footprint, and leveraging our system integration
capabilities. The acquisition has been accounted for using the
purchase method of accounting and therefore the purchase price
has been allocated to assets acquired and liabilities assumed
based on estimated fair values. The pro forma effect of this
acquisition would not be significantly different from reported
results. The $146 million excess consideration given over
the estimated fair value of net assets acquired was recorded as
goodwill. In addition, we recorded $10 million of
intangible assets, primarily patents and related technology,
which will be amortized over 5 years. The purchase price
and related allocation were finalized in the first quarter of
2002 resulting in an increase in goodwill of approximately $34
million. The increase was primarily attributable to adjustments
to fair value of assets and liabilities acquired and
finalization of our integration plans.


4. INVENTORIES, NET

Inventories, net consisted of:

|                                                                               |                           |               |       |       |              |   |       |       | 
|------------------------------------------------------------------------------ | ------------------------- | ------------- | ----- | ----- | ------------ | - | ----- | ----- | 
|                                                                               |                           | June 30,      |       |       | December 31, |  
|                                                                               |                           | 2002          |       |       | 2001         |  
|                                                                               |                           |               |       |       |              |  
|                                                                               |                           |              
|                                                                               |                           | (in millions) |      
|Productive material, work-in-process and supplies                              |                           | $             | 1,585 |       |              | $ | 1,563 |      
|Finished goods                                                                 |                           |               | 373   |       |              |   | 313   |      
|                                                                               |                           |               |       |       |              |  
|                                                                               | Total inventories at FIFO |               |       | 1,958 |              |   |       | 1,876 | 
|Less allowance to adjust the carrying value of
    certain inventories to LIFO |                           |               | (255  | )     |              |   | (255  | )    
|                                                                               |                           |               |       |       |              |  
|                                                                               | Total inventories, net    |               | $     | 1,703 |              |   | $     | 1,621 | 
|                                                                               |                           |               |       |       |              |  

5. DERIVATIVES AND HEDGING
ACTIVITIES

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

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

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

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In order to manage the interest rate risk
associated with our debt portfolio, we periodically enter into
derivative transactions to manage our exposure to changes in
interest rates, although we do not have any outstanding at
June 30, 2002.

Gains and losses on derivatives qualifying as
cash flow hedges are recorded in other comprehensive income
(OCI) to the extent that hedges are effective until the
underlying transactions are recognized in earnings. Net losses
included in OCI as of June 30, 2002 were $11 million
after-tax ($17 million pre-tax). Of this pre-tax total, a loss
of approximately $13 million is expected to be included in
cost of sales within the next 12 months and a loss of
approximately $7 million is expected to be included in
subsequent periods. A loss of approximately $3 million is
expected to be included in depreciation and amortization expense
over the lives of the related fixed assets and a gain of
approximately $6 million is expected to be included in
interest expense over the term of the related debt. The
unrealized amounts in OCI will fluctuate based on changes in the
fair value of open contracts at each reporting period. Due to
unusually pronounced production volume reductions, we
discontinued several cash flow hedges during the quarter ended
March 31, 2001, which resulted in the immediate recognition
of $6 million of income included in cost of sales. Cash
flow hedges are discontinued when it is probable that the
original forecasted transactions will not occur. The amount
included in cost of sales related to hedge ineffectiveness and
the time value of options was not material.

6. STOCKHOLDERS EQUITY

Changes in stockholders equity for the six
months ended June 30, 2002 were:

|                           |                                                                           |                            |     |   |            |   |   |          |  |                   |          |    |   |           |       |          |       |   |               |       |  |   |        |     |   |   |     |    |   |   |       |     |     | 
|-------------------------- | ------------------------------------------------------------------------- | -------------------------- | --- | - | ---------- | - | - | -------- |  | ----------------- | -------- | -- | - | --------- | ----- | -------- | ----- | - | ------------- | ----- |  | - | ------ | --- | - | - | --- | -- | - | - | ----- | --- | --- | 
|                           |                                                                           |                            |     |   |            |   |   |          |  |                   |          |    |   |          
|                           |                                                                           |                            |     |   |            |   |   |          |  | Accumulated Other |          |    |   |           |      
|                           |                                                                           |                            |     |   |            |   |   |          |  | Comprehensive     |          |    |   |           |      
|                           |                                                                           |                            |     |   |            |   |   |          |  | Income (Loss)     |          |    |   |           |      
|                           |                                                                           |                            |     |   |            |   |   |          |  |                   |          |    |  
|                           |                                                                           | Common Stock               |     |   | Additional |   |   |          |  | Minimum           |          |    |   |           |       |          | Total |  
|                           |                                                                           |                            |     |   | Paid-in    |   |   | Retained |  |                   | Pension  |    |   |           |       | Treasury |       |   | Stockholders |      
|                           |                                                                           | Shares                     |     |   | Amount     |   |   | Capital  |  |                   | Earnings |    |   | Liability |       |          | Other |   |               | Stock |  |   | Equity |    
|                           |                                                                           |                            |     |   |            |   |   |          |  |                   |          |    |   |           |       |          |       |   |               |       |  |   |        |    
|                           |                                                                           |                           
|                           |                                                                           | (in millions)              |    
|Balance at January 1, 2002 |                                                                           |                            | 565 |   |            | $ | 6 |          |  | $                 | 2,450    |    |   | $         | 1,343 |          |       | $ | (830          | )     |  | $ | (567   | )   |   | $ | (90 | )  |   | $ | 2,312 |    
|                           | Net income                                                                |                            |     |  |            |   |   |         |  |                   |          |   |   |           |       | 169      |       |   |               |      |  |   |        |    |   |   |     |   |   |   |       | 169 |    
|                           | Currency translation adjustments, net of tax                              |                            |     |  |            |   |   |         |  |                   |          |   |   |           |       |         |       |   |               |      |  |   |        | 61  |   |   |     |   |   |   |       | 61  |    
|                           | Net change in unrecognized loss on derivative
    instruments, net of tax |                            |     |  |            |   |   |         |  |                   |          |   |   |           |       |         |       |   |               |      |  |   |        | (13 | ) |   |     |   |   |   |       | (13 | )  
|                           |                                                                           |                            |     |   |            |   |   |          |  |                   |          |    |   |           |       |          |       |   |               |       |  |   |        |    
|                           |                                                                           | Total comprehensive income |     |   |            |   |   |          |  |                   |          |    |   |           |       |          |       |   |               |       |  |   |        |     |   |   |     |    |   |   |       |     | 217 | 
|                           | Net shares repurchased for employee benefit plans                         |                            |     |  |            |   |   |         |  |                   |          | (4 | ) |           |       |         |       |   |               |      |  |   |        |    |   |   |     | (8 | ) |   |       | (12 | )  
|                           | Dividends                                                                 |                            |     |  |            |   |   |         |  |                   |          |   |   |           |       | (78      | )     |   |               |      |  |   |        |    |   |   |     |   |   |   |       | (78 | )  
|                           |                                                                           |                            |     |   |            |   |   |          |  |                   |          |    |   |           |       |          |       |   |               |       |  |   |        |    
|Balance at June 30, 2002   |                                                                           |                            | 565 |   |            | $ | 6 |          |  | $                 | 2,446    |    |   | $         | 1,434 |          |       | $ | (830          | )     |  | $ | (519   | )   |   | $ | (98 | )  |   | $ | 2,439 |    
|                           |                                                                           |                            |     |   |            |   |   |          |  |                   |          |    |   |           |       |          |       |   |               |       |  |   |        |    

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7. SEGMENT REPORTING

Selected information regarding Delphis
product sectors follows:

|                            |                                |                         |                 |               |               |     |   |       |           |            |              |     |            |            |   |       |          |       |   |       |     |       |   |      |     |      |   |       |     |       | 
|--------------------------- | ------------------------------ | ----------------------- | --------------- | ------------- | ------------- | --- | - | ----- | --------- | ---------- | ------------ | --- | ---------- | ---------- | - | ----- | -------- | ----- | - | ----- | --- | ----- | - | ---- | --- | ---- | - | ----- | --- | ----- | 
|                            |                                |                         |                 |               |               |     |   |       |           |           
|                            |                                | Electronics & Mobile    |                 |               |               |     |   |       |           |            |             
|                            |                                | Communication           |                 |               |               |     |   |       |           |            |             
|                            |                                |                         |                 |               |               |     |   |       |           |            |             
|                            |                                |                         |                 | Other         |               |     |   |       | Safety,   |            |              |     |            |            |   |      
|                            |                                |                         |                 | Electronics & |               |     |   |       | Thermal & |            |              |     |            |            |   |      
|                            |                                | Mobile                  |                 |               | Mobile        |     |   |       |           | Electrical |              |     | Dynamics & |            |   |       |          |      
|                            |                                | MultiMedia(a)           |                 |               | Communication |     |   | Total |           |            | Architecture |     |            | Propulsion |   |       | Other(b) |       |   | Total |    
|                            |                                |                         |                 |               |               |     |   |       |           |            |              |     |            |            |   |       |          |       |   |       |    
|                            |                                |                        
|                            |                                | (in millions)           |                
|For the Three Months Ended: |                                |                         |                 |               |               |     |   |       |           |            |              |     |            |            |   |       |          |       |   |       |     |       |   |     
|June 30, 2002               |                                |                         |                 |               |               |     |   |       |           |            |              |     |            |            |   |       |          |       |   |       |     |       |   |      |     |      |   |      
|                            | Net sales to GM and affiliates |                         | $               | 68            |               |     | $ | 766   |           |            | $            | 834 |            |            | $ | 1,523 |          |       | $ | 2,137 |     |       | $ | 324  |     |      | $ | 4,818 |    
|                            | Net sales to other customers   |                         |                 | 26            |               |     |   | 301   |           |            |              | 327 |            |            |   | 966   |          |       |   | 1,022 |     |       |   | 189  |     |      |   | 2,504 |    
|                            | Inter-sector net sales         |                         |                 |              |               |     |   | 167   |           |            |              | 167 |            |            |   | 107   |          |       |   | 329   |     |       |   | (603 | )   |      |   |      |    
|                            |                                |                         |                 |               |               |     |   |       |           |            |              |     |            |            |   |       |          |       |   |       |    
|                            |                                |                         | Total net sales |               | $             | 94  |   |       | $         | 1,234      |              |     | $          | 1,328      |   |       | $        | 2,596 |   |       | $   | 3,488 |   |      | $   | (90  | ) |       | $   | 7,322 | 
|                            |                                |                         |                 |               |               |     |   |       |           |            |              |     |            |            |   |       |          |       |   |       |    
|                            |                                | Operating income (loss) |                 | $             | (4            | )   |   | $     | 143       |            |              | $   | 139        |            |   | $     | 187      |       |   | $     | 78  |       |   | $    | (22 | )    |   | $     | 382 |      
|                            |                                |                         |                 |               |               |     |   |       |           |            |              |     |            |            |   |       |          |       |   |       |    
|June 30, 2001               |                                |                         |                 |               |               |     |   |       |           |            |              |     |            |            |   |       |          |       |   |       |     |       |   |      |     |      |   |      
|                            | Net sales to GM and affiliates |                         | $               | 90            |               |     | $ | 748   |           |            | $            | 838 |            |            | $ | 1,450 |          |       | $ | 2,094 |     |       | $ | 342  |     |      | $ | 4,724 |    
|                            | Net sales to other customers   |                         |                 | 12            |               |     |   | 247   |           |            |              | 259 |            |            |   | 849   |          |       |   | 964   |     |       |   | 148  |     |      |   | 2,220 |    
|                            | Inter-sector net sales         |                         |                 |              |               |     |   | 172   |           |            |              | 172 |            |            |   | 105   |          |       |   | 320   |     |       |   | (597 | )   |      |   |      |    
|                            |                                |                         |                 |               |               |     |   |       |           |            |              |     |            |            |   |       |          |       |   |       |    
|                            |                                |                         | Total net sales |               | $             | 102 |   |       | $         | 1,167      |              |     | $          | 1,269      |   |       | $        | 2,404 |   |       | $   | 3,378 |   |      | $   | (107 | ) |       | $   | 6,944 | 
|                            |                                |                         |                 |               |               |     |   |       |           |            |              |     |            |            |   |       |          |       |   |       |    
|                            |                                | Operating income (loss) |                 | $             | (7            | )   |   | $     | 109       | (e)        |              | $   | 102        | (e)        |   | $     | 130      | (e)   |   | $     | 123 | (e)   |   | $    | (43 | )(e) |   | $     | 312 | (e)  
|                            |                                |                         |                 |               |               |     |   |       |           |            |              |     |            |            |   |       |          |       |   |       |    

|                          |                                |                         |                 |               |               |     |   |       |           |            |              |       |            |            |   |       |          |        |   |       |    |        |   |        |     |         |   |       |     |        | 
|------------------------- | ------------------------------ | ----------------------- | --------------- | ------------- | ------------- | --- | - | ----- | --------- | ---------- | ------------ | ----- | ---------- | ---------- | - | ----- | -------- | ------ | - | ----- | -- | ------ | - | ------ | --- | ------- | - | ----- | --- | ------ | 
|                          |                                |                         |                 |               |               |     |   |       |           |           
|                          |                                | Electronics & Mobile    |                 |               |               |     |   |       |           |            |             
|                          |                                | Communication           |                 |               |               |     |   |       |           |            |             
|                          |                                |                         |                 |               |               |     |   |       |           |            |             
|                          |                                |                         |                 | Other         |               |     |   |       | Safety,   |            |              |       |            |            |   |      
|                          |                                |                         |                 | Electronics & |               |     |   |       | Thermal & |            |              |       |            |            |   |      
|                          |                                | Mobile                  |                 |               | Mobile        |     |   |       |           | Electrical |              |       | Dynamics & |            |   |       |          |       
|                          |                                | MultiMedia(a)           |                 |               | Communication |     |   | Total |           |            | Architecture |       |            | Propulsion |   |       | Other(b) |        |   | Total |   
|                          |                                |                         |                 |               |               |     |   |       |           |            |              |       |            |            |   |       |          |        |   |       |   
|                          |                                |                        
|                          |                                | (in millions)           |                
|For the Six Months Ended: |                                |                         |                 |               |               |     |   |       |           |            |              |       |            |            |   |       |          |        |   |       |    |        |   |       
|June 30, 2002             |                                |                         |                 |               |               |     |   |       |           |            |              |       |            |            |   |       |          |        |   |       |    |        |   |        |     |         |   |      
|                          | Net sales to GM and affiliates |                         | $               | 135           |               |     | $ | 1,479 |           |            | $            | 1,614 |            |            | $ | 2,933 |          |        | $ | 4,130 |    |        | $ | 625    |     |         | $ | 9,302 |    
|                          | Net sales to other customers   |                         |                 | 45            |               |     |   | 566   |           |            |              | 611   |            |            |   | 1,810 |          |        |   | 1,945 |    |        |   | 342    |     |         |   | 4,708 |    
|                          | Inter-sector net sales         |                         |                 |              |               |     |   | 333   |           |            |              | 333   |            |            |   | 200   |          |        |   | 625   |    |        |   | (1,158 | )   |         |   |      |    
|                          |                                |                         |                 |               |               |     |   |       |           |            |              |       |            |            |   |       |          |        |   |       |   
|                          |                                |                         | Total net sales |               | $             | 180 |   |       | $         | 2,378      |              |       | $          | 2,558      |   |       | $        | 4,943  |   |       | $  | 6,700  |   |        | $   | (191    | ) |       | $   | 14,010 | 
|                          |                                |                         |                 |               |               |     |   |       |           |            |              |       |            |            |   |       |          |        |   |       |   
|                          |                                | Operating income (loss) |                 | $             | (10           | )   |   | $     | 254       | (c)        |              | $     | 244        | (c)        |   | $     | 322      | (c)    |   | $     | 86 | (c)    |   | $      | (40 | )(c)    |   | $     | 612 | (c)   
|                          |                                |                         |                 |               |               |     |   |       |           |            |              |       |            |            |   |       |          |        |   |       |   
|June 30, 2001             |                                |                         |                 |               |               |     |   |       |           |            |              |       |            |            |   |       |          |        |   |       |    |        |   |        |     |         |   |      
|                          | Net sales to GM and affiliates |                         | $               | 191           |               |     | $ | 1,420 |           |            | $            | 1,611 |            |            | $ | 2,767 |          |        | $ | 4,021 |    |        | $ | 691    |     |         | $ | 9,090 |    
|                          | Net sales to other customers   |                         |                 | 22            |               |     |   | 509   |           |            |              | 531   |            |            |   | 1,663 |          |        |   | 1,907 |    |        |   | 288    |     |         |   | 4,389 |    
|                          | Inter-sector net sales         |                         |                 |              |               |     |   | 329   |           |            |              | 329   |            |            |   | 222   |          |        |   | 627   |    |        |   | (1,178 | )   |         |   |      |    
|                          |                                |                         |                 |               |               |     |   |       |           |            |              |       |            |            |   |       |          |        |   |       |   
|                          |                                |                         | Total net sales |               | $             | 213 |   |       | $         | 2,258      |              |       | $          | 2,471      |   |       | $        | 4,652  |   |       | $  | 6,555  |   |        | $   | (199    | ) |       | $   | 13,479 | 
|                          |                                |                         |                 |               |               |     |   |       |           |            |              |       |            |            |   |       |          |        |   |       |   
|                          |                                | Operating income (loss) |                 | $             | (10           | )   |   | $     | 178       | (d)(e)     |              | $     | 168        | (d)(e)     |   | $     | 180      | (d)(e) |   | $     | 26 | (d)(e) |   | $      | (54 | )(d)(e) |   | $     | 320 | (d)(e)
|                          |                                |                         |                 |               |               |     |   |       |           |            |              |       |            |            |   |       |          |        |   |       |   



|    |                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Information for the Mobile MultiMedia business
    line within the Electronics & Mobile Communication sector is
    separately disclosed due to the strategic importance of this
    high-tech business line and

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | its usefulness in understanding sector net sales
    and operating results. Mobile MultiMedia develops products
    designed to bring the Internet, telematics, entertainment and
    mobile communication technologies into vehicles.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(b) | Other includes activity not allocated to the
    product sectors and elimination of inter-sector transactions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|(c) | Excludes the 2002 net restructuring and generator
    product line charges of $262 million with $20 million
    for Electronics & Mobile Communication, $101 million
    for Safety, Thermal & Electrical Architecture,
    $126 million for Dynamics & Propulsion and
    $15 million for Other.                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(d) | Excludes the 2001 restructuring and asset
    impairment charges of $599 million with $78 million
    for Electronics & Mobile Communication, $214 million
    for Safety, Thermal & Electrical Architecture,
    $280 million for Dynamics & Propulsion and
    $27 million for Other.                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(e) | Effective January 1, 2002, we adopted SFAS
    No. 142 Goodwill and Other Intangible Assets
    and stopped amortization of purchased goodwill. Accordingly, the
    three months ended June 30, 2001 excludes goodwill
    amortization of $9 million with $1 million for
    Electronics & Mobile Communication, $3 million for
    Safety, Thermal & Electrical Architecture, $4 million
    for Dynamics & Propulsion and $1 million for Other. The
    six months ended June 30, 2001 excludes goodwill
    amortization of $15 million with $2 million for
    Electronics & Mobile Communication, $4 million for
    Safety, Thermal & Electrical Architecture, $7 million
    for Dynamics & Propulsion and $2 million for Other.

8. COMMITMENTS AND
CONTINGENCIES

Delphi is from time to time subject to various
legal actions and claims incidental to its business, including
those arising out of alleged defects, breach of contracts,
product warranties, intellectual property matters,
employment-related matters and environmental matters. With
respect to environmental matters, Delphi has received notices
that it is a potentially responsible party (PRP) in
proceedings at various sites, including the Tremont City
Landfill Site located in Tremont, Ohio. With respect to warranty
matters, as previously disclosed, a few customers have advised
Delphi that they intend to pursue warranty claims vigorously.
Accordingly, although we cannot assure you that the future costs
of warranty claims by our customers will not be material, we
believe our established reserves are adequate to cover potential
warranty claims. However, the final amounts determined to be due
related to these matters could differ materially from our
recorded estimates.

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

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

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

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investments for potential impairments or
permanent declines in value, and record adjustments
periodically, in accordance with applicable accounting
requirements.


In November 2000, one customer entered into
corporate reorganization proceedings in Korea. As a result of
the reorganization, this customers obligations to its
suppliers, prior to November 2000, were legally frozen. On
April 30, 2002, this customer entered into agreements with
a major United States automotive manufacturer relating to
forming a new company, which is to purchase selected assets and
businesses of this customer and is to assume a portion of the
liabilities. On May 6, 2002, the Korean Bankruptcy Court
approved a preliminary reorganization plan, which provides for
only partial payment to creditors in the form of cash over a
period of two to three years, ranging from 40%-80% of the
relevant receivables, with the balance provided in equity of the
new company. A number of creditors, including certain of our
joint ventures which sell to this customer, have filed appeals
with the Bankruptcy Court. We expect the issues will not be
resolved until the final reorganization plan is approved and all
appeals are settled. We are vigorously pursuing collection of
all amounts owed to us directly, and owed to the joint ventures.
Also, we are continuing to work with the joint ventures to
facilitate their ongoing operations and believe that our net
investments in the joint ventures are recoverable. However, in
view of the preliminary reorganization plan, which does not
include payment of supplier claims in full and the significant
uncertainty surrounding the outcome of the reorganization, the
impact on our future results of operations and financial
condition could differ from currently recorded reserve estimates.

Our consolidated balance sheet as of
June 30, 2002 includes approximately $16 million of
accounts receivable from this customer, primarily in the U.S.
and Europe, related to shipments prior to November 2000. At
June 30, 2002, we have investments of $97 million,
generally through a 50% non-controlling voting interest, in
joint ventures that sell to this customer. At June 30,
2002, these ventures have approximately $225 million in
receivables due from this customer.

In April 2002, Delphi extended a consulting
agreement with Shoichiro Irimajiri, Inc., a company of which
Shoichiro Irimajiri, a member of Delphis Board of
Directors, is the principal shareholder. Under the consulting
agreement, the company performs services for Delphi relating to
the Japanese auto industry. The extension is for four months
ending August 31, 2002 at $50,000 per month. The Board of
Directors, with Mr. Irimajiri abstaining, approved the
extension.

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ITEM 2. MANAGEMENTS DISCUSSION AND
ANALYSIS OF FINANCIAL


CONDITION AND RESULTS OF OPERATIONS


Overview

While industry conditions in the North American
automotive market began to stabilize during the first half of
2002, other major automotive markets in which we operate
remained weak. Our previously announced restructuring plans
continue on track to yield improved results. We remain focused
on operating cost reductions resulting from restructuring and
cost containment initiatives.

Results of Operations

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

Three
Months Ended June 30, 2002 versus Three Months Ended
June 30, 2001

Net Sales.Consolidated net sales by product
sector and in total for the three months ended June 30,
2002 and 2001 were:

|                                          |                                          |                                          |       |       |       |  |       |       |       | 
|----------------------------------------- | ---------------------------------------- | ---------------------------------------- | ----- | ----- | ----- |  | ----- | ----- | ----- | 
|                                          |                                          |                                         
|                                          |                                          | Three Months                             |      
|                                          |                                          | Ended June 30,                           |      
|                                          |                                          |                                          |      
|Product Sector                            |                                          | 2002                                     |       |       | 2001  | 
|                                          |                                          |                                          |       |       |       | 
|                                          |                                          |                                         
|                                          |                                          | (in millions)                            |      
|Electronics & Mobile Communication        |                                          |                                          |       |       |       |  |       |      
|                                          | Mobile MultiMedia                        |                                          | $     | 94    |       |  | $     | 102   |      
|                                          | Other Electronics & Mobile Communication |                                          |       | 1,234 |       |  |       | 1,167 |      
|                                          |                                          |                                          |       |       |       | 
|                                          |                                          | Total Electronics & Mobile Communication |       |       | 1,328 |  |       |       | 1,269 | 
|Safety, Thermal & Electrical Architecture |                                          |                                          | 2,596 |       |       |  | 2,404 |      
|Dynamics & Propulsion                     |                                          |                                          | 3,488 |       |       |  | 3,378 |      
|Other                                     |                                          |                                          | (90   | )     |       |  | (107  | )    
|                                          |                                          |                                          |       |       |       | 
|                                          | Consolidated net sales                   |                                          | $     | 7,322 |       |  | $     | 6,944 |      
|                                          |                                          |                                          |       |       |       | 

Consolidated net sales for the second quarter of
2002 were $7.3 billion compared to $6.9 billion for
the same period of 2001. Net sales to GM increased by
$94 million, principally due to increased production volume
in North America, partially offset by other major automotive
markets which remained weak. Our non-GM sales increased by
$284 million as several previously announced customer
programs began ramping up to volume production levels. As a
percent of our total revenue for the second quarter of 2002 our
non-GM sales were 34%. Our net sales also were impacted by
continued price pressures that resulted in price reductions of
approximately $147 million, or 2.1% for the second quarter
of 2002 compared to approximately $176 million or 2.3% for
the comparable period of 2001.

Gross Margin.Our
gross margin was 13.5% for the second quarter of 2002 compared
to gross margin of 13.2% for the comparable period of 2001. The
slight improvement reflects greater efficiencies resulting from
stabilization of customer build schedules and savings realized
from our 2001 restructuring plans, partially offset by higher
wages and increased U.S. pension and healthcare expenses.

Selling, General and Administrative.Selling, general and administrative
expenses were $361 million or 4.9% of second quarter 2002
total net sales, as compared to $363 million or 5.2% of
second quarter of 2001 total net sales. The decrease as a
percent of net sales primarily results from aggressive cost
reduction efforts.

Depreciation and Amortization.Depreciation and amortization in 2002
was consistent with 2001 amounts, adjusted for $9 million
of goodwill amortization in the second quarter of 2001.

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Operating Income.Operating income was $382 million
for the second quarter of 2002 compared to operating income of
$303 million for the second quarter of 2001. To facilitate
analysis of our operating income by product sector, we have
excluded 2001 goodwill amortization of $9 million from the
information presented below:

|                                          |                                          |                                          |     |     |         |  |     |     |     | 
|----------------------------------------- | ---------------------------------------- | ---------------------------------------- | --- | --- | ------- |  | --- | --- | --- | 
|                                          |                                          |                                         
|                                          |                                          | Three Months                             |    
|                                          |                                          | Ended June 30,                           |    
|                                          |                                          |                                          |    
|Product Sector                            |                                          | 2002                                     |     |     | 2001(a) | 
|                                          |                                          |                                          |     |     |         | 
|                                          |                                          |                                         
|                                          |                                          | (in millions)                            |    
|Electronics & Mobile Communication        |                                          |                                          |     |     |         |  |     |    
|                                          | Mobile MultiMedia                        |                                          | $   | (4  | )       |  | $   | (7  | )  
|                                          | Other Electronics & Mobile Communication |                                          |     | 143 |         |  |     | 109 |    
|                                          |                                          |                                          |     |     |         | 
|                                          |                                          | Total Electronics & Mobile Communication |     |     | 139     |  |     |     | 102 | 
|Safety, Thermal & Electrical Architecture |                                          |                                          | 187 |     |         |  | 130 |    
|Dynamics & Propulsion                     |                                          |                                          | 78  |     |         |  | 123 |    
|Other                                     |                                          |                                          | (22 | )   |         |  | (43 | )  
|                                          |                                          |                                          |     |     |         | 
|                                          | Total operating income                   |                                          | $   | 382 |         |  | $   | 312 |    
|                                          |                                          |                                          |     |     |         | 



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Effective January 1, 2002, we adopted SFAS
    No. 142 Goodwill and Other Intangible Assets
    and stopped amortization of purchased goodwill. Accordingly, the
    second quarter 2001 excludes goodwill amortization of
    $9 million with $1 million for Electronics &
    Mobile Communication, $3 million for Safety, Thermal &
    Electrical Architecture, $4 million for Dynamics &
    Propulsion and $1 million for Other.

The increase in operating income from second
quarter 2001 primarily reflects increased North American
production volumes, improved efficiencies resulting from the
stabilization of customer build schedules, and savings realized
from our first quarter 2001 restructuring plans, offset by
increased employee-related costs. Our Dynamics & Propulsion
Sector was negatively impacted by mix of products sold. Mobile
MultiMedia reported an operating loss of $4 million
reflective of the ongoing high level of investment in
engineering and research and development related to the start-up
of this high-tech business.

Taxes.Our effective
tax rate was 36% for the three months ended June 30, 2002
and 2001.

Net Income.Our net
income was $220 million for the second quarter of 2002 as
compared to net income of $164 million for the second
quarter of 2001. Excluding goodwill amortization of
$7 million after-tax, second quarter 2001 net income would
have been $171 million.

Earnings Per Share.Basic and diluted earnings per share
was $0.39 for the second quarter of 2002 compared to basic and
diluted earnings per share of $0.29 for the second quarter 2001.
Excluding goodwill amortization of $7 million after-tax, second
quarter 2001 basic and diluted earnings per share would have
been $0.30.

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Six
Months Ended June 30, 2002 versus Six Months Ended
June 30, 2001

Net Sales.Consolidated net sales by product
sector and in total for the six months ended June 30, 2002
and 2001 were:

|                                          |                                          |                                          |       |        |       |  |       |        |       | 
|----------------------------------------- | ---------------------------------------- | ---------------------------------------- | ----- | ------ | ----- |  | ----- | ------ | ----- | 
|                                          |                                          |                                         
|                                          |                                          | Six Months Ended                         |      
|                                          |                                          | June 30,                                 |      
|                                          |                                          |                                          |      
|Product Sector                            |                                          | 2002                                     |       |        | 2001  | 
|                                          |                                          |                                          |       |        |       | 
|                                          |                                          |                                         
|                                          |                                          | (in millions)                            |      
|Electronics & Mobile Communication        |                                          |                                          |       |        |       |  |       |       
|                                          | Mobile MultiMedia                        |                                          | $     | 180    |       |  | $     | 213    |      
|                                          | Other Electronics & Mobile Communication |                                          |       | 2,378  |       |  |       | 2,258  |      
|                                          |                                          |                                          |       |        |       | 
|                                          |                                          | Total Electronics & Mobile Communication |       |        | 2,558 |  |       |        | 2,471 | 
|Safety, Thermal & Electrical Architecture |                                          |                                          | 4,943 |        |       |  | 4,652 |       
|Dynamics & Propulsion                     |                                          |                                          | 6,700 |        |       |  | 6,555 |       
|Other                                     |                                          |                                          | (191  | )      |       |  | (199  | )     
|                                          |                                          |                                          |       |        |       | 
|                                          | Consolidated net sales                   |                                          | $     | 14,010 |       |  | $     | 13,479 |      
|                                          |                                          |                                          |       |        |       | 

Consolidated net sales for the first six months
of 2002 were $14.0 billion compared to $13.5 billion
for the same period of 2001. Net sales to GM increased by
$212 million, principally due to increased production
volume in North America, partially offset by other major
automotive markets which remained weak. Our non-GM sales
increased by $319 million principally due to several
previously announced customer programs which began ramping up to
volume production levels and the acquisition of Delphi
Mechatronic Systems at the end of the first quarter of 2001,
partially offset by price decreases. As a percent of our total
revenue for the six months ended June 30, 2002, our non-GM
sales were 34%. Our net sales also were impacted by continued
price pressures that resulted in price reductions of
approximately $267 million, or 2.0% for the first six
months of 2002 compared to approximately $314 million or
2.0% for the comparable period of 2001.

Gross Margin.Our
gross margin was 12.8% for the first six months of 2002 compared
to gross margin of 11.5% for the comparable period of 2001. The
improvement reflects greater efficiencies resulting from
stabilization of customer build schedules and savings realized
from our 2001 restructuring plans, partially offset by higher
wages and increased U.S. pension and healthcare expenses. During
the first quarter of 2002, we recorded a charge of
$37 million related to our generator product line; this
charge is explained below. Excluding this charge, our gross
margin was 13.0%.

Selling, General and Administrative.Selling, general and administrative
expenses of $723 million, 5.2% of total net sales for the
first six months of 2002, decreased from $741 million or
5.5% of total net sales for the first six months of 2001. The
decrease primarily results from aggressive cost reduction
efforts partially offset by $5 million of incremental
selling, general and administrative expenses in the first
quarter of 2002 related to Delphi Mechatronic Systems acquired
at the end of the first quarter of 2001.

Depreciation and Amortization.Depreciation and amortization in 2002
was consistent with 2001 amounts, adjusted for the
$63 million long-lived asset impairment charge included in
depreciation and amortization in the first quarter of 2001, and
$15 million of goodwill amortization in the first six
months of 2001.

Restructuring.In
the first quarter of 2002, Delphi approved further restructuring
plans to eliminate 6,100 positions from our global workforce,
downsize more than 25 selected facilities in the United States
and Europe, and exit certain other activities by the end of the
first quarter of 2003. Approximately 15,990 positions have been
eliminated under the 2001 and 2002 programs through
June 30, 2002.

The first quarter of 2002 restructuring charge
totaled $231 million with $222 million of employee
costs (including postemployment benefits and special termination
pension benefits) and $9 million in other exit costs (lease
cancellation costs and contract cancellation fees). This charge,
when netted against the

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$6 million reversal noted below for the 2001
restructuring reserve, resulted in a net restructuring charge of
$225 million ($150 million after-tax) in the first
quarter of 2002. The plans entail the elimination of
approximately 6,100 positions worldwide, comprised of
3,100 U.S. employees and 3,000 employees in non-U.S.
locations. Employees at impacted locations have been informed of
the restructuring initiatives and the benefits available to them
under applicable benefit plans or related contractual
provisions. Affected employees have left or will leave Delphi
using a mixture of voluntary or involuntary separation programs,
early retirements, social plan programs, and layoffs. We expect
to pay approximately $200 million in cash related to the
restructuring programs with the remaining $31 million for
non-cash special termination pension benefits. During the first
six months of 2002, we paid $118 million related to
employee costs and $2 million related to exit costs. As of
June 30, 2002, approximately 2,000 U.S. employees and
2,550 non-U.S. employees have been separated under the
plans. We expect an additional 450 to 650 employees to
separate during the third quarter, with the remainder during the
fourth quarter 2002 and the first quarter in 2003. We expect to
begin to realize savings related to the 2002 restructuring
actions during the second half of 2002 with estimated ongoing
savings expected to grow in early 2004 to more than
$125 million (after-tax). These savings are expected to be
realized as reductions to cost of sales and selling, general and
administrative expenses.


The first quarter 2001 restructuring plans
resulted in a charge of $536 million that included
$492 million of employee costs (including postemployment
benefits and special termination pension and postretirement
benefits) and $44 million in other exit costs (principally lease
termination and contract cancellation payments). The plans
entailed the elimination of approximately 11,500 positions
worldwide, comprised of 5,600 U.S. hourly employees,
2,000 U.S. salaried employees, and 3,900 employees in
non-U.S. locations. Under the restructuring plans, we ultimately
eliminated 11,440 positions and incurred costs of
$530 million. For the U.S. hourly workforce, we reduced
5,400 positions against a plan of 5,600 positions.
This shortfall occurred during the first quarter of 2002, due to
minor variances in the execution of our restructuring plans. We
eliminated 4,040 non-U.S. positions, slightly above the
planned 3,900 positions, and we eliminated 2,000 U.S.
salaried employee positions as planned. Through June 30,
2002, total cash paid for restructuring was $457 million,
with $413 million for employee costs and $44 million
for other exit costs. We also had $73 million of non-cash
charges, principally for special termination pension and
postretirement benefits. Upon completion of our plans, in the
first quarter of 2002, we reversed $6 million of the
original $536 million charge on the Restructuring line in
our Statement of Operations. The $6 million is a result of
the minor shortfall in head count noted previously, as well as
slight favorable variances in the costs actually incurred under
the various initiatives. This reversal was netted against the
2002 restructuring charge explained above.

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

|                                        |  |                |      |   |            |   |     |            |  |   |       |   |  |   |      |  
|--------------------------------------- |  | -------------- | ---- | - | ---------- | - | --- | ---------- |  | - | ----- | - |  | - | ---- | -
|                                        |  |                |      |   |            |  
|                                        |  | Employee Costs |      |   |            |   |    
|                                        |  |                |      |   | Other Cash |   |     |           
|Restructuring Actions                   |  | Cash           |      |   | Non Cash   |   |     | Exit Costs |  |   | Total |  
|                                        |  |                |      |   |            |   |     |            |  |   |       |  
|First Quarter 2001 Restructuring Charge |  | $              | 419  |   |            | $ | 73  |            |  | $ | 44    |   |  | $ | 536  |  
|Usage                                   |  |                | (321 | ) |            |   | (72 | )          |  |   | (22   | ) |  |   | (415 | )
|                                        |  |                |      |   |            |   |     |            |  |   |       |  
|Balance at December 31, 2001            |  |                | 98   |   |            |   | 1   |            |  |   | 22    |   |  |   | 121  |  
|                                        |  |                |      |   |            |   |     |            |  |   |       |  
|Usage                                   |  |                | (92  | ) |            |   | (1  | )          |  |   | (22   | ) |  |   | (115 | )
|Adjustments due to change in estimate   |  |                | (6   | ) |            |   |    |            |  |   |      |   |  |   | (6   | )
|                                        |  |                |      |   |            |   |     |            |  |   |       |  
|Balance at June 30, 2002                |  | $              |     |   |            | $ |    |            |  | $ |      |   |  | $ |     |  
|                                        |  |                |      |   |            |   |     |            |  |   |       |  
|First Quarter 2002 Restructuring Charge |  | $              | 191  |   |            | $ | 31  |            |  | $ | 9     |   |  | $ | 231  |  
|First Quarter usage                     |  |                | (60  | ) |            |   | (31 | )          |  |   | (2    | ) |  |   | (93  | )
|Second Quarter usage                    |  |                | (58  | ) |            |   |    |            |  |   |      |   |  |   | (58  | )
|                                        |  |                |      |   |            |   |     |            |  |   |       |  
|Balance at June 30, 2002.               |  | $              | 73   |   |            | $ |    |            |  | $ | 7     |   |  | $ | 80   |  
|                                        |  |                |      |   |            |   |     |            |  |   |       |  

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The net restructuring charge recorded in the
first quarter of 2002 was $225 million, reflecting a
provision of $231 million, and a reversal of the 2001
charge of $6 million. At June 30, 2002, total
restructuring obligations were $80 million. In addition to
the restructuring charge explained above, our Statement of
Operations and Statement of Cash Flows include amounts related
to our generator product line. While not recorded on the
Restructuring line in the Statement of Operations, our plans for
the generator product line include similar charges, as explained
below. In total, the first quarter 2002 charges for
restructuring and our generator product line decreased earnings
by a net $262 million ($174 million after-tax), and
used $131 million of cash flow during the first six months
of 2002.

In December 2000, we announced that our generator
product line was part of our portfolio of businesses under
review. As of the fourth quarter 2001, we had entered into a
non-binding letter of intent to sell this product line and
expected to consummate the potential sale during the first half
of 2002. Recently, we announced we would not complete the
transaction as previously anticipated, and, accordingly began
the process to wind down the product line. This process affects
a number of parties, including our customers, employees and
suppliers. We have commenced discussions with these affected
parties. We expect these discussions to continue during the
second half of 2002. As a result of our decision to wind down
this product line, we have reviewed our current estimates with
respect to wind down related costs, including redundant work
force costs and determined, based upon our current expectations
that our reserves for these items are adequate. These amounts
are based upon our best estimates with respect to timing of the
wind down process and ultimate resolution of contractually
required payments. Due to the significance of the estimates
involved, the final costs for the wind down of the product line
could materially differ from the recorded amounts.

We expect the redundant workforce to grow as a
result of the wind down process, and we expect to resolve their
employment status by late in 2003, concurrent with the
expiration of our labor contracts. Such resolution, which will
affect the final cost for the wind down, could include
retirements, transfers to other facilities, paid separations,
continued redundant status and/or replacement work.

The total recorded loss associated with the wind
down of this product line was $231 million
($149 million after-tax), of which $194 million
($125 million after-tax) was recorded in the fourth quarter
of 2001 and $37 million ($24 million after-tax) was
recorded in the first quarter of 2002. We expect to pay
$75 million of the $231 million in cash, primarily for
estimated contractually required redundant workforce payments
related to our unionized U.S. manufacturing operations. We have
paid $11 million in the first six months of 2002.

Operating Income (Loss).Operating income was $350 million
for the first six months of 2002 compared to an operating loss
of $(294) million for the first six months of 2001. To
facilitate analysis of our operating income by product sector,
we have excluded the 2002 net restructuring and product line

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charges of $262 million, and 2001 charges of
$536 million for restructuring actions, $63 million
for asset impairments, and $15 million for goodwill
amortization from the information presented below:


|                                          |                                          |                                          |     |     |            |  |     |     |     | 
|----------------------------------------- | ---------------------------------------- | ---------------------------------------- | --- | --- | ---------- |  | --- | --- | --- | 
|                                          |                                          |                                         
|                                          |                                          | Six Months Ended                         |    
|                                          |                                          | June 30,                                 |    
|                                          |                                          |                                          |    
|Product Sector                            |                                          | 2002(a)                                  |     |     | 2001(b)(c) | 
|                                          |                                          |                                          |     |     |            | 
|                                          |                                          |                                         
|                                          |                                          | (in millions)                            |    
|Electronics & Mobile Communication        |                                          |                                          |     |     |            |  |     |    
|                                          | Mobile MultiMedia                        |                                          | $   | (10 | )          |  | $   | (10 | )  
|                                          | Other Electronics & Mobile Communication |                                          |     | 254 |            |  |     | 178 |    
|                                          |                                          |                                          |     |     |            | 
|                                          |                                          | Total Electronics & Mobile Communication |     |     | 244        |  |     |     | 168 | 
|Safety, Thermal & Electrical Architecture |                                          |                                          | 322 |     |            |  | 180 |    
|Dynamics & Propulsion                     |                                          |                                          | 86  |     |            |  | 26  |    
|Other                                     |                                          |                                          | (40 | )   |            |  | (54 | )  
|                                          |                                          |                                          |     |     |            | 
|                                          | Total operating income                   |                                          | $   | 612 |            |  | $   | 320 |    
|                                          |                                          |                                          |     |     |            | 



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Excludes the first quarter 2002 net restructuring
    and generator product line charges of $262 million with
    $20 million for Electronics & Mobile Communication,
    $101 million for Safety, Thermal & Electrical
    Architecture, $126 million for Dynamics &
    Propulsion and $15 million for Other.                                                                                                                               
|   
|(b) | Excludes the first quarter 2001 restructuring and
    asset impairment charges of $599 million with
    $78 million for Electronics & Mobile Communication,
    $214 million for Safety, Thermal & Electrical
    Architecture, $280 million for Dynamics & Propulsion
    and $27 million for Other.                                                                                                                                         
|   
|(c) | Effective January 1, 2002, we adopted SFAS
    No. 142 Goodwill and Other Intangible Assets
    and stopped amortization of purchased goodwill. Accordingly, the
    first six months of 2001 excludes goodwill amortization of
    $15 million with $2 million for Electronics &
    Mobile Communication, $4 million for Safety,
    Thermal & Electrical Architecture, $7 million for
    Dynamics & Propulsion and $2 million for Other.

The increase in operating income by sector from
the first six months of 2001 primarily reflects increased
North American production volumes, improved efficiencies
resulting from the stabilization of customer build schedules,
and savings realized from our first quarter 2001 restructuring
plans, offset by increased employee-related costs. Mobile
MultiMedia reported an operating loss of $10 million
reflective of the ongoing high level of investment in
engineering and research and development related to the start-up
of this high-tech business.

Taxes.Our effective
tax rate for the first six months of 2002 was 38% compared to
34% for the comparable period of 2001. These rates reflect our
inability to fully tax effect the restructuring initiatives in
certain jurisdictions. Our effective tax rate excluding the net
restructuring and product line charges in 2002 and restructuring
and impairment charges in 2001 was 36% for the six months ended
June 30, 2002 and 2001.

Net Income (Loss).Our net income was $169 million
for the six months of 2002 as compared to net loss of $(265)
million for the first six months of 2001. Excluding the 2002
restructuring and generator product line charges of
$174 million after-tax, net income would have been
$343 million compared to net income of $151 million,
which excludes first quarter 2001 restructuring and impairment
charges of $404 million after-tax and goodwill amortization
of $12 million after-tax.

Earnings (Loss) Per Share.Basic and diluted earnings per share
was $0.30 for the six months of 2002 compared to basic and
diluted loss per share of $(0.47), for the first six months of
2001. Excluding the 2002 restructuring and generator product
line charges of $174 million after-tax, basic and diluted
earnings per share would have been $0.61 and $0.60,
respectively, compared to basic and diluted earnings per share
of $0.27, which excludes first quarter 2001 restructuring and
impairment charges of $404 million after-tax and
$12 million goodwill amortization after-tax.

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Liquidity and Capital Resources

Liquidity

Our net liquidity, measured as cash and cash
equivalents less total debt, was $(2.9) billion at
June 30, 2002 compared to $(2.6) billion at
December 31, 2001. The ratio of our total debt to total
capital, which consists of total debt plus stockholders
equity, was 60.0% at June 30, 2002 and 59.2% at
December 31, 2001.

During the first six months of 2002, we made
payments of $92 million related to employee costs and
$22 million in other exit costs for the remainder of the
2001 restructuring charge. Of the $262 million net
restructuring and generator product line charges in 2002 and the
$194 million 2001 generator product line impairment charge,
we expect to pay approximately $275 million in cash. During
the six months ended June 30, 2002, we paid
$118 million related to employee costs, $2 million in
other exit costs and $11 million related to our generator
product line. We expect to pay up to an additional
$40 million during the third quarter of 2002 and the
remainder during the fourth quarter of 2002 and during 2003.

Requirements for working capital, acquisitions,
capital expenditures, dividends, repayment of debt securities,
separation related obligations and restructuring obligations are
expected to be funded from operations, supplemented as needed by
short-term or long-term borrowings available under our
commercial paper programs, our Credit Facilities described below
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 was renewed in the second
quarter of 2002 and now expires in June 2003. Except for the
extension of expiration date, the terms of the credit facility
renewed in the second quarter of 2002 remain substantially
unchanged. As of June 30, 2002, there were no amounts
outstanding under the Credit Facilities. Utilizing the Credit
Facilities as back up, Delphi maintains $2.5 billion of
worldwide commercial paper programs, under which
$1.4 billion was outstanding as of June 30, 2002.
Delphi also has approximately $140 million available under
uncommitted lines of credit. As of June 30, 2002, there
were no amounts outstanding under uncommitted lines of credit.
At June 30, 2002, our total debt level was
$3.7 billion. We expect our total debt to approximate
$3.4 billion by December 31, 2002.

Delphi leases certain property, primarily land
and buildings, under leases commonly known as synthetic
operating leases. These leases, which are accounted for as
operating leases, provide us tax treatment equivalent to
ownership, and also give us the option to purchase these
properties upon expiration of the lease. In aggregate, our
purchase price, if we chose to exercise such options,
approximates $127 million. These leases also require us to
guarantee a minimum value of $112 million upon expiration
of the leases. At June 30, 2002, the fair value of these
properties exceeds the minimum value guaranteed.

We have guaranteed the borrowings of one venture
and one supplier for approximately $15 million and
$4 million, respectively. We have no other financial
commitments (such as lines of credit, standby lines of credit,
standby repurchase obligations nor have we guaranteed such
items) to or on behalf of entities that are excluded from our
consolidated financial statements. As of June 30, 2002,
there have been no material changes to our unsecured debt and
leasing arrangements as described in our Annual Report on
Form 10-K for the year ended December 31, 2001. From
time to time we enter into purchase commitments with our
suppliers under customary purchase order terms. Any significant
losses implicit in these contracts would be recognized in
accordance with generally accepted accounting principles.

Delphi currently has a credit rating of BBB/ Baa2
with a stable outlook, which was reaffirmed by the rating
agencies in December 2001. Although not currently anticipated,
if we were downgraded to BBB- or Baa3, we believe we would
continue to have access to sufficient liquidity; however, our
cost of borrowing may increase. Although in these circumstances
our access to the commercial paper market likely would be

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limited, we believe our outstanding commercial
paper could be refinanced using a combination of funding
available from our $3.0 billion Credit Facilities described
above, uncommitted lines of credit, term debt or customer
receivable based financing, such as factoring. We believe that
our receivables are of a quality that would allow access to this
market. Our Credit Facilities also contain certain affirmative
and negative covenants including among others, requirements for
certain leverage and indebtedness ratios. We were in compliance
with all such covenants as of June 30, 2002.




Cash
Flows

Operating Activities.Net cash provided by operating
activities totaled $0.3 billion for the six months ended
June 30, 2002 compared to net cash provided by operating
activities of $0.7 billion for the six months ended
June 30, 2001. Cash provided by operating activities in the
first six months of 2002 was impacted by a $400 million
second quarter voluntary contribution to our U.S. hourly
pension plan and a $143 million second quarter payment
to GM for previously recorded separation related obligations for
other postretirement benefits. The payment to GM represents the
final payment required to settle our separation related
obligations. Cash provided by operating activities in the first
six months of 2001 resulted from improved working capital
management partially offset by a $175 million payment to GM
in the second quarter for previously recorded separation related
obligations for pension and other postretirement benefits.

Investing Activities.Cash flows used in investing
activities totaled $0.4 billion and $0.8 billion for
the six months ended June 30, 2002 and 2001, respectively.
The use of cash in the first six months of 2002 reflects capital
expenditures related to ongoing operations. The use of cash in
the first six months of 2001 reflects the acquisition of Delphi
Mechatronic Systems and Delphi Connection Systems-Specialty
Electronics for approximately $0.3 billion, as well as
capital expenditures related to ongoing operations.

Financing Activities.Net cash provided by financing
activities was $0.2 billion and $0.1 billion for the
six months ended June 30, 2002 and 2001, respectively. Cash
provided by financing activities during the first six months of
2002 represented increased borrowings of short-term debt. Cash
provided by financing activities during the first six months of
2001 represented the net proceeds from a $500 million
public debt offering partially offset by repayments of our
uncommitted lines of credit and commercial paper.

Dividends.The Board
of Directors declared a dividend on Delphi common stock of $0.07
per share on June 27, 2002, payable on August 5, 2002
to holders of record on July 8, 2002. The dividend declared
on March 13, 2002 was paid on April 22, 2002.

Outlook

According to Automotive News, automotive
production in North America in the first six months of 2002 was
5% higher than the same period in the prior year. Production
schedules for our largest customer in North America, our largest
market, were approximately 13% higher in the first six months of
2002 than in the comparable period in 2001. However, other major
automotive markets remained weak. Our non-GM revenue grew by 7%
during the first six months of 2002, and represents 34% of
our sales, up from 33% in the same period last year. We are
hopeful that North American production schedules will remain
firm, however, we are cautious that this stability will be
somewhat offset by continued softness in other major automotive
markets.

Delphi continues to implement productivity
improvements and streamline activities designed to reduce
overhead and improve manufacturing processes. In addition, we
continue to streamline our portfolio, reduce excess capacity and
operating costs, and respond to global industry conditions and
increased employee related costs such as U.S. health care and
pensions and wages in non-U.S. locations. As previously
announced, we are working to fix, sell or close our
instrumentation product line. Our objective is to reach a
conclusion with respect to this product line in the third
quarter of 2002. We intend that these actions will continue to
reduce our manufacturing and selling, general and administrative
costs, but cannot

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assure you that such actions will be effective or
sufficient to offset the impact of adverse market conditions.


In addition to conditions in our market and the
economy as a whole, we depend on GM as a customer. GM accounted
for 66% of our net sales for the first six months of 2002. Our
sales to GM have declined since our separation from GM in 1999;
principally reflecting the impact of customer driven price
reductions and the elimination of non-profitable businesses as
well as GMs diversification of its supply base and recent
changes in our product mix supplied to them. We also exited some
businesses as part of our portfolio review process. Reflecting
these and other factors we expect our sales to GM to further
decline over time. If we are unable to compete effectively for
new business with GMs other suppliers, our revenues may
decline. In connection with our separation from GM in 1999, we
entered into a supply agreement with GM affording us limited
bidding rights on new GM products for a period of three years.
Through December 31, 2001, we generally had the ability to
secure under competitive purchase order terms the first
replacement cycle of all product programs in the United States
and Canada, which we were providing to GM as of January 1,
1999, and certain other product programs. Consistent with
GMs contracts with other suppliers, the supply agreement
provided GM the right to re-source business existing at
January 1, 1999 if we were not competitive in terms of
quality, service, design and technology. This right of
last refusal under the supply agreement expired on
January 1, 2002. Accordingly, we now bid for GMs
business on the same basis as our competitors. To compete
effectively with these competitors, we will need to continue to
satisfy GMs pricing, service, technology and increasingly
stringent quality and reliability requirements, which, because
we are GMs largest supplier, particularly affect us. For
these reasons, we cannot provide any assurance as to the amount
of our future business with GM. While we intend to continue to
focus on retaining and winning GMs business, we cannot
assure you that we will succeed in doing so. Additionally, our
revenues may be affected by increases or decreases in GMs
business or market share. We are currently projecting our sales
beyond 2002 to grow modestly assuming projected production
levels, with non-GM sales increasing and GM sales flat to
decreasing.

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

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

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investments for potential impairments or
permanent declines in value, and record adjustments
periodically, in accordance with applicable accounting
requirements.


In November 2000, one customer entered into
corporate reorganization proceedings in Korea. As a result of
the reorganization, this customers obligations to its
suppliers, prior to November 2000, were legally frozen. On
April 30, 2002, this customer entered into agreements with
a major United States automotive manufacturer relating to
forming a new company, which is to purchase selected assets and
businesses of this customer and is to assume a portion of the
liabilities. On May 6, 2002, the Korean Bankruptcy Court
approved a preliminary reorganization plan, which provides for
only partial payment to creditors in the form of cash over a
period of two to three years, ranging from 40%-80% of the
relevant receivables, with the balance provided in equity of the
new company. A number of creditors, including certain of our
joint ventures which sell to this customer, have filed appeals
with the Bankruptcy Court. We expect the issues will not be
resolved until the final reorganization plan is approved and all
appeals are settled. We are vigorously pursuing collection of
all amounts owed to us directly, and owed to the joint ventures.
Also, we are continuing to work with the joint ventures to
facilitate their ongoing operations and believe that our net
investments in the joint ventures are recoverable. However, in
view of the preliminary reorganization plan, which does not
include payment of supplier claims in full and the significant
uncertainty surrounding the outcome of the reorganization, the
impact on our future results of operations and financial
condition could differ from currently recorded reserve estimates.

Our consolidated balance sheet as of
June 30, 2002 includes approximately $16 million of
accounts receivable from this customer, primarily in the U.S.
and Europe, related to shipments prior to November 2000. At
June 30, 2002, we have investments of $97 million,
generally through a 50% non-controlling voting interest, in
joint ventures that sell to this customer. At June 30,
2002, these ventures have approximately $225 million in
receivables due from this customer.

Related Party Transaction

In April 2002, Delphi extended a consulting
agreement with Shoichiro Irimajiri, Inc., a company of which
Shoichiro Irimajiri, a member of Delphis Board of
Directors, is the principal shareholder. Under the consulting
agreement, the company performs services for Delphi relating to
the Japanese auto industry. The extension is for four months
ending August 31, 2002 at $50,000 per month. The Board of
Directors, with Mr. Irimajiri abstaining, approved the
extension.

Environmental Matters

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

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New Accounting Pronouncements

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

In April 2002, the FASB issued SFAS No. 145
Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical
Corrections. This statement eliminates the automatic
classification of gain or loss on extinguishment of debt as an
extraordinary item of income and requires that such gain or loss
be evaluated for extraordinary classification under the criteria
of Accounting Principles Board No. 30 Reporting
Results of Operations. This statement also requires
sales-leaseback accounting for certain lease modifications that
have economic effects that are similar to sales-leaseback
transactions, and makes various other technical corrections to
existing pronouncements. This statement will be effective for
Delphi for the year ending December 31, 2003. The adoption
of this statement will not have a material effect on our results
of operations or financial position.

Forward-Looking Statements

The Private Securities Litigation Reform Act of
1995 provides a safe harbor for forward-looking statements made
by us or on our behalf. Delphi and its representatives may
periodically make written or oral statements that are
forward-looking, including statements included in
this report and other filings with the Securities and Exchange
Commission and in reports to our stockholders. All statements
contained or incorporated in this report which address operating
performance, events or developments that we expect or anticipate
may occur in the future (including statements relating to future
sales or earnings expectations, savings expected as a result of
global restructurings or other initiatives, portfolio
restructuring plans, volume growth, awarded sales contracts and
earnings per share expectations or statements expressing general
optimism about future operating results) are forward-looking
statements. These statements are made on the basis of
managements views and assumptions; as a result, there can
be no assurance that managements expectations will
necessarily come to pass. Principal important factors, risks and
uncertainties which may cause actual results to differ from
those expressed in forward-looking statements set forth in this
Quarterly Report on Form 10-Q include: our ability to
increase non-GM sales and achieve the labor benefits expected
from our separation from GM; our ability to retain GM business;
potential increases in our warranty costs; our ability to
successfully implement our global restructuring plans, including
our planned 2002 portfolio restructuring; our ability to
successfully implement our new markets initiative and achieve
the benefits anticipated by such strategy; our ability to enter
into definitive agreements to sell or wind down our generator
and instrumentation businesses and make satisfactory
arrangements with respect to antitrust matters, the labor force,
customers of such businesses and other matters; changes in
economic conditions, currency exchange rates or political
environment in the markets in which we operate; the impact of
possible terrorist attacks which could exacerbate other risks to
our business such as incremental costs, slowed production or
interruptions in the transportation system; financial or market
declines of our customers or significant business partners;
labor disruptions or material shortages; the level of
competition in the markets in which we operate; the cyclical
nature of the automobile industry, including significant
downturns in the automobile production rate; costs relating to
legal and administrative proceedings; changes in laws or
regulations affecting our business; our ability to realize cost
savings expected to offset price reductions; our ability to make
pension and other postretirement payments at levels anticipated
by management; our ability to successfully exit non-performing
businesses and absorb contingent liabilities related to
divestitures and facility closures; 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,

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risks and uncertainties discussed in our Annual
Report on Form 10-K for the year ended December 31,
2001 and other filings with the Securities and Exchange
Commission. Delphi does not intend or assume any obligation to
update any of these forward-looking statements.







ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK


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

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PART II. OTHER INFORMATION







ITEM 1. LEGAL PROCEEDINGS


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

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

ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS

The Annual Meeting of Stockholders of Delphi was
held on May 1, 2002. At the meeting, the following matters
were submitted to a vote of the stockholders of Delphi:



| |     |                                                                                                                                                                                                                                           
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | The election of three directors to serve for a
    three-year term beginning at the 2002 Annual Stockholders
    Meeting and expiring at the 2005 Annual Stockholders
    Meeting. The vote with respect to each nominee was as follows:

|                 |  |     |             |  |          |  |            | 
|---------------- |  | --- | ----------- |  | -------- |  | ---------- | 
|Nominee          |  | For |             |  | Withheld | 
|                 |  |     |             |  |          | 
|Robert H. Brust  |  |     | 381,795,734 |  |          |  | 96,962,756 | 
|Alan S. Dawes    |  |     | 381,761,528 |  |          |  | 96,996,962 | 
|Donald L. Runkle |  |     | 380,801,453 |  |          |  | 97,957,037 | 



| |     |                                                                                                                                                       
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | The ratification of the appointment of Deloitte
    & Touche LLP as Delphis independent public accountants
    for the year ending December 31, 2002.

|    |             |  |         |  |            |         |  |  |           |  |  |  |  | 
|--- | ----------- |  | ------- |  | ---------- | ------- |  |  | --------- |  |  |  |  | 
|For |             |  | Against |  |            | Abstain |  |  |          
|    |             |  |         |  |            |         |  |  |          
|    | 456,815,949 |  |         |  | 17,432,137 |         |  |  | 4,510,404 |  |  |  |  | 



| |     |                                                                                                                                                                                                                              
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (3) | A stockholder proposal requesting the Board of
    Directors to redeem any poison pill previously issued unless
    such issuance is approved by the affirmative vote of
    shareholders, to be held as soon as practicable.

|    |             |  |         |  |             |         |  |  |           |  |  |  |            | 
|--- | ----------- |  | ------- |  | ----------- | ------- |  |  | --------- |  |  |  | ---------- | 
|For |             |  | Against |  |             | Abstain |  |  | Non-Vote  | 
|    |             |  |         |  |             |         |  |  |           | 
|    | 237,325,146 |  |         |  | 173,962,611 |         |  |  | 6,301,757 |  |  |  | 61,168,976 | 



| |     |                                                                                                                                                                                                                                                                
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (4) | A stockholder proposal requesting the Board of
    Directors to take steps required to elect each director
    annually, and that any future change in the frequency of
    director election be submitted to a shareholder vote as a
    stand-alone proposal.

|    |             |  |         |  |             |         |  |  |           |  |  |  |            | 
|--- | ----------- |  | ------- |  | ----------- | ------- |  |  | --------- |  |  |  | ---------- | 
|For |             |  | Against |  |             | Abstain |  |  | Non-Vote  | 
|    |             |  |         |  |             |         |  |  |           | 
|    | 261,082,181 |  |         |  | 150,731,259 |         |  |  | 5,776,074 |  |  |  | 61,168,976 | 



| |     |                                                                                                                                                                                                                     
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (5) | A stockholder proposal requesting that the Board
    of Directors review and amend, if necessary, its code for
    international operations and report a summary of this review to
    stockholders by October 2002.

|    |            |  |         |  |             |         |  |  |            |  |  |  |            | 
|--- | ---------- |  | ------- |  | ----------- | ------- |  |  | ---------- |  |  |  | ---------- | 
|For |            |  | Against |  |             | Abstain |  |  | Non-Vote   | 
|    |            |  |         |  |             |         |  |  |            | 
|    | 86,519,601 |  |         |  | 313,665,819 |         |  |  | 17,404,094 |  |  |  | 61,168,976 | 



| |     |                                                                                                                                                                       
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (6) | A stockholder proposal recommending that the
    Board of Directors take steps necessary to implement a policy of
    confidential voting at all shareholder meetings.

|    |             |  |         |  |             |         |  |  |           |  |  |  |            | 
|--- | ----------- |  | ------- |  | ----------- | ------- |  |  | --------- |  |  |  | ---------- | 
|For |             |  | Against |  |             | Abstain |  |  | Non-Vote  | 
|    |             |  |         |  |             |         |  |  |           | 
|    | 246,110,194 |  |         |  | 165,489,905 |         |  |  | 5,989,415 |  |  |  | 61,168,976 | 

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| |     |                                                                                                                                                                                                                                                 
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (7) | A stockholder proposal requesting the Board of
    Directors to adopt a policy stating that the public accounting
    firm retained by Delphi to provide audit services should not
    also be retained to provide non-audit services to Delphi.

|    |             |  |         |  |             |         |  |  |            |  |  |  |            | 
|--- | ----------- |  | ------- |  | ----------- | ------- |  |  | ---------- |  |  |  | ---------- | 
|For |             |  | Against |  |             | Abstain |  |  | Non-Vote   | 
|    |             |  |         |  |             |         |  |  |            | 
|    | 138,906,072 |  |         |  | 267,646,575 |         |  |  | 11,036,867 |  |  |  | 61,168,976 | 






ITEM 6. EXHIBITS AND REPORTS ON FORM
8-K


(a) EXHIBITS

|        |       |  |              |                                                                                                                                                                                   
|------- | ----- |  | ------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |  |             
|Number  |       |  | Exhibit Name
|        |       |  |             
|        | 3(a)  |  |              | Amended and Restated Certificate of Incorporation
    of Delphi Automotive Systems Corporation                                                                                    
|        | 3(b)  |  |              | Certificate of Ownership and Merger, dated
    March 13, 2002, Merging Delphi Corporation into Delphi
    Automotive Systems Corporation                                          
|        | 3(c)  |  |              | By-laws of Delphi Automotive Systems Corporation,
    incorporated by reference to Exhibit 3.2 to Delphis
    Registration Statement on Form S-1 (Registration
    No. 333-67333)
|        | 10(a) |  |              | Extension of Consulting Agreement With Director
    dated April, 2002                                                                                                             
|        | 10(b) |  |              | 364-Day Fourth Amended and Restated Competitive
    Advance and Revolving Credit Facility dated June 21, 2002                                                                     
|        | 99    |  |              | Press Release dated July 17, 2002 regarding
    quarterly earnings                                                                                                                

(b) REPORTS ON FORM 8-K

None

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SIGNATURE


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



| |                   
| | ------------------
| | DELPHI CORPORATION
| |                   
| | (Registrant)      

July 17, 2002

| |                                          
| | -----------------------------------------
| | /s/ JOHN D. SHEEHAN                      
| |                                          
| | John D. Sheehan, Chief Accounting Officer
| | and Controller                           

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EXHIBIT INDEX

|        |       |  |              |                                                                                                                                                                                   
|------- | ----- |  | ------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |  |             
|Number  |       |  | Exhibit Name
|        |       |  |             
|        | 3(a)  |  |              | Amended and Restated Certificate of Incorporation
    of Delphi Automotive Systems Corporation                                                                                    
|       
|        | 3(b)  |  |              | Certificate of Ownership and Merger, dated
    March 13, 2002, Merging Delphi Corporation into Delphi
    Automotive Systems Corporation                                          
|       
|        | 3(c)  |  |              | By-laws of Delphi Automotive Systems Corporation,
    incorporated by reference to Exhibit 3.2 to Delphis
    Registration Statement on Form S-1 (Registration
    No. 333-67333)
|       
|        | 10(a) |  |              | Extension of Consulting Agreement With Director
    dated April, 2002                                                                                                             
|       
|        | 10(b) |  |              | 364-Day Fourth Amended and Restated Competitive
    Advance and Revolving Credit Facility dated June 21, 2002                                                                     
|       
|        | 99    |  |              | Press Release dated July 17, 2002 regarding
    quarterly earnings                                                                                                                

(b) REPORTS ON FORM 8-K

None