##### Table of Contents



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, 2003

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          |  | (IRS employer         
|incorporation or organization)           |  | identification number)
|                                        
|5725 Delphi Drive, Troy, Michigan        |  | 48098                 
|(Address of principal executive offices) |  | (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, 2003, there were 560,295,941
outstanding shares of the registrants $0.01 par value
common stock.



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TABLE OF CONTENTS



|                                                                                              |  |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|CONSOLIDATED STATEMENTS OF INCOME                                                            
|CONSOLIDATED BALANCE SHEETS                                                                  
|CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)                                            
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)                                       
|ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|ITEM 4. CONTROLS AND PROCEDURES                                                              
|PART II. OTHER INFORMATION                                                                   
|ITEM 1. LEGAL PROCEEDINGS                                                                    
|ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURE                                                                                    
|CERTIFICATIONS                                                                               
|Ex-10(a) Competitive Advance and Revolving Credit                                            
|EX-99(a) 906 Cert. of Chief Executive Officer                                                
|EX-99(b) 906 Cert. of Chief Financial Officer                                                



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##### Table of Contents



DELPHI CORPORATION

INDEX

|                               |  |                                                                                                             |    |      |    | 
|------------------------------ |  | ----------------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|                               |  |                                                                                                             |    | Page |   
|                               |  |                                                                                                             |    |      |   
|Part I  Financial Information
|Item 1.                        |  | Financial Statements                                                                                        |    |      |    | 
|                               |  | Consolidated Statements of Income (Unaudited) for
    the Three and Six Months Ended June 30, 2003 and 2002 |    |      | 3  | 
|                               |  | Consolidated Balance Sheets at June 30, 2003
    (Unaudited) and December 31, 2002                          |    |      | 4  | 
|                               |  | Consolidated Statements of Cash Flows (Unaudited)
    for the Six Months Ended June 30, 2003 and 2002       |    |      | 5  | 
|                               |  | Notes to Consolidated Financial Statements
    (Unaudited)                                                  |    |      | 6  | 
|Item 2.                        |  | Managements Discussion and Analysis of
    Financial Condition and Results of Operations                   |    |      | 13 | 
|Item 3.                        |  | Quantitative and Qualitative Disclosures About
    Market Risk                                              |    |      | 25 | 
|Item 4.                        |  | Controls and Procedures                                                                                     |    |      | 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 |     
|Certifications                 |  |                                                                                                             | 29 |     

2



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##### Table of Contents



PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

DELPHI CORPORATION






CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)


|                                              |                                             |                                         |      |       |            |   |      |       |       |   |      |        |        |   |      |        |        | 
|--------------------------------------------- | ------------------------------------------- | --------------------------------------- | ---- | ----- | ---------- | - | ---- | ----- | ----- | - | ---- | ------ | ------ | - | ---- | ------ | ------ | 
|                                              |                                             |                                         |      |      
|                                              |                                             | Three Months                            |      |       | Six Months |  
|                                              |                                             | Ended                                   |      |       | Ended      |  
|                                              |                                             | June 30,                                |      |       | June 30,   |  
|                                              |                                             |                                         |      |       |            |  
|                                              |                                             | 2003                                    |      |       | 2002       |   |      | 2003  |       |   | 2002 |       
|                                              |                                             |                                         |      |       |            |   |      |       |       |   |      |       
|                                              |                                             |                                        
|                                              |                                             | (in millions, except per share amounts) |     
|Net sales:                                    |                                             |                                         |      |       |            |   |      |       |       |   |      |        |        |   |      |       
|                                              | General Motors and affiliates               |                                         | $    | 4,313 |            |   | $    | 4,818 |       |   | $    | 8,868  |        |   | $    | 9,302  |       
|                                              | Other customers                             |                                         |      | 2,781 |            |   |      | 2,504 |       |   |      | 5,408  |        |   |      | 4,708  |       
|                                              |                                             |                                         |      |       |            |   |      |       |       |   |      |       
|                                              |                                             | Total net sales                         |      |       | 7,094      |   |      |       | 7,322 |   |      |        | 14,276 |   |      |        | 14,010 | 
|                                              |                                             |                                         |      |       |            |   |      |       |       |   |      |       
|Less operating expenses:                      |                                             |                                         |      |       |            |   |      |       |       |   |      |        |        |   |      |       
|                                              | Cost of sales, excluding items listed below |                                         |      | 6,240 |            |   |      | 6,332 |       |   |      | 12,552 |        |   |      | 12,221 |       
|                                              | Selling, general and administrative         |                                         |      | 422   |            |   |      | 361   |       |   |      | 811    |        |   |      | 723    |       
|                                              | Depreciation and amortization               |                                         |      | 260   |            |   |      | 247   |       |   |      | 513    |        |   |      | 491    |       
|                                              | Restructuring (Note 2)                      |                                         |      |      |            |   |      |      |       |   |      |       |        |   |      | 225    |       
|                                              |                                             |                                         |      |       |            |   |      |       |       |   |      |       
|                                              |                                             | Total operating expenses                |      |       | 6,922      |   |      |       | 6,940 |   |      |        | 13,876 |   |      |        | 13,660 | 
|                                              |                                             |                                         |      |       |            |   |      |       |       |   |      |       
|Operating income                              |                                             |                                         | 172  |       |            |   | 382  |       |       |   | 400  |        |        |   | 350  |       
|Less: interest expense                        |                                             |                                         | 45   |       |            |   | 47   |       |       |   | 90   |        |        |   | 95   |       
|Other income, net                             |                                             |                                         | 2    |       |            |   | 8    |       |       |   | 4    |        |        |   | 18   |       
|                                              |                                             |                                         |      |       |            |   |      |       |       |   |      |       
|Income before income taxes                    |                                             |                                         | 129  |       |            |   | 343  |       |       |   | 314  |        |        |   | 273  |       
|Income tax expense                            |                                             |                                         | 41   |       |            |   | 123  |       |       |   | 99   |        |        |   | 104  |       
|                                              |                                             |                                         |      |       |            |   |      |       |       |   |      |       
|Net income                                    |                                             | $                                       | 88   |       |            | $ | 220  |       |       | $ | 215  |        |        | $ | 169  |       
|                                              |                                             |                                         |      |       |            |   |      |       |       |   |      |       
|Basic and diluted earnings per share (Note 1) |                                             | $                                       | 0.16 |       |            | $ | 0.39 |       |       | $ | 0.38 |        |        | $ | 0.30 |       
|                                              |                                             |                                         |      |       |            |   |      |       |       |   |      |       

See notes to consolidated financial statements.

3



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DELPHI CORPORATION






CONSOLIDATED BALANCE SHEETS


|                                           |                                                                                                                    |                               |                            |        |              |        |        |        |       |        | 
|------------------------------------------ | ------------------------------------------------------------------------------------------------------------------ | ----------------------------- | -------------------------- | ------ | ------------ | ------ | ------ | ------ | ----- | ------ | 
|                                           |                                                                                                                    | June 30,                      |                            |        |             
|                                           |                                                                                                                    | 2003                          |                            |        | December 31, |       
|                                           |                                                                                                                    | (Unaudited)                   |                            |        | 2002         |       
|                                           |                                                                                                                    |                               |                            |        |              |       
|                                           |                                                                                                                    |                              
|                                           |                                                                                                                    | (in millions)                 |                           
|ASSETS                                    
|Current assets:                            |                                                                                                                    |                               |                            |        |              |        |        |       
|                                           | Cash and cash equivalents                                                                                          |                               | $                          | 730    |              |        | $      | 1,014  |      
|                                           | Accounts receivable, net:                                                                                          |                               |                            |        |              |        |        |        |      
|                                           |                                                                                                                    | General Motors and affiliates |                            |        | 2,596        |        |        |        | 2,304 |       
|                                           |                                                                                                                    | Other customers               |                            |        | 1,295        |        |        |        | 1,712 |       
|                                           | Retained interests in receivables (Note 3)                                                                         |                               |                            | 543    |              |        |        |       |      
|                                           | Inventories, net (Note 4)                                                                                          |                               |                            | 1,833  |              |        |        | 1,769  |      
|                                           | Deferred income taxes                                                                                              |                               |                            | 466    |              |        |        | 502    |      
|                                           | Prepaid expenses and other                                                                                         |                               |                            | 205    |              |        |        | 241    |      
|                                           |                                                                                                                    |                               |                            |        |              |       
|                                           |                                                                                                                    |                               | Total current assets       |        |              | 7,668  |        |        |       | 7,542  | 
|Long-term assets:                          |                                                                                                                    |                               |                            |        |              |        |        |       
|                                           | Property, net                                                                                                      |                               |                            | 6,023  |              |        |        | 5,944  |      
|                                           | Deferred income taxes                                                                                              |                               |                            | 3,675  |              |        |        | 3,649  |      
|                                           | Goodwill, net                                                                                                      |                               |                            | 738    |              |        |        | 699    |      
|                                           | Other                                                                                                              |                               |                            | 1,526  |              |        |        | 1,482  |      
|                                           |                                                                                                                    |                               |                            |        |              |       
|                                           |                                                                                                                    |                               | Total assets               |        | $            | 19,630 |        |        | $     | 19,316 | 
|                                           |                                                                                                                    |                               |                            |        |              |       
|LIABILITIES AND STOCKHOLDERS
    EQUITY  
|Current liabilities:                       |                                                                                                                    |                               |                            |        |              |        |        |       
|                                           | Notes payable and current portion of long-term
    debt                                                            |                               | $                          | 1,096  |              |        | $      | 682    |      
|                                           | Accounts payable                                                                                                   |                               |                            | 3,265  |              |        |        | 3,060  |      
|                                           | Accrued liabilities                                                                                                |                               |                            | 1,747  |              |        |        | 2,118  |      
|                                           |                                                                                                                    |                               |                            |        |              |       
|                                           |                                                                                                                    |                               | Total current liabilities  |        |              | 6,108  |        |        |       | 5,860  | 
|Long-term liabilities:                     |                                                                                                                    |                               |                            |        |              |        |        |       
|                                           | Long-term debt                                                                                                     |                               |                            | 1,533  |              |        |        | 2,084  |      
|                                           | Pension benefits                                                                                                   |                               |                            | 3,571  |              |        |        | 3,568  |      
|                                           | Postretirement benefits other than pensions                                                                        |                               |                            | 5,413  |              |        |        | 5,120  |      
|                                           | Other                                                                                                              |                               |                            | 1,352  |              |        |        | 1,405  |      
|                                           |                                                                                                                    |                               |                            |        |              |       
|                                           |                                                                                                                    |                               | Total liabilities          |        |              | 17,977 |        |        |       | 18,037 | 
|                                           |                                                                                                                    |                               |                            |        |              |       
|Stockholders equity (Note 6):             |                                                                                                                    |                               |                            |        |              |        |        |       
|                                           | Common stock, $0.01 par value, 1,350 million
    shares authorized, 565 million shares issued in 2003 and
    2002 |                               |                            | 6      |              |        |        | 6      |      
|                                           | Additional paid-in capital                                                                                         |                               |                            | 2,462  |              |        |        | 2,445  |      
|                                           | Retained earnings                                                                                                  |                               |                            | 1,666  |              |        |        | 1,530  |      
|                                           | Minimum pension liability                                                                                          |                               |                            | (2,098 | )            |        |        | (2,098 | )    
|                                           | Accumulated other comprehensive loss, excluding
    minimum pension liability                                      |                               |                            | (307   | )            |        |        | (493   | )    
|                                           | Treasury stock, at cost (4.7 million and
    6.9 million shares in 2003 and 2002, respectively)                    |                               |                            | (76    | )            |        |        | (111   | )    
|                                           |                                                                                                                    |                               |                            |        |              |       
|                                           |                                                                                                                    |                               | Total stockholders equity |        |              | 1,653  |        |        |       | 1,279  | 
|                                           |                                                                                                                    |                               |                            |        |              |       
|Total liabilities and stockholders equity |                                                                                                                    | $                             | 19,630                     |        |              | $      | 19,316 |       
|                                           |                                                                                                                    |                               |                            |        |              |       

See notes to consolidated financial statements.

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DELPHI CORPORATION






CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)


|                                      |                                                                                         |                                                                    |                                                         |       |      |      |   |      |      |      |  
|------------------------------------- | --------------------------------------------------------------------------------------- | ------------------------------------------------------------------ | ------------------------------------------------------- | ----- | ---- | ---- | - | ---- | ---- | ---- | -
|                                      |                                                                                         |                                                                   
|                                      |                                                                                         | Six Months                                                         |                                                        
|                                      |                                                                                         | Ended                                                              |                                                        
|                                      |                                                                                         | June 30,                                                           |                                                        
|                                      |                                                                                         |                                                                    |                                                        
|                                      |                                                                                         | 2003                                                               |                                                         |       | 2002 |     
|                                      |                                                                                         |                                                                    |                                                         |       |      |     
|                                      |                                                                                         |                                                                   
|                                      |                                                                                         | (in millions)                                                      |                                                        
|Cash flows from operating activities: |                                                                                         |                                                                    |                                                         |       |      |      |   |     
|                                      | Net income                                                                              |                                                                    | $                                                       | 215   |      |      | $ | 169  |     
|                                      | Adjustments to reconcile net income to net cash
    provided by operating activities:   |                                                                    |                                                         |       |      |      |   |      |     
|                                      |                                                                                         | Depreciation and amortization                                      |                                                         |       | 513  |      |   |      | 491  |     
|                                      |                                                                                         | Deferred income taxes                                              |                                                         |       | 15   |      |   |      | 36   |     
|                                      |                                                                                         | Restructuring                                                      |                                                         |       |     |      |   |      | 225  |     
|                                      | Changes in operating assets and liabilities:                                            |                                                                    |                                                         |       |      |      |   |      |     
|                                      |                                                                                         | Accounts receivable and retained interests in
    receivables, net |                                                         |       | (445 | )    |   |      | (817 | )   
|                                      |                                                                                         | Inventories, net                                                   |                                                         |       | (68  | )    |   |      | (87  | )   
|                                      |                                                                                         | Prepaid expenses and other                                         |                                                         |       | (13  | )    |   |      | 11   |     
|                                      |                                                                                         | Accounts payable                                                   |                                                         |       | 206  |      |   |      | 558  |     
|                                      |                                                                                         | Restructuring obligations                                          |                                                         |       | (24  | )    |   |      | (245 | )   
|                                      |                                                                                         | Accrued liabilities                                                |                                                         |       | (328 | )    |   |      | 69   |     
|                                      |                                                                                         | Other long-term liabilities                                        |                                                         |       | 301  |      |   |      | (74  | )   
|                                      |                                                                                         | Other                                                              |                                                         |       | 3    |      |   |      | (80  | )   
|                                      |                                                                                         |                                                                    |                                                         |       |      |     
|                                      |                                                                                         |                                                                    | Net cash provided by operating activities               |       |      | 375  |   |      |      | 256  |  
|                                      |                                                                                         |                                                                    |                                                         |       |      |     
|Cash flows from investing activities: |                                                                                         |                                                                    |                                                         |       |      |      |   |     
|                                      | Capital expenditures                                                                    |                                                                    |                                                         | (462  | )    |      |   | (461 | )   
|                                      | Other                                                                                   |                                                                    |                                                         | 23    |      |      |   | 38   |     
|                                      |                                                                                         |                                                                    |                                                         |       |      |     
|                                      |                                                                                         |                                                                    | Net cash used in investing activities                   |       |      | (439 | ) |      |      | (423 | )
|                                      |                                                                                         |                                                                    |                                                         |       |      |     
|Cash flows from financing activities: |                                                                                         |                                                                    |                                                         |       |      |      |   |     
|                                      | Net proceeds from (repayments of) borrowings
    under credit facilities and other debt |                                                                    |                                                         | (171  | )    |      |   | 309  |     
|                                      | Dividend payments                                                                       |                                                                    |                                                         | (79   | )    |      |   | (78  | )   
|                                      | Issuance (purchases) of treasury stock, net                                             |                                                                    |                                                         | 1     |      |      |   | (12  | )   
|                                      |                                                                                         |                                                                    |                                                         |       |      |     
|                                      |                                                                                         |                                                                    | Net cash (used in) provided by financing
    activities |       |      | (249 | ) |      |      | 219  |  
|                                      |                                                                                         |                                                                    |                                                         |       |      |     
|                                      | Effect of exchange rate fluctuations on cash and
    cash equivalents                   |                                                                    |                                                         | 29    |      |      |   | (56  | )   
|                                      |                                                                                         |                                                                    |                                                         |       |      |     
|                                      | Decrease in cash and cash equivalents                                                   |                                                                    |                                                         | (284  | )    |      |   | (4   | )   
|                                      | Cash and cash equivalents at beginning of period                                        |                                                                    |                                                         | 1,014 |      |      |   | 757  |     
|                                      |                                                                                         |                                                                    |                                                         |       |      |     
|                                      | Cash and cash equivalents at end of period                                              |                                                                    | $                                                       | 730   |      |      | $ | 753  |     
|                                      |                                                                                         |                                                                    |                                                         |       |      |     

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 (Delphi) is a world-leading
supplier of vehicle electronics, transportation components,
integrated systems and modules and other electronic technology.
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 2002 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,         | 
|                                    |  |                    |         |  |                  | 
|                                    |  | 2003               |         |  | 2002             |  |         | 2003 |  |  | 2002    | 
|                                    |  |                    |         |  |                  |  |         |      |  |  |         | 
|                                    |  |                   
|                                    |  | (in thousands)     |        
|Weighted average shares outstanding |  |                    | 560,291 |  |                  |  | 560,650 |      |  |  | 559,928 |  |  |  | 560,550 | 
|Effect of dilutive securities       |  |                    | 148     |  |                  |  | 8,238   |      |  |  | 59      |  |  |  | 7,626   | 
|                                    |  |                    |         |  |                  |  |         |      |  |  |         | 
|Diluted shares outstanding          |  |                    | 560,439 |  |                  |  | 568,888 |      |  |  | 559,987 |  |  |  | 568,176 | 
|                                    |  |                    |         |  |                  |  |         |      |  |  |         | 

The Board of Directors declared a dividend on
Delphi common stock of $0.07 per share on June 18, 2003,
payable on July 29, 2003, to holders of record on
June 30, 2003. The dividend declared on March 26, 2003
was paid on May 5, 2003.

Stock-Based
Compensation As
allowed under Statement of Financial Accounting Standards
(SFAS) No. 123, Accounting for
Stock-Based Compensation, Delphi accounts for stock-based
compensation using the intrinsic value method in accordance with
Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees, and
related interpretations. Stock options granted during the three
months ended June 30, 2003 were exercisable at prices equal
to the fair market value of Delphi common stock on the dates the
options were granted; accordingly, no compensation expense has
been recognized for the stock options granted.

6



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If we accounted for stock-based compensation
using the fair value recognition provisions of SFAS No. 123
and related amendments, our net income and basic and diluted
earnings per share would have been as follows:

|                                                                                                                                            |                                 |                           |    |      |            |   |     |      |  |   |      |      |  |   |     |      | 
|------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------- | ------------------------- | -- | ---- | ---------- | - | --- | ---- |  | - | ---- | ---- |  | - | --- | ---- | 
|                                                                                                                                            |                                 |                           |    |     
|                                                                                                                                            |                                 | Three Months              |    |      | Six Months |  
|                                                                                                                                            |                                 | Ended                     |    |      | Ended      |  
|                                                                                                                                            |                                 | June 30,                  |    |      | June 30,   |  
|                                                                                                                                            |                                 |                           |    |      |            |  
|                                                                                                                                            |                                 | 2003                      |    |      | 2002       |   |     | 2003 |  |   | 2002 |     
|                                                                                                                                            |                                 |                           |    |      |            |   |     |      |  |   |      |     
|                                                                                                                                            |                                 |                          
|                                                                                                                                            |                                 | (in millions,             |   
|                                                                                                                                            |                                 | except per share amounts) |   
|Net income, as reported                                                                                                                     |                                 | $                         | 88 |      |            | $ | 220 |      |  | $ | 215  |      |  | $ | 169 |     
|Less: Total stock-based employee compensation
    expense determined under fair value method for all awards, net
    of related tax effects |                                 |                           | 4  |      |            |   | 11  |      |  |   | 7    |      |  |   | 21  |     
|                                                                                                                                            |                                 |                           |    |      |            |   |     |      |  |   |      |     
|Pro forma net income                                                                                                                        |                                 | $                         | 84 |      |            | $ | 209 |      |  | $ | 208  |      |  | $ | 148 |     
|                                                                                                                                            |                                 |                           |    |      |            |   |     |      |  |   |      |     
|Earnings per share:                                                                                                                         |                                 |                           |    |      |            |   |     |      |  |   |      |      |  |   |     |     
|                                                                                                                                            | Basic and diluted  as reported |                           | $  | 0.16 |            |   | $   | 0.39 |  |   | $    | 0.38 |  |   | $   | 0.30 | 
|                                                                                                                                            |                                 |                           |    |      |            |   |     |      |  |   |      |     
|                                                                                                                                            | Basic and diluted  pro forma   |                           | $  | 0.15 |            |   | $   | 0.37 |  |   | $    | 0.37 |  |   | $   | 0.26 | 
|                                                                                                                                            |                                 |                           |    |      |            |   |     |      |  |   |      |     

During 1999, Delphi awarded certain employees
approximately 3 million restricted stock units, which were
delivered to them as stock during the first quarter of 2003 in
accordance with the original award terms. During the first
quarter of 2003, we also cancelled approximately 20 million
shares available for future grants under the terms of certain of
Delphis stock option plans. In April 2003, we granted
12 million options at a weighted average exercise price of
$8.43 per share and 3 million restricted stock units at a
weighted average fair market value of $8.43 per share. As of
June 30, 2003, there are 9 million shares available for
future grants.

2. RESTRUCTURING AND PRODUCT LINE
CHARGES

In the first quarter of 2002, Delphi approved
restructuring plans to eliminate approximately 6,100 positions
from our global workforce, comprised of 3,100 U.S. employees and
3,000 employees in non-U.S. locations, 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 and contract cancellation
fees). This charge, when netted against a $6 million
reversal 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 restructuring actions were completed as
planned in the first quarter of 2003. Total cash paid for
restructuring was $200 million, with $191 million for
employee costs and $9 million for other exit costs. The
cash outflows for the first quarter of 2003 were
$24 million, with $17 million for employee costs and
$7 million for other exit costs.

During the second quarter of 2002, we began to
wind down our generator product line. Of the total recorded loss
of $231 million ($149 million after-tax) associated
with the wind down of this product line, $37 million ($24
million after-tax) for contractually required payments
(principally employee related) was recorded in cost of sales
during the first quarter of 2002.

3. ASSET SECURITIZATION

In the first quarter of 2003, we entered into a
$500 million domestic accounts receivable securitization
facility agreement (Facility Agreement) under which
we sell certain trade receivables. When we sell receivables, we
retain a subordinated interest in the pool of receivables sold,
which are considered to be retained interests in the securitized
receivables. Losses on the sale of receivables depend in part on
the previous carrying amount of the financial assets involved in
the transfer, allocated between assets sold and the retained
interests based upon their relative fair values at the date of
transfer. We determine the fair

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value of the receivables sold and our retained
interests using estimated discounted cash flows upon the sale of
the receivables and, for the retained interests, at the end of
each quarter. The valuation methodology considers historical and
projected collections, the discount rate inherent in the
Facility Agreement (currently approximately 1.6%) and estimated
future credit losses arising from the sold receivables. Due to
the short-term nature of trade receivables, the carrying amount
approximates fair value of the retained interests. Variation in
the credit and discount assumptions would not significantly
impact fair value.


Under this Facility Agreement, we have agreed to
sell certain accounts receivable to Delphi Receivables LLC
(DR), a wholly-owned consolidated special purpose
entity. DR may then sell, on a non-recourse basis (subject to
certain exceptions relating to receivables that are reduced or
cancelled for reasons unrelated to the creditworthiness of the
obligor or customary write-offs, are disputed, or for which any
representations and warranties are no longer true), an undivided
interest in its receivables to certain third parties (the
receivable conduits), which are unrelated to Delphi or DR and
are expected to be multi-seller conduits that fund their
purchase through the issuance of commercial paper, with back-up
purchase commitments from the conduits financial
institutions. The transfer qualifies for sale treatment under
the provisions of SFAS No. 140, Accounting for the
Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities. The receivables are sold at fair market
value and the loss on the sale is recorded in operating income
at the time the undivided interest is sold to the third party.
We do perform collections and administrative functions on the
receivables sold. The nature of such activities and the terms of
the Facility Agreement do not result in the recognition of a
servicing asset or liability. At June 30, 2003, DR had sold
$488 million of undivided interests in its receivables to
the receivable conduits; these receivables have been excluded
from our consolidated balance sheet. A loss on sale of
$2 million was recorded for the three months ended
June 30, 2003. During the quarter ended June 30, 2003,
proceeds from new securitizations were $828 million and
proceeds from reinvested collections were $561 million. As
of June 30, 2003, the receivable conduits had a
preferential interest in $543 million of the receivables
held at DR to secure their interest under the Facility
Agreement. The Facility Agreement which is between Delphi, DR,
the receivable conduits, financial institutions and their
agents, expires on March 31, 2004 and can be extended on an
annual basis until March 31, 2006 based upon the mutual
agreement of the parties. Additionally, the Facility Agreement
contains financial and other covenants similar to our revolving
credit facilities that, if not met, would result in a
termination of the agreement. At June 30, 2003, we were in
compliance with all such covenants.

4. INVENTORIES, NET

Inventories, net consisted of:

|                                                                                |                           |               |       |       |              |   |       |       | 
|------------------------------------------------------------------------------- | ------------------------- | ------------- | ----- | ----- | ------------ | - | ----- | ----- | 
|                                                                                |                           | June 30,      |       |       | December 31, |  
|                                                                                |                           | 2003          |       |       | 2002         |  
|                                                                                |                           |               |       |       |              |  
|                                                                                |                           |              
|                                                                                |                           | (in millions) |      
|Productive material, work-in-process and supplies                               |                           | $             | 1,534 |       |              | $ | 1,587 |      
|Finished goods                                                                  |                           |               | 552   |       |              |   | 435   |      
|                                                                                |                           |               |       |       |              |  
|                                                                                | Total inventories at FIFO |               |       | 2,086 |              |   |       | 2,022 | 
|Less: allowance to adjust the carrying value of
    certain inventories to LIFO |                           |               | (253  | )     |              |   | (253  | )    
|                                                                                |                           |               |       |       |              |  
|                                                                                | Total inventories, net    |               | $     | 1,833 |              |   | $     | 1,769 | 
|                                                                                |                           |               |       |       |              |  

5. DERIVATIVES AND HEDGING
ACTIVITIES

Delphi is exposed to market risk, such as
fluctuations in foreign currency exchange rates, commodity
prices and changes in interest rates. To manage the volatility
relating to these exposures, we aggregate the exposures on a
consolidated basis to take advantage of natural offsets. For
exposures that are not offset within our operations, we enter
into various derivative transactions pursuant to our risk
management policies. Designation is performed on a transaction
basis to support hedge accounting. The changes in fair value of
these hedging instruments are offset in part or in whole by
corresponding changes in the fair value

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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.


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
gains included in OCI as of June 30, 2003, were
$18 million after-tax ($29 million pre-tax). Of this
pre-tax total, a gain of approximately $20 million is
expected to be included in cost of sales within the next
12 months and a gain of approximately $6 million is
expected to be included in subsequent periods. A loss of
approximately $2 million is expected to be included in
depreciation and amortization expense over the lives of the
related fixed assets and a gain of approximately $5 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. 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, 2003 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, 2003. |                                                                           |                            | 565 |   |            | $ | 6 |          |  | $             | 2,445    |    |  | $         | 1,530 |          |       | $ | (2,098        | )     |  | $ | (493   | )   |  | $ | (111 | )  |  | $ | 1,279 |    
|                            | Net income                                                                |                            |     |  |            |   |   |         |  |               |          |   |  |           |       | 215      |       |   |               |      |  |   |        |    |  |   |      |   |  |   |       | 215 |    
|                            | Currency translation adjustments and other, net
    of tax                |                            |     |  |            |   |   |         |  |               |          |   |  |           |       |         |       |   |               |      |  |   |        | 159 |  |   |      |   |  |   |       | 159 |    
|                            | Net change in unrecognized loss on derivative
    instruments, net of tax |                            |     |  |            |   |   |         |  |               |          |   |  |           |       |         |       |   |               |      |  |   |        | 27  |  |   |      |   |  |   |       | 27  |    
|                            |                                                                           |                            |     |   |            |   |   |          |  |               |          |    |  |           |       |          |       |   |               |       |  |   |        |    
|                            |                                                                           | Total comprehensive income |     |   |            |   |   |          |  |               |          |    |  |           |       |          |       |   |               |       |  |   |        |     |  |   |      |    |  |   |       |     | 401 | 
|                            | Shares issued for employee benefit plans                                  |                            |     |  |            |   |   |         |  |               |          | 17 |  |           |       |         |       |   |               |      |  |   |        |    |  |   |      | 35 |  |   |       | 52  |    
|                            | Dividends                                                                 |                            |     |  |            |   |   |         |  |               |          |   |  |           |       | (79      | )     |   |               |      |  |   |        |    |  |   |      |   |  |   |       | (79 | )  
|                            |                                                                           |                            |     |   |            |   |   |          |  |               |          |    |  |           |       |          |       |   |               |       |  |   |        |    
|Balance at June 30, 2003    |                                                                           |                            | 565 |   |            | $ | 6 |          |  | $             | 2,462    |    |  | $         | 1,666 |          |       | $ | (2,098        | )     |  | $ | (307   | )   |  | $ | (76  | )  |  | $ | 1,653 |    
|                            |                                                                           |                            |     |   |            |   |   |          |  |               |          |    |  |           |       |          |       |   |               |       |  |   |        |    

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7. SEGMENT REPORTING

Selected information regarding Delphis
product sectors is as follows:

|                                |                                |                 |   |             |              |  |   |            |       |  |          |       |       |       |   |        |        |   |   |       |        | 
|------------------------------- | ------------------------------ | --------------- | - | ----------- | ------------ |  | - | ---------- | ----- |  | -------- | ----- | ----- | ----- | - | ------ | ------ | - | - | ----- | ------ | 
|                                |                                |                 |   | Electrical, |              |  |   |            |       |  |         
|                                |                                | Dynamics,       |   |             | Electronics, |  |   | Automotive |       |  |          |       |      
|                                |                                | Propulsion      |   |             | Safety &     |  |   | Holdings   |       |  |          |       |      
|                                |                                | & Thermal       |   |             | Interior     |  |   | Group      |       |  | Other(a) |       |       | Total |  
|                                |                                |                 |   |             |              |  |   |            |       |  |          |       |       |       |  
|                                |                                |                
|                                |                                | (in millions)   |  
|For the Three Months
    Ended: |                                |                 |   |             |              |  |   |            |       |  |          |       |       |       |   |        |        |   |   |      
|June 30, 2003                   |                                |                 |   |             |              |  |   |            |       |  |          |       |       |       |   |        |        |   |   |      
|                                | Net sales to GM and affiliates |                 | $ | 1,920       |              |  | $ | 1,935      |       |  | $        | 458   |       |       | $ |       |        |   | $ | 4,313 |       
|                                | Net sales to other customers   |                 |   | 1,092       |              |  |   | 1,588      |       |  |          | 101   |       |       |   |       |        |   |   | 2,781 |       
|                                | Inter-sector net sales         |                 |   | 212         |              |  |   | 105        |       |  |          | 206   |       |       |   | (523   | )      |   |   |      |       
|                                |                                |                 |   |             |              |  |   |            |       |  |          |       |       |       |  
|                                |                                | Total net sales |   | $           | 3,224        |  |   | $          | 3,628 |  |          | $     | 765   |       |   | $      | (523   | ) |   | $     | 7,094  | 
|                                |                                |                 |   |             |              |  |   |            |       |  |          |       |       |       |  
|                                | Sector operating income (loss) |                 | $ | 123         |              |  | $ | 267        |       |  | $        | (158  | )     |       | $ | (60    | )(c)   |   | $ | 172   | (c)   
|                               
|June 30, 2002(b)                |                                |                 |   |             |              |  |   |            |       |  |          |       |       |       |   |        |        |   |   |      
|                                | Net sales to GM and affiliates |                 | $ | 2,079       |              |  | $ | 2,159      |       |  | $        | 580   |       |       | $ |       |        |   | $ | 4,818 |       
|                                | Net sales to other customers   |                 |   | 1,030       |              |  |   | 1,361      |       |  |          | 113   |       |       |   |       |        |   |   | 2,504 |       
|                                | Inter-sector net sales         |                 |   | 208         |              |  |   | 97         |       |  |          | 292   |       |       |   | (597   | )      |   |   |      |       
|                                |                                |                 |   |             |              |  |   |            |       |  |          |       |       |       |  
|                                |                                | Total net sales |   | $           | 3,317        |  |   | $          | 3,617 |  |          | $     | 985   |       |   | $      | (597   | ) |   | $     | 7,322  | 
|                                |                                |                 |   |             |              |  |   |            |       |  |          |       |       |       |  
|                                | Sector operating income (loss) |                 | $ | 140         |              |  | $ | 318        |       |  | $        | (57   | )     |       | $ | (19    | )      |   | $ | 382   |       
|                               
|For the Six Months
    Ended:   |                                |                 |   |             |              |  |   |            |       |  |          |       |       |       |   |        |        |   |   |      
|June 30, 2003                   |                                |                 |   |             |              |  |   |            |       |  |          |       |       |       |   |        |        |   |   |      
|                                | Net sales to GM and affiliates |                 | $ | 3,955       |              |  | $ | 3,949      |       |  | $        | 964   |       |       | $ |       |        |   | $ | 8,868 |       
|                                | Net sales to other customers   |                 |   | 2,128       |              |  |   | 3,079      |       |  |          | 201   |       |       |   |       |        |   |   | 5,408 |       
|                                | Inter-sector net sales         |                 |   | 404         |              |  |   | 212        |       |  |          | 422   |       |       |   | (1,038 | )      |   |   |      |       
|                                |                                |                 |   |             |              |  |   |            |       |  |          |       |       |       |  
|                                |                                | Total net sales |   | $           | 6,487        |  |   | $          | 7,240 |  |          | $     | 1,587 |       |   | $      | (1,038 | ) |   | $     | 14,276 | 
|                                |                                |                 |   |             |              |  |   |            |       |  |          |       |       |       |  
|                                | Sector operating income (loss) |                 | $ | 243         |              |  | $ | 527        |       |  | $        | (296  | )     |       | $ | (74    | )(c)   |   | $ | 400   | (c)   
|                               
|June 30, 2002(b)                |                                |                 |   |             |              |  |   |            |       |  |          |       |       |       |   |        |        |   |   |      
|                                | Net sales to GM and affiliates |                 | $ | 4,041       |              |  | $ | 4,160      |       |  | $        | 1,101 |       |       | $ |       |        |   | $ | 9,302 |       
|                                | Net sales to other customers   |                 |   | 1,955       |              |  |   | 2,534      |       |  |          | 219   |       |       |   |       |        |   |   | 4,708 |       
|                                | Inter-sector net sales         |                 |   | 400         |              |  |   | 188        |       |  |          | 561   |       |       |   | (1,149 | )      |   |   |      |       
|                                |                                |                 |   |             |              |  |   |            |       |  |          |       |       |       |  
|                                |                                | Total net sales |   | $           | 6,396        |  |   | $          | 6,882 |  |          | $     | 1,881 |       |   | $      | (1,149 | ) |   | $     | 14,010 | 
|                                |                                |                 |   |             |              |  |   |            |       |  |          |       |       |       |  
|                                | Sector operating income (loss) |                 | $ | 238         | (d)          |  | $ | 558        | (d)   |  | $        | (152  | )(d)  |       | $ | (32    | )(d)   |   | $ | 612   | (d)   



|    |                                                                                                                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Other includes activity not allocated to the
    product sectors and elimination of inter-sector transactions.                                                                                                                                                                                                         
|   
|(b) | As previously disclosed, amounts have been
    reclassified from prior presentation to conform to our new
    sector alignment.                                                                                                                                                                                        
|   
|(c) | Includes the second quarter 2003 legal settlement
    with a former supplier of $38 million.                                                                                                                                                                                                                           
|   
|(d) | Excludes the first quarter 2002 net restructuring
    and generator product line charges of $262 million with
    $78 million for Dynamics, Propulsion & Thermal,
    $64 million for Electrical, Electronics, Safety &
    Interior, $104 million for Automotive Holdings Group
    (AHG) and $16 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, environmental
matters, and employment-related matters. In particular, as more
fully discussed in Item 2. Managements
Discussion and Analysis of Financial Condition and Results of
Operations 

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Labor Matters, the International Union of
Electronic, Electrical, Salaried, Machine & Furniture
Workers-Communication Workers of America, AFL-CIO filed a
grievance to protest certain planned layoffs at one of our
manufacturing sites. The matter was submitted to binding
arbitration and the arbitrator ruled that Delphi had assumed an
enforceable contract obligation to maintain a minimum employment
level at the site but that strict enforcement of that contract
was not an appropriate remedy. Instead, the arbitrator ordered
the parties to appear at a remedial hearing to discuss and
present evidence as to the remedy. The hearing took place in
June 2003. We expect a ruling in the second half of 2003.


As previously disclosed, with respect to
environmental matters, Delphi 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. Based on the information gathered
to date, Delphi has been identified as the largest
waste-generator PRP, however, we expect that other parties,
including landfill operator and transporter PRPs, will
ultimately have to share a significant portion of any overall
site costs. In September 2002, Delphi and other PRPs
entered into a Consent Order with the Environmental Protection
Agency (EPA) to perform a Remedial Investigation and
Feasibility Study concerning a portion of the site. The
investigation is expected to be completed during 2005, as
various EPA reviews are required through each phase of the
study. We have reserved approximately $2 million for our
share of the expected investigation costs. Current preliminary
assessments indicate that a reasonably possible outcome of the
investigative study is capping and future monitoring of this
site, which would substantially limit future remediation costs.
Based on cost estimates received to date, we have included an
estimate of the potential costs of capping and future monitoring
of the site in our overall reserve estimates. Because the scope
of the investigation and the extent of the required remediation
are still being determined, it is possible that the final
resolution of this matter may require that we make material
future expenditures for remediation, possibly over an extended
period of time and possibly in excess of our existing reserves.
As the investigation proceeds, we will periodically re-assess
any potential remediation costs and, as appropriate, our overall
environmental reserves.

With respect to warranty matters, as previously
disclosed, a few customers have advised Delphi that they intend
to pursue warranty claims vigorously. In particular, although in
2001 we settled or resolved most of our known pre-separation
warranty claims with GM, as previously disclosed, GM requested
that Delphi agree to reimburse GM for the anticipated costs of
GMs voluntary recall campaign to repair certain 1996 to
1998 models which GM states could experience a failure of the
power steering gear lower pinion bearing. GM may assert
additional pre-separation claims in the future. As we have
already informed GM, we believe that this claim and the
remainder of known pre-separation warranty claims are adequately
covered by commercial defenses or customer credits and that we
have no further financial liability for such matters.
Accordingly, although we cannot ensure that the future costs of
warranty claims by GM or other customers will not be material,
we believe our established reserves are adequate to cover
potential warranty settlements. However, the final amounts
determined to be due related to these matters could differ
materially from our recorded estimates. Additionally, in
connection with our separation from GM, we agreed to indemnify
GM against substantially all losses, claims, damages,
liabilities or activities arising out of or in connection with
our business. Due to the nature of such indemnities we are not
able to estimate the maximum amount.

As previously disclosed, the Ninth Circuit Court
of Appeals affirmed the federal district courts decision
to award one of Delphis former suppliers approximately
$38 million ($25 million after-tax), inclusive of
accrued interest, in connection with a commercial dispute. The
settlement was included in selling, general and administrative
expenses and paid during the third quarter of 2003.

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.

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On a worldwide basis, Delphi has a concentration
of employees working under union collective bargaining
agreements representing approximately 91% of its hourly
workforce. A significant proportion of the U.S. union
employees labor agreements expire beginning in
September 2003. Certain suppliers and customers of Delphi
also have union represented work forces. Future work stoppages
by Delphi employees or employees of Delphis suppliers or
customers could disrupt Delphis production of automotive
components and systems. In addition, our ability to fix certain
sites and businesses that have been placed in AHG depend, in
part, on our ability to satisfactorily address any labor issues.

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ITEM 2. MANAGEMENTS DISCUSSION AND
ANALYSIS OF FINANCIAL


CONDITION AND RESULTS OF OPERATIONS


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, 2002.

Three
Months Ended June 30, 2003 versus Three Months Ended
June 30, 2002

Net Sales.Consolidated net sales by product
sector and in total for the three months ended June 30,
2003 and 2002 were:

|                                           |                        |                |       |       |      |   |       |       | 
|------------------------------------------ | ---------------------- | -------------- | ----- | ----- | ---- | - | ----- | ----- | 
|                                           |                        |               
|                                           |                        | Three Months   |      
|                                           |                        | Ended June 30, |      
|                                           |                        |                |      
|Product Sector                             |                        | 2003           |       |       | 2002 |  
|                                           |                        |                |       |       |      |  
|                                           |                        |               
|                                           |                        | (in millions)  |      
|Dynamics, Propulsion & Thermal             |                        | $              | 3,224 |       |      | $ | 3,317 |      
|Electrical, Electronics, Safety & Interior |                        |                | 3,628 |       |      |   | 3,617 |      
|Automotive Holdings Group                  |                        |                | 765   |       |      |   | 985   |      
|Other                                      |                        |                | (523  | )     |      |   | (597  | )    
|                                           |                        |                |       |       |      |  
|                                           | Consolidated net sales |                | $     | 7,094 |      |   | $     | 7,322 | 
|                                           |                        |                |       |       |      |  

Consolidated net sales for the second quarter of
2003 were $7.1 billion compared to $7.3 billion for
the same period of 2002. Our non-GM sales increased by
$277 million principally due to $223 million of
favorable currency exchange rates, increased production volumes
and new business from diversifying our global customer base,
partially offset by price decreases. As a percent of our net
sales for the second quarter of 2003, our non-GM sales were 39%.
Net sales to GM decreased by $505 million, due to
$484 million of lost production in North America primarily
resulting from the tornado stricken GM Oklahoma City facility,
price decreases and our decision to exit certain businesses.
Continued price pressures resulted in price reductions of
approximately $98 million, or 1.3% for the second quarter of
2003 compared to approximately $147 million or 2.1% for the
second quarter of 2002.

Gross Margin.Our
gross margin was 12.0% for the second quarter of 2003 compared
to gross margin of 13.5% for the second quarter of 2002. The
decrease reflected approximately $189 million of higher
wages and increased U.S. pension and healthcare expenses, lower
volumes and price decreases and the acceleration of portfolio
related actions, including costs associated with closure of a
facility and voluntary early retirements, of approximately
$27 million ($18 million after-tax).

Selling, General and Administrative.Selling, general and administrative
expenses (SG&A) were $422 million, 5.9% of
net sales for the second quarter of 2003, compared to
$361 million or 4.9% of total net sales for the second
quarter of 2002. SG&A was adversely impacted by a legal
settlement to one of our former suppliers of approximately
$38 million ($25 million after-tax), in connection
with a commercial dispute. Excluding the legal settlement,
SG&A was $384 million or 5.4% of net sales.

Depreciation and Amortization.Depreciation and amortization for the
second quarter of 2003, which includes $8 million
($5 million after-tax) of portfolio related actions,
principally facility closure costs, was consistent with amounts
for the comparable period of 2002.

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Operating Income.Operating income was $172 million
for the second quarter of 2003 compared to operating income of
$382 million for the second quarter of 2002.

|                                           |                        |                |      |     |      |   |     |     | 
|------------------------------------------ | ---------------------- | -------------- | ---- | --- | ---- | - | --- | --- | 
|                                           |                        |               
|                                           |                        | Three Months   |     
|                                           |                        | Ended June 30, |     
|                                           |                        |                |     
|Product Sector                             |                        | 2003           |      |     | 2002 |  
|                                           |                        |                |      |     |      |  
|                                           |                        |               
|                                           |                        | (in millions)  |     
|Dynamics, Propulsion & Thermal             |                        | $              | 123  |     |      | $ | 140 |    
|Electrical, Electronics, Safety & Interior |                        |                | 267  |     |      |   | 318 |    
|Automotive Holdings Group                  |                        |                | (158 | )   |      |   | (57 | )  
|Other                                      |                        |                | (60  | )   |      |   | (19 | )  
|                                           |                        |                |      |     |      |  
|                                           | Total operating income |                | $    | 172 |      |   | $   | 382 | 
|                                           |                        |                |      |     |      |  

The decrease in operating income from the second
quarter of 2002 primarily reflected increased pension,
healthcare and wages, lower pricing, the legal settlement in
connection with a commercial dispute and the portfolio-related
actions referred to above, partially offset by savings realized
from our restructuring plans, material cost savings and
manufacturing performance. The increase in net sales
attributable to currency exchange rates did not significantly
impact our operating income, as we manage our currency exposure
through hedging techniques, including derivative instruments.

Taxes.Our effective
tax rate for the second quarter of 2003 was between 31% and 32%
compared to 36% for the second quarter of 2002. The rate for the
second quarter of 2003 was affected by entity structuring, which
allowed substantial earnings from the Asia-Pacific region to be
considered indefinitely reinvested in foreign operations. As
compared to our original expectations, during the first six
months of 2003 we experienced higher than expected earnings in
certain jurisdictions outside of the United States (where
effective tax rates are lower than the effective U. S. tax
rate), and lower than expected earnings in the United States. We
expect that this shift may partially correct over the second six
months of 2003. We will re-revaluate our full year tax rate at
the end of the third quarter. If current trends continue, our
tax rate for the full year may be in the 29%-30% range.

Net Income.As a
result of the factors referred to above, our net income was
$88 million for the second quarter of 2003 as compared to
net income of $220 million for the second quarter of 2002.

Earnings Per Share.Basic and diluted earnings per share
was $0.16 for the second quarter of 2003 compared to basic and
diluted earnings per share of $0.39 for the second quarter 2002.

Six
Months Ended June 30, 2003 versus Six Months Ended
June 30, 2002

Net Sales.Consolidated net sales by product
sector and in total for the six months ended June 30, 2003
and 2002 were:

|                                           |                        |                  |        |        |      |   |        |        | 
|------------------------------------------ | ---------------------- | ---------------- | ------ | ------ | ---- | - | ------ | ------ | 
|                                           |                        |                 
|                                           |                        | Six Months Ended |       
|                                           |                        | June 30,         |       
|                                           |                        |                  |       
|Product Sector                             |                        | 2003             |        |        | 2002 |  
|                                           |                        |                  |        |        |      |  
|                                           |                        |                 
|                                           |                        | (in millions)    |       
|Dynamics, Propulsion & Thermal             |                        | $                | 6,487  |        |      | $ | 6,396  |       
|Electrical, Electronics, Safety & Interior |                        |                  | 7,240  |        |      |   | 6,882  |       
|Automotive Holdings Group                  |                        |                  | 1,587  |        |      |   | 1,881  |       
|Other                                      |                        |                  | (1,038 | )      |      |   | (1,149 | )     
|                                           |                        |                  |        |        |      |  
|                                           | Consolidated net sales |                  | $      | 14,276 |      |   | $      | 14,010 | 
|                                           |                        |                  |        |        |      |  

Consolidated net sales for the first six months
of 2003 were $14.3 billion compared to $14.0 billion
for the same period of 2002. Our non-GM sales increased by
$700 million principally due to $420 million of
favorable currency exchange rates, increased production volumes
and new business from diversifying our global customer base,
partially offset by price decreases. As a percent of our net
sales for the six months

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ended June 30, 2003, our non-GM sales were
38%. Net sales to GM decreased by $434 million, due to
$321 million of lost production in North America primarily
resulting from the tornado stricken GM Oklahoma City facility,
price decreases and our decision to exit certain businesses,
partially offset by favorable currency exchange rates. Our net
sales also were impacted by continued price pressures that
resulted in price reductions of approximately $209 million,
or 1.5% for the first six months of 2003 compared to
approximately $267 million or 2.0% for the first six months
of 2002.


Gross Margin.Our
gross margin was 12.1% for the first six months of 2003 compared
to gross margin of 12.8% for the first six months of 2002. The
decrease reflected approximately $371 million of higher
wages and increased U.S. pension and healthcare and price
decreases, partially offset by lower material costs, as well as
manufacturing performance and savings realized from our
restructuring plans. The gross margin for the first six months
of 2002 included a charge of $37 million related to our
generator product line.

Selling, General and Administrative.Selling, general and administrative
expenses was $811 million, 5.7% of total net sales for the
first six months of 2003, compared to $723 million or 5.2%
of total net sales for the first six months of 2002. Selling,
general and administrative expense was adversely impacted by a
legal settlement to one of our former suppliers of approximately
$38 million ($25 million after-tax), in connection
with a commercial dispute. Excluding the legal settlement,
selling, general and administrative expenses were
$773 million or 5.4% of net sales.

Depreciation and Amortization.Depreciation and amortization for the
first six months of 2003 was consistent with amounts for the
comparable period of 2002.

Restructuring.In
the first quarter of 2002, Delphi approved restructuring plans
to eliminate approximately 6,100 positions from our global
workforce, comprised of 3,100 U.S. employees and 3,000 employees
in non-U.S. locations, 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 and contract
cancellation fees). This charge, when netted against a
$6 million reversal 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 restructuring actions were completed as
planned in the first quarter of 2003. Total cash paid for
restructuring was $200 million, with $191 million for
employee costs and $9 million for other exit costs. The
cash outflows for the first quarter of 2003 were
$24 million, with $17 million for employee costs and
$7 million for other exit costs. We are currently realizing
savings, principally payroll and related costs, associated with
these restructuring actions and we expect these savings to grow
to more than $125 million (after-tax) by early 2004 with
reductions of approximately $90 million in cost of sales
and approximately $35 million in selling, general and
administrative expense. The after-tax breakdown of these savings
by sector is expected to be approximately $43 million for
Dynamics, Propulsion & Thermal, approximately
$36 million for Electrical, Electronics, Safety &
Interior, approximately $37 million for Automotive Holdings
Group and approximately $9 million for Other.

Operating Income.Operating income was $400 million
for the first six months of 2003 compared to operating income of
$350 million for the first six months of 2002. To
facilitate analysis of our operating

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income by product sector, we have excluded the
2002 net restructuring and product line charges of
$262 million from the segment information presented below:


|                                           |                        |                  |      |     |         |   |      |     | 
|------------------------------------------ | ---------------------- | ---------------- | ---- | --- | ------- | - | ---- | --- | 
|                                           |                        |                 
|                                           |                        | Six Months Ended |     
|                                           |                        | June 30,         |     
|                                           |                        |                  |     
|Product Sector                             |                        | 2003             |      |     | 2002(a) |  
|                                           |                        |                  |      |     |         |  
|                                           |                        |                 
|                                           |                        | (in millions)    |     
|Dynamics, Propulsion & Thermal             |                        | $                | 243  |     |         | $ | 238  |    
|Electrical, Electronics, Safety & Interior |                        |                  | 527  |     |         |   | 558  |    
|Automotive Holdings Group                  |                        |                  | (296 | )   |         |   | (152 | )  
|Other                                      |                        |                  | (74  | )   |         |   | (32  | )  
|                                           |                        |                  |      |     |         |  
|                                           | Total operating income |                  | $    | 400 |         |   | $    | 612 | 
|                                           |                        |                  |      |     |         |  



| |     |                                                                                                                                                                                                                                                                                                                 | 
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| | (a) | Excludes the first quarter 2002 net restructuring
    and generator product line charges of $262 million with
    $78 million for Dynamics, Propulsion & Thermal,
    $64 million for Electrical, Electronics, Safety &
    Interior, $104 million for Automotive Holdings Group and
    $16 million for Other. | 

The decrease in operating income from the six
months of 2002 primarily reflected increased pension, healthcare
and wages, lower pricing, the legal settlement in connection
with a commercial dispute and the portfolio-related actions
referred to above, partially offset by savings realized from our
restructuring plans, material cost savings and manufacturing
performance. The increase in net sales attributable to currency
exchange rates did not significantly impact our operating
income, as we manage our currency exposure through hedging
techniques, including derivative instruments.

Taxes.Our effective
tax rate for the first six months of 2003 was between 31% and
32% compared to 38% for the comparable period of 2002. The rate
for the first six months of 2003 was affected by entity
structuring, which allowed substantial earnings from the
Asia-Pacific region to be considered indefinitely reinvested in
foreign operations. As compared to our original expectations,
during the first six months of 2003 we experienced higher than
expected earnings in certain jurisdictions outside of the United
States (where effective tax rates are lower than the effective
U. S. tax rate), and lower than expected earnings in the United
States. We expect that this shift may partially correct over the
second six months of 2003. We will re-revaluate our full year
tax rate at the end of the third quarter. If current trends
continue, our tax rate for the full year may be in the 29%-30%
range. The rate for the six months of 2002 reflected our
inability to fully tax effect our restructuring initiatives in
certain jurisdictions. The effective tax rate for the full year
2002 was 35%.

Net Income.As a
result of the factors referred to above, our net income was
$215 million for the first six months of 2003 as compared
to net income of $169 million for the first six months of
2002.

Earnings Per Share.Basic and diluted earnings per share
was $0.38 for the six months of 2003 compared to basic and
diluted earnings per share of $0.30, for the first six
months of 2002.

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Our segment data shown above is based on our
realigned sectors; for comparative purposes, the financial data
for all the quarterly periods in 2002 is shown below:

|                                                  |                 |               |       |        |                   |   |       |            |  |   |          |       |  |       |        |        |   |   |        |        | 
|------------------------------------------------- | --------------- | ------------- | ----- | ------ | ----------------- | - | ----- | ---------- |  | - | -------- | ----- |  | ----- | ------ | ------ | - | - | ------ | ------ | 
|                                                  |                 | Dynamics,     |       |        | Electrical,       |   |       | Automotive |  |   |          |       | 
|                                                  |                 | Propulsion &  |       |        | Electronics,      |   |       | Holdings   |  |   |          |       | 
|                                                  |                 | Thermal       |       |        | Safety & Interior |   |       | Group      |  |   | Other(a) |       |  | Total |       
|                                                  |                 |               |       |        |                   |   |       |            |  |   |          |       |  |       |       
|                                                  |                 |              
|                                                  |                 | (in millions) |      
|For the Three Months Ended March 31,
    2002    
|Net sales to GM and affiliates                    |                 | $             | 1,962 |        |                   | $ | 2,001 |            |  | $ | 521      |       |  | $     |       |        |   | $ | 4,484  |       
|Net sales to other customers                      |                 |               | 925   |        |                   |   | 1,173 |            |  |   | 106      |       |  |       |       |        |   |   | 2,204  |       
|Inter-sector net sales                            |                 |               | 192   |        |                   |   | 91    |            |  |   | 269      |       |  |       | (552   | )      |   |   |       |       
|                                                  |                 |               |       |        |                   |   |       |            |  |   |          |       |  |       |       
|                                                  | Total net sales |               | $     | 3,079  |                   |   | $     | 3,265      |  |   | $        | 896   |  |       | $      | (552   | ) |   | $      | 6,688  | 
|                                                  |                 |               |       |        |                   |   |       |            |  |   |          |       |  |       |       
|Sector operating income (loss)                    |                 | $             | 98    | (b)    |                   | $ | 240   | (b)        |  | $ | (95      | )(b)  |  | $     | (13    | )(b)   |   | $ | 230    | (b)   
|                                                 
|For the Three Months Ended June 30,
    2002     
|Net sales to GM and affiliates                    |                 | $             | 2,079 |        |                   | $ | 2,159 |            |  | $ | 580      |       |  | $     |       |        |   | $ | 4,818  |       
|Net sales to other customers                      |                 |               | 1,030 |        |                   |   | 1,361 |            |  |   | 113      |       |  |       |       |        |   |   | 2,504  |       
|Inter-sector net sales                            |                 |               | 208   |        |                   |   | 97    |            |  |   | 292      |       |  |       | (597   | )      |   |   |       |       
|                                                  |                 |               |       |        |                   |   |       |            |  |   |          |       |  |       |       
|                                                  | Total net sales |               | $     | 3,317  |                   |   | $     | 3,617      |  |   | $        | 985   |  |       | $      | (597   | ) |   | $      | 7,322  | 
|                                                  |                 |               |       |        |                   |   |       |            |  |   |          |       |  |       |       
|Sector operating income (loss)                    |                 | $             | 140   |        |                   | $ | 318   |            |  | $ | (57      | )     |  | $     | (19    | )      |   | $ | 382    |       
|                                                 
|For the Three Months Ended September 30,
    2002
|Net sales to GM and affiliates                    |                 | $             | 1,760 |        |                   | $ | 1,835 |            |  | $ | 482      |       |  | $     |       |        |   | $ | 4,077  |       
|Net sales to other customers                      |                 |               | 914   |        |                   |   | 1,356 |            |  |   | 99       |       |  |       |       |        |   |   | 2,369  |       
|Inter-sector net sales                            |                 |               | 220   |        |                   |   | 79    |            |  |   | 230      |       |  |       | (529   | )      |   |   |       |       
|                                                  |                 |               |       |        |                   |   |       |            |  |   |          |       |  |       |       
|                                                  | Total net sales |               | $     | 2,894  |                   |   | $     | 3,270      |  |   | $        | 811   |  |       | $      | (529   | ) |   | $      | 6,446  | 
|                                                  |                 |               |       |        |                   |   |       |            |  |   |          |       |  |       |       
|Sector operating income (loss)                    |                 | $             | 68    |        |                   | $ | 179   |            |  | $ | (107     | )     |  | $     | (15    | )      |   | $ | 125    |       
|                                                 
|For the Three Months Ended December 31,
    2002 
|Net sales to GM and affiliates                    |                 | $             | 1,953 |        |                   | $ | 2,021 |            |  | $ | 509      |       |  | $     |       |        |   | $ | 4,483  |       
|Net sales to other customers                      |                 |               | 1,014 |        |                   |   | 1,369 |            |  |   | 105      |       |  |       |       |        |   |   | 2,488  |       
|Inter-sector net sales                            |                 |               | 218   |        |                   |   | 90    |            |  |   | 244      |       |  |       | (552   | )      |   |   |       |       
|                                                  |                 |               |       |        |                   |   |       |            |  |   |          |       |  |       |       
|                                                  | Total net sales |               | $     | 3,185  |                   |   | $     | 3,480      |  |   | $        | 858   |  |       | $      | (552   | ) |   | $      | 6,971  | 
|                                                  |                 |               |       |        |                   |   |       |            |  |   |          |       |  |       |       
|Sector operating income (loss)                    |                 | $             | 107   |        |                   | $ | 235   |            |  | $ | (116     | )     |  | $     | (11    | )      |   | $ | 215    |       
|                                                 
|For the Year Ended December 31,
    2002         
|Net sales to GM and affiliates                    |                 | $             | 7,754 |        |                   | $ | 8,016 |            |  | $ | 2,092    |       |  | $     |       |        |   | $ | 17,862 |       
|Net sales to other customers                      |                 |               | 3,883 |        |                   |   | 5,259 |            |  |   | 423      |       |  |       |       |        |   |   | 9,565  |       
|Inter-sector net sales                            |                 |               | 838   |        |                   |   | 357   |            |  |   | 1,035    |       |  |       | (2,230 | )      |   |   |       |       
|                                                  |                 |               |       |        |                   |   |       |            |  |   |          |       |  |       |       
|                                                  | Total net sales |               | $     | 12,475 |                   |   | $     | 13,632     |  |   | $        | 3,550 |  |       | $      | (2,230 | ) |   | $      | 27,427 | 
|                                                  |                 |               |       |        |                   |   |       |            |  |   |          |       |  |       |       
|Sector operating income (loss)                    |                 | $             | 413   | (b)    |                   | $ | 972   | (b)        |  | $ | (375     | )(b)  |  | $     | (58    | )(b)   |   | $ | 952    | (b)   



|    |                                                                                                                                                                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Other includes activity not allocated to the
    product sectors and elimination of inter-sector transactions.                                                                                                                                                                                                 
|   
|(b) | Excludes the first quarter 2002 net restructuring
    and generator product line charges of $262 million with
    $78 million for Dynamics, Propulsion & Thermal,
    $64 million for Electrical, Electronics, Safety &
    Interior, $104 million for Automotive Holdings Group and
    $16 million for Other.

Liquidity and Capital Resources

Liquidity

The following are some key metrics that we use
when we internally monitor our liquidity and capital resources.
We believe that these metrics provide a consistent, objective
measure of our cash and financing position and the changes from
period to period highlight the impacts of our operating results,
capital expenditures and working capital management on our
liquidity. Our net liquidity, which is calculated as

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cash and cash equivalents less total debt, was
$(1,899) million at June 30, 2003 as compared to
$(1,752) million at December 31, 2002. The change in
net liquidity at June 30, 2003 results primarily from our
pension contributions of $600 million during the first half
of 2003, partially offset by our strong cash flow. The negative
balance reflects our intended capital structure and we expect
that we will be able to meet our future obligations as they
become due. At June 30, 2003, our ratio of debt to total
capital (which consists of debt plus stockholders equity)
was 61.4%, as compared to 68.4% at December 31, 2002.


Requirements for working capital, acquisitions,
capital expenditures, pension funding, dividends, repayment of
debt securities 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 as defined below, sales of
receivables under our accounts receivable securitization
facility, proceeds from any future bond offerings, proceeds from
the future offering of preferred securities by our wholly-owned
subsidiary, Delphi Properties, all of which are 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 2003 and now expires in June 2004. Except for
the extension of expiration date, the terms of the credit
facility renewed in the second quarter of 2003 remain
substantially unchanged. As of June 30, 2003 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
$0.3 billion was outstanding as of June 30, 2003.
Delphi also has approximately $90 million available under
uncommitted lines of credit. As of June 30, 2003 there were
no amounts outstanding under uncommitted lines of credit.

In the first quarter of 2003, we entered into a
$500 million domestic accounts receivable securitization
facility agreement (Facility Agreement) under which
we sell certain trade receivables to Delphi Receivables LLC
(DR), a wholly-owned consolidated special purpose
entity. DR may then sell, on a non-recourse basis (subject to
certain exceptions relating to receivables that are reduced or
cancelled for reasons unrelated to the creditworthiness of the
obligor or customary write-offs, are disputed, or for which any
representations and warranties are no longer true), an undivided
interest in its receivables to certain third parties (the
receivable conduits), which are unrelated to Delphi or DR and
are expected to be multi-seller conduits that fund their
purchase through the issuance of commercial paper, with back-up
purchase commitments from the conduits financial
institutions. The transfer qualifies for sale treatment under
the provisions of SFAS No. 140, Accounting for the
Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities. The receivables are sold at fair market
value and the loss on the sale is recorded in operating income
at the time the undivided interest is sold to the third party.
We do perform collections and administrative functions on the
receivables sold. The nature of such activities and the terms of
the Facility Agreement do not result in the recognition of a
servicing asset or liability. At June 30, 2003, DR had sold
$488 million of undivided interests in its receivables to
the receivable conduits; these receivables have been excluded
from our consolidated balance sheet. A loss on sale of
$2 million was recorded for the three months ended
June 30, 2003. During the quarter ended June 30, 2003,
proceeds from new securitizations were $828 million and
proceeds from reinvested collections were $561 million. As
of June 30, 2003, the receivable conduits had a
preferential interest in $543 million of the receivables
held at DR to secure their interest under the Facility
Agreement. The Facility Agreement which is between Delphi, DR,
the receivable conduits, financial institutions and their
agents, expires on March 31, 2004 and can be extended on an
annual basis until March 31, 2006 based upon the mutual
agreement of the parties. Additionally, the Facility Agreement
contains financial and other covenants similar to our revolving
credit

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facilities that, if not met, would result in a
termination of the agreement. At June 30, 2003, we are in
compliance with all such covenants.


During June 2003, we signed a letter of
mandate to enter into a trade receivable securitization program
of up to
320 million
for our European accounts receivable. We expect to finalize the
transaction in the third quarter of 2003. In the interim, we
have entered into a $330 million bridge loan agreement with
a LIBOR based interest rate, which is due September 30,
2003, but may be extended, to October 31, 2003. As of
June 30, 2003 our outstanding borrowings were
$180 million, which is included in notes payable and
current portion of long-term debt. From time to time, certain
subsidiaries may also sell receivables in the normal course of
their operations. Such sales are generally consistent year to
year and do not significantly impact our liquidity.

We lease certain property, primarily land and
buildings that are used in our operations, under leases commonly
known as synthetic 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 at any time during the term or to cause the
properties to be remarketed upon lease expiration. In
June 2003, we entered into new five-year leases with a bank
for our corporate headquarters and two manufacturing sites. In
aggregate, our purchase price under such leases, if we choose to
exercise such option, approximates $100 million. The leases
also provide that if we do not exercise our purchase option upon
expiration of the term and instead elect our remarketing option
we will pay any difference between the $100 million
purchase option amount and the proceeds of remarketing, up to a
maximum of approximately $71 million. At June 30,
2003, the aggregate fair value of these properties exceeds the
minimum value guaranteed upon exercise of the remarketing option
and we recorded our estimate of the fair value of the residual
value guarantee of $3 million as a long-term liability.
Under the leases we also provide certain indemnities to the
lessor, including environmental indemnities. Due to the nature
of such potential obligations, it is not possible to estimate
the maximum amount of such exposure or the fair value. However,
we do not expect such amounts, if any, to be material. In
addition, the leases contain certain covenants and cross-default
provisions to our Credit Facility, which would require us to pay
the full $100 million if we default on our obligations
under the leases. We have two additional synthetic leases. One
of these leases, for an operation in Ohio, continues to qualify
as an operating lease under the generally accepted accounting
principles after the adoption of Financial Accounting Standards
Board (FASB) Interpretation No. 46,
Consolidation of Variable Interest Entities,
(FIN 46) Our purchase price on this facility is
$28 million and we have a guaranteed residual value of
$22 million. Our other synthetic lease, which has a
purchase price and residual value guarantee of approximately
$12 million, has been consolidated on our balance sheet.

In order to provide financial flexibility to
Delphi and our suppliers, we maintain a program through General
Electric Capital Corporation (GECC) pursuant to a
trade payables agreement. When a Delphi supplier elects to
participate in the program, GECC pays the supplier the amount
due from Delphi, prior to the due date of the accounts payable.
In exchange for the early payment, our suppliers accept a
discounted payment. On the original due date of the payables, we
pay GECC the full amount. These amounts are classified as
accounts payable in the consolidated balance sheet of Delphi; at
June 30, 2003 we had approximately $168 million due to
GECC under this program. Starting in the fourth quarter of 2002,
we exercised our right under our trade payables agreement with
GECC, whereby we are permitted to defer payment on these
accounts payable discussed above to GECC for a period of up to
30 days, and in exchange we pay GECC a fee for the period
of such deferral. As of June 30, 2003, we have not elected
to defer payment on such payables. Also in the fourth quarter of
2002, we entered into a program where GECC paid certain
suppliers, on our behalf, the regularly scheduled payment
according to the terms of our purchase orders with those
suppliers. We elect, for a fee, to pay GECC at a date generally
30 days later than the regularly scheduled payment terms.
At June 30, 2003, we have not elected to delay any such
payments.

We have guaranteed the borrowings of one venture
for approximately $15 million. We have no other financial
commitments (such as lines of credit, standby lines of credit,
standby repurchase obligations, or guarantees of such items) to
or on behalf of entities that are excluded from our consolidated
financial statements. As of June 30, 2003, except as
described above, there have been no material changes to our

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unsecured debt and leasing arrangements as
described in our Annual Report on Form 10-K for the year
ended December 31, 2002. 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.


In the first quarter of 2003, we filed a
registration statement with the Securities and Exchange
Commission (SEC) for the sale of $300 million
of preferred securities in our wholly-owned subsidiary, Delphi
Properties, Inc., a real estate investment trust
(REIT). We are currently assessing the right time to
issue these securities, but we expect to come to market in the
third quarter.

Delphi is rated by Standard & Poors,
Moodys and Fitch Ratings. We currently have long-term
credit ratings of BBB-/Baa2/BBB, respectively, and short-term
credit ratings of A3/P2/F2, respectively. On May 22, 2003,
because of our large underfunded employee benefit obligations as
well as concerns about the outlook for the automotive industry
generally and Delphis largest customer, General Motors
Corporation, specifically, Standard & Poors
Ratings Services (S&P) lowered its long-term corporate
credit rating on Delphi to BBB- with a negative outlook. In
addition, the rating was removed from CreditWatch and our
short-term corporate credit rating of A-3 was reaffirmed. The
action by Standard & Poors did result in a higher
facility fee in the recently renewed 364-day Credit Facility,
but did not result in any change in the facility fees and
interest rate charged under our five-year Credit Facility during
the quarter because such amounts are based on the higher of our
rating by Standard & Poors or Moodys. We
believe that our pension and healthcare liabilities even in the
current environment are manageable, particularly because of
their long-term nature. We expect strong cash flow generation to
exceed future pension and OPEB funding by a sizable margin. In
addition, given borrowing facilities already in place, Delphi
has sufficient liquidity to manage our ongoing business.
Although not currently anticipated, if we were downgraded by
Moodys to Baa3, our facility fee and borrowing costs under
our existing five-year Credit Facility would increase. However,
we currently have no amounts outstanding under such facilities
and do not expect that we will need to draw on these facilities
even in the event of such a downgrade. In the event of a further
downgrade to BB+/Baa3/BBB-, we believe we would continue to have
access to sufficient liquidity; however, our cost of borrowing
may further increase and our ability to raise unsecured debt in
the public bond markets may be limited. In addition, as a result
of our short-term credit ratings, our access to the commercial
paper market has been limited as compared to historical levels.
As further described above, we were able to refinance commercial
paper using a number of programs. To the extent that current
levels of commercial paper become unavailable, these alternative
financing programs as well as other means of financing, would be
utilized.

Cash
Flows

Operating Activities.Net cash provided by operating
activities totaled $0.4 billion for the six months ended
June 30, 2003 compared to net cash provided by operating
activities of $0.3 billion for the six months ended
June 30, 2002. Cash provided by operating activities in the
first six months of 2003 was impacted by voluntary contributions
to our U.S. pension plans of $600 million. In addition,
sales under our new accounts receivable Facility Agreement
effectively replaced sales under another program, which
permitted us to sell certain accounts receivable, on a
non-recourse basis, to GECC. As a result, the new Facility
Agreement did not have a significant impact on our cash flow
from operations. 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. pension plans
and a $143 million second quarter payment to GM for
previously recorded separation related obligations for other
postretirement benefits.

Investing Activities.Cash flows used in investing
activities totaled $0.4 billion for the six months ended
June 30, 2003 and 2002. The use of cash in the first six
months of 2003 and 2002 reflects capital expenditures related to
ongoing operations.

Financing Activities.Net cash used in financing activities
totaled $(0.2) billion for the six months ended
June 30, 2003 compared to net cash provided by financing
activities of $0.2 billion for the six months ended
June 30, 2002. Cash used in financing activities during the
first six months of 2003

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represented repayments of borrowings under credit
facilities and other debt as well as payments of dividends. Cash
provided by financing activities during the first six months of
2002 represented increased borrowings of short-term debt.


Dividends.The Board
of Directors declared a dividend on Delphi common stock of
$0.07 per share on June 18, 2003, payable on
July 29, 2003, to holders of record on June 30, 2003.
The dividend declared on March 26, 2003 was paid on
May 5, 2003.

Outlook

General.We continue
to experience softness in the major automotive markets. However,
our non-GM revenue is expected to continue to grow, up
approximately 15% in first six months of 2003 over the
comparable period of 2002 and representing 38% of our total
sales for the first six months of 2003. We expect compounded
annual non-GM revenue growth of at least 10% on a constant
exchange rate basis over time. Given the current uncertainty
inherent in the world economy as a whole and the automotive
industry in particular, we expect our third quarter 2003 sales
to be $6.6 billion, net income to be just above breakeven,
and operating cash flow to be between $50 million and
$150 million. Operating cash flow is defined as cash flow
from operations, prepared on a generally accepted accounting
principles (GAAP) basis, after approximately
$250 million of capital expenditures. As we announced in
June, we now expect our 2003 sales to be between
$27.5 billion and $28.0 billion but closer to
$27 billion on an exchange adjusted basis which is
comparable to our guidance for 2003 given in December 2002. Net
income for 2003 is expected to be between $375 million and
$475 million. Since production volumes are toward the low
end of the range, we expect our earnings will likely be in the
lower half of the range as well. We expect operating cash flow
to be between $1.2 billion and $1.3 billion. Operating
cash flow is defined as cash flow from operations, prepared on a
GAAP basis, before $600 million of pension contributions
and after approximately $1.0 billion of capital
expenditures. The aforementioned amounts do not include the
impact, if any, from the results of our upcoming labor
negotiations or the remedy of the grievance arbitration as more
fully discussed in Item 2. Managements
Discussion and Analysis of Financial Condition and Results of
Operations  Labor Matters.

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 as well as wages in non-U.S. locations. As previously
announced, we are in the process of winding down our generators
product line, which is now part of AHG. AHG is designed to
provide a better environment for all of our stakeholders. Each
of the product lines and sites within AHG has its own unique set
of challenges that require us to be flexible and creative in our
ongoing efforts to find solutions.

In addition to conditions in our market and the
economy as a whole, we depend on GM as a customer. GM accounted
for 62% of our net sales for the first six months of 2003. Our
sales to GM have declined since our separation from GM;
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 vehicle content and the product mix supplied to
them. We also continue to exit some businesses as part of our
portfolio review process. Reflecting these and other factors, we
expect our sales to GM to decline over time. If we are unable to
compete effectively for new business with GMs other
suppliers, our revenues may decline further. While we intend to
continue to focus on retaining and winning GMs business,
we cannot ensure that we will succeed in doing so. Additionally,
our revenues may be affected by increases or decreases in
GMs business or market share. Our GM North America content
per vehicle for the second quarter of 2003 was $2,714 and based
on the better than expected performance in the second half of
2003, we anticipate that our full year 2003 content per vehicle
may trend higher than the $2,675 which was previously expected.

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

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result, in bodily injury and/or property damage.
In addition, as we actively pursue additional technological
innovation in both automotive and non-automotive industries and
enhance the value of our intellectual property portfolio, we
incur ongoing costs to enforce and defend our intellectual
property and face an inherent risk of exposure to the claims of
other suppliers and parties that we have allegedly violated
their intellectual property rights. We cannot ensure that we
will not experience any material warranty, product liability or
intellectual property claim 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 practices
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 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 attempt to 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 ensure 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 settlements. Our warranty reserves are based upon our
best estimates of amounts necessary to settle future and
existing claims. We regularly evaluate the appropriateness of
these reserves, and adjust them when appropriate. However, the
final amounts determined to be due related to these matters
could differ materially from our recorded estimates.


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

U.S. Pension Plans.Delphi sponsors defined benefit
pension plans covering certain hourly and salaried employees in
the United States. At December 31, 2002, the projected
benefit obligation exceeded the market value of plan assets by
$4.1 billion. We are not required by employee benefit and
tax laws to make contributions to our pension plans prior to
2004, however, we contributed $350 million in
January 2003 and an additional $250 million in
May 2003 to our U.S. pension plans. Changes in interest
rates and the market values of the securities held by the plans
during 2003 could materially, positively or negatively, change
our underfunded status and affect the level of pension expense
and required contributions in 2004 and beyond. For example,
every 100 basis point difference in our actual 2003 asset
returns versus our assumed 9% long-term asset return rate would
increase or decrease the underfunded status of our plans by
approximately $60 million and our 2004 pension expense by
approximately $7 million to $10 million. Similarly, a
25 basis point change in the discount rate used to value pension
liabilities at December 31, 2003, could increase or
decrease the underfunded status of our plans by approximately
$300 million and 2004 pension expense by approximately
$20 million to $30 million. Actual investment returns
and changes in the discount rate during 2003 will have no effect
on our 2003 pension expense.

Environmental Matters

As previously disclosed, with respect to
environmental matters, Delphi 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

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ground water contamination, is in the early
stages of investigation and involves multiple other PRPs. Based
on the information gathered to date, Delphi has been identified
as the largest waste-generator PRP, however, we expect that
other parties, including landfill operator and transporter PRPs,
will ultimately have to share a significant portion of any
overall site costs. In September 2002, Delphi and other
PRPs entered into a Consent Order with the Environmental
Protection Agency (EPA) to perform a Remedial
Investigation and Feasibility Study concerning a portion of the
site. The investigation is expected to be completed during 2005,
as various EPA reviews are required through each phase of the
study. We have reserved approximately $2 million for our
share of the expected investigation costs. Current preliminary
assessments indicate that a reasonably possible outcome of the
investigative study is capping and future monitoring of this
site, which would substantially limit future remediation costs.
Based on cost estimates received to date, we have included an
estimate of the potential costs of capping and future monitoring
of the site in our overall reserve estimates. Because the scope
of the investigation and the extent of the required remediation
are still being determined, it is possible that the final
resolution of this matter may require that we make material
future expenditures for remediation, possibly over an extended
period of time and possibly in excess of our existing reserves.
As the investigation proceeds, we will periodically re-assess
any potential remediation costs and, as appropriate, our overall
environmental reserves.


Labor Matters

On a worldwide basis, Delphi has a concentration
of employees working under union collective bargaining
agreements representing approximately 91% of its hourly
workforce. A significant proportion of the U.S. union
employees labor agreements expire beginning in
September 2003. Certain suppliers and customers of Delphi
also have union represented work forces. Future work stoppages
by Delphi employees or employees of Delphis suppliers or
customers could disrupt Delphis production of automotive
components and systems. In addition, our ability to fix certain
sites and businesses that have been placed in AHG depend, in
part, on our ability to satisfactorily address any labor issues.

During 2002, the International Union of
Electronic, Electrical, Salaried, Machine & Furniture
Workers-Communication Workers of America, AFL-CIO (the
IUE-CWA) filed a grievance to protest certain
planned layoffs at one of our manufacturing sites. The grievance
was submitted to binding arbitration under the terms of
Delphis labor agreement with the IUE-CWA. During the first
quarter of 2003, the arbitrator ruled in favor of the
IUE-CWAs position that Delphi had assumed an enforceable
contract obligation to maintain a minimum employment level at
the site of 1,500 jobs until the year 2011. The arbitrator
further ruled, however, that enforcing the contractually
required minimum employment level at the site for the full term
was not an appropriate remedy. Instead, the arbitrator ordered
the parties to appear at a future remedial hearing, scheduled
during the second quarter of 2003, to discuss and present
evidence as to the remedy. The hearing was conducted in
June 2003. We expect a ruling in the latter half of 2003.
Although our obligation for unpaid wages of employees on layoff
at June 30, 2003 was not material, a remedy that requires
continued employment at prior levels for a significant length of
time would adversely impact our ability to achieve cost savings
and achieve an acceptable net income at the facility. The
facility is included within our AHG as the facility does not
meet our targets for net income, and attempts to develop a
fix plan have been ongoing. Our ability to execute
such a plan will be dependent on the resolution of this dispute.

New Accounting Pronouncements

The FASB recently issued the following
pronouncements:



| |   |                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------
| |  | SFAS No. 149, Amendment of Statement
    133 on Derivative Instruments and Hedging Activities                         
|
| |  | SFAS No. 150, Accounting for Certain
    Financial Instruments with Characteristics of both Liabilities
    and Equity

The adoption of these accounting pronouncements
will not have a material effect on our results of operations or
financial position.

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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, earnings expectations, savings expected as a result of
our 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 current views and assumptions with respect to
future events. Important factors, risks and uncertainties which
may cause actual results to differ from those expressed in our
forward-looking statements are set forth in this Quarterly
Report on Form 10-Q. In particular, the achievement of
projected levels of revenue, earnings, cash flow and debt levels
will depend on our ability to execute our portfolio and other
global restructuring plans in a manner which satisfactorily
addresses any resultant antitrust or labor issues and customer
concerns, any contingent liabilities related to divestitures or
integration costs associated with acquisitions, and other
matters; the success of our efforts to diversify our customer
base and still maintain existing GM business; the continued
protection and exploitation of our intellectual property to
develop new products and enter new markets; and our ability to
capture expected benefits of our cost reduction initiatives so
as to maintain flexibility to respond to adverse and cyclical
changes in general economic conditions and in the automotive
industry in each market in which we operate, including customer
cost reduction initiatives, potential increases in warranty
costs, funding requirements and pension contributions,
healthcare costs, disruptions in the labor, commodities or
transportation markets caused by terrorism, war or labor
unrests, other changes in the political and regulatory
environments where we do business; and other factors, risks and
uncertainties discussed in our Annual Report on Form 10-K for
the year ended December 31, 2002 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.

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ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK


There have been no material changes to our
exposures to market risk since December 31, 2002.






ITEM 4. CONTROLS AND
PROCEDURES


We have designed our disclosure controls and
procedures to ensure that material information related to
Delphi, including our consolidated subsidiaries, is made known
to our Disclosure Committee, including our principal executive
officer and principal financial officer on a regular basis, in
particular during the period in which the quarterly reports are
being prepared. As required, we evaluate the effectiveness of
these disclosure controls and procedures as of the end of each
quarter. As of the end of the second quarter, we believe that
such controls and procedures are operating effectively as
designed.

We presented the results of our most recent
evaluation to our independent auditors, Deloitte & Touche
LLP, and the Audit Committee of the Board of Directors. Based on
such evaluation, the Companys management, including the
principal executive officer and principal financial officer,
concluded that the Companys disclosure controls and
procedures are adequate to ensure the clarity and material
completeness of the Companys disclosure in its periodic
reports required to be filed with the SEC and there are no
significant deficiencies or material weaknesses in the design or
operation of internal controls over financial reporting which
are reasonably likely to adversely affect our ability to record,
process, summarize and report financial information.

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PART II. OTHER INFORMATION







ITEM 1. LEGAL PROCEEDINGS


Other than the former supplier award discussed in
Note 8 and the arbitration with the IUE-CWA discussed in
Item 2. Managements Discussion and
Analysis of Financial Condition and Results of
Operations  Labor Matters, there have been no
other 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, 2002.

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, 2003. 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 2003 Annual
Stockholders Meeting and expiring at the 2006 Annual
Stockholders Meeting. The vote with respect to each
nominee was as follows:

|                    |  |     |             |  |          |  |             | 
|------------------- |  | --- | ----------- |  | -------- |  | ----------- | 
|Nominee             |  | For |             |  | Withheld | 
|                    |  |     |             |  |          | 
|J.T. Battenberg III |  |     | 365,104,903 |  |          |  | 122,835,633 | 
|Virgis W. Colbert   |  |     | 347,266,523 |  |          |  | 140,674,013 | 
|Shoichiro Irimajiri |  |     | 365,741,795 |  |          |  | 122,198,741 | 

(2) The ratification of the appointment of
Deloitte & Touche LLP as Delphis independent public
accountants for the year ending December 31, 2003.

|    |             |  |         |  |            |         |  |  |           | 
|--- | ----------- |  | ------- |  | ---------- | ------- |  |  | --------- | 
|For |             |  | Against |  |            | Abstain | 
|    |             |  |         |  |            |         | 
|    | 472,950,485 |  |         |  | 10,879,800 |         |  |  | 4,111,072 | 

(3) A stockholder proposal requesting the
Board of Directors to approve the proposal for the redemption of
Delphis stockholders rights plan.

|    |             |  |         |  |             |         |  |  |           | 
|--- | ----------- |  | ------- |  | ----------- | ------- |  |  | --------- | 
|For |             |  | Against |  |             | Abstain | 
|    |             |  |         |  |             |         | 
|    | 245,146,484 |  |         |  | 159,546,916 |         |  |  | 7,038,554 | 

(4) A stockholder proposal requesting the
Board of Directors to approve the proposal for the annual
election of directors:

|    |             |  |         |  |             |         |  |  |           | 
|--- | ----------- |  | ------- |  | ----------- | ------- |  |  | --------- | 
|For |             |  | Against |  |             | Abstain | 
|    |             |  |         |  |             |         | 
|    | 283,582,395 |  |         |  | 121,623,057 |         |  |  | 6,526,800 | 

(5) A stockholder proposal requesting the
Board of Directors to approve the proposal for the adoption of a
code for Delphis international operations:

|    |             |  |         |  |             |         |  |  |            | 
|--- | ----------- |  | ------- |  | ----------- | ------- |  |  | ---------- | 
|For |             |  | Against |  |             | Abstain | 
|    |             |  |         |  |             |         | 
|    | 113,373,684 |  |         |  | 263,657,983 |         |  |  | 34,701,584 | 

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ITEM 6. EXHIBITS AND REPORTS ON
FORM 8-K


(a) EXHIBITS

|        |       |  |              |                                                                                                                                                                                                                                                                           
|------- | ----- |  | ------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |  |             
|Number  |       |  | Exhibit Name
|        |       |  |             
|        | 3(a)  |  |              | Amended and Restated Certificate of Incorporation
    of Delphi Automotive Systems Corporation, incorporated by
    reference to Exhibit 3(a) to Delphis Quarterly Report
    on Form 10-Q for the quarter ended June 30, 2002.                                          
|        | 3(b)  |  |              | Certificate of Ownership and Merger, dated
    March 13, 2002, Merging Delphi Corporation into Delphi
    Automotive Systems Corporation, incorporated by reference to
    Exhibit 3(b) to Delphis Quarterly Report on
    Form 10-Q for the quarter ended June 30, 2002.
|        | 3(c)  |  |              | By-laws of Delphi Automotive Systems Corporation,
    incorporated by reference to Exhibit 3.2 to Delphis
    Registration Statement on Form S-1 (Registration
    No. 333-67333).                                                                                       
|        | 10(a) |  |              | 364  Day Fifth Amended and Restated
    Competitive Advance and Revolving Credit Facility dated
    June 20, 2003                                                                                                                                                        
|        | 99(a) |  |              | Certification Pursuant to 18 U.S.C.
    Section 1350, As Adopted Pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002.                                                                                                                                           
|        | 99(b) |  |              | Certification Pursuant to 18 U.S.C.
    Section 1350, As Adopted Pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002.                                                                                                                                           

(b) REPORTS ON FORM 8-K

During the three months ended June 30, 2003
for which this report is filed, Delphi filed the following
reports on Form 8-K:



| |                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | April 16, 2003, Form 8-K reporting
    under Item 12. Disclosure of Results of
    Operations and Financial Condition the filing of financial
    information containing highlighted financial data for the three
    months ended March 31, 2003.
|
| | May 9, 2003, Form 8-K reporting under
    Item 5. Other Events disclosing the
    outcome of a commercial dispute.                                                                                                                                
|
| | May 23, 2003, Form 8-K reporting under
    Item 5. Other Events disclosing credit
    rating action by Standard & Poors Ratings Services.                                                                                                        
|
| | June 12, 2003, Form 8-K reporting under
    Item 5. Other Events disclosing revised
    guidance for the second quarter and calendar year 2003.                                                                                                   

27



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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, 2003 |  | /s/ JOHN D. SHEEHAN
    -----------------------------------------------------
    John D. Sheehan, Chief Accounting
    Officer and Controller

28



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##### Table of Contents








CERTIFICATIONS


Certification of Principal Executive
Officer

I, J. T. Battenberg III, certify that:



| |    |                                                                                                                                                                                                                                                                                                                           
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | I have reviewed this report on Form 10-Q of
    Delphi Corporation;                                                                                                                                                                                                                                                       
|
| | 2. | Based on my knowledge, this report does not
    contain any untrue statement of a material fact or omit to state
    a material fact necessary to make the statements made, in light
    of the circumstances under which such statements were made, not
    misleading with respect to the period covered by this report;
|
| | 3. | Based on my knowledge, the financial statements,
    and other financial information included in this report, fairly
    present in all material respects the financial condition,
    results of operations and cash flows of the registrant as of,
    and for, the periods presented in this report;                   
|
| | 4. | The registrants other certifying officers
    and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-15(e) and 15d-15(e)) for the registrant and have:                                                                                  



| |    |                                                                                                                                                                                                                                                                                                                                                                                                       
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | Designed such disclosure controls and procedures,
    or caused such disclosure controls and procedures to be designed
    under our supervision, to ensure that material information
    relating to the registrant, including its consolidated
    subsidiaries, is made known to us by others within those
    entities, particularly during the period in which this report is
    being prepared;
|
| | b) | Evaluated the effectiveness of the
    registrants disclosure controls and procedures and
    presented in this report our conclusions about the effectiveness
    of the disclosure controls and procedures, as of the end of the
    period covered by this report based on such evaluation; and                                                                                                   
|
| | c) | Disclosed in this report any change in the
    registrants internal control over financial reporting that
    occurred during the registrants most recent fiscal quarter
    that has materially affected, or is reasonably likely to
    materially affect, the registrants internal control over
    financial reporting; and                                                                    



| |    |                                                                                                                                                                                                                                                                                                                     
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5. | The registrants other certifying officers
    and I have disclosed, based on our most recent evaluation of
    internal control over financial reporting, to the
    registrants auditors and the audit committee of the
    registrants board of directors (or persons performing the
    equivalent functions):



| |    |                                                                                                                                                                                                                                                                                          
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | All significant deficiencies and material
    weaknesses in the design or operation of internal control over
    financial reporting which are reasonably likely to adversely
    affect the registrants ability to record, process,
    summarize and report financial information; and
|
| | b) | Any fraud, whether or not material, that involves
    management or other employees who have a significant role in the
    registrants internal control over financial reporting.                                                                                                       

|              |  |                                                                                                                                                                                                                   
|------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|July 17, 2003 |  | /s/ J. T. BATTENBERG III
    -----------------------------------------------------
    J. T. Battenberg III
    Chairman of the Board,
    Chief Executive Officer and
    President (Principal Executive Officer)

29



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##### Table of Contents



Certification of Principal Financial
Officer

I, Alan S. Dawes, certify that:



| |    |                                                                                                                                                                                                                                                                                                                           
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | I have reviewed this report on Form 10-Q of
    Delphi Corporation;                                                                                                                                                                                                                                                       
|
| | 2. | Based on my knowledge, this report does not
    contain any untrue statement of a material fact or omit to state
    a material fact necessary to make the statements made, in light
    of the circumstances under which such statements were made, not
    misleading with respect to the period covered by this report;
|
| | 3. | Based on my knowledge, the financial statements,
    and other financial information included in this report, fairly
    present in all material respects presented in this the financial
    condition, results of operations and cash flows of the
    registrant as of, and for, the periods presented in this report; 
|
| | 4. | The registrants other certifying officers
    and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-15(e) and 15d-15(e)) for the registrant and have:                                                                                  



| |    |                                                                                                                                                                                                                                                                                                                                                                                                       
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | Designed such disclosure controls and procedures,
    or caused such disclosure controls and procedures to be designed
    under our supervision, to ensure that material information
    relating to the registrant, including its consolidated
    subsidiaries, is made known to us by others within those
    entities, particularly during the period in which this report is
    being prepared;
|
| | b) | Evaluated the effectiveness of the
    registrants disclosure controls and procedures and
    presented in this report our conclusions about the effectiveness
    of the disclosure controls and procedures, as of the end of the
    period covered by this report based on such evaluation; and                                                                                                   
|
| | c) | Disclosed in this report any change in the
    registrants internal control over financial reporting that
    occurred during the registrants most recent fiscal quarter
    that has materially affected, or is reasonably likely to
    materially affect, the registrants internal control over
    financial reporting; and                                                                    



| |    |                                                                                                                                                                                                                                                                                                                     
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5. | The registrants other certifying officers
    and I have disclosed, based on our most recent evaluation of
    internal control over financial reporting, to the
    registrants auditors and the audit committee of the
    registrants board of directors (or persons performing the
    equivalent functions):



| |    |                                                                                                                                                                                                                                                                                          
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | All significant deficiencies and material
    weaknesses in the design or operation of internal control over
    financial reporting which are reasonably likely to adversely
    affect the registrants ability to record, process,
    summarize and report financial information; and
|
| | b) | Any fraud, whether or not material, that involves
    management or other employees who have a significant role in the
    registrants internal control over financial reporting.                                                                                                       

|              |  |                                                                                                                                                                                  
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|July 17, 2003 |  | /s/ ALAN S. DAWES
    -----------------------------------------------------
    Alan S. Dawes
    Vice Chairman and
    Chief Financial Officer
    (Principal Financial Officer)

30



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##### Table of Contents



EXHIBIT INDEX

|        |       |  |              |                                                                                                                                                                                                                                                                           
|------- | ----- |  | ------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |  |             
|Number  |       |  | Exhibit Name
|        |       |  |             
|        | 3(a)  |  |              | Amended and Restated Certificate of Incorporation
    of Delphi Automotive Systems Corporation, incorporated by
    reference to Exhibit 3(a) to Delphis Quarterly Report
    on Form 10-Q for the quarter ended June 30, 2002.                                          
|        | 3(b)  |  |              | Certificate of Ownership and Merger, dated
    March 13, 2002, Merging Delphi Corporation into Delphi
    Automotive Systems Corporation, incorporated by reference to
    Exhibit 3(b) to Delphis Quarterly Report on
    Form 10-Q for the quarter ended June 30, 2002.
|        | 3(c)  |  |              | By-laws of Delphi Automotive Systems Corporation,
    incorporated by reference to Exhibit 3.2 to Delphis
    Registration Statement on Form S-1 (Registration
    No. 333-67333).                                                                                       
|        | 10(a) |  |              | 364  Day Fifth Amended and Restated
    Competitive Advance and Revolving Credit Facility dated
    June 20, 2003                                                                                                                                                        
|        | 99(a) |  |              | Certification Pursuant to 18 U.S.C.
    Section 1350, As Adopted Pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002.                                                                                                                                           
|        | 99(b) |  |              | Certification Pursuant to 18 U.S.C.
    Section 1350, As Adopted Pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002.                                                                                                                                           

31