DELPHI AUTOMOTIVE SYSTEMS CORP, 424B5, 1999-04-30

DELPHI AUTOMOTIVE SYSTEMS CORP
424B5, 1999-04-30
MOTOR VEHICLE PARTS & ACCESSORIES

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<PAGE> 1

Filed Pursuant To Rule 424(b)(5)
Registration Statement No. 333-73285

PROSPECTUS SUPPLEMENT
(To prospectus dated March 30, 1999)

$1,500,000,000
[DELPHI LOGO]

Delphi Automotive Systems Corporation
$500,000,000 6 1/8% Notes due 2004
$500,000,000 6 1/2% Notes due 2009
$500,000,000 7 1/8% Debentures due 2029
------------------------

The notes due 2004 will bear interest at 6 1/8% per year and will mature on
May 1, 2004, the notes due 2009 will bear interest at 6 1/2% per year and will
mature on May 1, 2009 and the debentures due 2029 will bear interest at 7 1/8%
per year and will mature on May 1, 2029. We will pay interest on the notes and
debentures (collectively, the "Offered Securities") on May 1 and November 1 of
each year, beginning November 1, 1999. We may redeem the Offered Securities
prior to maturity, in whole or in part, as described in this prospectus
supplement.
------------------------

INVESTING IN THE OFFERED SECURITIES INVOLVES CERTAIN RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE S-3.
------------------------

<TABLE>
<CAPTION>
PUBLIC OFFERING UNDERWRITING PROCEEDS BEFORE
PRICE(1) DISCOUNT EXPENSES
--------------- ------------ ---------------
<S> <C> <C> <C>
Per Note due 2004.......................................... 99.873% .350% 99.523%
Total.................................................... $499,365,000 $1,750,000 $497,615,000
Per Note due 2009.......................................... 99.393% .450% 98.943%
Total.................................................... $496,965,000 $2,250,000 $494,715,000
Per Debenture due 2029..................................... 99.230% .875% 98.355%
Total.................................................... $496,150,000 $4,375,000 $491,775,000
</TABLE>

- -------------------------
(1) Plus accrued interest from May 4, 1999, if settlement occurs after that
date.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.

The Offered Securities are being offered for sale in the United States,
Europe and Asia. We have applied to have the Offered Securities listed and
traded in accordance with the rules of the Luxembourg Stock Exchange. The
Offered Securities will be ready for delivery in book-entry form only through
The Depository Trust Company, Cedelbank or the Euroclear System, as the case may
be, on or about May 4, 1999.
------------------------
Joint Bookrunners

MERRILL LYNCH & CO. MORGAN STANLEY DEAN WITTER
------------------------
Co-Lead Managers
CHASE SECURITIES INC. GOLDMAN, SACHS & CO.
------------------------
Co-Managers

<TABLE>
<S> <C> <C>
BNY CAPITAL MARKETS, INC. BANC ONE CAPITAL MARKETS, INC. BARCLAYS CAPITAL
FIRST UNION CAPITAL MARKETS CORP. BLAYLOCK & PARTNERS, L.P. BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS BNP CAPITAL MARKETS, LLC DEUTSCHE BANK
ORMES CAPITAL MARKETS, INC. CIBC WORLD MARKETS NATIONSBANC MONTGOMERY SECURITIES LLC
SG COWEN CREDIT LYONNAIS S.A. SALOMON SMITH BARNEY
</TABLE>

------------------------

The date of this prospectus supplement is April 28, 1999.
<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT PAGE
--------------------- ----
<S> <C>
Risk Factors................................ S-3
The Company................................. S-5
Use of Proceeds............................. S-6
Capitalization.............................. S-7
Selected Financial Data..................... S-8
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................ S-11
Business of Delphi.......................... S-28
Executive Officers and Directors............ S-39
Description of the Offered Securities....... S-45
Certain United States Federal Tax Matters... S-52
Underwriting................................ S-56
General Information......................... S-58
Legal Matters............................... S-59
</TABLE>

<TABLE>
<CAPTION>
PROSPECTUS PAGE
---------- ----
<S> <C>
About this Prospectus....................... 2
Where You Can Find More Information......... 3
The Company................................. 4
Risk Factors................................ 5
Use of Proceeds............................. 5
Ratio of Earnings to Fixed Charges.......... 5
Description of Debt Securities.............. 5
Plan of Distribution........................ 13
Experts..................................... 15
Legal Opinions.............................. 15
</TABLE>

THE LUXEMBOURG STOCK EXCHANGE TAKES NO RESPONSIBILITY FOR THE CONTENTS OF
THIS DOCUMENT, MAKES NO REPRESENTATION AS TO ITS ACCURACY OR COMPLETENESS AND
EXPRESSLY DISCLAIMS ANY LIABILITY WHATSOEVER FOR ANY LOSS HOWSOEVER ARISING FROM
OR IN RELIANCE UPON THE WHOLE OR ANY PART OF THE CONTENTS OF THIS DOCUMENT AND
THE ACCOMPANYING PROSPECTUS.

No person is authorized to give any information or to represent anything
not contained in this prospectus supplement or the accompanying prospectus. You
must not rely on any unauthorized information or representations. This
prospectus supplement and the accompanying prospectus are an offer to sell or to
buy only the Offered Securities, but only under circumstances and in
jurisdictions where it is lawful to do so. The information contained in this
prospectus supplement or the accompanying prospectus as well as information
previously filed with the Securities and Exchange Commission and incorporated by
reference is current only as of the date of such information. Our business,
financial condition, results of operations and prospects may have changed since
that date.

OFFERS AND SALES OF THE OFFERED SECURITIES ARE SUBJECT TO RESTRICTIONS IN
RELATION TO THE UNITED KINGDOM, DETAILS OF WHICH ARE SET OUT IN "UNDERWRITING"
BELOW. THE DISTRIBUTION OF THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS AND THE OFFERING OF THE OFFERED SECURITIES IN CERTAIN OTHER
JURISDICTIONS MAY ALSO BE RESTRICTED BY LAW. THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER, OR AN INVITATION ON OUR
BEHALF OR ON BEHALF OF THE UNDERWRITERS OR ANY OF THEM TO SUBSCRIBE FOR AND
PURCHASE, ANY OF THE OFFERED SECURITIES, AND MAY NOT BE USED FOR OR IN
CONNECTION WITH AN OFFER OR SOLICITATION BY ANYONE, IN ANY JURISDICTION IN WHICH
SUCH AN OFFER OR SOLICITATION IS NOT AUTHORIZED OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.

We cannot guarantee that application to the Luxembourg Stock Exchange will
be approved, and sale of the Offered Securities is not conditioned on obtaining
this listing.

References in this prospectus supplement and the accompanying prospectus to
"we," "us," "our" and the "company" are to Delphi Automotive Systems
Corporation.

In this prospectus supplement and the accompanying prospectus, unless
otherwise specified or the context otherwise requires, references to "dollars,"
"$" and "U.S. $" are to United States dollars.

S-2
<PAGE> 3

RISK FACTORS

In considering whether to purchase the Offered Securities, you should
carefully consider all the information we have included or incorporated by
reference in this prospectus supplement and the accompanying prospectus. In
particular, you should carefully consider the risk factors described below. In
addition, please read "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Forward-Looking Statements" beginning on
page S-26 of this prospectus supplement, where we describe additional
uncertainties associated with our business and the forward-looking statements in
this prospectus supplement and the accompanying prospectus.

WE MAY NOT BE ABLE TO REALIZE THE EXPECTED BENEFITS OF OUR SEPARATION FROM
GENERAL MOTORS

As a result of our initial public offering of common stock in February
1999, General Motors now owns approximately 82.3% of our outstanding common
stock and the public owns the rest. On April 12, 1999, the General Motors board
of directors approved the complete separation of our company from General Motors
principally by means of a tax-free spin-off to holders of General Motors $1- 2/3
common stock. To effect the spin-off of our company, the General Motors board
declared a dividend on the $1- 2/3 common stock consisting of approximately
80.1% of our outstanding common stock, payable on May 28, 1999 to holders of
record as of May 25, 1999. General Motors intends to contribute the remaining
approximately 2.2% of our outstanding common stock owned by it to a voluntary
employees' beneficiary association trust for General Motors' hourly retirees if
General Motors receives confirmation from the Internal Revenue Service that such
contribution will not affect the tax-free status of the spin-off of our company.
If General Motors does not receive such a confirmation from the Internal Revenue
Service on a timely basis, the remaining shares of our common stock owned by
General Motors will be distributed to the holders of the $1- 2/3 common stock as
part of the spin-off. If General Motors fails to complete the separation of our
company from General Motors as contemplated, our business would be adversely
affected. Specifically, we would likely not realize the increased non-General
Motors sales, improved labor relations, capital planning flexibility and other
benefits we expect to achieve in connection with the separation, all of which
are important to our business strategy.

Although we expect General Motors to continue to be our largest customer
for a significant period of time, our ability to realize future sales to General
Motors is subject to a number of risks. These risks include uncertainties
relating to our business under the supply agreement that we have entered into
with General Motors, under which General Motors has certain rights to move
business from us to other suppliers. The supply agreement also requires General
Motors to provide us the opportunity to supply on competitive terms the first
replacement cycle of certain product programs. However, in order to utilize this
ability to secure next generation business, we must be competitive in a number
of areas. Other suppliers' bids to provide particular products may include
offers of price reductions to General Motors on other current or future
products, and General Motors may under the supply agreement consider the overall
economic effect of such package proposals in assessing our competitiveness.
Accordingly, we cannot provide any assurance as to the amount of our future
business with General Motors. While we intend to continue to focus on retaining
and winning General Motors' business, we cannot assure you that we will succeed
in doing so.

Nor can we assure you that we will successfully enhance our ability to
expand our revenue base through additional sales to customers other than General
Motors. We face significant competition within each of our major product areas,
including some competitors which have substantial size and scale and some which
have lower cost structures. Even if we successfully increase our sales to other
customers, such sales, if any, will likely not be realized, if at all, for
several years because the majority of vehicle manufacturer parts purchases for
the next several years have already been sourced.

S-3
<PAGE> 4

OUR HISTORICAL FINANCIAL INFORMATION MAY NOT BE REPRESENTATIVE OF OUR RESULTS AS
A SEPARATE INDEPENDENT COMPANY

Our historical financial information for periods before January 1, 1999 may
not reflect what our results of operations, financial position and cash flows
would have been had we been a separate, independent entity during the periods
presented or what our results of operations, financial position and cash flows
will be in the future. This is because:

- we have made certain adjustments and allocations because General Motors
did not account for us, and we were not operated, as a stand-alone
business for all periods presented; and

- the information does not reflect many significant changes that will occur
in our funding and operations as a result of our separation from General
Motors, including employee and tax matters.

We cannot assure you that the adjustments and allocations we have made in
preparing our historical consolidated financial statements appropriately reflect
our operations during such periods as if we had in fact operated as a
stand-alone entity or what the actual effect of our separation from General
Motors will be. Accordingly, we cannot assure you that our historical results of
operations are indicative of our future operating or financial performance.

WE MAY HAVE GREATER THAN EXPECTED CAPITAL REQUIREMENTS

In connection with our separation from General Motors, we have agreed to
assume certain obligations relating to pensions and other postretirement
employee benefits-principally medical benefits-for our employees as well as for
certain employees associated with prior divestitures. We expect that our pension
contributions will be material to our results of operations and financial
condition, and, under certain circumstances, we could be required to make a
significant payment to General Motors in connection with the allocation of other
postretirement employee benefits. As a result of these obligations, our
liquidity position may be adversely affected if we fail to realize our expected
cash flows from operations. In addition, under our supply agreement with General
Motors, the timing of payments from General Motors to us under existing
contracts changed as of January 1, 1999, with the result that our working
capital needs have increased substantially from the levels assumed by the
historical consolidated financial statements.

OUR BUSINESS MAY BE ADVERSELY IMPACTED BY WORK STOPPAGES AND OTHER LABOR
RELATIONS MATTERS ARISING FROM THE GENERAL CONDUCT OF OUR BUSINESS OR FROM THE
SEPARATION

We are subject to a risk of work stoppages and other labor relations
matters because our hourly workforce is highly unionized. In connection with
General Motors' proposed separation of our company, we will assume the terms of
the national labor agreements negotiated by General Motors. We expect to achieve
from the separation of our company increased competitiveness over time as a
result of improving our labor relations and establishing more flexible local
work rules and practices, but our largest union, the UAW, which represents about
28% of our unionized employees, has stated that it is on record as opposing
General Motors' divestiture of our company and that the UAW can and will
aggressively work to protect the rights and interests of its members who would
be impacted by the separation. We cannot assure you that this and other issues
with our labor unions will be resolved favorably to us in the future, that we
will not experience significant work stoppages or that we will not record
significant charges related to those work stoppages. In addition, if one or more
of our customers, including General Motors, experiences a material work
stoppage, such work stoppage may have a resulting effect on our company,
including the possible shutdown of our production lines related to such
customers, which could have a material adverse effect on our business.

S-4
<PAGE> 5

THE COMPANY

The information contained in this section is qualified in its entirety by
and should be read together with the more detailed information and financial
statements included elsewhere, or incorporated by reference, in this prospectus
supplement and the accompanying prospectus.

Delphi Automotive Systems Corporation is the world's largest and most
diversified supplier of components, integrated systems and modules to the
automotive industry, with 1998 net sales of $28.5 billion. We have become a
leader in the global automotive parts industry by capitalizing on the extensive
experience we gained as the principal supplier of automotive parts to General
Motors Corporation ("General Motors"), the world's largest manufacturer of
automotive vehicles. We are primarily a Tier 1 supplier, which means that we
generally provide our products directly to automotive vehicle manufacturers
("VMs"). We also sell our products to the worldwide aftermarket for replacement
parts and to customers other than VMs. We have established an expansive global
presence, with a network of manufacturing sites, technical centers, sales
offices and joint ventures located in every major region of the world, and sell
our products to every major manufacturer of light vehicles in the world.

- Electronics & Mobile Communication, which includes our automotive
electronics and audio and communications systems;

- Safety, Thermal & Electrical Architecture, which includes our interior,
thermal and power and signal distribution products; and

- Dynamics & Propulsion, which includes our energy and engine management,
chassis and steering products.

Our core business objective is to increase our earnings by expanding our
sales globally while improving our operating performance. We believe that our
comprehensive vehicle knowledge and expansive global presence provide a solid
foundation for our continued growth, particularly as VMs increasingly seek
suppliers with technical expertise who can provide competitively-priced systems
solutions to meet consumers' requirements for ride and handling performance,
safety, security, communications, convenience and entertainment and who can
deliver products and offer customer service on a worldwide basis. Although we
expect that General Motors will remain our largest customer for a significant
period of time, we also expect that our sales to General Motors' North American
operations will decline over time. Accordingly, our strategy focuses on
increasing sales to other customers while maintaining our strong relationship
with General Motors.

Our company was incorporated in Delaware in late 1998. Effective as of
January 1, 1999, we acquired the assets and assumed the liabilities of the
businesses of the Delphi Automotive Systems business sector of General Motors.
Before the initial public offering in February 1999 of our common stock, we were
a wholly-owned subsidiary of General Motors. General Motors now owns
approximately 82.3% of our outstanding common stock and the public owns the
rest. On April 12, 1999, the General Motors board of directors approved the
complete separation of our company from General Motors principally by means of a
tax-free spin-off to holders of General Motors $1- 2/3 common stock (the
"Spin-off"). To effect the Spin-off, the General Motors board declared a
dividend on the $1- 2/3 common stock consisting of approximately 80.1% of our
outstanding common stock, payable on May 28, 1999 to holders of record as of May
25, 1999. General Motors intends to contribute the remaining approximately 2.2%
of our outstanding common stock owned by it to a voluntary employees'
beneficiary association trust for General Motors' hourly retirees if General
Motors receives confirmation from the Internal Revenue Service that such
contribution

S-5
<PAGE> 6

will not affect the tax-free status of the Spin-off. If General Motors does not
receive such a confirmation from the Internal Revenue Service on a timely basis,
the remaining shares of our common stock owned by General Motors will be
distributed to the holders of the $1- 2/3 common stock as part of the Spin-off.
General Motors has previously received a private letter ruling from the Internal
Revenue Service to the effect that the Spin-off would be tax-free to General
Motors and its stockholders for United States federal income tax purposes.

USE OF PROCEEDS

We will receive net proceeds from the offering of the Offered Securities of
about $1,484 million. We intend to use such proceeds for general corporate
purposes, including repayment of about $1,075 million of amounts currently
outstanding under our revolving credit facilities. Our borrowings under these
revolving credit facilities, which have due dates of January 3, 2000 and January
3, 2004, were about $1.6 billion as of March 31, 1999. As of March 31, 1999, the
interest rates on our borrowings under the credit facilities ranged between
about 5.39% and 5.44%. For more information about our credit facilities, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources--Debt Capitalization and Available
Financing Sources" and Note 8 to our consolidated financial statements
incorporated by reference in this prospectus supplement and the accompanying
prospectus.

S-6
<PAGE> 7

CAPITALIZATION

Set forth below is the historical capitalization of our company at December
31, 1998 and as adjusted to give effect to our initial public offering of common
stock, the terms of a master separation agreement to which we and General Motors
are parties (the "Separation Agreement") and the offering of the Offered
Securities pursuant to this prospectus supplement. Except as described in this
prospectus supplement, the accompanying prospectus or the documents we
incorporate by reference, there has been no material change in our consolidated
capitalization since December 31, 1998. You should read the information set
forth below in conjunction with "Selected Financial Data" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" which
appear elsewhere in this prospectus supplement and our consolidated financial
statements, including the notes thereto, which are incorporated by reference in
this prospectus supplement and the accompanying prospectus.

<TABLE>
<CAPTION>
DECEMBER 31, 1998
------------------------------------------------
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------------- -----------
(UNAUDITED) (UNAUDITED)
(IN MILLIONS)
<S> <C> <C> <C>
DEBT:
Notes payable and current portion of long-term
debt.............................................. $ 359 $ -- $ 359
Long term debt:
Intracompany note payable and other long-term
debt........................................... 3,141 (3,141)(1)
3,141(1)
(1,484)(2) 1,657
Offered Securities................................ -- 1,484(2) 1,484
------ ------- ------
Total debt..................................... 3,500 -- 3,500
------ ------- ------
EQUITY:
Common stock, par value $.01, 1,350,000,000 shares
authorized; 465,000,000 shares issued and
outstanding; 565,000,000 shares pro forma as
adjusted.......................................... -- 1(3)
5(4) 6
Preferred stock, par value $.10, 650,000,000 shares
authorized; none issued........................... -- -- --
Additional paid-in capital.......................... -- 1,620(3)
1,613(4) 3,233
General Motors' net investment...................... 77 1,541(1)
(1,618)(4) --
Accumulated translation adjustments................. (68) -- (68)
------ ------- ------
Total equity................................... 9 3,162 3,171
------ ------- ------
Total capitalization........................... $3,509 $ 3,162 $6,671
====== ======= ======
</TABLE>

- ---------------
The following pro forma adjustments were made to reflect our initial public
offering of common stock, the terms of the Separation Agreement and the offering
of the Offered Securities as if the transactions occurred on December 31, 1998.
See Note 17 of our consolidated financial statements incorporated by reference
in this prospectus supplement and the accompanying prospectus for additional
information.

(1) Reflects the settlement of certain intracompany accounts receivable from
General Motors with the intracompany note payable to General Motors. On
January 1, 1999, immediately prior to the transactions contemplated by the
Separation Agreement, certain intracompany accounts receivable from General
Motors, of about $1.6 billion, were settled with the $3.1 billion
outstanding intracompany note payable to General Motors with the difference
resulting in an increase in General Motors' net investment in Delphi. Delphi
initially financed its operations with borrowings from revolving credit
facilities. See "Use of Proceeds."
(2) Reflects the net proceeds from the issuance of the Offered Securities. The
Offered Securities are presented net of discounts and other costs of
issuance. The net proceeds will be used for general corporate purposes,
including repayment of amounts outstanding under our revolving credit
facilities. See "Use of Proceeds" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Liquidity and Capital
Resources--Debt Capitalization and Available Financing Sources."
(3) Reflects the net proceeds from the sale of one hundred million shares of
common stock in our initial public offering, at a price of $17.00 per share.
The initial public offering proceeds are being used for general corporate
purposes, including working capital requirements which were impacted by the
change in General Motors accounts receivable payment terms. Such payment
terms were modified to require payment by General Motors on the second day
of the second month following shipment by Delphi.
(4) Reflects the adjustment to equity to reclassify General Motors' net
investment in Delphi as common stock and additional paid-in-capital.

S-7
<PAGE> 8

SELECTED FINANCIAL DATA

The following selected financial data of Delphi reflect the historical
results of operations and cash flows of the businesses that were considered part
of the Delphi Automotive Systems business sector of General Motors during each
respective period. In addition, the data for all periods include amounts
relating to Delco Electronics Corporation ("Delco Electronics"), the electronics
and mobile communication business that was transferred by General Motors from
Hughes Electronics to Delphi in December 1997. The historical consolidated
statement of operations data set forth below do not reflect many significant
changes that have occurred or will occur in the operations and funding of our
company as a result of our separation from General Motors effective as of
January 1, 1999 and our initial public offering of common stock in February
1999.

The selected financial data of Delphi should be read in conjunction with,
and are qualified by reference to, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere in this
prospectus supplement and the consolidated financial statements and notes
thereto incorporated by reference in this prospectus supplement and the
accompanying prospectus. The consolidated statement of operations and cash flow
data set forth below for each of the three years in the period ended December
31, 1998, and the consolidated balance sheet data as of December 31, 1998 and
1997, are derived from, and qualified by reference to, the consolidated
financial statements incorporated by reference in this prospectus supplement and
the accompanying prospectus, and should be read in conjunction with those
consolidated financial statements and the notes thereto. The consolidated
statement of operations and cash flow data for the year ended December 31, 1995,
and the consolidated balance sheet data as of December 31, 1996, are derived
from audited consolidated financial statements not included elsewhere or
incorporated by reference in this prospectus supplement or the accompanying
prospectus. The consolidated statement of operations and cash flow data for the
year ended December 31, 1994, and the consolidated balance sheet data as of
December 31, 1995 and 1994, are derived from unaudited consolidated financial
statements not included elsewhere or incorporated by reference in this
prospectus supplement or the accompanying prospectus, which in our opinion,
include all adjustments, consisting of only normal recurring adjustments,
necessary for a fair presentation of the results for such periods.

The financial information presented below may not be indicative of our
future performance and does not necessarily reflect what our financial position
and results of operations would have been had we operated as a separate,
stand-alone entity during the periods presented. You should read the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" section, which describes a number of factors which have affected our
financial results, including significant price reductions as General Motors
implemented its global sourcing initiative, labor disruptions at both General
Motors and Delphi and charges associated with certain competitiveness
initiatives.

The pro forma selected financial data as of and for the year ended December
31, 1998 were derived from the application of pro forma adjustments to our
historical consolidated financial statements and give effect to our initial
public offering of common stock and the impact of the terms of the Separation
Agreement. The pro forma balance sheet data have been prepared as if our
separation from General Motors and our initial public offering occurred on
December 31, 1998. The pro forma statement of operations data have been prepared
as if our separation from General Motors had been completed and our initial
public offering had occurred on January 1, 1998. Specifically, the pro forma
financial data give effect to:

- our initial public offering of common stock;

- the settlement of certain intracompany accounts with General Motors and a
change in General Motors' accounts receivable payment terms;

- decreased employee benefit costs due to General Motors' retention of
certain benefit obligations; and

- certain incremental costs associated with operating Delphi as a
stand-alone publicly traded company.

S-8
<PAGE> 9

The pro forma balance sheet data are not necessarily indicative of what our
financial position would have been had the separation of our business from
General Motors been completed and had our initial public offering occurred on
December 31, 1998. The pro forma statement of operations data are not
necessarily indicative of what our results of operations would have been had the
separation of our business from General Motors been completed and had our
initial public offering occurred at the beginning of 1998.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
PRO FORMA
1998 1998 1997 1996 1995 1994(1)
--------- ------- ------- ------- ------- -------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales......................... $28,479 $28,479 $31,447 $31,032 $31,661 $31,044
Operating expenses:
Cost of sales, excluding items
listed below................. 25,887 26,135 27,710 27,471 27,384 27,081
Selling, general and
administrative............... 1,600 1,463 1,415 1,445 1,366 1,157
Depreciation and
amortization................. 1,102 1,102 1,970 843 773 722
------- ------- ------- ------- ------- -------
Operating (loss) income........... (110) (221) 352 1,273 2,138 2,084
Interest expense.................. (277) (277) (287) (276) (293) (310)
Other income, net................. 232 232 194 115 101 103
------- ------- ------- ------- ------- -------
(Loss) income before income
taxes.......................... (155) (266) 259 1,112 1,946 1,877
Income tax (benefit) expense...... (131) (173) 44 259 639 644
------- ------- ------- ------- ------- -------
(Loss) income before cumulative
effect of change in accounting
principle...................... (24) (93) 215 853 1,307 1,233
Cumulative effect of change in
accounting principle, net of
tax............................ -- -- -- -- -- (258)
------- ------- ------- ------- ------- -------
Net (loss) income................. $ (24) $ (93) $ 215 $ 853 $ 1,307 $ 975
======= ======= ======= ======= ======= =======
Basic and diluted (loss) earnings
per share...................... $ (0.04) $ (0.20) $ 0.46 $ 1.83 $ 2.81 $ 2.10
======= ======= ======= ======= ======= =======
STATEMENT OF CASH FLOWS DATA:
Cash provided by operating
activities..................... n/a $ 849 $ 2,918 $ 2,701 $ 1,370 n/a
Cash used in investing
activities..................... n/a (1,216) (1,320) (995) (1,141) n/a
Cash provided by (used in)
financing activities........... n/a 384 (1,549) (1,686) (263) n/a
OTHER FINANCIAL DATA:
EBITDA(2)......................... $ 1,167 $ 1,056 $ 2,459 $ 2,182 $ 2,959 $ 2,603
</TABLE>

<TABLE>
<CAPTION>
AT DECEMBER 31,
------------------------------------------------------------------
PRO FORMA
1998 1998 1997 1996 1995 1994
--------- ------- ------- ------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets...................... $18,668 $15,506 $15,026 $15,390 $15,635 $14,494
Total debt........................ 3,500 3,500 3,500 3,500 3,500 3,500
Equity (deficit).................. 3,171 9 (413) 922 1,354 120
</TABLE>

- ---------------
(1) Delphi adopted Statement of Financial Accounting Standards ("SFAS") No. 112,
"Employers' Accounting for Postemployment Benefits," effective January 1,
1994. The adoption had an unfavorable cumulative effect of $258 million
after-tax, which is reflected in 1994 net income. Earnings per share before
the unfavorable cumulative effect of the change in accounting principle was
$2.65 per share. The unfavorable cumulative effect of the change in
accounting principle was $0.55 per share.

S-9
<PAGE> 10

(2) "EBITDA" is defined as income before provision for interest expense and
interest income, income taxes, depreciation and amortization. EBITDA is not
presented as an alternative measure of operating results or cash flow from
operations, as determined in accordance with generally accepted accounting
principles, but because we believe it is a widely accepted indicator of our
ability to incur and service debt. EBITDA does not give effect to cash used
for debt service requirements and thus does not reflect funds available for
dividends, reinvestment or other discretionary uses. In addition, EBITDA, as
presented herein, may not be comparable to similarly titled measures
reported by other companies.

S-10
<PAGE> 11

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

HISTORICAL FINANCIAL STATEMENTS

Our consolidated financial statements, which are discussed below, reflect
the historical results of operations and cash flows of the businesses that were
considered part of the Delphi business sector of General Motors during each
respective period; however, they do not reflect many significant changes that
have occurred and will occur in the operations and funding of our company as a
result of our separation from General Motors and our initial public offering of
common stock. The historical consolidated balance sheets reflect the assets and
liabilities transferred to our company in accordance with the transactions
contemplated by the Separation Agreement. Delphi and Delco Electronics were
under the common control of General Motors during such periods; therefore, our
consolidated financial statements include amounts relating to Delco Electronics
for all periods presented, although Delco Electronics was not integrated with
our company until December 1997. See Note 1 to our consolidated financial
statements incorporated by reference in this prospectus supplement and the
accompanying prospectus for a summary of our organization and significant
factors reflected in our historical financial statements. See "--Results of
Operations--Liquidity and Capital Resources" and Note 17 to those consolidated
financial statements for information on changes in our operations and funding
that are expected to result from our separation from General Motors and our
initial public offering of common stock.

SEPARATION FROM GENERAL MOTORS

Delphi and General Motors (and, in some cases, their respective affiliates)
have entered into certain agreements providing for the separation of Delphi's
business from General Motors, including the Separation Agreement. For more
information regarding the separation terms, see the description of the
arrangements between General Motors and Delphi contained in our Annual Report on
Form 10-K for the fiscal year ended December 31, 1998, which is incorporated by
reference in this prospectus supplement and the accompanying prospectus.

RECENT FINANCIAL RESULTS

A strong North American market coupled with aggressive cost-reduction more
than offset the impact of the economic downturn in South America as we reported
net income for the first three months of 1999 of $284 million.

Historical net income for the first quarter of 1998, as measured under
generally accepted accounting principles, was $236 million. However, the $236
million does not reflect the impact of the terms of the Separation Agreement.
After including the effect of the Separation Agreement, pro forma first quarter
1998 net income was $254 million. Thus, on a comparable basis, Delphi's first
quarter 1999 net income of $284 million reflects a 12 percent increase over the
1998 level of $254 million.

Consolidated net sales were $7.5 billion for the first three months of 1999
compared to $7.6 billion for the first three months of 1998. This reflects
growth in sales revenue from ongoing operations and strong North American sales,
offset by the impact of businesses divested in late 1998 and a decline in South
American sales. Non-General Motors sales for the first three months of 1999 were
up 12 percent, after adjusting to eliminate the 1998 sales of our seating,
lighting, coil spring and several smaller businesses, which were divested in
1998.

Our balance sheet as of March 31, 1999 reflected cash and marketable
securities of $1.1 billion and total debt of $1.9 billion, resulting in net
liquidity of $(0.8) billion, a significant improvement compared to net liquidity
of $(2.5) billion, or $(1.4) billion on a pro forma basis, at December 31, 1998.
Our pension obligations and total stockholders' equity were $2.2 billion and
$3.4 billion, respectively, as of March 31, 1999.

S-11
<PAGE> 12

Additional information concerning our recent financial results is set forth
in our Current Report on Form 8-K filed April 16, 1999, which is incorporated by
reference in this prospectus supplement and the accompanying prospectus.

RESULTS OF OPERATIONS

To facilitate analysis, the following table sets forth historical
consolidated statement of operations data as a percentage of consolidated net
sales for each of the periods presented:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
NET SALES................................................... 100.0% 100.0% 100.0%
Operating expenses:
Cost of sales, excluding items listed below............... 91.8 88.1 88.5
Selling, general and administrative....................... 5.1 4.5 4.7
Depreciation and amortization............................. 3.9 6.3 2.7
----- ----- -----
OPERATING (LOSS) INCOME..................................... (0.8) 1.1 4.1
Interest expense............................................ (0.9) (0.9) (0.9)
Other income, net........................................... 0.8 0.6 0.4
----- ----- -----
(Loss) income before income taxes........................... (0.9) 0.8 3.6
Income tax (benefit) expense................................ (0.6) 0.1 0.8
----- ----- -----
NET (LOSS) INCOME........................................... (0.3)% 0.7% 2.8%
===== ===== =====
</TABLE>

In order to more fully understand the fluctuations, you should consider the
impact of special items and work stoppages as discussed below.

SPECIAL ITEMS AND WORK STOPPAGES

The global automotive components and systems market is increasingly
competitive and is undergoing significant restructuring and consolidation
activities. All of our major industry competitors continue to increase their
focus on efficiency and cost improvements, while facing increasing price
pressures from VMs. As a result, in 1997 we initiated a study to evaluate the
long-term competitiveness of all facets of our businesses ("Competitiveness
Study"). As market conditions continued to warrant such review, a
Competitiveness Study was again completed in 1998 in conjunction with our annual
business planning cycle. Additional information regarding the results of each
Competitiveness Study is included below and in Note 3 to our consolidated
financial statements incorporated by reference in this prospectus supplement and
the accompanying prospectus.

Our operating results for the periods presented also were impacted by a
number of other special items which management views as non-recurring in nature.
Such special items included divestitures and plant closing charges as well as
work stoppages at certain General Motors and Delphi locations. Although these
items are considered non-recurring, we cannot provide assurance that other
special items and/or work stoppages will not occur with greater or lesser
effects in future periods.

The following is a summary of the special items that impacted our operating
results during the periods presented:

1998

- During 1998, we recorded a $310 million charge, or $192 million
after-tax, related to the 1998 Competitiveness Study. Overall, the charge
had the effect of increasing cost of sales and depreciation and
amortization by $154 million and $156 million, respectively.

- During 1998, we recorded a loss of $430 million, or $271 million
after-tax, related to divestitures involving our seating, lighting, and
coil spring businesses. The charge had the effect of increasing cost of
sales and depreciation and amortization by $382 million and $48 million,
respectively.

S-12
<PAGE> 13

- Work stoppages at General Motors and Delphi during 1998 reduced operating
income by about $726 million, or $450 million after-tax, after
considering partial recovery of lost production in subsequent periods.

1997

- During 1997, we recorded a $1.4 billion charge, or $870 million
after-tax, relating to the 1997 Competitiveness Study. Overall, the
charge had the effect of increasing 1997 cost of sales and depreciation
and amortization by $262 million and $1.1 billion, respectively.

- Work stoppages during 1997 reduced operating income by about $148
million, or $92 million after-tax, after considering partial recovery of
lost production in subsequent periods.

- During 1997, we recorded an $80 million plant closing charge, or $50
million after-tax, relating to a facility in Trenton, New Jersey. This
charge had the effect of increasing cost of sales by $80 million.

- Other special items included gains aggregating $97 million, or $60
million after-tax. These gains primarily related to the sale of certain
businesses and investments, none of which were material on an individual
basis.

1996

- During 1996, we sold four facilities located in Flint and Livonia,
Michigan and Oshawa and Windsor, Ontario, which resulted in a loss of
$247 million, or $153 million after-tax. The loss had the effect of
increasing cost of sales and depreciation and amortization by $167
million and $80 million, respectively.

- During 1996, three major work stoppages at various General Motors and
Delphi facilities in the United States and Canada had an unfavorable
impact of about $453 million, or $281 million after-tax, resulting from
lower General Motors production volumes, after considering partial
recovery of lost production in subsequent periods.

- Retiree lump sum benefit payments resulting from U.S. labor negotiations
during 1996 resulted in a charge of $86 million, or $53 million
after-tax.

- Other special charges totaled $50 million, or $31 million after-tax.
These costs primarily reflect the sale of certain business investments,
none of which were material on an individual basis.

1998 VERSUS 1997

Net Sales. Consolidated net sales and changes in net sales by product
sector and in total for the years ended December 31, 1998 and 1997 were:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, CHANGE
-------------------- ------------------
PRODUCT SECTOR 1998 1997 $ %
-------------- ------- ------- ------- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Electronics & Mobile Communication...... $ 4,823 $ 5,539 $ (716) (12.9)%
Safety, Thermal & Electrical
Architecture.......................... 11,226 12,728 (1,502) (11.8)
Dynamics & Propulsion................... 12,862 13,733 (871) (6.3)
Eliminations............................ (432) (553) 121 n/a
------- ------- ------- -----
Consolidated net sales................ $28,479 $31,447 $(2,968) (9.4)%
======= ======= ======= =====
</TABLE>

The decrease in consolidated net sales for each product sector reflects
unfavorable volume associated with work stoppages, after considering partial
recovery of lost production, divested businesses (primarily in our Safety,
Thermal & Electrical Architecture product sector) and unfavorable economic
conditions in

S-13
<PAGE> 14

Asia and Latin America. In addition, our net sales continue to be impacted by
pricing pressures as vehicle manufacturers reduce their cost structures through
competitive sourcing initiatives and global vehicle platforms. Specifically, all
of our product sectors were impacted by price reductions required by General
Motors and other customers which totaled $465 million (or 1.6% of net sales). As
a percentage of net sales, price reductions declined from 1997 levels to levels
which we believe will be more indicative of future pricing pressures from VMs,
although we cannot assure you in this regard. Overall, price reductions had the
largest impact on our Electronics & Mobile Communication product sector (2.7% of
net sales) due to the impact of General Motors-North America's continued
implementation of its global sourcing strategy and reflecting the overall price
declines throughout the electronics industry. The unfavorable impact of lower
volumes, as discussed above, and price reductions was partially offset by an
increase in sales to customers other than General Motors. Sales to customers
other than General Motors during 1998 increased about $620 million or 11%
compared to 1997.

Cost of Sales. Cost of sales represented 91.8% of consolidated net sales
for 1998 compared to 88.1% for 1997. The increase reflects the impact of special
items and work stoppages along with other factors which are described in greater
detail in the operating (loss) income discussion below.

Selling, General and Administrative Expenses and Depreciation and
Amortization. Selling, general and administrative expenses increased by $48
million during 1998 compared to 1997. Depreciation and amortization increased by
$28 million during 1998 excluding the impact of special charges during 1998 and
1997 totaling $204 million and $1.1 billion, respectively, related to
divestitures and the Competitiveness Study for each period. The increase in
depreciation and amortization, excluding the impact of special charges,
reflected incremental depreciation associated with a larger fixed asset base.

Operating (Loss) Income. Our operating loss was $221 million for 1998
compared to operating income of $352 million in 1997. Excluding the impact of
special items and work stoppages, operating income totaled $1.2 billion and $1.9
billion for the years ended December 31, 1998 and 1997, respectively. The
following information on operating income and changes in operating income and
its components excludes the impact of special items and work stoppages. See
"--Special Items and Work Stoppages" for additional information.

Operating income by product sector and in total, excluding the impact of
special items and work stoppages, was:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------
PRODUCT SECTOR 1998 1997
-------------- ------ ------
(IN MILLIONS)
<S> <C> <C>
Electronics & Mobile Communication.......................... $ 511 $ 612
Safety, Thermal & Electrical Architecture................... 707 1,060
Dynamics & Propulsion....................................... 314 400
Other....................................................... (287) (130)
------ ------
Total operating income excluding the impact of special
items and work stoppages............................... $1,245 $1,942
====== ======
</TABLE>

Operating income, excluding the impact of special items and work stoppages,
was unfavorably impacted by continuing price pressures, the economic downturn in
Latin America and unfavorable design costs and product mix. These unfavorable
items were significantly offset by our aggressive cost reduction efforts as we
have implemented several strategies to reduce our cost structure and maintain
our desired level of profitability. Specifically, each of our product sectors
achieved material and manufacturing cost savings which totaled about $945
million during 1998, exceeding price reductions and unrecovered design change
costs by $110 million. Cost savings achieved primarily reflect the results of
our global sourcing initiatives and continued implementation of lean
manufacturing strategies. In addition, operating income was favorably impacted
by greater sales penetration of non-General Motors customers during 1998.

S-14
<PAGE> 15

Interest Expense. Interest expense totaled $277 million and $287 million
for the years ended December 31, 1998 and 1997, respectively. The decrease in
interest expense reflects lower interest rates during 1998 in comparison to 1997
rates.

Other Income, Net. Other income, net totaled $232 million for 1998,
compared to $194 million in 1997. The increase primarily reflects improved
profitability for certain non-consolidated ventures during 1998.

Taxes. The effective income tax rate for 1998 was a 65.0% credit compared
to an effective income tax rate of 17.0% for 1997. During 1998, certain
deductions and tax credits remained constant while taxable income decreased
substantially, resulting in a greater effective tax benefit as a percentage of
pretax income.

Net (Loss) Income. Our historical net loss totaled $93 million in 1998
compared to net income of $215 million during 1997. Excluding special items and
work stoppages, our income was $820 million and $1.2 billion for the years ended
December 31, 1998 and 1997, respectively, reflecting the impact of items
discussed above.

PRO FORMA 1998

Our operating loss and net loss, as reported for 1998, does not reflect the
impact of many changes in our operations that are expected to result from our
separation from General Motors. After giving effect to the terms of the
Separation Agreement, our operating loss and net loss would have been $110
million and $24 million, respectively, for 1998. Excluding the impact of special
items and work stoppages and after giving effect to the terms of the Separation
Agreement, operating income and net income would have been $1.4 billion and $889
million, respectively, for 1998. Overall, the terms of the Separation Agreement
would have had a favorable impact on our reported operating loss and net loss of
$111 million and $69 million, respectively, for the year ended December 31,
1998, reflecting the net effect of lower employee benefit costs and higher other
costs associated with operating Delphi as a stand-alone company. For additional
information on the impact of the terms of the Separation Agreement, see Note 17
to our consolidated financial statements incorporated by reference in this
prospectus supplement and the accompanying prospectus.

1997 VERSUS 1996

Net Sales. Consolidated net sales and changes in net sales by product
sector and in total for the years ended December 31, 1997 and 1996 were:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, CHANGE
------------------ -------------
PRODUCT SECTOR 1997 1996 $ %
-------------- ------- ------- ----- ----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Electronics & Mobile Communication............ $ 5,539 $ 5,315 $ 224 4.2%
Safety, Thermal & Electrical Architecture..... 12,728 12,942 (214) (1.7)
Dynamics & Propulsion......................... 13,733 13,293 440 3.3
Eliminations.................................. (553) (518) (35) n/a
------- ------- ----- ----
Consolidated net sales...................... $31,447 $31,032 $ 415 1.3%
======= ======= ===== ====
</TABLE>

The increase in consolidated net sales during 1997 reflects a $260 million
increase in sales to non-General Motors customers and improved General
Motors-North America production volumes, after adjusting for the impact of work
stoppages. These improved volumes during 1997 were partially offset by the
impact of the 1996 sale of four plants by the Safety, Thermal & Electrical
Architecture product sector, which had combined historical annual net sales of
about $1.0 billion, as well as continued price pressures. Price reductions
required by General Motors and non-General Motors customers had an unfavorable
sales impact on all of our product sectors and totaled about $730 million, or
2.3% of net sales, during 1997.

S-15
<PAGE> 16

Price reductions for our Electronics & Mobile Communication product sector,
representing 3.3% of net sales, exceeded the overall percentage for Delphi on a
consolidated basis due to the timing of the implementation of General
Motors-North America's global sourcing as it related to electronics products and
the overall price declines throughout the electronics industry.

Cost of Sales. Cost of sales, as a percentage of consolidated net sales,
decreased to 88.1% in 1997 from 88.5% in 1996. The decrease as a percentage of
net sales reflects a lower impact of work stoppages in 1997 compared to 1996
along with other factors which are described in greater detail in the operating
income discussion below.

Selling, General and Administrative Expenses and Depreciation and
Amortization. Selling, general and administrative expenses remained constant
during 1997 and 1996 while depreciation and amortization, excluding the $1.1
billion charge associated with the Competitiveness Study, increased slightly.

Operating Income. Operating income decreased to $352 million in 1997 from
$1.3 billion in 1996. Excluding the impact of special items and work stoppages,
operating income totaled $1.9 billion in 1997 compared to $2.1 billion in 1996.
The following information on operating income and changes in operating income
and its components excludes the impact of special items and work stoppages. See
"--Special Items and Work Stoppages" for additional information.

Operating income by product sector and in total, excluding the impact of
special items and work stoppages, was:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------
PRODUCT SECTOR 1997 1996
-------------- ---- ----
(IN MILLIONS)
<S> <C> <C>
Electronics & Mobile Communication.......................... $ 612 $ 810
Safety, Thermal & Electrical Architecture................... 1,060 955
Dynamics & Propulsion....................................... 400 321
Other....................................................... (130) (27)
------ ------
Total operating income excluding the impact of special
items and work stoppages............................... $1,942 $2,059
====== ======
</TABLE>

As a result of strategies implemented to reduce our cost structure, we
realized material and manufacturing cost savings of about $450 million during
1997. Cost savings were realized by all of our product sectors; however, price
reductions and unrecovered design change costs, which together totaled about
$960 million in 1997, more than offset the cost savings. Unrecovered design
change costs had an unfavorable impact on operating income of about $230 million
in 1997, primarily affecting our Electronics & Mobile Communication product
sector. In addition, operating income was favorably impacted by greater sales
penetration of non-General Motors customers and improved General Motors-North
America production volumes after adjusting for the impact of work stoppages.

Interest Expense. Interest expense totaled $287 million and $276 million in
1997 and 1996, respectively. The increase in interest expense in 1997 primarily
reflected slightly higher interest rates during the period.

Other Income, Net. Other income, net totaled $194 million in 1997 compared
with $115 million in 1996. The amount reported for 1997 includes a gain of $97
million, or $60 million after-tax, relating to the sale of certain business
investments. The gain was partially offset by a decline in earnings of
nonconsolidated affiliates, which decreased to $27 million in 1997 compared with
$57 million in 1996. The decline reflected lower equity earnings due to the sale
of certain minority owned investments and the unfavorable impact of economic
volatility on overseas joint ventures.

S-16
<PAGE> 17

Taxes. The effective income tax rate for 1997 was 17.0% compared with 23.3%
for 1996. The lower 1997 effective income tax rate primarily reflected the
favorable impact of state and local income tax rates which were generally lower
than in 1996. The favorable impact of state and local tax rates was partially
offset by higher foreign tax rates during 1997.

Net Income. Net income totaled $215 million in 1997 and $853 million in
1996. Income, excluding the impact of special items and work stoppages, totaled
$1.2 billion in 1997 compared to $1.4 billion in 1996 reflecting the items
discussed above.

LIQUIDITY AND CAPITAL RESOURCES

Pursuant to a cash and debt management agreement with General Motors and an
intracompany note payable to General Motors, our historical balance sheets
reflect cash and marketable securities of $1.0 billion and combined short-term
and long-term debt capitalization of $3.5 billion at December 31, 1998 and 1997.
The short-term and long-term debt capitalization included a $3.1 billion
intracompany note payable to General Motors and outstanding debt at our
international subsidiaries. The $3.1 billion intracompany note payable to
General Motors represented the portion of General Motors' outstanding debt that
was specifically related to our operations.

Our net liquidity was $(2.5) billion at December 31, 1998 and 1997. Our net
liquidity consists of cash and marketable securities less the total of
short-term and long-term debt. The ratio of total debt to total capital, which
consists of total debt plus equity, was 100% at December 31, 1998 compared to
113% at December 31, 1997. The ratio of total debt to total capital was greater
than 100% at December 31, 1997, reflecting the impact of a net deficit in
stockholder's equity. The ratio of total debt to total capital decreased during
1998, reflecting differences in various separation adjustments required at each
date. Our initial public offering and other related transactions resulted in a
pro forma total debt to total capital ratio of 52% at December 31, 1998.

LIQUIDITY PRIOR TO AND UPON OUR SEPARATION FROM GENERAL MOTORS AND OUR
INITIAL PUBLIC OFFERING

The following table sets forth the changes in our net liquidity, certain of
which occurred immediately prior to or in connection with the transfer of assets
and liabilities from General Motors to our company. The impact of the offering
of the Offered Securities is not reflected below. The extension of payment terms
for intracompany accounts receivable and the settlement of intracompany accounts
receivable with the intracompany note payable occurred before assets and
liabilities were transferred to Delphi Automotive Systems Corporation.
Consequently, these transactions were executed by the Delphi businesses, and not
by Delphi Automotive Systems Corporation.

<TABLE>
<CAPTION>
CASH AND
MARKETABLE SHORT- AND NET
SECURITIES LONG-TERM DEBT LIQUIDITY
---------- -------------- ---------
(IN BILLIONS)
<S> <C> <C> <C>
Net liquidity at December 31, 1998--as reported........ $ 1.0 $ 3.5 $(2.5)
Extension of payment terms for intracompany accounts
receivable from General Motors....................... (2.1) -- (2.1)
Settlement of intracompany note payable to General
Motors............................................... -- (3.1) 3.1
Increase in accounts receivable, subsequent to
settlement of intracompany accounts receivable....... (1.6) -- (1.6)
Proceeds from revolving credit facilities.............. 3.1 3.1 --
Proceeds from initial public offering of common
stock................................................ 1.6 -- 1.6
----- ----- -----
Pro forma net liquidity.............................. $ 2.0 $ 3.5 $(1.5)
===== ===== =====
</TABLE>

Each of the above changes in our net liquidity is discussed in the sections
that follow.

S-17
<PAGE> 18

EXTENSION OF PAYMENT TERMS

In accordance with the terms of our supply agreement with General Motors,
which became effective as of January 1, 1999, payment terms for intracompany
accounts receivable from General Motors have been modified such that payments
will generally be due from General Motors on the second day of the second month
following the date of shipment by Delphi. These modified payment terms are
consistent with those General Motors is currently in the process of introducing
to all of its suppliers. Previous payment terms generally required General
Motors to make intracompany accounts receivable payments in the month following
shipment by Delphi. Overall, this change increased accounts receivable by about
$2.1 billion beginning in 1999. While Delphi intends to seek an extension of
payment terms with its suppliers over time, in most cases, it currently pays
suppliers on the 25th day of the month following the date a shipment is
received. The difference in the payment terms for accounts receivable and
accounts payable results in a monthly short-term cash flow gap. Delphi is
financing this short-term cash flow gap through short-term borrowings, as
discussed below.

DEBT CAPITALIZATION AND AVAILABLE FINANCING SOURCES

Immediately prior to the transactions contemplated by the Separation
Agreement, approximately $1.6 billion of certain intracompany accounts
receivable from General Motors were offset with the $3.1 billion outstanding
intracompany note payable to General Motors, with the difference resulting in an
increase in General Motors' net investment in Delphi. We expect to finance our
operations with third party funding of up to $3.1 billion. Such funding will be
in the form of drawdowns from the available $4.9 billion third party revolving
credit facilities and structured financing arrangements, including this offering
of the Offered Securities. In this regard, borrowings under third party
revolving credit facilities were about $1.6 billion as of March 31, 1999. In
addition, during the fourth quarter of 1998, we implemented a $175 million
accounts receivable factoring program.

In January 1999, we entered into two financing arrangements with a
syndicate of lenders providing for an aggregate of $4.9 billion in available
revolving credit facilities. In general, we may borrow up to $4.9 billion under
the facilities through January 3, 2000, after which $1.5 billion will be
available through January 3, 2004. The $4.9 billion we may borrow will be
reduced to the extent of any net cash proceeds received from public offerings of
common stock subsequent to our initial public offering and cash proceeds from
public offerings and private placements of debt securities, excluding debt
securities with a maturity of less than one year but including the Offered
Securities. The total reduction arising from issuances of common stock and debt
securities (including in our initial public offering) will not reduce aggregate
availability by more than $2.0 billion. Generally, following the issuance of the
Offered Securities, we expect our borrowings under the revolving credit
facilities to be split between 364-day and five-year tranches. We may borrow
under these financing arrangements for general corporate purposes. The credit
facilities include certain customary affirmative and negative covenants,
including maintenance of a ratio of consolidated total debt to consolidated
EBITDA, excluding extraordinary items. The credit facilities also provide for
certain events of default, including upon a change in control, which is
generally defined to include the acquisition of more than 20% of the voting
power of our common stock by any person other than General Motors. For
additional information on our revolving credit facilities, see Note 8 to the
consolidated financial statements incorporated by reference in this prospectus
supplement and the accompanying prospectus.

General Motors currently owns about 82.3% of our common stock. As a result,
General Motors will continue to include us as a "subsidiary" for various
financial reporting, accounting and other purposes until after the Spin-off is
completed. Accordingly, we have agreed to certain covenants regarding the
incurrence of debt. Specifically, so long as General Motors owns at least 50% of
our outstanding shares of common stock, these covenants limit our maximum
indebtedness, including indebtedness incurred in connection with acquisitions.

Delphi's intra-year cash fluctuations are impacted by the volume and timing
of worldwide vehicle production. Examples of seasonal effects in the industry
include the shut-down of operations of our

S-18
<PAGE> 19

primary North American customers for about two weeks in July, the subsequent
ramp-up of new model production and the additional one-week shut-down in
December. We believe that our company has sufficient financial flexibility to
fund these fluctuations and to access the global capital markets on terms and in
amounts satisfactory to it, although there can be no assurance that this will be
the case. In addition, we expect cash flows from operations, the establishment
of the revolving credit facilities and other short-term sources to be sufficient
to satisfy future working capital, capital expenditures, research and
development, pension funding requirements and debt service requirements during
the next 12 to 18 months. We expect cash flows from operations, the
establishment of the revolving credit facilities and access to the short-term
and long-term capital markets to satisfy our funding needs during our five-year
business planning cycle. See "--Cash Flows--Investing Activities" and "--Our
Other Postretirement Employee Benefits and Underfunded Pension Obligations."

CASH FLOWS

Operating Activities. Net cash provided by operating activities was $849
million for the year ended December 31, 1998 compared to $2.9 billion in 1997
and $2.7 billion in 1996. The decrease in 1998 cash flows reflects the impact of
work stoppages and the related overall net loss for 1998, as well as decreases
in accrued and other liabilities. The decrease in accrued and other liabilities
in 1998 reflected a reduction in income taxes payable and the timing of
settlements for amounts accrued in prior periods. The 1997 increase in cash
flows from operating activities primarily reflects increases in accounts
payable, accrued liabilities and other liabilities partially offset by increased
accounts receivable and cash used for other postretirement benefits as discussed
below. The 1997 changes referenced above primarily reflected an increased volume
of activity, differences in the timing of settlements, and amounts accrued in
connection with the Competitiveness Studies.

Operating cash flow during 1998 and 1997 reflected contributions to a
Voluntary Employees' Beneficiary Association trust. The contributions, which
totaled $677 million in 1998 and $925 million in 1997, were made in connection
with General Motors' pre-funding of a portion of its other postretirement
benefit liabilities. In accordance with the terms of the Separation Agreement,
General Motors will retain 100% of the pre-funding and, accordingly, Delphi's
other postretirement benefit liabilities do not reflect an allocation of the
Voluntary Employees' Beneficiary Association trust assets.

Investing Activities. Cash flows used in investing activities totaled $1.2
billion, $1.3 billion and $1.0 billion for the years ended December 31, 1998,
1997 and 1996, respectively. Overall, cash flows used in investing activities
primarily relate to our capital expenditure program, partially offset by
proceeds from asset sales. Our capital expenditure program promotes our
growth-oriented business strategy by investing in existing core areas, where
efficiencies and profitability can be enhanced, and by targeting funds for new
innovative technologies, where long-term growth opportunities can be realized.

Capital expenditures by product sector and geographic region for the
periods presented were:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1998 1997 1996
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Electronics & Mobile Communication.................... $ 180 $ 122 $ 195
Safety, Thermal & Electrical Architecture............. 449 464 418
Dynamics & Propulsion................................. 741 778 548
Other................................................. 11 19 16
------ ------ ------
Total Capital Expenditures.......................... $1,381 $1,383 $1,177
====== ====== ======
United States......................................... $ 888 $ 930 $ 809
Canada & Mexico....................................... 127 88 65
Other International................................... 366 365 303
------ ------ ------
Total Capital Expenditures.......................... $1,381 $1,383 $1,177
====== ====== ======
</TABLE>

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The increased spending during 1998 and 1997 primarily relates to the timing
of the start-up of new product programs, increased penetration with non-General
Motors customers and expansion into new market areas primarily outside the
United States.

We expect capital expenditures to total $1.5 billion in 1999. Such
expenditures will primarily be utilized for equipment, tooling and other
spending associated with new product programs, including increasing sales to
non-General Motors customers. Expenditures will also be used for expansion into
new markets outside the United States and the continued implementation of lean
manufacturing strategies. About 43% of 1999 capital expenditures are targeted
outside the United States. The Electronics & Mobile Communication, the Safety,
Thermal & Electrical Architecture and the Dynamics & Propulsion product sectors
are expected to account for about 18%, 34% and 48%, respectively, of 1999
capital expenditures.

Financing Activities. Net cash provided by financing activities was $384
million during 1998 compared to net cash used in financing activities of $1.5
billion and $1.7 billion in 1997 and 1996, respectively. Cash provided by or
used in financing activities primarily related to the transfer or assumption of
assets and liabilities to our company from General Motors under the terms of the
Separation Agreement. The period-to-period changes reflect differences in
separation adjustments for various assets and liabilities.

OUR OTHER POSTRETIREMENT EMPLOYEE BENEFITS AND UNDERFUNDED PENSION OBLIGATIONS

In connection with our separation from General Motors, we have entered into
several agreements relating to pensions and other postretirement employee
benefits for our employees as well as certain employees associated with prior
divestitures. Our pension obligations are based on the pension plans' assets,
the expected investment return on those assets and the plans' expected
liabilities. Under current economic conditions and federal government
regulations, our pension obligations would be considered to be "underfunded."
The amount of underfunding can vary from time to time, depending on factors such
as discount rates, asset returns, contributions and other factors. As of
December 31, 1998, Delphi's U.S. salaried and hourly other postretirement
employee benefit obligation was about $4.6 billion and the underfunded pension
obligation was about $2.2 billion.

Because of the underfunded nature of certain pension plans, federal
regulations will require that our contributions over time meet minimum funding
requirements. Delphi is responsible for assuming the underfunded hourly pension
liability associated with Delphi hourly employees or paying General Motors for
underfunding relating to such employees.

Although we are not required to do so, we have commenced discussions with
the Pension Benefit Guaranty Corporation regarding the underfunded nature of
certain pension plans. In connection with these discussions, the Pension Benefit
Guaranty Corporation may request that we take actions in excess of federal
regulatory minimum requirements. The outcome of these discussions is as yet
unknown, but if any actions in excess of federal regulatory minimum requirements
are discussed, we intend to seek to maintain sufficient financial flexibility in
order to execute our business strategy. We also may determine, as part of our
capital planning process, to make voluntary contributions to our pension plans
in excess of federal regulatory minimum requirements in order to further address
the underfunded status of our pension plans.

In any event, regardless of the outcome of our discussions with the Pension
Benefit Guaranty Corporation, we expect these contributions to be material to
our results of operations and financial condition. We cannot accurately predict
the amount or timing of contributions that will be required in the future or the
related impact on our financial results and financial condition. These amounts
may be affected by general economic conditions, including anticipated interest
rates, the actual investment return on plan assets, the retirement rate of our
employees, the attrition rate of our employees and other factors.

In addition, we and General Motors have agreed with the UAW and the IUE
that any of our hourly employees who are members of such unions and who retire
on or before October 1, 1999 will be treated as General Motors employees for
purposes of postretirement benefit obligations. We anticipate that we will
assume other postretirement employee benefits obligations and pension
obligations for such employees who retire after October 1, 1999. The allocation
of pension and other postretirement benefit obligations between

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us and General Motors assumes certain levels of employee retirements prior to
October 1, 1999, based on historical experience and conditions surrounding our
separation from General Motors. We have agreed with General Motors to
recalculate the allocation of those liabilities based on the actual level of
retirements on or before October 1, 1999. Accordingly, if and to the extent that
greater than the assumed number of our employees retire on or before October 1,
1999, we would be required to make a payment to General Motors. Depending on the
amount of such a payment, if any, it could have a material adverse effect on our
short-term liquidity.

INFLATION

Inflation generally affects Delphi by increasing the cost of labor,
equipment and raw materials. We believe that, because rates of inflation in
countries where we have significant operations have been moderate during the
periods presented, inflation has not had a significant impact on our results of
operations.

YEAR 2000

Many computerized systems and microprocessors that are embedded in a
variety of products either made or used by Delphi have the potential for
operational problems if they lack the ability to handle the transition to the
Year 2000. This issue has the potential to cause disruption to our business, our
suppliers and the companies we supply. In our capacity as principal supplier to
and majority-owned subsidiary of General Motors, we are part of General Motors'
comprehensive worldwide Year 2000 program. As part of that program, Delphi is
identifying and remediating potential Year 2000 problems in its business
information systems and other systems embedded in its engineering and
manufacturing operations. Delphi, in conjunction with General Motors' supplier
assessment and remediation program, has also initiated communications and site
assessments with its suppliers and other third parties in order to assess and
reduce the risk that Delphi's operations could be adversely affected by the
failure of these third parties to address adequately the Year 2000 issue.

One of our first priorities was the analysis of microprocessors used in our
automotive components, integrated systems and modules supplied to vehicle
manufacturers, which has now been completed. Most of the processors reviewed
have no date-related functionality, and accordingly have no specific Year 2000
issues. Of the vehicle processors that perform date-related functions, none had
any Year 2000 issues. However, one trip computer module supplied by us to
another vehicle manufacturer does not recognize 2000 as a leap year but can be
reset without affecting performance. This does not affect vehicle operation or
occupant safety nor is it expected to result in material cost to Delphi.

Our Year 2000 program teams are responsible for remediating all of our
information technology and embedded systems. Information technology principally
consists of business information systems, such as mainframe and other shared
computers and associated business application software, and infrastructure, such
as personal computers, operating systems, networks and devices like switches and
routers. Embedded systems include microprocessors used in factory automation and
in systems such as elevators, security and facility management. Delphi's Year
2000 program includes assessment and remediation services provided by Electronic
Data Systems Corporation ("EDS"), which is a principal supplier of information
technology services to Delphi.

The Year 2000 program is being implemented in seven phases, some of which
are being conducted concurrently:

- Inventory. This phase involves the identification and validation of an
inventory of all systems that could be affected by the Year 2000 issue.
The inventory phase commenced in earnest in 1997 and is substantially
complete. As a result, we have identified approximately 1,600 business
information systems and about 300,000 infrastructure items and embedded
systems.

- Assessment. This phase involves the initial testing, code scanning and
supplier contacts to determine whether remediation is needed and to
develop a remediation plan, if applicable. The

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assessment of business information systems is substantially complete and
included a determination that about one quarter of such systems should be
regarded as "critical" based on criteria such as the potential for
business disruption. The assessment of infrastructure items and embedded
systems was substantially complete by the end of 1998.

- Remediation. This phase involves the design and execution of a
remediation plan, followed by testing for adherence to the design.
Although we have substantially completed the remediation of our critical
systems, we expect to continue to address remediation of these and other
systems on a selectively prioritized basis in the future. Unimportant
systems have been and will continue to be removed from our Year 2000
inventory and will not be remediated. We believe that we are
substantially on track to meet our remediation targets. Based on our
ongoing plan to implement new enterprise software incrementally, we will
replace rather than remediate certain existing information systems. In
this regard, a number of implementations are scheduled to be completed in
Europe in the first half of 1999. In the United States, implementation of
the enterprise software at one of our principal product groups is
expected to be completed in July 1999.

- System Test. This phase involves the testing of remediated items to
ensure that they function normally after being replaced in their original
operating environment. It is closely related to the remediation phase and
follows essentially the same schedule.

- Implementation. This phase involves the return of items to normal
operation after satisfactory performance in system testing. It follows
essentially the same schedule as remediation and system testing.

- Readiness Testing. This phase involves the planning for and testing of
integrated systems in a Year 2000 ready environment, including ongoing
auditing and follow-up. Readiness testing is currently underway. This
phase commenced in the fourth quarter of 1998 and is expected to be a
major focus of the Year 2000 program throughout 1999.

- Contingency Planning. This phase involves the development and execution
of plans that narrow the focus on specific areas of significant concern
and concentrate resources to address them. We currently believe that the
most reasonably likely worst case scenario is that there will be some
localized disruptions of systems that will affect individual business
processes, facilities or suppliers for a short time rather than systemic
or long-term problems affecting our business operations as a whole. Our
contingency planning will continue to identify systems or other aspects
of our business or that of our suppliers that we believe would be most
likely to experience Year 2000 problems as well as those business
operations in which a localized disruption could have the potential for
causing a wider problem by interrupting the flow of products, materials
or data to other operations. Because there is uncertainty as to which
activities may be affected and the exact nature of the problems that may
arise, our contingency planning will focus on minimizing the scope and
duration of any disruptions by having sufficient personnel, inventory and
other resources in place to permit a flexible, real-time response to
specific problems as they may arise at individual locations around the
world. Some of the actions that we may consider include the deployment of
emergency response teams on a regional or local basis and the development
of plans for the allocation, stockpiling or re-sourcing of components and
materials that may be critical to our continued production. Specific
contingency plans and resources for permitting the necessary flexibility
of response are expected to be identified and put into place commencing
in mid-1999.

The assessment and remediation phases described above include communicating
with our suppliers as part of a broader supplier assessment program in which we
are participating with General Motors. As part of that program, an industry
trade association, the Automotive Industry Action Group, has distributed Year
2000 compliance questionnaires as well as numerous Year 2000 awareness and
assistance mailings to many of the 40,000 supplier sites that supply Delphi
throughout the world. We are not relying entirely on assurances contained in
those questionnaire responses and we are participating in General Motors' own
further assessment of our suppliers. That further assessment includes General
Motors' own on-site review of suppliers considered to be critical to General
Motors' operations, including Delphi's operations as part of

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General Motors. These supplier assessment efforts have been substantially
completed with respect to our critical supplier sites. Based on our
participation with General Motors in this assessment activity to date, we
believe that a substantial majority of our suppliers are making acceptable
progress toward Year 2000 readiness. We are also participating in a program that
General Motors has established to provide further assistance to suppliers that
desire more input or that are believed to be at high risk of noncompliance as a
result of the foregoing assessment efforts. This supplier assistance program
currently includes providing compliance workshops and remediation consultants to
work with suppliers on developing and implementing their own remediation
programs. We also expect that our contingency planning efforts described above
will address any critical suppliers that we still identify as being at high risk
of encountering Year 2000 problems upon completion of the supplier assistance
program. We have entered into arrangements with General Motors to provide for
continued coordination of our respective supplier assessment and assistance
efforts after our separation from General Motors.

In contrast to some Year 2000 programs, we are not relying entirely on the
receipt of written assurances from our suppliers with respect to their Year 2000
compliance; rather, together with General Motors, we are also evaluating certain
suppliers on a first-hand basis and are seeking to enhance their likelihood of
full Year 2000 readiness by actively assisting them with training and
consultation regarding Year 2000 remediation projects. We expect that
information from our suppliers, written responses and our interactions with them
will provide us with a basis for further contingency planning and risk
management.

The cost of our Year 2000 program is being expensed as incurred with the
exception of capitalizable replacement hardware and, beginning in 1999,
capitalizable computer software costs developed for internal use. Total
incremental spending by Delphi is not expected to be material to our operations,
liquidity or capital resources. We incurred about $40 million and $7 million of
Year 2000 expense during 1998 and 1997, respectively. Delphi currently expects
its total Year 2000 spending to be about $106 million, which will be funded from
operations, with peak spending occurring in late 1998 and early 1999, plus about
$9 million of additional costs associated with information technology projects
that were already underway or scheduled independently of our Year 2000 program
but that have been accelerated due to the Year 2000 issue. This total spending
also includes an additional payment of about $13 million, part of General
Motors' overall additional payment to EDS of $75 million at the end of the first
quarter of 2000 if systems remediated by EDS under its master information
technology services agreement with General Motors are capable of continued
operation before, on and after January 1, 2000 without causing a significant
business disruption that results in a material financial loss to "General
Motors" due to the millennium change. For this purpose, "General Motors"
includes Delphi and all other General Motors units being supported by EDS as of
December 31, 1998, taken in the aggregate, including any such General Motors
unit which may subsequently be divested but that continues to be supported by
the remediation services of EDS. The estimated value of the services EDS is
required to provide to Delphi under its master information technology services
agreement with General Motors that are included in normal fixed price services
and other on-going payments to EDS that are attributable to work being performed
in connection with Delphi's Year 2000 program is about $73 million, which is
part of the estimated $260 million attributable to General Motors overall. This
does not represent incremental spending to Delphi. None of our information
technology projects has been delayed due to Year 2000.

In view of the foregoing, we do not currently anticipate that we will
experience a significant disruption of our business as a result of the Year 2000
issue. However, there is still uncertainty about the broader scope of the Year
2000 issue as it may affect Delphi and third parties, including our customers,
that are critical to Delphi's operations. For example, lack of readiness by
electrical and water utilities, financial institutions, governmental agencies or
other providers of general infrastructure could, in some geographic areas, pose
significant impediments to Delphi's ability to carry on our normal operations in
the area or areas so affected. In the event that Delphi is unable to complete
the remedial actions as described above and is unable to implement adequate
contingency plans in the event that problems are encountered, there could be a
material adverse effect on Delphi's business, results of operations or financial
condition.

Statements made herein about the implementation of various phases of
Delphi's Year 2000 program, the costs expected to be associated with that
program and the results that Delphi expects to achieve

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constitute forward-looking information. As noted above, there are many
uncertainties involved in the Year 2000 issue, including the extent to which
Delphi will be able to successfully remediate systems and adequately provide for
contingencies that may arise, as well as the broader scope of the Year 2000
issue as it may affect third parties that are not controlled by Delphi.
Accordingly, the costs and results of Delphi's Year 2000 program and the extent
of any impact on Delphi's operations could vary materially from those stated
herein.

EUROPEAN MONETARY UNION

Within Europe, the European Economic and Monetary Union introduced a new
currency, the euro, on January 1, 1999. The new currency is in response to the
European Economic and Monetary Union's policy of economic convergence to
harmonize trade policy, eliminate business costs associated with currency
exchange and to promote the free flow of capital, goods and services.

On January 1, 1999, the participating countries adopted the euro as their
local currency, initially available for currency trading on currency exchanges
and non-cash transactions such as banking. The existing local currencies, or
legacy currencies, will remain legal tender through January 1, 2002. Beginning
on January 1, 2002, euro-denominated bills and coins will be issued for cash
transactions. For a period of up to six months from this date, both legacy
currencies and the euro will be legal tender. On or before July 1, 2002, the
participating countries will withdraw all legacy currencies and use exclusively
the euro.

The introduction of the euro is a significant event with potential
implications for our existing operations within countries participating in the
European Economic and Monetary Union. As such, we have committed resources to
conduct risk assessments and to take corrective actions, where required, to
ensure that we are prepared for the introduction of the euro. We have undertaken
a review of the euro implementation and concentrated on areas such as
operations, finance, treasury, legal, information management, procurement and
others, both in participating and non-participating European Union countries
where we have operations. Also, existing legacy accounting and business systems
and other business assets have been reviewed for euro compliance, including
assessing any risks from third parties. Progress regarding euro implementation
is reported periodically to management.

We have not experienced any significant operational disruptions to date and
do not currently expect the continued implementation of the euro to cause any
significant operational disruptions. In addition, we have not incurred and do
not expect to incur any significant costs from the continued implementation of
the euro, including any currency risk, which could materially affect our
liquidity or capital resources.

DEFERRED INCOME TAXES

As of December 31, 1998, Delphi's consolidated balance sheet included a net
deferred tax asset of about $2.9 billion. This net deferred tax asset relates to
temporary differences between amounts of assets and liabilities for financial
reporting purposes and the basis of such assets and liabilities as measured by
tax laws. For more information, see Note 5 to our consolidated financial
statements incorporated by reference in this prospectus supplement and the
accompanying prospectus. About $1.6 billion of the net deferred tax asset
balance is related to the obligation for postretirement benefits other than
pensions. Realization of the net deferred tax asset is dependent upon profitable
operations in the United States and future reversals of existing taxable
temporary differences. Although realization is not assured, we believe that it
is more likely than not that such benefits will be realized through the
reduction of future taxable income. Management has carefully considered various
factors in assessing the probability of realizing these deferred tax assets,
including:

- Delphi's operating results, excluding the impact of special items and
work stoppages, over the most recent three year period and overall
financial forecasts of book and taxable income for the 1999-2004 period.

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- The ability to utilize tax planning, such as capitalization of research
and experimentation costs for tax purposes, so that Delphi does not
generate any significant U.S. federal tax net operating loss
carryforwards.

- The extended period of time over which the tax assets can be utilized.
Postretirement benefits become tax deductions over periods up to 50
years.

ENVIRONMENTAL MATTERS

Delphi is subject to various laws governing the protection of the
environment, including laws regulating air emissions, water discharges and waste
management. Delphi has made and will continue to make capital and other
expenditures to comply with environmental requirements. However, such
expenditures were not material during the years ended December 31, 1998, 1997
and 1996 and are not expected to be material in 1999 or 2000. Environmental
requirements are complex, change frequently and have tended to become more
stringent over time. Accordingly, we cannot assure you that these requirements
will not change or become more stringent in the future in a manner that could
have a material adverse effect on our business.

Delphi is also subject to environmental laws requiring investigation and
cleanup of environmental contamination and is in various stages of investigation
and cleanup at its manufacturing sites where contamination has been alleged. As
of December 31, 1998, our reserve for such environmental investigation and
cleanup totaled about $20 million.

The process of estimating environmental clean up liabilities is complex and
dependent primarily on the nature and extent of historical information and
physical data relating to a contaminated site, the complexity of the site, the
uncertainty as to what remedy and technology will be required, the outcome of
discussions with regulatory agencies and, at multi-party sites, other
potentially responsible parties. In future periods, new laws or regulations,
advances in cleanup technologies and additional information about the ultimate
cleanup remedy that is used could significantly change our estimates.
Accordingly, we cannot assure you that our environmental cleanup costs and
liabilities will not exceed the amount of our current reserve.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133
requires recognition of all derivative financial instruments as either assets or
liabilities in consolidated balance sheets at fair value and determines the
method(s) of gain/loss recognition. We are required to adopt SFAS No. 133 with
our fiscal year ending December 31, 2000 and are currently assessing the effect
that it may have on our consolidated financial statements.

SFAS No. 133 provides that, if certain conditions are met, a derivative may
be specifically designated as:

- a hedge of the exposure to changes in the fair value of a recognized
asset or liability or an unrecognized firm commitment (a "fair value
hedge");

- a hedge of the exposure to variable cash flows of a forecasted
transaction (a "cash flow hedge"); or

- a hedge of the foreign currency exposure of a net investment in a foreign
operation, an unrecognized firm commitment, an available-for-sale
security or a foreign-currency-denominated forecasted transaction (a
"foreign currency hedge").

Under SFAS No. 133, the accounting for changes in the fair value of a
derivative depends on its intended use and designation. For a fair value hedge,
the gain or loss is recognized in earnings in the period of change together with
the offsetting loss or gain on the hedged item. For a cash flow hedge, the
effective portion of the derivative's gain or loss is initially reported as a
component of other comprehensive income and subsequently reclassified into
earnings when the forecasted transaction affects earnings. For a

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foreign currency hedge, the gain or loss is reported in other comprehensive
income as part of the cumulative translation adjustment. For all other items not
designated as hedging instruments, the gain or loss is recognized in earnings in
the period of change.

In March 1998, the Accounting Standards Executive Committee for the
American Institute of Certified Public Accountants released Statement of
Position ("SOP") 98-1, "Accounting for the Costs of Computer Software Developed
for Internal Use." SOP 98-1 requires the capitalization of certain expenditures
for software that is purchased or internally developed once certain criteria are
met. Currently, we generally expense the costs of developing or obtaining
internal use software as incurred. We adopted SOP 98-1 on January 1, 1999, as
required. We expect that about $30 million to $40 million of spending that would
have otherwise been expensed as incurred will be capitalized in 1999 in
accordance with the provisions of SOP 98-1.

FORWARD-LOOKING STATEMENTS

Delphi is subject to various factors, many of which are outside of its
control, that could cause actual results to differ from those expressed in
forward-looking statements made by us throughout this prospectus supplement or
the accompanying prospectus and elsewhere. All statements which address
operating performance, events or developments that we expect or anticipate will
occur in the future, including statements relating to volume growth, share of
sales and earnings per share growth or statements expressing general optimism
about future operating results, are forward-looking statements. The following
are the principal important factors which, in addition to those factors
identified in our filings with the Securities and Exchange Commission and
incorporated into this prospectus supplement and the accompanying prospectus by
reference, may cause actual results to differ from those expressed in such
forward-looking statements:

- Changes in General Motors' previously announced intention to complete the
Spin-off during the second quarter of 1999.

- The ability of our company to increase sales to customers other than
General Motors and to achieve the labor benefits we expect from our
separation from General Motors.

- Changes in the operations, financial condition or results of operations
of our customers, including our largest customer, General Motors.

- Changes in the level of future business we expect from General Motors and
other customers because, among other reasons, of a customer's decision to
delay, cancel or redesign a vehicle model, a lower than expected volume
of vehicles produced, or the contractual right of the vehicle
manufacturer to cancel our agreement or replace us as a supplier for
certain reasons.

- Changes in economic conditions or political instability in the major
markets where our company procures material, components, and supplies for
the production of our principal products or where our products are
produced, distributed or sold (i.e., North America, Europe, Latin America
and Asia-Pacific), including the effects of current economic problems in
Asia, Brazil and other regions of Latin America, including Mexico.

- Shortages of materials or interruptions in transportation systems, labor
strikes, work stoppages, or other interruptions to or difficulties in the
employment of labor in the major markets where our company purchases
material, components and supplies for the production of our products or
where our products are produced, distributed or sold.

- Significant changes in the competitive environment in the major markets
where our company purchases material, components and supplies for the
production of our products or where our products are produced,
distributed or sold.

- Changes in the laws, regulations, policies or other activities of
governments, agencies and similar organizations where such actions may
affect the production, licensing, distribution or sale of our company's
products, the cost thereof or applicable tax rates.

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- The ability of our company to generate cost savings and operational
improvements in the future sufficient to offset contractually required
price reductions, price reductions necessary to win additional business
and increases in raw material costs.

- The ability of our company to maintain financial flexibility to make
payments for pensions and other postretirement employee benefits and to
implement capital expenditures, all at the levels and times planned by
management.

- Changes in currency rates and certain commodity prices, which could have
an adverse effect on the value of our international assets or on our
reported revenues and operating profits. At present, fluctuations in the
U.S. dollar, Mexican peso, French franc, Spanish peseta, German mark and
South Korean won will have the greatest impact on our financial
performance. As our business grows in China and other countries, we will
become subject to greater risks related to the local currencies.

- Additional risk factors include our ability to provide high quality
products at competitive prices, to sustain technological competitiveness,
to develop new products that meet changing consumer preferences, to meet
changing vehicle manufacturer supply requirements on a timely, cost
effective basis, and the ability to respond to competitive pressures and
react quickly to other major changes in the marketplace.

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BUSINESS OF DELPHI

OVERVIEW

Delphi is the world's largest and most diversified supplier of components,
integrated systems and modules to the automotive industry, with 1998 net sales
of $28.5 billion. We have become a leader in the global automotive parts
industry by capitalizing on the extensive experience we gained as the principal
supplier of automotive parts to General Motors, the world's largest manufacturer
of automotive vehicles. We are primarily a Tier 1 supplier, which means that we
generally provide our products directly to VMs. We also sell our products to the
worldwide aftermarket for replacement parts and to non-VM customers. We have
established an expansive global presence, with a network of manufacturing sites,
technical centers, sales offices and joint ventures located in every major
region of the world.

Delphi was incorporated in Delaware on September 16, 1998. In 1991, General
Motors organized its many separate automotive parts operations into a single
group, which since that time has transformed from a North America-based, captive
component supplier to General Motors into a global supplier of components,
integrated systems and modules for a wide range of customers. In 1995, the group
was given the name "Delphi Automotive Systems" in order to establish its
separate identity in the automotive parts industry. In late 1997, in connection
with the spin-off by General Motors of its defense electronics business, General
Motors transferred Delco Electronics to us in order to more closely integrate
Delco Electronics' expertise in electronics with our capabilities in automotive
components and systems. Effective January 1, 1999, General Motors transferred or
agreed to transfer the assets used in our business to our company and our
subsidiaries, and we and our subsidiaries assumed, or agreed to assume, pay,
perform, satisfy and discharge, the related liabilities.

In February 1999, we completed an initial public offering of 100 million
shares of our common stock, which represents about 17.7% of our outstanding
common stock. General Motors now owns the remaining 82.3% of our outstanding
common stock. On April 12, 1999, the General Motors board of directors approved
the complete separation of our company from General Motors principally by means
of a tax-free spin-off to holders of General Motors $1- 2/3 common stock. To
effect the Spin-off, the General Motors board declared a dividend on the $1- 2/3
common stock consisting of approximately 80.1% of our outstanding common stock
payable on May 28, 1999 to holders of record as of May 25, 1999. General Motors
intends to contribute the remaining approximately 2.2% of our outstanding common
stock owned by it to a voluntary employees' beneficiary association trust for
General Motors' hourly retirees if General Motors receives confirmation from the
Internal Revenue Service that such contribution will not affect the tax-free
status of the Spin-off. If General Motors does not receive such a confirmation
from the Internal Revenue Service on a timely basis, the remaining shares of our
common stock owned by General Motors will be distributed to the holders of the
$1- 2/3 common stock as part of the Spin-off. General Motors has previously
received a private letter ruling from the Internal Revenue Service to the effect
that the Spin-off would be tax-free to General Motors and its stockholders for
United States federal income tax purposes.

INDUSTRY

The automotive parts industry generally provides components, systems,
subsystems and modules to VMs for the manufacture of new vehicles, as well as to
the aftermarket for use as replacement parts for current production and older
vehicles. Five key trends have been reshaping our industry over the past several
years:

- INCREASED EMPHASIS ON SYSTEMS AND MODULES SOURCING. In order to simplify
the vehicle design and assembly processes and reduce their costs, VMs
increasingly look to their suppliers to provide fully engineered,
pre-assembled combinations of components rather than individual
components. By offering sophisticated systems and modules rather than
individual components, suppliers have assumed many of the design,
engineering, research and development and assembly functions
traditionally performed by VMs. In addition, suppliers now often
manufacture and ship component parts to the general location of a VM's
assembly line and then provide local assembly of systems and modules.

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- GLOBALIZATION OF SUPPLIERS. The globalization of VMs, which reflects the
broader global market for vehicle sales and the desire of VMs to increase
vehicle production in low-cost markets, has driven the globalization of
suppliers as they follow their customers. In order to serve multiple
markets in a more cost effective manner, many VMs are turning to global
vehicle platforms such as "world cars," which typically are designed in
one location but produced and sold in many different geographic markets
around the world.

- INCREASING ELECTRONIC CONTENT. We believe that the electronic content of
vehicles has been increasing and will continue to increase in the future.
This increase in electronic content is largely driven by continued, and
often increasingly stringent, regulatory standards for automotive
emissions and safety as well as consumer demand for increased vehicle
performance and functionality at lower cost. Replacing mechanical with
electronic components and integration of mechanical and electrical
functions within the vehicle allows VMs to achieve substantial reduction
in the weight and complexity of automotive vehicles, resulting in easier
assembly, enhanced fuel economy, improved emissions control and better
vehicle performance.

- ONGOING INDUSTRY CONSOLIDATION. The worldwide automotive parts industry
is consolidating as suppliers seek to achieve operating synergies through
business combinations, shift production to locations with more flexible
local work rules and practices, acquire complementary technologies, build
stronger customer relationships and follow their customers as they expand
globally. The need for suppliers to provide VMs with single-point
sourcing of integrated systems and modules on a global basis has also
helped fuel industry consolidation.

- SHORTER PRODUCT DEVELOPMENT CYCLES. Suppliers are under pressure from VMs
to respond more quickly with new designs and product innovations in order
to support rapidly changing consumer tastes and regulatory requirements.
In addition, in developing countries, as broad economic improvements are
made, demand has increased for smaller, less expensive vehicles that
satisfy basic transportation needs.

STRATEGY

The key elements of our business strategy are:

- to supply our customers with high-quality, innovative components, systems
and modules;

- to exceed existing customers' expectations while building new
relationships;

- to leverage our global presence to meet our customers' needs;

- to improve our operating performance; and

- to complete strategic acquisitions, joint ventures and alliances.

SUPPLY HIGH-QUALITY, INNOVATIVE COMPONENTS, SYSTEMS AND MODULES. We believe
that the current industry trend towards increased system and module sourcing by
VMs creates a substantial competitive advantage for our company. We believe that
our extensive operating history as a vertically integrated supplier to the
world's largest VM provides us with the technical expertise, breadth of product
offerings and manufacturing scale needed to compete successfully on a system and
module basis while continuing to supply high-quality components. By building on
our electronics integration expertise, our systems capabilities and the breadth
of our product offerings, we are working to develop high-quality product
offerings which will provide our customers with the ability to offer consumers
enhanced vehicle control, superior occupant protection, collision avoidance
systems, onboard communications systems, advanced energy and engine management
systems, advanced electrical and electronic vehicle architecture and passenger
entertainment and convenience features at competitive prices.

EXCEED EXISTING CUSTOMERS' EXPECTATIONS WHILE BUILDING NEW
RELATIONSHIPS. Although we intend to pursue new business with General Motors and
expect to continue to be a principal supplier to General Motors and its General
Motors-North America operations for a significant period of time, our strategy

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focuses on growing our business across a more diversified customer base, thereby
making us less dependent on the volume of vehicles produced by General
Motors-North America. We believe that our focus on customer satisfaction, as
demonstrated by our technology leadership, product quality, cost control and
customer responsiveness, positions us well as we strive to increase our sales to
other customers. In order to better serve our customers, our sales and marketing
personnel are organized into 25 dedicated customer service teams, 19 of which
work with customers other than General Motors. Each team is led by one of our
managers and functions as a single point of contact within the company to
represent the interests of the customer throughout our organization. These teams
are supported by our network of manufacturing facilities and engineering and
technical resources worldwide.

LEVERAGE GLOBAL PRESENCE. We can provide significant manufacturing,
engineering, technical and other support to our customers in every major market
in which they operate. We believe that our geographic presence is one of the
broadest in the industry. As of December 31, 1998, we had 168 wholly owned and
leased manufacturing sites, 27 technical centers, 51 customer service centers
and sales activity offices and 40 joint ventures or other strategic alliances in
36 countries on six continents. We are continuously evaluating and enhancing our
engineering and technical resources, which currently include over 15,000
engineers, scientists and technicians, to provide an efficient, customer-focused
global network of engineering and technology customer centers that we believe
will better serve our customers around the world. For financial information
regarding the principal geographic areas in which we operate, see Note 14 to the
consolidated financial statements incorporated by reference in this prospectus
supplement and the accompanying prospectus.

IMPROVE OPERATING PERFORMANCE. We have developed, and are implementing,
initiatives to improve our operating performance. Operational improvements have
enabled Delphi to achieve significant cost reductions and improve productivity
in the face of an increasingly aggressive cost focus by most major VMs. Our
continued ability to realize operating performance improvements is important to
our ability to achieve our business objective. Our primary initiatives to
improve operating performance are:

- Delphi Manufacturing System. The Delphi Manufacturing System involves
reorganizing the workplace and improving the production process in order
to maximize manufacturing flexibility, reduce total manufacturing costs
and achieve lean production. Under the Delphi Manufacturing System,
traditional manufacturing production lines are replaced by more flexible
manufacturing cells which typically consist of clusters of individual
manufacturing operations and efficient work stations, with the operators
placed centrally within each cellular configuration to increase
operational availability.

- Structural Cost Reductions. We continuously seek to achieve savings
through reducing our structural costs, principally through infrastructure
improvements, such as combining operations whenever possible to reduce
our overhead, administrative and related costs, and eliminate
redundancies. We also seek to reduce our structural costs by implementing
a unified, common approach to operations globally, including a common
organizational and management structure, application of the Delphi
Manufacturing System at all of our manufacturing plants, common training
programs and a common set of key metrics for measuring performance.

- Global Sourcing. We use global sourcing in order to obtain the best
prices for our direct and indirect materials, machinery and equipment and
services. Our purchasing process focuses on advance, long-term sourcing
through long-term or lifetime contracts. In order to ensure a consistent
high-quality supply of goods and services, we utilize common systems,
policies and procedures across our company, including a common supplier
quality improvement process. On average, since 1993 we have reduced our
materials costs by about 3% to 4% per year based on a year-to-year actual
price comparison, excluding Delco Electronics, which was not integrated
into our operations until December 1997.

- Labor Relations. We emphasize the sharing of relevant information with
our international and local union leadership worldwide and working with
the unions to jointly develop local work rules and practices. While we
have been a part of General Motors, the national labor agreements
negotiated

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by General Motors with the unions have applied to our workforce in the
United States and Canada. We believe that, as a fully independent company
with control over our own labor relations after the Spin-off, we would
have the right to negotiate regarding our own national and local labor
agreements directly with the unions representing our employees. We
believe that our complete separation from General Motors will enable us,
over time, to increase our competitiveness by establishing local work
rules and practices more consistent with those generally prevailing in
the automotive parts industry, but our largest union, the UAW, which
represents about 28% of our unionized employees, has stated that it is on
record as opposing General Motors' divestiture of our company and that
the UAW can and will aggressively work to protect the rights and
interests of its members who would be impacted by the divestiture. We
cannot assure you as to when or the extent to which we will be able to
achieve the benefits we contemplate.

- Product Portfolio Management. We have implemented a portfolio management
process designed to streamline and focus our product portfolio to
facilitate our emphasis on comprehensive, integrated systems-based
solutions for customers. Our current product portfolio includes about 190
product lines and reflects the integration of 30 product lines from Delco
Electronics as well as new product development activities.

- Fix/Sell/Close Process. We have adopted a "fix/sell/close" process to
improve our cost competitiveness. Under this process, we review our
global operations and investments, including our joint ventures, to
identify operations or investments not performing at desired levels.
These operations or investments are placed into a category to be fixed,
sold or closed. With input from our unions, management then develops a
specific plan to deal with each operation in a timely manner. We will
continue to monitor our operations and investments and we believe that
this ongoing process will continue to improve our cost competitiveness in
the future. However, our ability to eliminate product lines, close plants
and divest businesses is subject to certain restrictions in our supply
agreement with General Motors as described in our Annual Report on Form
10-K for the fiscal year ended December 31, 1998, which is incorporated
by reference in this prospectus supplement and the accompanying
prospectus.

COMPLETE STRATEGIC ACQUISITIONS, JOINT VENTURES AND ALLIANCES. We intend to
participate actively in the industry trend towards consolidation by pursuing
strategic acquisitions and alliances in order to complement or fill gaps in our
existing product portfolio, enhance our design and manufacturing capabilities,
improve our geographic presence in selected areas and increase our access to new
customers.

While we currently believe that we will be able to successfully execute the
business strategies outlined above, we cannot assure you in this regard. Our
ability to execute each of the business strategies discussed above is subject to
numerous risks and uncertainties, including those described elsewhere in this
prospectus supplement and in our filings with the Securities and Exchange
Commission.

MANAGEMENT

We believe that our experienced and highly skilled management team provides
us with a significant competitive advantage. Our 21 most senior managers have an
average of about 25 years of experience in the automotive industry, including in
many cases extensive experience with General Motors in the areas of vehicle
design, engineering and manufacturing. We have also been successful in hiring a
significant number of managers from several of our other VM and non-VM customers
as well as from our competitors, which has enhanced our understanding of and
ability to serve our customers' needs.

We have developed an organizational structure for the management of our
company which utilizes a lean, multi-functional matrix approach. Our chief
operating decision-making group is the Delphi Strategy Board, which is comprised
of the Chief Executive Officer and 20 senior executives representing all three
of our product sectors as well as our world and regional headquarters staff.
Each product sector is managed by a strategy board or equivalent managing
committee comprised of individuals that have responsibility for the
profitability and cash flow of the sector's various product lines and
businesses. Our three product sectors are managed separately because of
differences in the nature of the respective product groupings.

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RESEARCH AND DEVELOPMENT

We have substantial technical and vehicle integration expertise as a result
of our extensive operating history as the in-house supplier to the world's
largest VM. We were the first supplier to produce a number of new products,
including the first electric self-starter, in-dash radio, turn signal, catalytic
converter, airbag, tilt steering column, independent front-wheel suspension,
energy-absorbing steering column, electric power sliding door and integrated
child safety seat. More recently, we were the first supplier to produce
brake-by-wire systems and computer-controlled engine management systems. As a
result, we have developed a comprehensive knowledge of the design, engineering,
manufacture and operation of all aspects of the automotive vehicle.

We believe that our engineering and technical expertise, together with our
emphasis on continuing research and development, allows us to use the latest
technologies, materials and processes to solve problems for our customers and to
bring new, innovative products to market. We maintain technical engineering
centers in every major region of the world to develop and provide advanced
products, processes and manufacturing support for all of our manufacturing sites
and to provide our customers with local engineering capabilities and design
development on a global basis. As of December 31, 1998, we employed more than
15,000 engineers, scientists and technicians around the world. We continuously
evaluate and enhance our engineering and technical resources and are currently
considering plans to reorganize our worldwide engineering and technical
resources into a more efficient, customer-focused global network.

We believe that continued research and development activities are critical
to maintaining our leadership position in the industry. Our total expenditures
for research, development and engineering activities were $1.4 billion, $1.5
billion and $1.6 billion in 1998, 1997 and 1996, respectively. As a result, we
have introduced over 50 new products and processes during each of the last
several years.

INTELLECTUAL PROPERTY

We have generated a large number of patents and trademarks in the operation
of our business. Under our separation arrangements with General Motors,
generally speaking, we own the patents, patent applications and records of
invention that are primarily related to components produced or sold by us and
any other patents that would be more valuable to us than to General Motors.
Accordingly, General Motors has transferred to us full or partial ownership of
about 2,800 patents, 640 U.S. patent applications and 620 records of invention
as well as the corresponding foreign patents and patent applications. In
addition, we and General Motors have agreed to license certain of our existing
patents to each other. While we believe that these patents, inventions and
licenses are, in the aggregate, important to the conduct of our business, none
is individually considered material to our business.

Although we do not rely on material "patent-protected" technology, our
ability to continue to generate technological innovations is important to ensure
our long-term success as well as the competitiveness of our business. Our focus
on innovation is evidenced by the 586 patents relating to our business which
have been recorded in recent years. We intend to continue to actively pursue
technological innovation.

General Motors has transferred to us ownership of about 1,170 trademark
registrations and applications, including about 70 in the United States, as well
as unregistered trademarks. Our trademarks include the following: E-STEER,
FOREWARN, Freedom, Gold Dot, INTELLEK, Monsoon, QUADRASTEER and TRAXXAR.

PRODUCTS AND COMPETITION

We believe that we have the largest and most diversified portfolio of
products in the industry. Our product offerings are organized in three product
sectors: Electronics & Mobile Communication; Safety, Thermal & Electrical
Architecture; and Dynamics & Propulsion.

Our overall product portfolio is extremely broad by industry standards.
Very few other Tier 1 suppliers compete across the full range of our product
areas. However, we do face significant competition across all three of our
principal product sectors from each of the following major Tier 1 suppliers:
Robert Bosch

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GmbH, Denso Inc. and Visteon Automotive Systems, a unit of Ford Motor Company.
Our product sector offerings and principal competitors are summarized below. For
more information on our product sectors, see Note 14 to the consolidated
financial statements incorporated by reference in this prospectus supplement and
the accompanying prospectus.

ELECTRONICS & MOBILE COMMUNICATION. Our Electronics & Mobile Communication
product sector accounted for $4.6 billion, or 16.1%, of our 1998 net sales,
excluding certain inter-sector sales which we eliminate for purposes of
determining our total consolidated net sales. This sector is one of the leading
global providers of automotive electronics products and offers a wide variety of
audio and communication systems for vehicles including the Monsoon(R) Audio
System, the FOREWARN(R) collision warning system and TEXALARM(TM) security
systems. The automotive electronics capabilities of this sector are utilized in
connection with many of the product offerings of our two other product sectors
to produce systems, subsystems and modules designed to enhance vehicle safety,
comfort, security and efficiency. Our principal competitors in the Electronics &
Mobile Communication product sector include the following: Denso Inc., Siemens
AG, Robert Bosch GmbH, Mannesman VDO AG and Motorola, Inc.

SAFETY, THERMAL & ELECTRICAL ARCHITECTURE. Our Safety, Thermal & Electrical
Architecture product sector accounted for $11.1 billion, or 39.0%, of our 1998
net sales, excluding inter-sector sales. This sector offers a wide range of
products relating to the vehicle interior as well as the expertise to integrate
them into individual vehicle designs to simplify manufacturer assembly and
enhance vehicle marketability. The sector also offers safety/airbag systems and
thermal products, including powertrain cooling systems and climate control
systems that meet global mandates for alternative refrigerant capabilities. The
sector is also a global leader in the production of wiring harnesses and
connectors for electrical power and signal distribution. Our principal
competitors in the Safety, Thermal & Electrical Architecture product sector
include the following: Yazaki Corp., Valeo SA, Autoliv Inc., Denso Inc. and TRW
Inc.

DYNAMICS & PROPULSION. Our Dynamics & Propulsion product sector accounted
for $12.8 billion, or 44.9%, of our 1998 net sales, excluding inter-sector
sales. This sector offers a wide range of energy and engine management systems
designed to optimize engine performance and emissions control through management
of vehicle air intake, fuel delivery, combustion and exhaust after-treatment.
The sector also offers all major chassis control systems-steering, braking,
suspension and engine, including the TRAXXAR(R) vehicle stability system with a
focus on providing superior ride and handling performance, high reliability,
reduced mass and improved fuel efficiency. The sector's steering products
feature vehicle control and driveline technologies and advanced electronic
controls to improve performance. Our principal competitors in the Dynamics &
Propulsion product sector include the following: Robert Bosch GmbH, LucasVarity
PLC, NSK Ltd., Siemens AG and TRW Inc.

CUSTOMERS

GENERAL. We currently sell our products to all of the major VMs. While we
expect our business with customers other than General Motors to increase over
time, we also expect that General Motors will remain our largest customer by far
for a significant period of time due to the long-term nature of sales contracts
in our industry, our strong customer-supplier relationship with General Motors
and the supply agreement we entered into with General Motors in January 1999 in
connection with our separation from General Motors. We supply parts to each
regional sector of General Motors' Automotive Operations, including its
automotive operations in the United States, Canada and Mexico ("General
Motors-North America"), and to General Motors' automotive operations throughout
the rest of the world ("General Motors-International"). In addition, we sell our
products to the worldwide aftermarket for replacement parts. Currently, most of
our aftermarket sales are to General Motors' Service Parts Operations ("General
Motors-SPO") for distribution principally to the North American aftermarket.

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The following table shows how our total sales were derived for each of the
last three years. The percentages for 1998 were affected by work stoppages at
certain General Motors and Delphi locations in the United States in June and
July 1998.

<TABLE>
<CAPTION>
TOTAL SALES
-----------------------
YEAR ENDED
DECEMBER 31,
-----------------------
CUSTOMER 1998 1997 1996
-------- ----- ----- -----
<S> <C> <C> <C>
General Motors-North America............................. 62.2% 65.4% 66.6%
General Motors-International............................. 11.0 11.2 11.7
General Motors-SPO....................................... 5.4 5.1 5.2
----- ----- -----
Total General Motors................................... 78.6 81.7 83.5
Other Customers.......................................... 21.4 18.3 16.5
----- ----- -----
100.0% 100.0% 100.0%
===== ===== =====
</TABLE>

For purposes of the foregoing table, "total sales" include all of the sales
from joint ventures and other investments in which we own a minority interest
even though these sales are not reflected in our sales as reported in our
consolidated financial statements incorporated by reference in this prospectus
supplement and the accompanying prospectus. This is how we have historically
tracked our sales by customer for internal purposes. We include our minority
joint venture sales for this purpose because, among other things, they
principally relate to our joint ventures outside the United States where we
frequently have significant influence over product design and technology and
customer relationships but do not own more than 50%. If we owned more than 50%
of these joint ventures, in most cases, we would include these sales in our
consolidated sales. In addition, many of these joint ventures use our
technologies. If we did not include these sales, the percentages set forth above
for General Motors would be higher.

AWARDED BUSINESS. We have a substantial base of awarded business from VMs,
including business with General Motors-North America under arrangements that are
governed by our supply agreement with General Motors. We track as "awarded
business" the future sales that we have a strong expectation of realizing based
on various types of VM awards to us and various assumptions we make regarding,
among other things, the timing and volume of vehicle production, option mix and
product pricing. On that basis, we believe that we currently have a solid
foundation of awarded business upon which to grow our company. We cannot assure
you, however, that we will in fact realize any specific amount of awarded
business because it remains in all cases subject to a number of important risks
and uncertainties, including the volume and option mix of vehicles actually
produced, the timing of such production, the determination by our VM customers
to delay, cancel or redesign vehicle programs and price reductions negotiated in
connection with a VM customer's sourcing of new business with us. In addition,
our VM customers generally have a contractual right to replace us with another
supplier throughout the duration of a contract for a variety of reasons,
although the impact of this contractual right is mitigated to some extent by the
substantial re-engineering costs that a VM typically would need to incur in
order to introduce a new supplier to an established vehicle platform. Subject to
the foregoing risks and uncertainties, we currently estimate revenues from our
existing awarded business to be about $28 billion for 1999 and about $22 billion
for 2003. The amount of our awarded business declines over time as the vehicle
programs in which we are currently participating mature and eventually
terminate. However, particularly in the later years, we expect that we will be
awarded additional business from General Motors and other customers.

SALES TO GENERAL MOTORS. In 1992, General Motors launched a major
reorganization of its automotive business to streamline its business practices
and downsize its North American automotive operations. At that time, General
Motors announced its intention to begin filling its procurement needs on a
global basis. Pursuant to this initiative, General Motors has provided suppliers
worldwide with the opportunity to bid for the business of General Motors-North
America, historically sourced with us. As a result, our share of General
Motors-North America automotive parts requirements has declined since 1992.

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We believe that we are and will continue to be able to compete effectively
for General Motors-North America business because of the high quality of our
products, our ongoing cost reduction efforts and our product and technological
innovations. As a principal supplier to General Motors, we periodically have
discussions with General Motors relating to its future vehicle programs and our
long-term technology and product development. Although we have no commitments to
General Motors in this regard, we expect to continue these discussions for some
period of time after our complete separation from General Motors based on our
strong customer-supplier relationship. However, we do expect the portion of
General Motors-North America's automotive parts requirements which we supply and
the prices we charge to General Motors-North America to continue to decline over
the next several years. As a result, we also expect that our total sales to
General Motors will decline over the next several years. Through our strategy of
aggressively pursuing increased business with customers other than General
Motors-North America, including additional sales to General
Motors-International, however, we will strive to mitigate these effects and
increase our total sales.

We have historically supplied a lower percentage of General
Motors-International's automotive parts requirements than the percentage of
parts we have supplied to General Motors-North America. Until the last several
years, we were operated by General Motors as a captive, North American-based
supplier to General Motors' North American operations. As a result, we did not
focus heavily on our global business opportunities, including those with General
Motors-International. We also did not have the global presence to compete
effectively for General Motors-International business. As noted above, we have
substantially expanded our global presence over the last several years and
intend to continue to compete for additional General Motors-International
business.

SUPPLY AGREEMENT. The supply agreement we have entered into with General
Motors in connection with our separation from General Motors provides that all
existing contracts between General Motors and our company as of January 1, 1999
generally remain in effect, including the pricing, duration and purchase order
terms and conditions. However, the timing of payments from General Motors to us
under the existing contracts changed as of January 1, 1999 to generally require
payment by General Motors on the second day of the second month following
shipment, rather than in the month following General Motors' receipt of the
related invoice. These modified payment terms are consistent with the new
payment terms that General Motors is currently in the process of introducing to
its other suppliers.

The supply agreement provides us with certain rights to provide on
competitive terms the first replacement cycle of all product programs in the
United States and Canada which we were providing to General Motors as of January
1, 1999, provided that General Motors sources such replacement programs prior to
January 1, 2002 and we are competitive in terms of design, quality, price,
service and technology as these factors relate to all aspects of bid packages
that may be submitted by other suppliers. Other suppliers' bids to provide
particular products may include offers of price reductions to General Motors on
other current or future products, and General Motors may under the supply
agreement consider the overall economic effect of such package proposals in
assessing our competitiveness. Given the general duration of most vehicle
programs of about five to eight years, depending on the vehicle model, we expect
that this ability to secure next generation business from General Motors-North
America, together with our existing contracts and other commitments, will
provide us with the opportunity to maintain substantial business with General
Motors-North America well into the next decade. We will also have the
opportunity to bid on the same basis as other suppliers for other new General
Motors-North America business as well as for General Motors-International
business. Our ability to realize revenues on all General Motors business,
including business awarded pursuant to existing contracts, is in all cases
subject to a variety of factors, including the volume and option mix of vehicles
actually produced by General Motors, the timing of such production and our
continuing competitiveness.

The supply agreement specifies that General Motors has the right to move
its existing business with us to other suppliers in the event that we are not
competitive in terms of quality, service, design or technology. In addition,
General Motors has the right at all times to adopt new technology, whether or
not such technology is available through us. If we are unable to provide the new
technology or an equivalent technology acceptable to General Motors on a
competitive basis, General Motors is free to move the

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business from us to another supplier. For more information regarding the terms
of the supply agreement, you should refer to our Annual Report on Form 10-K for
the fiscal year ended December 31, 1998, which is incorporated by reference in
this prospectus supplement and the accompanying prospectus.

OTHER VMS. Although General Motors is by far our largest customer, we do
business with all of the other major VMs worldwide. Our top five VM customers
other than General Motors are DaimlerChrysler, Toyota, Fiat, Volkswagen, and
Renault. Our combined sales to these customers accounted for about 8% of our
total 1998 net sales, and our top ten VM customers other than General Motors
accounted for about 11% of our total 1998 net sales. In determining these
percentages, we have not included sales of entities in which we have a minority
interest.

AFTERMARKET. We sell products to the worldwide aftermarket as replacement
parts for current production and older vehicles. In 1998, our aftermarket
revenues of $2.1 billion represented 7.2% of our total net sales. We currently
sell most of these products into the North American aftermarket under
arrangements with General Motors-SPO, the principal aftermarket sales
organization of General Motors. General Motors-SPO distributes replacement parts
to the aftermarket primarily through General Motors automobile dealerships and
independent distributors, including warehouse distributors and direct retailers.
Outside North America, we principally sell into the aftermarket through
independent distributors.

Under the terms of our separation from General Motors, we and General
Motors have agreed that, subject to certain exceptions, General Motors-SPO will
be the exclusive distributor of our products into the U.S. aftermarket and we
will be the exclusive supplier of these products to General Motors-SPO through
at least December 31, 2000. General Motors-SPO currently markets our products
under a number of brand names, including ACDelco(R), Freedom(R) and Voyager(R).
In connection with our separation from General Motors, we have agreed with
General Motors-SPO to split the ownership of these aftermarket brands. General
Motors-SPO owns the ACDelco brand and any AC and Delco derivatives and
formatives. However, we have been granted a perpetual, worldwide, royalty-free
license to use the trade name "Delco Electronics" and the trademarks "DELCO" and
"DELCO ELECTRONICS" in connection with certain of our products as well as a
worldwide license to use the trademarks "AC," "DELCO" and "AC Delco" until
January 1, 2000. We own the Freedom brand, although we may not use the brand in
the United States until the expiration of our arrangement with General
Motors-SPO. General Motors-SPO will own the Voyager battery brand, but may only
use it on batteries it purchases from us. For more information about these
arrangements, you should refer to our Annual Report on Form 10-K for the fiscal
year ended 1998, which is incorporated by reference in this prospectus
supplement and the accompanying prospectus.

We have historically derived our principal aftermarket revenues through our
relationship with General Motors-SPO. We believe that there exist opportunities
to increase our revenues from sales in the aftermarket and augment the "Delphi"
brand presence in the aftermarket over time by establishing new supply
relationships with various participants along the aftermarket distribution
channel. We believe that our ability to sell products developed for the VM
market to aftermarket customers can reduce the impact of adverse changes in
demand for new vehicles. With respect to the aftermarket in the United States,
we intend to continue to sell products through General Motors-SPO until the
expiration of the transitional arrangements described above. Outside the United
States, we are initially focusing on the aftermarket business in Europe and
South America.

We believe that incremental aftermarket sales opportunities will be
available to us following our complete separation from General Motors. However,
growth in the highly competitive aftermarket business will take time to achieve
in light of the significant investment in an aftermarket distribution
infrastructure that is required.

NON-VM CUSTOMERS. We are also diversifying by supplying certain of our
products, including connection systems, flex-circuits wiring, instrumentation
and map sensors, to new customer areas, such as the aerospace, motorcycle and
computer industries. Our non-VM customers include Boeing Company,
Harley-Davidson Inc. and Silicon Graphics Inc. We are also building
relationships with Tandem Computers Inc., Storage Technologies and Lucent
Technologies Inc. These non-VM sales accounted for

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only a nominal amount of our total 1998 net sales. We believe that opportunities
exist to increase our sales in this area and we intend to continue to work to
expand our sales to non-VM customers.

VARIABILITY IN DELPHI'S BUSINESS

There are a number of factors that contribute to variability in our
business. The variability can produce significant fluctuations in sales and
earnings from quarter to quarter, and in some cases from year to year. The
primary factors that affect variability are summarized below.

AUTOMOTIVE INDUSTRY. Almost all of our business is directly related to
automotive sales and production by our customers, which are highly cyclical and
depend on general economic conditions and other factors, including consumer
spending and preferences. Any significant reduction in automotive production and
sales by our customers would have a material adverse effect on our business.

REGIONAL. We have substantial operations in every major region of the world
and economic conditions in these regions often differ. The recent economic
downturn in Asia and in Brazil and other regions of Latin America, including
Mexico, has led to reductions in demand for automobiles and component parts in
those areas and has had an adverse effect on our financial results in 1998. To
the extent that these conditions continue to worsen, or spread to other regions,
particularly in the United States, our business will continue to be adversely
affected.

SEASONAL. Our business is moderately seasonal as our primary North American
customers historically halt operations for about two weeks in July and about one
week in December. In addition, third quarter automotive production is
traditionally lower as new models enter production. Accordingly, third and
fourth quarter results may reflect these trends.

ARRANGEMENTS BETWEEN GENERAL MOTORS AND DELPHI

The separation of Delphi from General Motors and the transactions being
undertaken in connection therewith are being effected pursuant to the Separation
Agreement, under which General Motors and its subsidiaries transferred to us the
assets of its automotive components business, and we assumed the liabilities of
that business. Among other things, the Separation Agreement (1) provides for the
allocation of liability between us and General Motors for product liability
claims, general litigation claims and employment-related claims, all relating to
the General Motors automotive components business and (2) requires General
Motors to maintain, for a specified period, insurance policies for our benefit
that are comparable to General Motors' own insurance policies.

In addition, we have entered into certain ancillary agreements contemplated
by the Separation Agreement that govern various interim and ongoing
relationships between us and General Motors. Among these ancillary agreements,
(1) the IPO and Distribution Agreement requires us to cooperate with General
Motors in all respects to complete the Spin-off, (2) the Registration Rights
Agreement provides for registration rights for General Motors if our separation
from General Motors is not completed or is completed without General Motors
divesting itself of all of the Delphi common stock held by it, (3) the Component
Supply Agreement governs our sale of products to General Motors, (4) the U.S.
Employee Matters Agreement governs the allocation of responsibility for certain
employee-related matters between General Motors and us, (5) certain income tax
allocation agreements govern the allocation of U.S. income tax liabilities
between General Motors and us, (6) various intellectual property agreements
govern the division, transfer and use of certain intellectual property to or by
us, (7) the Real Estate Matters Agreement governs the assignment or sub-lease of
General Motors' real estate portfolio related to its automotive components parts
business, (8) the Environmental Matters Agreement governs the allocation of
environmental liabilities between General Motors and us, (9) the Business
Relationship Agreement governs the sale and distribution of aftermarket products
in the United States and (10) various transition services agreements govern the
provision by General Motors to us, for specified periods of time until we
develop an independent means of obtaining or the ability to provide ourself,
services such as purchasing systems services, audit services, administrative
support services, treasury, accounting and payroll services, tax and customs
services and information systems services.

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All of the foregoing agreements were made in the context of a
parent-subsidiary relationship and were negotiated in the overall context of our
separation from General Motors. The terms of these agreements may be more or
less favorable to us than if they had been negotiated with unaffiliated third
parties. Certain of these agreements, including the Separation Agreement, the
IPO and Distribution Agreement, the Registration Rights Agreement, the Component
Supply Agreement, the Business Relationship Agreement, the U.S. Employee Matters
Agreement and the tax allocation agreements have been filed as exhibits to our
Annual Report on Form 10-K for the fiscal year ended December 31, 1998, which is
incorporated by reference in this prospectus supplement and the accompanying
prospectus.

Certain international, intellectual property and real property assets
relating primarily to the business of Delphi are still held by General Motors or
its affiliates, pending receipt of consents or approvals or satisfaction of
other applicable requirements necessary for the transfer of such assets to
Delphi. We do not believe that these assets and operations are, individually or
in the aggregate, material to our company. However, the information included or
incorporated by reference in this prospectus supplement and the accompanying
prospectus, including our consolidated financial statements, assumes and gives
effect to the completion of all such transactions. In addition, certain
information technology assets relating primarily to our business are still held
by General Motors or its affiliates, pending receipt of consents necessary for
the transfer of such assets to Delphi, or may be retained by General Motors if
consents to their transfer cannot be obtained. Also, certain assets and
liabilities relating to employees working under collective bargaining agreements
were transferred to Delphi in connection with our separation from General
Motors.

We have also entered into a series of agreements with General Motors
similar to the ancillary agreements discussed above with respect to those Delphi
assets located outside the United States. In most countries, General Motors'
vehicle and component businesses were operated by separate legal entities. In
such countries, the entities that operate the components business were
transferred to Delphi. Where certain facilities or functions were shared by such
separate legal entities, the shared functions or facilities were generally
separated in accordance with the principles set forth in the corresponding
ancillary agreement in the United States. In those countries in which the
vehicle and components businesses are owned by one legal entity, new entities
have been or will be formed in order to separate the Delphi business from the
General Motors business. Agreements have been or will be entered into in each of
the countries where operations are to be transferred to Delphi. Although the
agreements for most countries have or will have different terms than the
ancillary agreements in the United States, in general they are or will be
similar in scope to the ancillary agreements.

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EXECUTIVE OFFICERS AND DIRECTORS

EXECUTIVE OFFICERS, KEY EMPLOYEES AND DIRECTORS OF DELPHI

Set forth below is certain information concerning the executive officers
and key employees of our company, and the individuals who are serving on our
Board of Directors. Our Board of Directors currently has 11 members. Messrs.
Losh, Pearce, and Smith are currently executive officers and/or directors of
General Motors, and Mr. Wyman was a director of General Motors until October
1998. The three directors who are currently executive officers and/or directors
of General Motors have advised us that they will resign from our Board of
Directors in connection with the Spin-off.

EXECUTIVE OFFICERS AND KEY EMPLOYEES

<TABLE>
<CAPTION>
NAME POSITION
---- --------
<S> <C>
J.T. Battenberg III....................... Chairman of the Board, Chief Executive Officer and
President
Alan S. Dawes............................. Chief Financial Officer and Vice President
Volker J. Barth........................... Vice President
William A. Ebbert......................... Vice President
Guy C. Hachey............................. Vice President
David R. Heilman.......................... Vice President
Rodney O'Neal............................. Vice President
Ronald M. Pirtle.......................... Vice President
Donald L. Runkle.......................... Vice President
Paul J. Tosch............................. Vice President
Hans J. Weiser............................ Vice President
David B. Wohleen.......................... Vice President
John P. Arle.............................. Vice President, Mergers, Acquisitions and Planning
James A. Bertrand......................... Vice President, Operations
John G. Blahnik........................... Vice President and Treasurer
Ray C. Campbell........................... Vice President, Purchasing
Karen L. Healy............................ Vice President, Corporate Affairs
Peter H. Janak............................ Vice President and Chief Information Officer
Mark C. Lorenz............................ Vice President, Production Control and Logistics
Logan G. Robinson......................... Vice President and General Counsel
Mark R. Weber............................. Vice President, Human Resources Management

DIRECTORS
NAME PRINCIPAL OCCUPATION
- ------------------------------------------ --------------------------------------------------------
J.T. Battenberg III....................... Chairman of the Board, Chief Executive Officer and
President
Thomas H. Wyman........................... Former Chairman, President and Chief Executive Officer
of CBS, Inc.
John F. Smith, Jr......................... Chairman and Chief Executive Officer of General Motors
Corporation
Harry J. Pearce........................... Vice Chairman of General Motors Corporation
J. Michael Losh........................... Chief Financial Officer of General Motors Corporation
Oscar De Paula Bernardes Neto............. Chairman of the Boards of Santista Alimentos S/A and
Seara Alimentos S/A
Virgis W. Colbert......................... Executive Vice President of Miller Brewing Company
Shoichiro Irimajiri....................... President and Representative Director of Sega
Enterprises, Ltd.
Susan A. McLaughlin....................... President, Consumer Services for BellSouth
Telecommunications, Inc.
John D. Opie.............................. Vice Chairman and Executive Officer, General Electric
Company
Roger S. Penske........................... Chairman and Chief Executive Officer of Penske
Corporation
</TABLE>

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<PAGE> 40

MR. BATTENBERG has led Delphi and its precursor, the Automotive Components
Group Worldwide ("ACG Worldwide"), since 1992. In July 1995, he was named
President of Delphi. He was named Chief Executive Officer of Delphi in August
1998 and Chairman of the Board of Delphi in November 1998. Mr. Battenberg also
serves as the Chairman of the Delphi Strategy Board. Mr. Battenberg held various
positions with General Motors beginning in 1961, including Superintendent of
Industrial Engineering, Comptroller, Production Manager and Plant Manager. In
1986, he was appointed Product Manager for the former Buick-Oldsmobile-Cadillac
Group's Flint Automotive Division. He later served as Vice President of the
division, and then Vice President and Group Executive for the
Buick-Oldsmobile-Cadillac Group. Mr. Battenberg was named Vice President and
Group Executive of ACG Worldwide in 1992. Two years later, he was elected a
Senior Vice President and President of ACG Worldwide. In July 1995, he was
elected Executive Vice President of General Motors and President of Delphi
Automotive Systems, formerly ACG Worldwide. Mr. Battenberg is on the Board of
Trustees of Kettering University, formerly known as General Motors Institute
("GMI"), and the National Advisory Board for Chase Manhattan Corp. He is also a
member of the Council on Competitiveness.

MR. DAWES was named Chief Financial Officer of Delphi in August 1998 and a
Delphi Automotive Systems Vice President in November 1998. Previously, Mr. Dawes
served as General Manager of Delphi Chassis Systems, formerly Delco Chassis
Systems, a position to which he was named in 1994. From 1992 to 1994, he was
Executive-in-Charge of Operations for ACG Worldwide. Mr. Dawes joined General
Motors in 1981, originally as a financial analyst with its Treasurer's Office,
and held a number of positions including Assistant Treasurer in 1988 and
Assistant Comptroller in 1991.

MR. BARTH was named a Delphi Automotive Systems Vice President in November
1998 and President of Delphi South America in November 1996. He had been
Executive Director of Worldwide Purchasing for Delphi since 1994. From 1993 to
1994, he was Executive Director of Worldwide Purchasing-Metallic. From 1992 to
1993, he was Director of Materials Management for General Motors do Brasil in
Sao Paulo, and from 1991 to 1992, he was Director of Purchasing for the same.
Prior thereto, he held several purchasing assignments for General Motors' Adam
Opel subsidiary since joining General Motors in 1963.

MR. EBBERT was named a Delphi Automotive Systems Vice President in November
1998 and President of Delphi Asia Pacific in July 1993. He had been Chairman and
Managing Director of Vauxhall Motors Limited, UK, since 1988. Previously, Mr.
Ebbert had been Group Director of Business Operations for Delphi Automotive
Systems. Prior thereto, he held a number of senior assignments with Delphi
Saginaw Steering Systems' central office. He joined General Motors in 1965.

MR. HACHEY was named a Delphi Automotive Systems Vice President and
President of Delphi Chassis Systems in November 1998. He had been General
Manager of Delphi Chassis Systems since August 1998. Previously, Mr. Hachey had
been Manufacturing Manager, Worldwide Operations, for the former Delphi Interior
& Lighting Systems since 1995. From 1994 to 1995, he was Director of
Manufacturing Operations for Delphi Automotive Systems and, from 1992 to 1994,
he was Director of Manufacturing Operations for the heating, ventilation and air
conditioning/heat exchangers business unit of what is now Delphi Harrison
Thermal Systems. Prior thereto, Mr. Hachey held several manufacturing positions
with General Motors since 1978.

MR. HEILMAN was named a Delphi Automotive Systems Vice President and
President of Delphi Packard Electric Systems in November 1998. He had been
General Manager of Delphi Packard Electric Systems since October 1994. From 1993
to 1994, Mr. Heilman served as Director of Delphi Packard Electric Systems'
North American Business Unit and from 1991 to 1993, he was Director of Packard
International. Prior thereto, Mr. Heilman served in numerous engineering,
manufacturing and product-related positions since joining Delphi Packard
Electric Systems in 1964.

MR. O'NEAL was named a Delphi Automotive Systems Vice President and
President of Delphi Interior Systems in November 1998. He had been General
Manager of the former Delphi Interior & Lighting Systems since May 1997.
Previously, Mr. O'Neal had been General Director of Warehousing and Distribution
for General Motors-SPO since 1994. From late 1992 to 1994, Mr. O'Neal served as
Director of Manufacturing for ACG Worldwide. From 1991 to late 1992, Mr. O'Neal
was first Director of

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<PAGE> 41

Industrial Engineering for Chevrolet-Pontiac-General Motors of Canada ("C-P-C")
and later was named Director of Manufacturing Engineering with General Motors.
Prior thereto, Mr. O'Neal held numerous engineering and manufacturing positions
with General Motors since 1971. Mr. O'Neal is a board member of Woodward
Governor Company.

MR. PIRTLE was named a Delphi Automotive Systems Vice President and
President of Delphi Harrison Thermal Systems in November 1998. He had been
General Manager of Delphi Harrison Thermal Systems since November 1996.
Previously, Mr. Pirtle had been Director of North American Operations at Delphi
Packard Electric Systems since 1994. From 1992 to 1994, Mr. Pirtle was Finance
Director for AC Delco Systems and, from 1990 to 1992, he was Executive-in-Charge
of General Motors' Corporate Strategic Planning Group. Prior thereto, Mr. Pirtle
held various engineering and financial and planning positions with General
Motors since 1972. Mr. Pirtle is a Board member of the Alumni Association of
Kettering University, formerly GMI, and a Board member of the University of
Pittsburgh School of Engineering.

MR. RUNKLE was named a Delphi Automotive Systems Vice President and
President of Delphi Energy and Engine Management Systems in November 1998. He
had been General Manager of Delphi Energy & Engine Management Systems since May
1996. Previously, Mr. Runkle had been General Manager of Delphi Saginaw Steering
Systems since August 1993. From 1992 to 1993, Mr. Runkle was in charge of
General Motors' North American Advanced Engineering Center and, from 1988 to
1992, he was in charge of General Motors' former Advanced Engineering Staff.
Prior thereto, Mr. Runkle served in a series of engineering positions with
General Motors since 1968.

MR. TOSCH was named a Delphi Automotive Systems Vice President and
President of Delphi Saginaw Steering Systems in November 1998. He had been
General Manager of Delphi Saginaw Steering Systems since May 1997. Previously,
Mr. Tosch had been General Manager of the former Delphi Interior & Lighting
Systems since October 1994. From 1991 to 1994, Mr. Tosch was General Manager of
Delphi Harrison Thermal Systems. From 1987 to 1991, he was Managing Director of
Vauxhall Motors Limited. Prior thereto, Mr. Tosch held various engineering and
managerial positions with General Motors since 1963.

MR. WEISER was named a Delphi Automotive Systems Vice President in November
1998 and has been President of Delphi Automotive Systems Europe, formerly ACG
Europe, since 1993. He became Managing Director of Packard Electric Europa in
Wuppertal, Germany, in 1990 and was appointed Chairman of the Supervisory Board
of all Corporate Subsidiaries of Packard Electric Europa, a position he held
until his current assignment. Mr. Weiser was appointed Chairman of the Executive
Board of Kabelwerke Reinshagen GmbH in 1986. Mr. Weiser had been with Kabelwerke
Reinshagen GmbH since 1974, which was acquired by Delphi Packard Electric in
1981.

MR. WOHLEEN was named a Delphi Automotive Systems Vice President and
President of Delphi Delco Electronics in November 1998. He had been General
Manager of Delphi Delco Electronics since August 1998. Prior to his current
position, he had been a General Director of Engineering with Delco Electronics,
which is now Delphi Delco Electronics, since February 1997. In 1994, Mr. Wohleen
was named Director of Electrical, Interior and HVAC for General Motors' Midsize
Car Division in Warren, Michigan, and in 1995, he assumed additional
responsibility for general assembly, tools and process and powertrain
coordination for General Motors' MidLux Car Division in Warren. Prior thereto,
Mr. Wohleen held a series of engineering and manufacturing positions with
General Motors since 1978.

MR. ARLE was named Vice President of Mergers, Acquisitions and Planning for
Delphi Automotive Systems in November 1998. He had been Executive Director of
Planning for Delphi since February 1998. Previously, he was Vice President and
Chief Financial Officer for Saab Automobile AB since 1993. From 1992 to 1993, he
was Vice President and Finance Manager for General Motors of Canada, Ltd. From
1988 to 1992, he was General Manager and Comptroller for the General
Motors/Toyota NUMMI joint venture. Prior thereto, he held several finance and
human resources positions at General Motors since 1975.

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<PAGE> 42

MR. BERTRAND was named Vice President of Operations for Delphi Automotive
Systems in November 1998. He had been Executive Director of Operations for
Delphi since June 1997. Previously, he was Executive Director of Development for
small cars at General Motors' International Operations since 1995. From 1992
until 1995, he was Comptroller at Adam Opel AG in Russelsheim, Germany. From
1989 to 1992, he was Director of Financial Analysis and Planning for General
Motors Europe. Prior thereto, he held finance, business and engineering
positions for General Motors since 1979.

MR. BLAHNIK was named Treasurer of Delphi Automotive Systems in August 1998
and a Delphi Vice President in November 1998. He had been Executive Director of
Finance for Delphi since June 1996. Previously, he was Senior Vice President and
Chief Financial Officer at Delco Electronics since 1995. From 1994 to 1995, he
was Director of Finance for General Motors' Lansing Automotive Division. From
1991 to 1994, he was Executive Director for General Motors' Latin American
Operations and President of Banco General Motors, and from 1988 until 1991, he
was a Comptroller of General Motors do Brasil. Prior thereto, he held several
finance positions at General Motors since 1978.

MR. CAMPBELL was named Vice President of Purchasing for Delphi Automotive
Systems in November 1998. He had been Executive Director of Worldwide Purchasing
for Delphi since November 1996. Previously, he was Executive Director of
Worldwide Purchasing, Quality/Supplier Development, at General Motors' North
American Operations since 1995. From 1994 to 1995, he was Executive Director of
Worldwide Purchasing, Strategic and Metallic Activities. Prior thereto, he held
a variety of managerial and purchasing positions at General Motors since 1964.

MS. HEALY was named Vice President of Corporate Affairs for Delphi
Automotive Systems in November 1998. She had been Executive Director of
Communications for Delphi since June 1997. Previously, she was Manufacturing
Manager for Delphi's Flint East Operations, Plants 6 and 7, since July 1996.
From June 1995 to July 1996, she was Director of Corporate Communications at
General Motors' central office. From January 1995 to June 1995, she was Director
of Communications for Delphi. Prior thereto, Ms. Healy held several personnel,
labor relations and communications positions at General Motors since 1976. She
serves on the Board of Trustees for the Music Hall Center for the Performing
Arts in Detroit and the Executive Board for the Troy Chamber of Commerce.

MR. JANAK was named Chief Information Officer for Delphi Automotive Systems
in April 1998 and a Delphi Vice President in November 1998. He had been a Vice
President and Chief Information Officer at TRW Inc. since February 1995.
Previously, he was Vice President and General Manager of TRW's Information
Services Division. Prior thereto, he worked in propulsion engineering for NASA's
Apollo program and worked for Chrysler Corporation, Teledyne Brown Engineering,
Planning Research Corporation and the German firm, Technologieforshung.

MR. LORENZ was named Vice President of Production Control and Logistics for
Delphi Automotive Systems in November 1998. He had been Director of Production
Control and Logistics for Delphi since March 1996. Previously, he had been
Director of Materials Management for General Motors' North American Operations
Prototype Shops since June 1993. From 1991 to 1993, he was Director of Materials
Management, Experimental Manufacturing. From 1990 to 1991, he was Manager of
Synchronous Organization, and from 1989 to 1990, he was Advisor, C-P-C
production systems. Prior thereto, he held various manufacturing and materials
management positions at General Motors since 1973.

MR. ROBINSON was named General Counsel and a Delphi Automotive Systems Vice
President in December 1998. Previously, he was Of Counsel to the Corporate,
Securities and Business Law group at Dickinson Wright PLLC, a Michigan law firm
headquartered in Detroit, since April 1998. From February 1996 to April 1998, he
was Senior Vice President, Secretary and General Counsel for ITT Automotive,
Inc. From April 1987 to February 1996, he was a lawyer for Chrysler Corporation
serving, among other positions, as Vice President and General Counsel for
Chrysler International Corporation, a subsidiary of Chrysler Corporation, and
Geschaftsfuhrer, or Managing Director, of Chrysler Austria GmbH. Prior thereto,
he held positions at TRW Inc. in Cleveland, Ohio, and at Coudert Brothers and
Wender, Murase & White in New York City.

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MR. WEBER was named Vice President of Human Resources Management for Delphi
Automotive Systems in November 1998. He had been Executive Director of Human
Resources Management for Delphi since January 1995. Previously, he was General
Director of Personnel and Public Affairs at the former Inland Fisher Guide since
1993. From 1991 to 1993, he was General Director of Personnel for the same. From
1988 to 1991, he was Director of Industrial Relations at C-P-C, and from 1986 to
1988, he served as Director of Human Resources for Salaried Personnel at C-P-C.
From 1985 to 1986, he was Director of General Offices Personnel at C-P-C. Prior
thereto, he held a number of human resource and personnel positions at General
Motors since 1966.

MR. WYMAN was named Lead Independent Director for Delphi Automotive Systems
in October 1998. Mr. Wyman had served on the Board of Directors of General
Motors from 1985 until October 1998. Mr. Wyman was formerly Chairman, President
and Chief Executive Officer of CBS, Inc., New York. Mr. Wyman was Senior Advisor
of SBC Warburg Inc. from 1996 to 1997 and Chairman of S.G. Warburg & Co. Inc.
from 1992 to 1996. Mr. Wyman is also a Director of AT&T Corporation. Mr. Wyman
is a member of the Advisory Board of Nestle USA, Inc., the International
Advisory Group of Toshiba Corporation (Tokyo) and The Business Council. Mr.
Wyman is Trustee Emeritus of The Ford Foundation and The Aspen Institute and
Chairman Emeritus of Amherst College.

MR. SMITH has been associated with General Motors since 1961 and was named
a Director of Delphi Automotive Systems in October 1998. On January 1, 1996, Mr.
Smith became Chairman of the Board of Directors of General Motors and in October
1998, Mr. Smith's title was changed from Chief Executive Officer and President
to Chief Executive Officer of General Motors. Effective November 1992, Mr. Smith
was elected as General Motors' Chief Executive Officer and President. Effective
August 1990, Mr. Smith was elected Vice Chairman of the Board of Directors of
General Motors and, on April 6, 1992, he was elected President and Chief
Operating Officer of General Motors. Mr. Smith was elected Executive Vice
President in charge of International Operations for General Motors in 1988. He
is also a Director of Hughes Electronics and The Procter & Gamble Company. Mr.
Smith is Co-Chairman of The Business Roundtable and a member of The Business
Council, the U.S.-Japan Business Council, Catalyst and The Chancellor's
Executive Committee of the University of Massachusetts. Mr. Smith is a member of
the Board of Trustees, Boston University; the Board of Overseers of Memorial
Sloan-Kettering Cancer Center; the Board of Governors of The Nature Conservancy;
and the Board of Polish-American Enterprise Fund.

MR. PEARCE has been associated with General Motors since 1985 and was named
a Director of Delphi Automotive Systems in October 1998. Effective January 1,
1996, Mr. Pearce was elected a Director and became Vice Chairman of the Board of
Directors of General Motors. In July 1994, Mr. Pearce assumed responsibility for
General Motors' Strategic Decision Center, Corporate Communications, Allison
Transmission Division, Electro-Motive Division, Urban and Community Affairs,
Executive Compensation and Corporate Governance and the Corporate Services
Staff. Effective November 1992, he was elected Executive Vice President of
General Motors. In May 1987, Mr. Pearce was elected Vice President and General
Counsel of General Motors, a position he retained through August 1, 1994. Mr.
Pearce is also a Director of Hughes Electronics, Marriott International, Inc.
and MDU Resources Group, Inc. Mr. Pearce is a member of The Conference Board,
Northwestern University School of Law Dean's Advisory Council and the Board of
Visitors of the United States Air Force Academy. Mr. Pearce is also a Trustee of
Howard University.

MR. LOSH has been associated with General Motors since 1964 and was named a
Director of Delphi Automotive Systems in October 1998. In July 1994, Mr. Losh
was elected Executive Vice President and Chief Financial Officer of General
Motors. Effective May 1992, Mr. Losh was elected Group Executive in charge of
North American Vehicle Sales, Service and Marketing of General Motors. He was
named General Manager of General Motors' Oldsmobile Division in June 1989. In
July 1984, Mr. Losh was elected Vice President of General Motors and General
Manager of its Pontiac Division.

MR. BERNARDES NETO is Chairman of the Boards of Directors of Santista
Alimentos S/A and Seara Alimentos S/A, two food companies headquartered in
Brazil and controlled by Bunge International, a Bermuda holding company
headquartered in Sao Paulo, Brazil, which controls a number of food,
agribusiness and fertilizer companies around the world. Previously, Mr.
Bernardes Neto was the Chief

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Executive Officer of Bunge International. Before joining Bunge, he was a Senior
Partner with Booz-Allen & Hamilton where he specialized in strategy and
organization consulting to industry in Latin America. His 15 years of consulting
experience include several projects related to the automotive industry in South
America. Mr. Bernardes Neto is a Director for RBS and Alcoa in Brazil. He is
also a member of the Advisory Board for Booz-Allen & Hamilton.

MR. COLBERT was appointed an Executive Vice President of Miller Brewing
Company in July 1997. He is responsible for all plant operations, brewing,
research, quality assurance, engineering, purchasing, corporate operations
planning and improvement and information systems. He had been a Senior Vice
President, Worldwide Operations since 1995. In 1993, he was elected to the
Miller Board of Directors and Executive Committee. Also in 1993, he was named
Senior Vice President in charge of operations, a position he held until 1995.
From 1990 to 1993, he was Vice President of plant operations, and from 1989 to
1990 he was Vice President of materials manufacturing. Prior thereto, he held
several manufacturing and production positions at Miller since joining the
company in 1979. Mr. Colbert is a Director for Aeroquip-Vickers, Inc., Milwaukee
County Council, Boy Scouts of America, Columbia Health Systems and Greater
Milwaukee Open. He is Chairman of the Board of the Thurgood Marshall Scholarship
Fund and he is a member of the Board of Trustees of Fisk University, Nashville,
Tennessee. Mr. Colbert also serves on the Board of Regents of the Milwaukee
School of Engineering, is a member of the Executive Advisory Committee for the
National Urban League's Black Executive Exchange Program, and serves on the
Opportunities Industrialization Centers of America's National Industrial
Council.

MR. IRIMAJIRI was elected President and Representative Director of Sega
Enterprises, Ltd. in February 1998. He had been responsible for the CS Business
Group, Quality Assurance Division and Intellectual Property Rights Department
since August 1997. Previously, he was Co-Chairman of Sega America, Inc., since
July 1996. From April 1996 to July 1996, he was responsible for CS Research &
Development Group, Overseas Consumer Business Group, Quality Assurance Division,
Multimedia Office and Intellectual Property Department. Prior thereto, he held
various positions at Sega since 1993. Before joining Sega, Mr. Irimajiri had
been an Executive Vice President at Honda Motor Co. Ltd. since June 1990. He was
responsible for directing Honda's development and production activities. He had
been associated with Honda since 1963.

MS. MCLAUGHLIN is President, Consumer Services for BellSouth
Telecommunications, Inc., a position she has held since March 1998. From 1987 to
1998, Ms. McLaughlin held numerous financial and marketing management positions
at Eastman Kodak in Rochester, N.Y. Her most recent position was Vice President
and Chief Operating Officer of Kodak Professional, where she managed that
division's worldwide operations, including sales and marketing. Before joining
Kodak, Ms. McLaughlin spent 13 years in corporate banking with Citibank and
Chase. Ms. McLaughlin serves on the Board of Directors of Dayton Hudson
Corporation.

MR. OPIE was elected Vice Chairman of the Board and an Executive Officer
for General Electric Company in 1995. He had been President and Chief Executive
Officer of GE Lighting and a GE Senior Vice President since 1986. Previously, he
had been Vice President of GE's distribution equipment business since 1983. From
1982 to 1983, he was President of the Specialty Plastics Division. From 1980 to
1982, he was Vice President of the Lexan Products Division of GE Plastics, and
from 1977 to 1980, he was General Manager of the division. In 1975, Mr. Opie
became General Manager of the battery business, a position he held until moving
to GE Plastics. He has been associated with General Electric since 1961.

MR. PENSKE is the founder and Chairman of Penske Corporation, which was
established in 1969 and is comprised of three business groups: Transportation
Services, Automotive and Performance. In the Transportation Services Group, Mr.
Penske serves as the Chairman and Chief Executive Officer of Detroit Diesel
Corporation. He is Chairman of the Board of Penske Truck Leasing Corporation and
Penske Motorsports, Inc. and a Director of General Electric Company and
Gulfstream Aerospace Corporation. He is Chairman of the Detroit Investment Fund,
which was created by Detroit Renaissance, of which he is also a Director. Mr.
Penske is also a member of the Robert Bosch International AG Advisory Board and
a Trustee of the Henry Ford Museum & Greenfield Village and a member of the
Business Council.

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<PAGE> 45

DESCRIPTION OF THE OFFERED SECURITIES

Information in this section should be read in conjunction with the
statements under "Description of Debt Securities" in the accompanying
prospectus.

GENERAL

The notes in the aggregate principal amount of $500,000,000 due 2004 mature
on May 1, 2004 and bear interest at 6 1/8% per annum. The notes in the aggregate
principal amount of $500,000,000 due 2009 mature on May 1, 2009 and bear
interest at 6 1/2% per annum. The debentures in the aggregate principal amount
of $500,000,000 due 2029 mature on May 1, 2029 and bear interest at 7 1/8% per
annum.

The Offered Securities:

- will be issued in U.S. dollars in denominations of $1,000 and integral
multiples of $1,000.

- will be issued pursuant to an Indenture dated April 28, 1999 (the
"Indenture") between Delphi and The First National Bank of Chicago, as
trustee, and each of the notes and debentures will represent a new and
separate series under the Indenture.

- are redeemable before maturity at the option of Delphi, in whole or in
part, at the redemption prices set forth herein plus accrued interest,
and each series is redeemable in whole, but not in part, at 100% of the
principal amount plus accrued interest of the relevant Offered Securities
in the event of certain changes relating to United States taxation.

- are not subject to any sinking fund.

- will be represented by one or more global certificates in fully
registered form. Except in certain limited circumstances, the Offered
Securities will not be issued in definitive form. If the Offered
Securities are issued in definitive form, they will be issued in
registered form, and payments of principal and interest will be made
according to alternative arrangements.

- represent unsecured and unsubordinated debt.

- will be repaid at par at maturity.

- will rank pari passu with each other and with Delphi's other unsecured
and unsubordinated debt.

Interest:

- is payable on May 1 and November 1 of each year, payable to the persons
in whose names the Offered Securities are registered at the close of
business on April 15 and October 15, as the case may be, prior to the
payment date.

- will be calculated on the basis of a 360-day year of twelve 30-day
months.

- payments begin on November 1, 1999 and interest will begin to accrue from
May 4, 1999.

We will deliver to the trustee, annually, an officers' certificate as to
the existence or absence of defaults under the Indenture. We may, without the
consent of the holders of the Offered Securities, issue additional securities
having the same ranking and the same interest rate, maturity and other terms as
the Offered Securities. Any additional securities, together with the related
series of Offered Securities, will consist of a single series of securities
under the Indenture.

OPTIONAL REDEMPTION

Each of the notes due 2004, the notes due 2009 and the debentures due 2029
may be redeemed in whole at any time or in part from time to time, at the option
of Delphi at a redemption price equal to the greater of (1) 100% of the
principal amount of the applicable series of notes or debentures to be redeemed,
and (2) the sum of the present values of the remaining scheduled payments of
principal and interest on the applicable series of notes or debentures to be
redeemed discounted to the date of

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redemption on a semi-annual basis (assuming a 360-day year consisting of twelve
30-day months) at the applicable Treasury Rate plus 10 basis points for the
notes due 2004, the applicable Treasury Rate plus 15 basis points for the notes
due 2009 or the applicable Treasury Rate plus 25 basis points for the debentures
due 2029 plus, in each case, accrued and unpaid interest on the principal amount
being redeemed to the redemption date.

"Treasury Rate" means, with respect to any redemption date, (1) the yield,
under the heading which represents the average for the immediately preceding
week, appearing in the most recently published statistical release designated
"H.15(519)" or any successor publication which is published weekly by the Board
of Governors of the Federal Reserve System and which establishes yields on
actively traded United States Treasury securities adjusted to constant maturity
under the caption "Treasury Constant Maturities," for the maturity corresponding
to the Comparable Treasury Issue (if no maturity is within three months before
or after the Remaining Life, yields for the two published maturities most
closely corresponding to the Comparable Treasury Issue will be determined and
the Treasury Rate will be interpolated or extrapolated from such yields on a
straight line basis, rounding to the nearest month) or (2) if such release (or
any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semi-annual equivalent yield-to-maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price of
such redemption date. The Treasury Rate will be calculated on the third Business
Day preceding the redemption date.

"Business Day" means any calendar day that is not a Saturday, Sunday or
legal holiday in New York, New York and on which commercial banks are open for
business in New York, New York.

"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term ("Remaining Life") of the notes to be redeemed that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of such notes.

"Independent Investment Banker" means either Merrill Lynch, Pierce, Fenner
& Smith Incorporated or Morgan Stanley & Co. Incorporated, and their respective
successors, or, if both firms are unwilling or unable to select the Comparable
Treasury Issue, an independent investment banking institution of national
standing appointed by the trustee after consultation with Delphi.

"Comparable Treasury Price" means (1) the average of five Reference
Treasury Dealer Quotations for such redemption date, after excluding the highest
and lowest Reference Treasury Dealer Quotations, or (2) if the Independent
Investment Banker obtains fewer than five such Reference Treasury Dealer
Quotations, the average of all such quotations.

"Reference Treasury Dealer" means (1) Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Morgan Stanley & Co. Incorporated, and their respective
successors, provided, however, that if any of the foregoing shall cease to be a
primary U.S. government securities dealer in New York City (a "Primary Treasury
Dealer"), Delphi will substitute for such underwriter another Primary Treasury
Dealer and (2) any other Primary Treasury Dealer selected by the Independent
Investment Banker after consultation with Delphi.

"The Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Independent Investment Banker, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Independent Investment Banker at 5:00
p.m., New York City time, on the third Business Day preceding such redemption
date.

Holders of Offered Securities to be redeemed will receive notice thereof by
first-class mail at least 30 and not more than 60 days before the date fixed for
redemption. If fewer than all of the securities are to be redeemed, the trustee
will select, not more than 60 days before the redemption date, the particular

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securities or portions thereof for redemption from the outstanding securities
not previously called by such method as the trustee deems fair and appropriate.

BOOK-ENTRY, DELIVERY AND FORM

The Offered Securities will be issued in the form of one or more definitive
global securities in registered form (each, a "Global Security"). The Global
Securities will be deposited, until all obligations of Delphi with respect to
the Offered Securities are satisfied, with, or on behalf of, The Depository
Trust Company ("DTC") and registered, at the request of DTC, in the name of Cede
& Co. Beneficial interests in the Global Securities will be represented through
book-entry accounts of financial institutions acting on behalf of beneficial
owners as direct and indirect participants in DTC (the "DTC Participants").
Investors may elect to hold their interests in the Global Securities through
either DTC or Cedelbank or Morgan Guaranty Trust Company of New York, Brussels
Office, as operator of the Euroclear System ("Euroclear"), either directly if
they are participants in such systems, or indirectly through organizations that
are participants in such systems. Cedelbank and Euroclear will hold interests on
behalf of their participants through customers' securities accounts in
Cedelbank's and Euroclear's names on the books of their respective U.S.
depositaries, which in turn will hold such interests in customers' securities
accounts in the U.S. depositaries' names on the books of DTC. The Chase
Manhattan Bank will act as U.S. depositary for Euroclear, and Citibank, N.A.
will act as U.S. depositary for Cedelbank (in such capacities, the "U.S.
Depositaries"). Beneficial interests in the Global Securities may be held in
denominations of $1,000 and integral multiples thereof. The Global Securities
may be transferred, as a whole but not in part, only to another nominee of DTC
or to a successor of DTC or its nominee.

So long as DTC or its nominee is the registered owner of a Global Security,
DTC or such nominee, as the case may be, will be considered the sole owner and
holder of the Offered Securities represented by such Global Security for all
purposes of the notes or debentures, as the case may be. Owners of beneficial
interests in Global Securities will not be entitled to have the Offered
Securities represented by such Global Securities registered in their names.
Accordingly, each person owning a beneficial interest in a Global Security must
rely on the procedures of DTC, or its nominee, and, if such person is not a
participant, on the procedures of the participant through which such person owns
its interest, to exercise any rights of a holder of notes or debentures, as the
case may be.

DTC advises that it is a limited-purpose trust company organized under the
laws of the State of New York, a member of the Federal Reserve system, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code and a "clearing agency" registered under the provision of Section 17A of
the Securities Exchange Act of 1934, as amended. DTC was created to hold
securities of DTC Participants and to facilitate the clearance and settlement of
securities transactions among DTC Participants in such securities through
electronic book-entry changes in accounts of DTC Participants, thereby
eliminating the need for physical movement of securities. DTC Participants
include securities brokers and dealers (including underwriters), banks, trust
companies, clearing corporations and certain other organizations. Access to
DTC's book-entry system is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a DTC Participant, either directly or indirectly. DTC agrees
with and represents to DTC Participants that it will administer its book-entry
system in accordance with its rules and by-laws and requirements of law.

DTC also advises that:

1. DTC management is aware that some computer applications, systems,
and the like for processing dates ("Systems") that are dependent upon
calendar dates, including dates before, on, and after January 1, 2000, may
encounter "Year 2000 problems." DTC has informed DTC Participants and other
members of the financial community (the "Industry") that it has developed
and is implementing a program so that its Systems, as the same relate to
the timely payment of distributions (including principal and income
payments) to securityholders, book-entry deliveries, and settlement of
trades within DTC ("DTC Services"), continue to function appropriately.
This program includes a

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technical assessment and a remediation plan, each of which is complete.
Additionally, DTC's plan includes a testing phase, which is expected to be
completed within appropriate time frames.

2. DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents,
as well as third party vendors from whom DTC licenses software and
hardware, and third party vendors on whom DTC relies for information or the
provision of services, including telecommunication and electrical utility
service providers, among others. DTC has informed the Industry that it is
contacting (and will continue to contact) third party vendors from whom DTC
acquires services to: (i) impress upon them the importance of such services
being Year 2000 compliant and (ii) determine the extent of their efforts
for Year 2000 remediation (and, as appropriate, testing) of their services.
In addition, DTC is in the process of developing such contingency plans as
it deems appropriate.

3. The foregoing information with respect to DTC has been provided to
the Industry for informational purposes only and is not intended to serve
as a representation, warranty, or contract modification of any kind.

Cedelbank advises that it is incorporated under the laws of Luxembourg as a
professional depositary. Cedelbank holds securities for its participating
organizations ("Cedelbank Participants") and facilitates the clearance and
settlement of securities transactions among Cedelbank Participants through
electronic book-entry changes in accounts of Cedelbank Participants, thereby
eliminating the need for physical movement of certificates. Cedelbank provides
to Cedelbank Participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Cedelbank interfaces with domestic markets
in several countries. As a professional depositary, Cedelbank is subject to
regulation by the Luxembourg Monetary Institute. Cedelbank Participants are
recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations and may include the underwriters. Indirect
access to Cedelbank is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Cedelbank Participant either directly or indirectly.

Distributions with respect to Offered Securities held beneficially through
Cedelbank will be credited to cash accounts of Cedelbank Participants in
accordance with its rules and procedures, to the extent received by the U.S.
Depositary for Cedelbank.

Euroclear advises that it was created in 1968 to hold securities for
participants of Euroclear ("Euroclear Participants") and to clear and settle
transactions among Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Euroclear includes various other services, including
securities lending and borrowing, and interfaces with domestic markets in
several countries. Euroclear is operated by the Brussels, Belgium office of
Morgan Guaranty Trust Company of New York (the "Euroclear Operator"), under
contract with Euroclear Clearance Systems S.C., a Belgian cooperative
corporation (the "Cooperative"). All operations are conducted by the Euroclear
Operator, and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator, not the Cooperative. The
Cooperative establishes policies for Euroclear on behalf of Euroclear
Participants. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries
and may include the underwriters. Indirect access to Euroclear is also available
to other firms that clear through or maintain a custodial relationship with a
Euroclear Participant, either directly or indirectly.

The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.

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Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.

Distributions with respect to Offered Securities held beneficially through
Euroclear will be credited to the cash accounts of Euroclear Participants in
accordance with the Terms and Conditions, to the extent received by the U.S.
Depositary for Euroclear.

Offered Securities will not be issued in definitive form, except in very
limited circumstances. If any of Euroclear, Cedelbank or DTC notifies Delphi
that it is unwilling or unable to continue as a clearing system in connection
with the Global Securities or, in the case of DTC only, DTC ceases to be a
clearing agency registered under the Exchange Act, and in each case a successor
clearing system is not appointed by Delphi within 90 days after receiving such
notice from Euroclear, Cedelbank or DTC or on becoming aware that DTC is no
longer so registered, Delphi will issue or cause to be issued individual
certificates in registered form on registration of transfer of, or in exchange
for, book-entry interests in the Offered Securities represented by such Global
Securities upon delivery of such Global Securities for cancellation. In the
event definitive Offered Securities are issued, the holders thereof will be able
to receive payments on the notes and effect transfers of the notes at the
offices of the Luxembourg paying agent and transfer agent. Delphi has appointed
Banque Internationale a Luxembourg S.A. as paying agent and transfer agent in
Luxembourg with respect to the Offered Securities in definitive form, and as
long as the Offered Securities are listed on the Luxembourg Stock Exchange,
Delphi will maintain a paying agent and transfer agent in Luxembourg, and any
change in the Luxembourg paying agent and transfer agent will be published in
Luxembourg. See "--Notices."

GLOBAL CLEARANCE AND SETTLEMENT PROCEDURES

Initial settlement for the Offered Securities will be made in immediately
available funds. Secondary market trading between DTC Participants will occur in
the ordinary way in accordance with DTC rules and will be settled in immediately
available funds using DTC's Same-Day Funds Settlement System. Secondary market
trading between Cedelbank Participants and/or Euroclear Participants will occur
in the ordinary way in accordance with the applicable rules and operating
procedures of Cedelbank and Euroclear and will be settled using the procedures
applicable to conventional Eurobonds in immediately available funds.

Cross-market transfers between persons holding directly or indirectly
through DTC on the one hand, and directly or indirectly through Cedelbank or
Euroclear Participants, on the other, will be effected in DTC in accordance with
DTC's rules on behalf of the relevant European international clearing system by
its U.S. Depositary; however, such cross-market transactions will require
delivery of instructions to the relevant European international clearing system
by the counterparty in such systems in accordance with its rules and procedures
and within its established deadlines (European time). The relevant European
international clearing system will, if the transaction meets its settlement
requirements, deliver instructions to its U.S. Depositary to take action to
effect final settlement on its behalf by delivering or receiving Offered
Securities in DTC, and making or receiving payment in accordance with normal
procedures for same-day funds settlement applicable to DTC. Cedelbank
Participants and Euroclear Participants may not deliver instructions directly to
the U.S. Depositaries.

Because of time-zone differences, credits of Offered Securities received in
Cedelbank or Euroclear as a result of a transaction with a DTC Participant will
be made during subsequent securities settlement processing and dated the
business day following the DTC settlement date. Such credits or any transactions

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in such Offered Securities settled during such processing will be reported to
the relevant Euroclear or Cedelbank Participants on such business day. Cash
received in Cedelbank or Euroclear as a result of sales of Offered Securities by
or through a Cedelbank Participant or a Euroclear Participant to a DTC
Participant will be received with value on the DTC settlement date but will be
available in the relevant Cedelbank or Euroclear cash account only as of the
business day following settlement in DTC.

Although DTC, Cedelbank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Offered Securities among
participants of DTC, Cedelbank and Euroclear, they are under no obligation to
perform or continue to perform such procedures and such procedures may be
discontinued at any time.

PAYMENT OF ADDITIONAL AMOUNTS

Delphi will, subject to the exceptions and limitations set forth below, pay
as additional interest on the Offered Securities such additional amounts as are
necessary in order that the net payment by Delphi or a paying agent of the
principal of and interest on the Offered Securities to a holder who is a
non-United States person (as defined below), after deduction for any present or
future tax, assessment or governmental charge of the United States or a
political subdivision or taxing authority thereof or therein, imposed by
withholding with respect to the payment, will not be less than the amount
provided in the Offered Securities to be then due and payable; provided,
however, that the foregoing obligation to pay additional amounts will not apply:

(1) to a tax, assessment or governmental charge that is imposed or
withheld solely by reason of the holder, or a fiduciary, settlor,
beneficiary, member or shareholder of the holder if the holder is an
estate, trust, partnership or corporation, or a person holding a power over
an estate or trust administered by a fiduciary holder, being considered as:

(a) being or having been present or engaged in trade or business in
the United States or having or having had a permanent establishment in
the United States;

(b) having a current or former relationship with the United States,
including a relationship as a citizen or resident thereof;

(c) being or having been a foreign or domestic personal holding
company, a passive foreign investment company or a controlled foreign
corporation with respect to the United States or a corporation that has
accumulated earnings to avoid United States federal income tax; or

(d) being or having been a "10-percent shareholder" of Delphi as
defined in section 871(h)(3) of the United States Internal Revenue Code
of 1986, as amended (the "Code"), or any successor provision;

(2) to any holder that is not the sole beneficial owner of the Offered
Securities, or a portion thereof, or that is a fiduciary or partnership,
but only to the extent that a beneficiary or settlor with respect to the
fiduciary or a beneficial owner or member of the partnership would not have
been entitled to the payment of an additional amount had the beneficiary,
settlor, beneficial owner or member received directly its beneficial or
distributive share of the payment;

(3) to a tax, assessment or governmental charge that is imposed or
withheld solely by reason of the failure of the holder or any other person
to comply with certification, identification or information reporting
requirements concerning the nationality, residence, identity or connection
with the United States of the holder or beneficial owner of such Offered
Securities, if compliance is required by statute, by regulation of the
United States Treasury Department or by an applicable income tax treaty to
which the United States is a party as a precondition to exemption from, or
reduction of, such tax, assessment or other governmental charge;

(4) to a tax, assessment or governmental charge that is imposed
otherwise than by withholding by Delphi or a paying agent from the payment;

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(5) to a tax, assessment or governmental charge that is imposed or
withheld solely by reason of a change in law, regulation, or administrative
or judicial interpretation that becomes effective more than 15 days after
the payment becomes due or is duly provided for, whichever occurs later;

(6) to an estate, inheritance, gift, sales, excise, transfer, wealth
or personal property tax or a similar tax, assessment or governmental
charge;

(7) to any tax, assessment or other governmental charge required to be
withheld by any paying agent from any payment of principal of or interest
on any Offered Security, if such payment can be made without such
withholding by any other paying agent; or

(8) in the case of any combination of items (1), (2), (3), (4), (5),
(6) or (7) above.

The Offered Securities are subject in all cases to any tax, fiscal or other
law or regulation or administrative or judicial interpretation applicable
thereto. Except as specifically provided under this heading "--Payment of
Additional Amounts," Delphi will not be required to make any payment with
respect to any tax, assessment or governmental charge imposed by any government
or a political subdivision or taxing authority thereof or therein.

As used under this heading "--Payment of Additional Amounts" and under the
headings "--Redemption for Tax Reasons" and "Certain United States Federal Tax
Matters," the term "United States" means the United States of America (including
the States and the District of Columbia) and its territories, its possessions
and other areas subject to its jurisdiction. "United States person" means (1)
any individual who is a citizen or resident of the United States, (2) a
corporation, partnership or other entity created or organized in or under the
laws of the United States, (3) any estate the income of which is subject to
United States federal income taxation regardless of its source or (4) any trust
if a court within the United States is able to exercise primary supervision over
the administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust or if the trust
elects under United States Treasury Regulations to be treated as a U.S. person,
and "non-United States person" means a person who is not a United States person.

REDEMPTION FOR TAX REASONS

If (1) as a result of any change in, or amendment to, the laws (or any
regulations or rulings promulgated thereunder) of the United States (or any
political subdivision or taxing authority thereof or therein), or any change in,
or amendments to, the official position regarding the application or
interpretation of such laws, regulations or rulings, which change or amendment
is announced or becomes effective on or after the date of this prospectus
supplement, Delphi becomes or will become obligated to pay additional amounts as
described herein under the heading "--Payment of Additional Amounts" or (2) any
act is taken by a taxing authority of the United States on or after the date of
this prospectus supplement, whether or not such act is taken with respect to
Delphi or any affiliate, that results in a substantial probability that Delphi
will or may be required to pay such additional amounts, then Delphi may, at its
option, redeem, in whole, but not in part, each affected series of the Offered
Securities on not less than 30 nor more than 60 days' prior notice, at a
redemption price equal to 100% of the principal amount of the relevant Offered
Securities, together with interest accrued but unpaid thereon to the date fixed
for redemption; provided that Delphi determines, in its business judgment, that
the obligation to pay such additional amounts cannot be avoided by the use of
reasonable measures available to it, not including substitution of the obligor
under the Offered Securities. No redemption pursuant to (2) above may be made
unless Delphi shall have received an opinion of independent counsel to the
effect that an act taken by a taxing authority of the United States results in a
substantial probability that it will or may be required to pay the additional
amounts described herein under the heading "--Payment of Additional Amounts" and
Delphi shall have delivered to the trustee a certificate, signed by a duly
authorized officer, stating that based on such opinion Delphi is entitled to
redeem the Offered Securities pursuant to their terms.

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NOTICES

Notices to holders of the Offered Securities will be published in certain
authorized newspapers in The City of New York, in London, and, so long as the
Offered Securities are listed on the Luxembourg Stock Exchange, in Luxembourg.
It is expected that publication will be made in The City of New York in The Wall
Street Journal, in London in the Financial Times, and in Luxembourg in the
Luxembourg Wort. Any such notice shall be deemed to have been given on the date
of such publication or, if published more than once, on the date of the first
such publication. So long as the Offered Securities are listed on the Luxembourg
Stock Exchange, we will publish notice of any change in the Luxembourg paying
agent and transfer agent in Luxembourg in this manner.

APPLICABLE LAW

The Offered Securities and the Indenture will be governed by and construed
in accordance with the laws of the State of New York.

CERTAIN UNITED STATES FEDERAL TAX MATTERS

UNITED STATES TAXATION OF NON-UNITED STATES PERSONS

In the opinion of Drinker Biddle & Reath LLP, as tax counsel to Delphi,
under United States federal tax law as of the date of this prospectus
supplement, and subject to the discussion of backup withholding below:

(1) payments of principal and interest on any of the Offered
Securities that is beneficially owned by a non-United States person will
not be subject to United States federal withholding tax; provided, that in
the case of interest,

(x) (a) the beneficial owner does not actually or constructively own
10% or more of the total combined voting power of all classes
of stock of Delphi entitled to vote,

(b) the beneficial owner is not a "controlled foreign
corporation," within the meaning of the United States
Internal Revenue Code of 1986, as amended, that is related to
Delphi through stock ownership, and

(c) either (A) the beneficial owner certifies, under penalties of
perjury, that he is not a United States person and provides
his name and address or (B) a securities clearing
organization, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or
business and holds the securities certifies, under penalties
of perjury, that such statement has been received from the
beneficial owner by it or by a financial institution between
it and the beneficial owner and, if any such financial
intermediary is a foreign intermediary that is not a
"qualified" foreign intermediary (as defined in applicable
Treasury regulations), furnishes the payor with a copy of
such statement by the beneficial owner;

(y) the beneficial owner is entitled to the benefits of an income
tax treaty under which the interest is exempt from United States federal
withholding tax and the beneficial owner of the security or such owner's
agent provides an appropriate IRS Form claiming the exemption; or

(z) the beneficial owner conducts a trade or business in the United
States to which the interest is effectively connected and the beneficial
owner of the security or such owner's agent provides an appropriate IRS
Form to that effect;

provided that in each such case, the relevant certification or IRS Form
is delivered pursuant to applicable procedures and is properly
transmitted in a timely manner to the person otherwise required to
withhold United States federal income tax, and none of the persons
receiving the relevant certification or IRS Form has actual knowledge
that the certification or any statement on the IRS Form is false;

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(2) a non-United States person will not be subject to United States
federal income tax on any gain realized on the sale, exchange or redemption
of an Offered Security unless the gain is effectively connected with the
beneficial owner's trade or business in the United States or, in the case
of an individual, the beneficial owner is present in the United States for
183 days or more in the taxable year in which the sale, exchange or
redemption occurs and certain other conditions are met; and

(3) an Offered Security owned by an individual who at the time of
death is not a citizen or resident of the United States will not be subject
to United States federal estate tax as a result of the individual's death
if the individual does not actually or constructively own 10% or more of
the total combined voting power of all classes of stock of Delphi entitled
to vote and the interest on the Offered Security would not have been
effectively connected with a United States trade or business of the
individual.

Interest on an Offered Security that is effectively connected with the
conduct of a trade or business in the United States by a beneficial owner who is
a non-United States person, although exempt from United States withholding tax,
may be subject to United States income tax as if such interest were earned by a
United States person.

For purposes of this discussion, a "non-United States person" is a person
other than an individual citizen or resident of the United States, a partnership
or corporation formed under the laws of the United States or any state of the
United States, an estate that is subject to United States federal income tax on
its worldwide income or a trust that is subject to primary supervision and
administration by a court within the United States and all substantial decisions
with respect to which are controlled by one or more United States persons.

UNITED STATES TAXATION OF UNITED STATES PERSONS

PAYMENTS OF INTEREST. Interest on an Offered Security will generally be
taxable to a United States person as ordinary interest income at the time it is
accrued or is received, in accordance with such United States person's method of
accounting for tax purposes.

SALE, EXCHANGE OR REDEMPTION OF THE OFFERED SECURITIES. Upon the sale,
exchange or redemption of an Offered Security, a United States person will
recognize taxable gain or loss equal to the difference between the amount
realized on the sale, exchange or redemption, and such United States person's
adjusted tax basis in the Offered Security. For these purposes, the amount
realized does not include any amount attributable to accrued interest on the
Offered Security. Amounts attributable to accrued interest are treated as
interest as described under "Payments of Interest" above. A United States
person's adjusted tax basis in an Offered Security generally will equal the cost
of the Offered Security to such United States person.

In general, gain or loss realized on the sale, exchange or redemption of an
Offered Security will be capital gain. Such gain will be long-term capital gain
if at the time of such sale, exchange or redemption, the Offered Security has
been held for more than 12 months. Under current law, the excess of net long-
term capital gains over net short-term capital losses is taxed at a lower rate
than ordinary income for certain non-corporate taxpayers. The distinction
between capital gain or loss and ordinary gain or loss is also relevant for
other purposes, including, among other things, limitations on the deductibility
of capital losses.

BACKUP WITHHOLDING AND INFORMATION REPORTING

In general, information reporting requirements will apply to payments of
principal and interest made on any of the Offered Securities and the proceeds of
the sale of an Offered Security within the United States to non-corporate
holders of the Offered Securities, and "backup withholding" at a rate of 31%
will apply to such payments or proceeds if the holder fails to provide an
accurate taxpayer identification number in the manner required or to report all
interest and dividends required to be shown on his federal income tax returns.

S-53
<PAGE> 54

Information reporting on IRS Form 1099 and backup withholding will not
apply to payments made by Delphi or a paying agent on a security to a non-United
States person if, in the case of interest, the IRS Form described in clause (y)
in Paragraph (1) above has been provided under applicable procedures, or, in the
case of interest or principal, the certification described in clause (x)(c) in
Paragraph (1) above and a certification that the beneficial owner satisfies
certain other conditions have been supplied under applicable procedures,
provided that the payor does not have actual knowledge that the certifications
are incorrect.

Payments to a non-United States person of the proceeds from the sale of an
Offered Security made to or through a foreign office of a broker will not be
subject to information reporting or backup withholding, except that if the
broker is a United States person, a controlled foreign corporation for United
States tax purposes or a foreign person 50% or more of whose gross income is
effectively connected with a United States trade or business for a specified
three-year period, information reporting may apply to such payments. Payments of
the proceeds from the sale of an Offered Security to or through the United
States office of a broker are subject to information reporting and backup
withholding unless the holder or beneficial owner certifies that he is a
non-United States person and that he satisfies certain other conditions or
otherwise establishes an exemption from information reporting and backup
withholding.

Backup withholding is not a separate tax, but is allowed as a refund or
credit against the holder's United States federal income tax, provided the
necessary information is furnished to the Internal Revenue Service. Interest on
a security that is beneficially owned by a non-United States person will be
reported annually on IRS Form 1042-S, which must be filed with the Internal
Revenue Service and furnished to such beneficial owner.

CERTAIN UNITED STATES TAX DOCUMENTATION REQUIREMENTS

A beneficial owner of the Offered Securities will generally be subject to
the 30% United States federal withholding tax that generally applies to payments
of interest on a registered form debt obligation issued by a United States
person, unless one of the following steps is taken to obtain an exemption from
or reduction of the tax:

EXEMPTION FOR UNITED STATES PERSONS (IRS FORM W-9). A beneficial owner of
Offered Securities who is a United States person can obtain a complete exemption
from the 30% withholding tax by providing a properly completed IRS Form W-9
(Request for Taxpayer Identification Number and Certification). As discussed
above, interest on the Offered Securities will, however, be generally reportable
as gross income to such a beneficial owner in accordance with his method of
accounting for federal income tax purposes.

EXEMPTION FOR NON-UNITED STATES PERSONS UNRELATED TO DELPHI (IRS FORM W-8
OR W-8BEN). A beneficial owner of Offered Securities who is a non-United States
person (other than certain persons who are related to Delphi through stock
ownership as described in clauses (x)(a) and (b) of Paragraph (1) above, can
obtain an exemption from withholding tax by providing a properly completed IRS
Form W-8 (Certificate of Foreign Status) or Form W-8BEN (Certificate of Foreign
Status of Beneficial Owner for United States Tax Withholding). Copies of IRS
Form W-8 or W-8BEN may be obtained from Banque Internationale a Luxembourg S.A.,
the Luxembourg listing agent.

EXEMPTION FOR NON-UNITED STATES PERSONS WITH EFFECTIVELY CONNECTED INCOME
(IRS FORM 4224 OR W-8ECI). A beneficial owner of Offered Securities who is a
non-United States person, including a non-United States corporation or bank with
a United States branch, and who conducts a trade or business in the United
States with which interest income on the securities is effectively connected,
can obtain an exemption from withholding tax by providing a properly completed
IRS Form 4224 (Exemption from Withholding of Tax on Income Effectively Connected
with the Conduct of a Trade or Business in the United States) or Form W-8ECI
(Certificate of Foreign Person's Claim for Exemption from Withholding on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).

EXEMPTION OR REDUCED RATE FOR NON-UNITED STATES PERSONS ENTITLED TO THE
BENEFITS OF A TREATY (IRS FORM 1001 OR W-8BEN). A beneficial owner of Offered
Securities who is a non-United States person

S-54
<PAGE> 55

entitled to the benefits of an income tax treaty to which the United States is a
party can obtain an exemption from or reduction of the withholding tax
(depending on the terms of the treaty) by providing a properly completed IRS
Form 1001 (Ownership, Exemption or Reduced Rate Certificate) or Form W-8BEN.

Recently promulgated Treasury Regulations (the "New Withholding Tax
Regulations") have modified certain of the foregoing requirements with which
foreign persons must comply to be entitled to an exemption from United States
withholding tax or a reduction in the applicable United States withholding tax
rate. Under the New Withholding Tax Regulations, IRS Forms W-8BEN and W-8ECI are
now applicable under the circumstances described above, although during 1999 the
old Forms (IRS Forms W-8, 4224 and 1001) may continue to be used. If an old Form
is used during 1999, it will continue to be effective until December 31, 2000.

The New Withholding Tax Regulations also permit the shifting of primary
responsibility for withholding to certain qualified financial intermediaries
acting on behalf of beneficial owners. Although a beneficial owner will still be
required to submit a Form W-8 or its equivalent to such an intermediary, the
intermediary generally will not be required to forward a Form W-8 or its
equivalent received from a beneficial owner to the U.S. withholding agent as
under prior procedures. Instead, the intermediary to the extent that it is a
foreign intermediary will be required to submit Form W-8IMY (Certificate of
Foreign Intermediary, Foreign Partnership, or Certain U.S. Branches for United
States Tax Withholding) to the withholding agent to make representations that
the intermediary is not the beneficial owner of the payments it receives and
about the status of the beneficial owner(s). However, if a foreign intermediary
is a nonqualified intermediary, it will still need to transmit to the ultimate
U.S. withholding agent a copy of the Form W-8 of the beneficial owner or its
equivalent, as under prior procedures.

Each holder of Offered Securities who is a non-United States person should
be aware that if he does not properly provide the required IRS Form, or if a
required IRS Form (or, if permissible, a copy of such Form) is not properly
transmitted to and received by the person otherwise required to withhold United
States federal income tax, interest on the Offered Securities may be subject to
United States withholding tax at a 30% rate (or backup withholding at a 31%
rate, as discussed above) and the holder (including the beneficial owner) will
not be entitled to any additional amounts from Delphi described above under the
heading "Description of the Offered Securities--Payment of Additional Amounts"
with respect to such withholding tax. Such withholding tax, however, may in
certain circumstances be allowed as a refund or as a credit against such
holder's United States federal income tax.

Prospective investors should also note that the foregoing discussion does
not deal with all aspects of the New Withholding Tax Regulations and other
United States federal tax matters that may be potentially relevant to them.
Investors are advised to consult their own tax advisors for specific advice
regarding their particular situation and all relevant tax matters, including
taxes other than United States federal taxes.

S-55
<PAGE> 56

UNDERWRITING

We are selling the Offered Securities to the underwriters named below
pursuant to an underwriting agreement dated April 28, 1999. Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Morgan Stanley & Co. Incorporated are
acting as joint bookrunners. Subject to certain conditions, we have agreed to
sell to each of the underwriters, and each of the underwriters has severally
agreed to purchase, the principal amount of Offered Securities set forth in the
following tables:

<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES DUE 2004
- ----------- -----------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith Incorporated.......... $175,000,000
Morgan Stanley & Co. Incorporated........................... 175,000,000
Chase Securities Inc. ...................................... 50,000,000
Goldman, Sachs & Co. ....................................... 50,000,000
BNY Capital Markets, Inc. .................................. 10,000,000
First Union Capital Markets Corp. .......................... 10,000,000
Lehman Brothers Inc. ....................................... 10,000,000
Ormes Capital Markets, Inc. ................................ 10,000,000
SG Cowen Securities Corporation............................. 10,000,000
------------
Total.................................................. $500,000,000
============
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES DUE 2009
- ----------- -----------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith Incorporated.......... $175,000,000
Morgan Stanley & Co. Incorporated........................... 175,000,000
Chase Securities Inc. ...................................... 50,000,000
Goldman, Sachs & Co. ....................................... 50,000,000
Banc One Capital Markets, Inc. ............................. 10,000,000
Blaylock & Partners, L.P. .................................. 10,000,000
BNP Capital Markets, LLC ................................... 10,000,000
CIBC Oppenheimer Corp. ..................................... 10,000,000
Credit Lyonnais S.A. ....................................... 10,000,000
------------
Total.................................................. $500,000,000
============
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF DEBENTURES DUE 2029
- ----------- ----------------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith Incorporated.......... $175,000,000
Morgan Stanley & Co. Incorporated........................... 175,000,000
Chase Securities Inc. ...................................... 50,000,000
Goldman, Sachs & Co. ....................................... 50,000,000
Barclays Bank PLC........................................... 10,000,000
Bear, Stearns & Co. Inc. ................................... 10,000,000
Deutsche Bank AG London .................................... 10,000,000
NationsBanc Montgomery Securities LLC....................... 10,000,000
Salomon Smith Barney Inc. .................................. 10,000,000
------------
Total.................................................. $500,000,000
============
</TABLE>

Under the terms and conditions of the underwriting agreement, if the
underwriters take any of the Offered Securities, then they are obligated to take
and pay for all of the Offered Securities.

S-56
<PAGE> 57

The Offered Securities are a new issue of securities with no established
trading market. We will apply for listing of the Offered Securities on the
Luxembourg Stock Exchange. We cannot guarantee that application to the
Luxembourg Stock Exchange will be approved, and sale of the Offered Securities
is not conditioned on obtaining this listing. We have been advised by the
underwriters that the underwriters intend to make a market in the Offered
Securities, but they are not obligated to do so and may discontinue market
making at any time without notice. We cannot give any assurance as to the
liquidity of any trading market for the Offered Securities.

The underwriters propose initially to offer the Offered Securities of each
series to the public at the respective public offering prices set forth on the
cover page of this prospectus supplement and to offer some of the Offered
Securities of each series to certain dealers at the public offering prices less
a concession not in excess of:

- .225% of the principal amount in the case of the Notes due 2004

- .30% of the principal amount in the case of the Notes due 2009

- .50% of the principal amount in the case of the Debentures due 2029

After the initial public offering, the underwriters may change the public
offering prices, concessions and discounts.

The Offered Securities are offered for sale in those jurisdictions in the
United States, Europe and Asia where it is legal to make such offers.

Each of the underwriters has agreed that it will not offer, sell or deliver
any of the Offered Securities, directly or indirectly, or distribute this
prospectus supplement or the accompanying prospectus or any other offering
material relating to the Offered Securities, in or from any jurisdiction except
under circumstances that will, to the best knowledge and belief of such
underwriter, result in compliance with the applicable laws and regulations
thereof and which will not impose any obligations on Delphi except as set forth
in the underwriting agreement.

Each underwriter has represented and agreed that (a) it has not offered or
sold, and, prior to the expiration of the period of six months from the closing
date for the Offered Securities, will not offer or sell any Offered Securities
to persons in the United Kingdom, except to those persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995, (b) it has complied and will comply with
all applicable provisions of the Financial Services Act of 1986, with respect to
anything done by it in relation to the Offered Securities in, from or otherwise
involving the United Kingdom, and (c) it has only issued or passed on and will
only issue or pass on in the United Kingdom any document received by it in
connection with the issue of the Offered Securities to a person who is of a kind
described in Article 11 (3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996, as amended, or is a person to whom such
documents may otherwise lawfully be issued or passed on.

Each underwriter has represented and agreed that it has not, directly or
indirectly, offered or sold and will not, directly or indirectly, offer or sell
in the Netherlands any of the Offered Securities to any persons other than
persons who trade or invest in securities in the conduct of a profession or
business (which includes banks, stockbrokers, insurance companies, pension
funds, other institutional investors and finance companies and treasury
departments of large enterprises).

Purchasers of the Offered Securities may be required to pay stamp taxes and
other charges in accordance with the laws and practices of the country of
purchase in addition to the issue price set forth on the cover page hereof.

S-57
<PAGE> 58

In connection with the offering of the Offered Securities, the underwriters
may, to the extent permitted by applicable law, engage in transactions that
stabilize, maintain or otherwise affect the price of the Offered Securities.
Specifically, the underwriters may overallot in connection with the offering of
the Offered Securities, creating a short position in the Offered Securities for
their own account. In addition, the underwriters may bid for, and purchase,
Offered Securities in the open market to cover short positions or to stabilize
the price of the Offered Securities. Finally, the underwriters may reclaim
selling concessions allowed for distributing the Offered Securities in the
offering, if the underwriters repurchase previously distributed Offered
Securities in transactions to cover short positions, in stabilization
transactions or otherwise. Any of these activities may stabilize or maintain the
market prices of the Offered Securities above independent market levels. The
underwriters are not required to engage in any of these activities and may end
any of these activities at any time.

Certain underwriters have agreed to reimburse Delphi for certain expenses
incurred by Delphi in connection with the offering of the Offered Securities. We
currently estimate that our share of the total expenses of the offering of the
Offered Securities, excluding underwriting discounts and commissions, will be
approximately $500,000.

Affiliates of certain of the underwriters are lenders under our revolving
credit facilities and will receive a portion of the amounts repaid under these
facilities with the net proceeds of the offering of the Offered Securities.
Because more than 10% of the net proceeds of the offering will be paid to
certain affiliates of the underwriters, the offering is being made in accordance
with Rule 2710(c)(8) of the Conduct Rules of the National Association of
Securities Dealers, Inc. In addition, in the ordinary course of their respective
businesses certain of the underwriters and their affiliates have engaged and may
in the future engage in various other banking and financial services for and
commercial transactions with Delphi and its affiliates.

We have agreed to indemnify the several underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
or to contribute payments which the underwriters may be required to make in
respect of such liabilities.

GENERAL INFORMATION

Application will be made to list the Offered Securities on the Luxembourg
Stock Exchange. In connection with the listing application, the Amended and
Restated Certificate of Incorporation and the Bylaws of Delphi and a legal
notice relating to the issuance of the Offered Securities have been deposited
prior to listing with the Greffier en Chef du Tribunal d'Arrondissement de et a
Luxembourg, where copies thereof may be obtained upon request. Copies of the
above documents together with this prospectus supplement, the accompanying
prospectus, the Indenture and Delphi's current Annual and Quarterly Reports, as
well as all future Annual Reports and Quarterly Reports, so long as any of the
Offered Securities are outstanding, will be made available for inspection at the
main office of Banque Internationale a Luxembourg S.A. in Luxembourg. Banque
Internationale a Luxembourg S.A. will act as intermediary between the Luxembourg
Stock Exchange and Delphi and the holders of the Offered Securities. In
addition, copies of the Annual Reports and Quarterly Reports of Delphi and all
other documents incorporated by reference in this prospectus supplement and the
accompanying prospectus may be obtained free of charge at such office.

Other than as disclosed or contemplated herein or in the documents
incorporated herein by reference, there has been no material adverse change in
the financial position of Delphi since December 31, 1998.

Neither Delphi nor any of its subsidiaries is involved in litigation,
arbitration, or administrative proceedings relating to claims or amounts that
are material in the context of the issue of the Offered Securities.

Delphi accepts responsibility for the information contained in relation to
Delphi and the provisions of the Offered Securities in this prospectus
supplement and the accompanying prospectus.

The Offered Securities have been accepted for clearance through Euroclear
and Cedelbank.

S-58
<PAGE> 59

Resolutions relating to the issue and sale of the Offered Securities were
adopted by the Board of Directors of Delphi on March 15, 1999.

The notes due 2004 have been assigned Euroclear and Cedel Common Code No.
9726373, International Security Indemnification Number (ISIN) US247126AA38 and
CUSIP No. 247126 AA 3.

The notes due 2009 have been assigned Euroclear and Cedel Common Code No.
9726381, International Security Indemnification Number (ISIN) US247126AB11 and
CUSIP No. 247126 AB 1.

The debentures due 2029 have been assigned Euroclear and Cedel Common Code
No. 9726390, International Security Indemnification Number (ISIN) US247126AC93
and CUSIP No. 247126 AC 9.

LEGAL MATTERS

The validity of the Offered Securities, as well as certain other legal
matters, will be passed upon for Delphi by Drinker Biddle & Reath LLP. Certain
legal matters will be passed upon for the underwriters by O'Melveny & Myers LLP.
Certain legal matters relating to the federal tax consequences of the issuance
of the Offered Securities and other matters relating thereto will be passed upon
for Delphi by Drinker Biddle & Reath LLP.

S-59
<PAGE> 60

PRINCIPAL OFFICE OF
DELPHI AUTOMOTIVE SYSTEMS CORPORATION

5725 Delphi Drive
Troy, Michigan 48098

TRUSTEE

The First National Bank of Chicago
Corporate Trust Office
One First National Plaza
Suite 0126
Chicago, Illinois 60670-0126

LUXEMBOURG PAYING AGENT AND TRANSFER AGENT

Banque Internationale a Luxembourg S.A.
69 route d'Esch
L-1470 Luxembourg

LUXEMBOURG STOCK EXCHANGE LISTING AGENT

Banque Internationale a Luxembourg S.A.
69 route d'Esch
L-1470 Luxembourg

LEGAL ADVISERS

<TABLE>
<S> <C> <C>
To Delphi Automotive Systems To Delphi Automotive Systems To the underwriters
Corporation as to United States Law Corporation as United as to
States Tax Counsel United States Law
Drinker Biddle & Reath LLP Drinker Biddle & Reath LLP O'Melveny & Myers LLP
1345 Chestnut Street 1345 Chestnut Street Citicorp Center
Philadelphia, Pennsylvania 19107-3496 Philadelphia, Pennsylvania 19107-3496 153 East 53rd Street
New York, New York 10022
</TABLE>

AUDITORS TO
DELPHI AUTOMOTIVE SYSTEMS CORPORATION

Deloitte & Touche LLP
600 Renaissance Center
Suite 900
Detroit, Michigan 48243-1704

S-60
<PAGE> 61

PROSPECTUS

U.S. $2,500,000,000
[LOGO]

DELPHI AUTOMOTIVE SYSTEMS CORPORATION
5725 DELPHI DRIVE
TROY, MICHIGAN 48098
(248)813-2000

DEBT SECURITIES

We may offer to sell up to U.S. $2,500,000,000 of our debt securities in
one or more offerings. In this prospectus, we describe generally the terms of
these securities. We will describe the specific terms of the securities that we
offer in a supplement to this prospectus at the time of each offering. If any
offering involves underwriters, dealers or agents, we will describe our
arrangements with them in the prospectus supplement that relates to that
offering.

SEE "RISK FACTORS" ON PAGE 5 FOR INFORMATION YOU SHOULD CONSIDER BEFORE
BUYING THESE SECURITIES.

----------------------

The Securities and Exchange Commission and State Securities regulators have
not approved or disapproved these securities, or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal
offense.

----------------------

The date of this prospectus is March 30, 1999.
<PAGE> 62

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
About this Prospectus....................................... 2
Where You Can Find More Information......................... 3
The Company................................................. 4
Risk Factors................................................ 5
Use of Proceeds............................................. 5
Ratio of Earnings to Fixed Charges.......................... 5
Description of Debt Securities.............................. 5
Plan of Distribution........................................ 13
Experts..................................................... 15
Legal Opinions.............................................. 15
</TABLE>

-------------------------

You should rely only on the information incorporated by reference or
contained in this prospectus and any applicable prospectus supplement. We have
not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, our securities only in jurisdictions where offers and sales are permitted.
The information contained in this prospectus or the applicable prospectus
supplement is accurate only as of the date on the front of those documents,
regardless of the time of delivery of this prospectus or the applicable
prospectus supplement or of any sale of our securities.

In this prospectus, "we", "us", "our" and the "Company" each refers to
Delphi Automotive Systems Corporation.

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement that we have filed with
the Securities and Exchange Commission using a "shelf" registration process.
Under this shelf registration, we may sell the securities described in this
prospectus in one or more offerings up to a total dollar amount of
$2,500,000,000. We provide information to you about these securities in three
documents that progressively provide more detail:

1. This prospectus, which contains general information that may or may not
apply to each offering of securities.

2. The applicable prospectus supplement, which will contain more specific
information than this prospectus and may also add, update or change
information contained in this prospectus. To the extent information
differs from this prospectus, as amended, you should rely on the
different information in the applicable prospectus supplement.

3. The pricing supplement, if applicable, will provide final details about
a specific offering and the terms of the offered securities, including
their price. To the extent information differs from this prospectus or
the prospectus supplement, you should rely on the different information
in the pricing supplement.

You should read both this prospectus and any prospectus supplement or pricing
supplement together with any additional information described under the heading
"Where You Can Find More Information" to learn more about the Company and the
securities offered.

2
<PAGE> 63

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC, Washington, D.C., a registration statement on
Form S-3 under the Securities Act of 1933, as amended, with respect to the
securities that we are offering by this prospectus. This prospectus does not
contain all of the information set forth in the registration statement and the
exhibits and schedules thereto. Certain items are omitted in accordance with the
rules and regulations of the SEC. For further information with respect to the
Company and the securities offered hereby, reference is made to the registration
statement and the exhibits and any schedules filed with the registration
statement. Statements contained in this prospectus as to the contents of any
contract or other document referred to are not necessarily complete and in each
instance, if such contract or document is filed as an exhibit, reference is made
to the copy of such contract or other document filed as an exhibit to the
registration statement, each statement being qualified in all respects by such
reference.

We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file, including
the registration statement, at the SEC's Public Reference Room at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the SEC's regional offices
located at Seven World Trade Center, Suite 1300, New York, New York 10048 and at
Citicorp Center, Suite 1400, 500 West Madison Street, Chicago, IL 60661. For
further information on the operation of the Public Reference Room, you may call
the SEC at 1-800-SEC-0330. Our SEC filings are also available to the public over
the Internet at the SEC's website at http://www.sec.gov. You may also inspect
our SEC filings at the New York Stock Exchange, the exchange on which our common
stock is listed, at 20 Broad Street, 7th Floor, New York, New York 10005.

The SEC allows us to "incorporate by reference" the information in
documents that we file with them. This means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is an important part of this prospectus, and
information in documents that we file after the date of this prospectus and
before the termination of the offering contemplated by this prospectus will
automatically update and supersede information in this prospectus.

We incorporate by reference our Annual Report on Form 10-K for the year
ended December 31, 1998 (File No. 1-14787), and any future filings made with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended, until we sell all of the securities offered by this
prospectus.

We will provide without charge, upon written or oral request, to each
person to whom this prospectus is delivered, a copy of any or all of the
documents described above which have been or may be incorporated by reference in
this prospectus but not delivered with this prospectus. Such request should be
directed to:
Delphi Automotive Systems Corporation
Attn: Investor Relations
5725 Delphi Drive
Troy, Michigan 48098
Telephone Number: (248)813-2000

3
<PAGE> 64

This prospectus contains or incorporates by reference forward-looking
statements that have been made pursuant to the provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are
not historical facts, but rather are based on our current expectations,
estimates and projections about Delphi's industry, our beliefs and assumptions.
Words such as "anticipates", "expects", "intends", "plans", "believes", "seeks",
"estimates" and similar expressions are intended to identify forward-looking
statements. These statements are not guarantees of future performance and are
subject to certain risks, uncertainties and other factors, some of which are
beyond our control, are difficult to predict and could cause actual results to
differ materially from those expressed or forecasted in the forward-looking
statements. Many of these risks and uncertainties will be described with
particularity in the applicable prospectus supplement. We caution you not to
place undue reliance on these forward-looking statements, which reflect our
management's view only as of the date of this prospectus or the prospectus
supplement containing such forward-looking statements. We are not obligated to
update these statements or publicly release the result of any revisions to them
to reflect events or circumstances after the date of this prospectus or the
applicable prospectus supplement, or to reflect the occurrence of unanticipated
events.

THE COMPANY

We are the world's largest and most diversified supplier of components,
integrated systems and modules to the automotive industry, with 1998 net sales
of $28.5 billion. We have become a leader in the global automotive parts
industry by capitalizing on the extensive experience we have gained as the
principal supplier of automotive parts to General Motors, the world's largest
manufacturer of automotive vehicles. We are primarily a "Tier 1" supplier, which
means that we generally provide our products directly to automotive vehicle
manufacturers. We also sell our products to the worldwide aftermarket for
replacement parts and to customers other than vehicle manufacturers.

Before the initial public offering of our common stock in February 1999, we
were a wholly-owned subsidiary of General Motors. General Motors now owns
approximately 82.3% of our outstanding common stock and the public owns the
rest. Several years ago, we began to transform our Company from a North
America-based, captive component supplier to General Motors into a global
supplier of components, integrated systems and modules for a wide range of
customers. We now sell our products to every major manufacturer of light
vehicles in the world. We have also established an expansive global presence,
with a network of manufacturing sites, technical centers, sales offices and
joint ventures located in every major region of the world.

Through our experience with General Motors, we have developed a
sophisticated understanding of the design, engineering, manufacture and
operation of all aspects of the automotive vehicle. We have both extensive,
technical expertise in a broad range of product lines and strong systems
integration skills, which enable us to provide comprehensive, systems-based
solutions for our customers. We believe that we are one of the leading Tier 1
suppliers in each of our focused product areas. We operate our business along
three major product sectors which work closely together to coordinate our
product development and marketing efforts. Our three product sectors are:
Electronics & Mobile Communication, which includes our automotive electronics
and audio and communication systems; Safety, Thermal & Electrical Architecture,
which includes our interior, thermal and power and signal distribution products;
and Dynamics & Propulsion, which includes our energy and engine management,
chassis and steering products.

Our Company was incorporated in Delaware in late 1998 in preparation for
our initial public offering and for the separation of our business from General
Motors effective as of January 1, 1999, when we acquired the assets and assumed
the liabilities of the business of the Delphi Automotive Systems business sector
of General Motors.

General Motors has announced that it currently plans to complete its
divestiture of our Company later in 1999 by distributing all of its shares of
our common stock to the holders of General Motors' $1-2/3 common stock. General
Motors currently expects to accomplish this distribution through a split-off
(such as an exchange offer by General Motors in which holders of General Motors'
$1-2/3 common stock would
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be invited to tender shares of that stock to General Motors in exchange for the
465 million shares of our common stock held by General Motors), a spin-off or
some combination of both transactions. General Motors has sole discretion to
determine the timing, structure and terms of the distribution. We have agreed to
cooperate with General Motors in all respects to complete the divestiture
because we believe that our complete separation from General Motors will enhance
our ability to pursue our business strategy. General Motors is not, however,
obligated to complete the divestiture and we cannot assure you as to whether or
when it will occur.

RISK FACTORS

You should carefully consider the specific risks set forth under the
caption "Risk Factors" in the applicable prospectus supplement before making an
investment decision. The risks and uncertainties described in the applicable
prospectus supplement are not the only ones facing our Company. Additional risks
and uncertainties not currently known to us or that we currently think are
immaterial may also impact our business operations.

USE OF PROCEEDS

Unless we otherwise state in the applicable prospectus supplement, we will
use the net proceeds from the sale of the securities to repay portions of the
indebtedness outstanding under our revolving credit facilities or for other
general corporate purposes.

RATIO OF EARNINGS TO FIXED CHARGES

Our ratios of earnings to fixed charges were 6.4, 6.8, 4.3 and 1.7 for the
years ended December 31, 1994, 1995, 1996 and 1997, respectively. Fixed charges
exceeded earnings by $320 million for the year ended December 31, 1998,
resulting in a ratio of less than one.

Our earnings available for fixed charges for the years ended December 31,
1998, 1997 and 1996 were impacted by a number of special items which management
views as non-recurring in nature. The special items included charges associated
with our evaluation of the competitiveness of our business, divestitures and
plant closing charges as well as work stoppages at certain General Motors and
Delphi locations. Excluding the impact of these special items, our ratio of
earnings to fixed charges would have been 4.6, 6.3 and 7.0 for the years ended
December 31, 1998, 1997 and 1996, respectively. For more information on special
items and work stoppages, see "Management's Discussion and Analysis of Financial
Condition and Results of Operations-Results of Operations-Special Items and Work
Stoppages" and Note 3 to our consolidated financial statements included in our
1998 Annual Report on Form 10-K incorporated herein by reference.

Our ratio of earnings to fixed charges for each of the periods indicated
has been computed by dividing earnings before income taxes and fixed charges by
the fixed charges. Earnings have been adjusted to exclude equity earnings of
non-consolidated affiliates and include cash distributions received from non-
consolidated affiliates. This ratio includes the earnings and fixed charges of
the Company and its consolidated subsidiaries. Fixed charges primarily include
interest expense and amortization of debt expense.

DESCRIPTION OF DEBT SECURITIES

We describe in this section the general terms that will apply to any
particular series of debt securities that the Company may offer in the future.
When the Company issues a particular series, we will describe in the prospectus
supplement that relates to the series (i) the specific terms of the debt
securities and (ii) the extent to which the general terms described in this
section apply to the debt securities of that series.

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The Company expects to issue the debt securities under an Indenture with
The First National Bank of Chicago as Trustee, which is included as an exhibit
to the registration statement of which this prospectus forms a part. In the
discussion that follows, we summarize particular provisions of the Indenture and
include the relevant section numbers of the Indenture in parentheses. Our
discussion of Indenture provisions is not complete; you should read the
Indenture for a more complete understanding of the provisions we describe.

The aggregate principal amount of debt securities that the Company may
issue under the Indenture is unlimited. (Section 2.01)

GENERAL

Each prospectus supplement relating to a particular series of debt
securities that the Company offers will describe the specific terms of the
series of debt securities. Those specific terms will include some or all of the
following:

(i) the designation of the debt securities;

(ii) the authorized denominations if other than $1000 (or integrals of
$1000) for registered debt securities and if other than $5000 for
unregistered securities, and any limit on the aggregate principal amount of
the debt securities;

(iii) the percentage of their principal amount at which the debt
securities are issued;

(iv) the maturity date or dates of the debt securities (or the manner
of determining the maturity date);

(v) the annual interest rate or rates, if any, which may be fixed or
variable; and the manner of calculating any variable interest rate;

(vi) the date or dates from which interest, if any, will accrue (or
the method of determining such date or dates), and the interest payment
dates and their associated record dates;

(vii) whether the Company may redeem the debt securities and, if so,
the redemption date or dates, redemption price or prices, and other
applicable terms of redemption;

(viii) any mandatory or optional sinking fund or analogous provisions;

(ix) provisions for the defeasance of the debt securities;

(x) the form in which we will issue debt securities (registered or
bearer), any restrictions on the exchange of one form for another and on
the offer, sale and delivery of debt securities in either form;

(xi) whether and under what circumstances the Company will pay
additional amounts on debt securities held by a person who is not a United
States person (as defined in the prospectus supplement) in respect of
specified taxes, assessments or other governmental charges withheld or
deducted; and if so, whether the Company has the option to redeem the
affected debt securities rather than pay such additional amounts;

(xii) if other than U.S. dollars, the currency or currencies for which
the debt securities may be purchased and the currency in which the
principal of, premium, if any, and interest, if any, on the debt securities
is payable;

(xiii) any exchanges on which the debt securities are listed;

(xiv) whether the debt securities are to be issued in book-entry form
and, if so, the identity of the depositary for such book-entry debt
securities;

(xv) the place or places where the principal of, premium, if any,
interest, if any, and certain additional amounts required in respect of
taxes owed to holders of the debt securities, if any, on the debt
securities is payable;

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(xvi) if the amount of principal of and interest on the debt
securities may be determined with reference to an index based on a currency
other than that in which the debt securities are denominated, the manner of
determining such amounts;

(xvii) the portion of the principal amount (if other than the
principal amount) of the debt securities payable upon declaration of
acceleration of their maturity date;

(xviii) the form and terms of any certificates, documents or
conditions required for the issuance of debt securities in definitive form;

(xix) any trustees, depositories, authenticating or paying agents,
transfer agents, registrars or any other agents with respect to the debt
securities;

(xx) any other specific terms of the debt securities, including any
additional covenants and any terms that may be required or advisable under
applicable laws or regulations. (Section 2.01)

The debt securities will be unsecured and will rank equally and ratably
with all other unsecured and unsubordinated indebtedness of the Company (other
than obligations preferred by mandatory provisions of law).

Unless we say otherwise in a prospectus supplement, holders of debt
securities may present them for transfer (unless the debt securities are issued
in book-entry form) or payment at the office of the Trustee, One First National
Plaza, Suite 0126, Chicago, Illinois 60670-0126. The Company may, however, pay
the interest on registered debt securities by mailing checks to the holders of
those debt securities at the addresses listed in the Company's register or, for
holders of at least U.S. $10,000,000 aggregate principal amount of debt
securities, by wire transfer of immediately available funds. (Sections 4.01 and
4.02) The Company will not levy a service charge for any transfer or exchange of
registered debt securities, but may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection with a transfer or
exchange. (Section 2.05)

Holders of debt securities in bearer form (together with any coupons
attached to them) must physically present such debt securities or coupons for
payment, subject to any applicable laws and regulations, at one of the paying
agencies that the Company maintains in a city or cities located outside the
United States. (Sections 4.01 and 4.02) Debt securities in bearer form (except
for temporary bearer securities) and any coupons attached to them will be
transferable by delivery. (Section 2.05)

The Company may issue some of the debt securities as discounted debt
securities (bearing no interest or interest at a rate that is below market at
the time of issuance), which are sold at a substantial discount below their
stated principal amount. When an event of default occurs with respect to a
particular series of debt securities, the amount that the holders of such series
may declare to be immediately due and payable will be less than the principal
amount in the case of discounted debt securities. (Section 6.01)

If a prospectus supplement specifies that the debt securities will have a
redemption option, the "Option to Elect Repurchase" will constitute an issuer
tender offer under the Exchange Act of 1934, as amended. The Company will comply
with all issuer tender offer rules and regulations under the Securities Exchange
Act of 1934, as amended, if such redemption option is elected, including making
any required filings with the Securities and Exchange Commission and furnishing
certain information to the holders of the debt securities.

BOOK-ENTRY SECURITIES--DELIVERY AND FORM

Some or all of the debt securities of a series may be issued in the form of
one or more global securities, each of which will have an aggregate principal
amount equal to the aggregate principal amount of the debt securities that it
represents. Each global security will be deposited with a depositary (to be
specified in the applicable prospectus supplement) or its nominee, and, if in
registered form, registered in the name of the depositary or the depositary's
nominee. Each depositary for a global security in registered form must be a
clearing agency registered under the Securities Exchange Act of 1934, as
amended, and any other applicable statute or regulation. (Section 2.03)
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The beneficial owner of a debt security represented by a global security in
bearer form may exchange its interest in the global security for a debt security
or debt securities in either bearer or registered form of any authorized
denomination, subject to the rules of the depositary. (Section 2.10)

We will describe the specific terms of the depositary arrangement with
respect to a series of debt securities in the applicable prospectus supplement.

CERTAIN COVENANTS

In this section we describe the principal covenants that will apply to the
debt securities unless otherwise indicated in the applicable prospectus
supplement. We make use of several defined terms; the associated definitions are
located at the end of this section.

Limitation on Liens.

The Indenture provides that the Company will not, and will not permit any
of its Manufacturing Subsidiaries to, issue or assume any Debt secured by a
Mortgage upon any Domestic Manufacturing Property of the Company or of any
Manufacturing Subsidiary, or upon any shares of stock or indebtedness of any
Manufacturing Subsidiary (whether that Domestic Manufacturing Property, those
shares of stock or that indebtedness are then currently owned or later acquired)
without providing at the same time that the Company issues or assumes any such
Debt that the debt securities (together with any other indebtedness of the
Company or the Manufacturing Subsidiary ranking equally with the debt securities
then existing or later created) will be secured equally and ratably with such
Debt.

The foregoing restriction does not, however, apply if the aggregate amount
of Debt that the Company or any Manufacturing Subsidiary issues or assumes and
so secures by Mortgages, together with (i) all other Debt of the Company and its
Manufacturing Subsidiaries which (if originally issued or assumed at such time)
would otherwise be subject to the foregoing restrictions, but not including Debt
permitted to be secured under clauses (i) through (v) of the immediately
following paragraph and not including Permitted Receivables Financings, and (ii)
all Attributable Debt of the Company and its Manufacturing Subsidiaries in
respect of sale and lease-back transactions, does not at the time exceed 15% of
Consolidated Net Tangible Assets as shown on the audited consolidated financial
statements for the most recently completed fiscal year.

In addition, the covenant described in the first paragraph above does not
apply to:

(i) Mortgages on property, shares of stock or indebtedness of any
corporation or other entity existing at the time (a) that the corporation
or other entity becomes a Manufacturing Subsidiary or (b) of a sale, lease
or other disposition of all or substantially all of the properties of the
corporation or other entity to the Company or a Manufacturing Subsidiary;

(ii) Mortgages on property that exist at the time the Company or a
Manufacturing Subsidiary acquires the property; or Mortgages to secure (a)
the payment of all or part of the purchase price of such property when the
Company or a Manufacturing Subsidiary acquires it, (b) any Debt incurred
prior to, at the time of, or within 180 days after, the later of the date
of acquisition of such property and the date such property is placed in
service, for the purpose of financing all or any part of its purchase
price, or (c) any Debt incurred for the purpose of financing the Company's
or a Manufacturing Subsidiary's cost of improvements to such acquired
property;

(iii) Mortgages securing a Manufacturing Subsidiary's Debt to the
Company or to another Subsidiary;

(iv) Mortgages on property of the Company or a Manufacturing
Subsidiary in favor of:

(a) the United States of America or any State,

(b) any department, agency or instrumentality or political
subdivision of the United States of America or any State, or

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in connection with financing arrangements between the Company or a
Manufacturing Subsidiary and any of the foregoing governmental bodies or
agencies, to the extent that Mortgages are required by the governmental
programs under which those financing arrangements are made, to secure
partial, progress, advance or other payments under any contract or
statute or to secure any indebtedness incurred for the purpose of
financing all or part of the purchase price or the cost of construction
of the property subject to such Mortgages;

(v) Any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any Mortgage referred to
in the foregoing clauses (i) to (iv), as long as (a) the principal amount
of Debt secured by any such Mortgage does not exceed the principal amount
of Debt so secured at the time of such extension, renewal or replacement
and (b) the extension, renewal or replacement is limited to all or a part
of the property (including improvements) that secured the Mortgage being
extended, renewed or replaced. (Section 4.06)

Limitation on Sale and Lease-Back.

The Indenture provides that the Company will not, and will not permit any
Manufacturing Subsidiary to, enter into any arrangement with any person in which
the Company or a Manufacturing Subsidiary leases from such person any Domestic
Manufacturing Property that (i) the Company or the Manufacturing Subsidiary owns
on the date that the debt securities are originally issued and (ii) the Company
or the Manufacturing Subsidiary has sold or will sell to such person (except for
temporary leases having a maximum term of three years and except for leases
between the Company and a Manufacturing Subsidiary or between Manufacturing
Subsidiaries), unless either:

(i) The Company or the Manufacturing Subsidiary could, under the
covenant on limitation on liens described above, issue, assume, extend,
renew or replace Debt secured by a Mortgage on the Domestic Manufacturing
Property equal in amount to the Attributable Debt in respect of such sale
and lease-back arrangement without equally and ratably securing the debt
securities; however, on and after the date that the sale and lease-back
arrangement becomes effective, the Attributable Debt in respect of such
sale and lease-back arrangement would be deemed for all purposes under the
covenant on limitation on liens described above and the covenant on
limitation on sale and lease-back to be Debt subject to the provisions of
the covenant on limitation on liens described above (which provisions
include the exceptions set forth in clauses (i) through (v) of this
description of such covenant), or

(ii) Within 180 days of the effective date of the sale and lease-back
arrangement, the Company applies a cash amount equal to the Attributable
Debt in respect of the arrangement to the retirement (other than any
mandatory retirement or by way of payment at maturity) of Debt of the
Company or any Manufacturing Subsidiary (other than Debt owned by the
Company or any Manufacturing Subsidiary) that by its terms matures at, or
is extendible or renewable at the borrower's option to a date more than
twelve months after the date of the creation of such Debt. (Section 4.07)

Limitation on Consolidation, Merger, Sale or Conveyance.

The Indenture provides that the Company will not merge or consolidate with
any other entity, and will not sell or convey all or substantially all of its
assets to any person or entity, unless:

(i) Either the Company is the surviving corporation, or if not, the
successor entity is organized under the laws of the United States or any
State and expressly assumes, by executing a supplemental indenture, (a) the
obligation to pay the principal of, premium, if any, interest, if any, and
any other additional amounts, on all the debt securities and any coupons
and (b) the performance of all of the Company's covenants and the
satisfaction of all the conditions to be satisfied by the Company under the
Indenture;

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(ii) Immediately after the merger, consolidation, sale or conveyance
is effective, no event of default under the Indenture will have occurred or
be continuing; and

(iii) The Company delivers to the Trustee under the Indenture a
certificate and legal opinion each stating that the merger, consolidation,
sale or conveyance, any supplemental indenture, and any assumption by the
successor entity of the Company's obligations described above, complies
with the requirements set forth in Article Eleven of the Indenture
regarding the Company's ability to carry out a merger, consolidation, sale
or conveyance of assets. (Section 11.01)

Definitions Applicable to Covenants.

The following definitions will apply to the covenants summarized above:

(i) "Attributable Debt" means, at the time of determination as to any
lease, the present value (discounted at the actual rate, if stated, or, if
no rate is stated, the implicit rate of interest of such lease transaction
as determined by the chairman, president, any vice chairman, any vice
president, the treasurer or any assistant treasurer of the Company),
calculated using the interval of scheduled rental payments under such
lease, of the obligation of the lessee for net rental payments during the
remaining term of such lease (excluding any subsequent renewal or other
extension options held by the lessee). The term "net rental payments"
means, with respect to any lease for any period, the sum of the rental and
other payments required to be paid in such period by the lessee thereunder,
but not including, however, any amounts required to be paid by such lessee
(whether or not designated as rental or additional rental) on account of
maintenance and repairs, insurance, taxes, assessments, water rates,
indemnities or similar charges required to be paid by such lessee
thereunder or any amounts required to be paid by such lessee thereunder
contingent upon the amount of sales, earnings or profits or of maintenance
and repairs, insurance, taxes, assessments, water rates, indemnities or
similar charges; provided, however, that, in the case of any lease which is
terminable by the lessee upon the payment of a penalty in an amount which
is less than the total discounted net rental payments required to be paid
from the later of the first date upon which such lease may be so terminated
and the date of the determination of net rental payments, "net rental
payments" shall include the then-current amount of such penalty from the
later of such two dates, and shall exclude the rental payments relating to
the remaining period of the lease commencing with the later of such two
dates.

(ii) "Consolidated Net Tangible Assets" means, at any date, all
amounts that would, in conformity with GAAP, be set forth opposite the
caption "total assets" (or any like caption) on a consolidated balance
sheet of the Company and its consolidated Subsidiaries less (i) all current
liabilities and (ii) goodwill, trade names, patents, unamortized debt
discount, organization expenses and other like intangibles of the Company
and its consolidated Subsidiaries.

(iii) "Debt" means notes, bonds, debentures or other similar evidences
of indebtedness for money borrowed.

(iv) "Domestic Manufacturing Property" means any manufacturing plant
or facility owned by the Company or any Manufacturing Subsidiary which is
located within the continental United States of America and, in the opinion
of the Board of Directors, is of material importance to the total business
conducted by the Company and its consolidated affiliates as an entity.

(v) "GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time set forth in the
opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board, or in such
other statements by a successor entity as may be in general use by
significant segments of the accounting profession, which are applicable to
the circumstances as of the date of determination.

(vi) "Manufacturing Subsidiary" means any Subsidiary (A) substantially
all the property of which is located within the continental United States
of America, (B) which owns a Domestic
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Manufacturing Property and (C) in which the Company's investment, direct or
indirect and whether in the form of equity, debt, advances or otherwise, is
in excess of $1 billion as shown on the books of the Company as of the end
of the fiscal year immediately preceding the date of determination;
provided, however, that "Manufacturing Subsidiary" shall not include any
Subsidiary that is principally engaged in leasing or in financing
installment receivables or otherwise providing financial or insurance
services to the Company or others or that is principally engaged in
financing the Company's operations outside the continental United States of
America.

(vii) "Mortgage" means any mortgage, pledge, lien, security interest,
conditional sale or other title retention agreement or other similar
encumbrance.

(viii) "Non-Recourse Debt" means all Debt which, in accordance with
GAAP, is not required to be recognized on a consolidated balance sheet of
the Company as a liability.

(ix) "Permitted Receivables Financings" means, at any date of
determination, the aggregate amount of any Non-Recourse Debt outstanding on
such date relating to securitizations or other similar off-balance sheet
financings of accounts receivable of the Company or any of its
Subsidiaries.

(x) "Subsidiary" means any corporation or other entity of which at
least a majority of the outstanding stock or other beneficial interests
having by the terms thereof ordinary voting power to elect a majority of
the board of directors or other governing body of such corporation or other
entity (irrespective of whether or not at the time stock or other
beneficial interests of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) is at the time owned by the Company, or by one or more
Subsidiaries, or by the Company and one or more Subsidiaries. (Section
4.07)

DEFEASANCE

If the terms of a particular series of debt securities provide for
defeasance of those debt securities, the Company may, at its option, (i)
discharge its obligations under the Indenture with respect to, and the entire
indebtedness on all the outstanding debt securities of, that series or (ii) not
comply with any term, provision, condition or covenant contained in the
Indenture with respect to that series, in each case by:

(i) depositing with the Trustee funds, or obligations issued or
guaranteed by the United States of America, sufficient to pay and discharge
the entire indebtedness on all outstanding debt securities of the series,
or fulfilling other terms and conditions of the satisfaction and discharge
of the debt securities of the series;

(ii) paying all other sums payable with respect to the outstanding
debt securities of the series;

(iii) delivering to the Trustee a legal opinion confirming that the
holders of the outstanding debt securities and any related coupons will not
recognize income, gain or loss for Federal income tax purposes as a result
of the defeasance of their debt securities; and

(iv) delivering to the Trustee an officer's certificate and legal
opinion each confirming that the Company has complied with all conditions
relating to defeasance of the debt securities contained in the Indenture.
(Section 12.02)

MODIFICATION OF THE INDENTURE

The Indenture provides that the Company and the Trustee may enter into
supplemental indentures without the consent of the holders of the debt
securities to (a) evidence the assumption by a successor corporation of the
obligations of the Company, (b) add covenants for the protection of the holders
of the debt securities, (c) add or change any of the provisions of the Indenture
to permit or facilitate the issuance of debt securities of any series in bearer
form and to provide for the exchange of debt securities in bearer form with
registered debt securities, (d) cure any ambiguity or correct any inconsistency
in the Indenture or in a supplemental indenture, (e) transfer, assign, mortgage
or pledge any property to or with the Trustee, (f) establish the form or terms
of debt securities of any series as permitted by the terms of
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the Indenture, (g) evidence the acceptance of appointment by a successor trustee
and (h) change or eliminate provisions of the Indenture where the changes or
eliminations do not apply to any debt security outstanding and become effective
only when there is no debt security outstanding of a series created before the
execution of the supplemental indenture that is entitled to the benefit of the
provision being changed or eliminated. (Section 10.01)

The Indenture also provides that the Company and the Trustee may enter into
a supplemental indenture to modify the Indenture, any supplemental indenture or
the rights of the holders of the debt securities issued under either such
Indenture or supplemental indenture, with the consent of the holders of not less
than a majority in principal amount of the debt securities of all series at the
time outstanding that are affected by that modification (voting as one class) if
the modification does not:

(i) (a) change the fixed maturity of any debt securities, (b) reduce
their principal amount or premium, if any, (c) reduce the rate or extend
the time of payment of interest or any additional amounts payable on the
debt securities, (d) reduce the amount due and payable upon acceleration of
the maturity of the debt securities or the amount provable in bankruptcy or
(e) make the principal of, or any interest, premium or additional amounts
on, any debt security payable in a coin or currency different from that
provided in the debt security,

(ii) impair the right to initiate suit for the enforcement of any such
payment on or after the stated maturity of the debt securities, or

(iii) reduce the requirement, stated above, for the consent of the
holders of the debt securities to any modification described above, or the
percentage required for the consent of the holders to waive defaults,
without the consent of the holder of each debt security so affected.
(Section 10.02)

EVENTS OF DEFAULT

An event of default with respect to any series of debt securities is
defined in the Indenture as: (a) default in payment of any principal or premium,
if any, on the series; (b) default for 30 days in payment of any interest or
additional amounts due with respect to the series; (c) default for 90 days after
notice in performance of any other covenant or agreement applicable to the debt
securities or contained in the Indenture; (d) default by the Company or any
Significant Subsidiary in any payment of $25,000,000 or more of principal of or
interest on any Debt or in the payment of $25,000,000 or more on account of any
guarantee in respect of Debt, beyond any period of grace that may be provided in
the instrument or agreement under which such Debt or guarantee was created (for
these purposes, the term "Significant Subsidiary" is defined as any Subsidiary
of the Company that, at any time, has at least 5% of the consolidated revenues
of the Company and its Subsidiaries at such time as reflected in the most recent
annual audited consolidated financial statements of the Company; the term
"Subsidiary" is defined as in our description of the covenants under the
Indenture); or (e) certain events of bankruptcy, insolvency or reorganization.
(Section 6.01)

If an event of default under clause (a), (b), (c) or (d) above occurs with
respect to any series, the Trustee or the holders of at least 25% in aggregate
principal amount of all debt securities then outstanding affected by the event
of default may declare the principal (or, in the case of discounted debt
securities, the amount specified in their terms) of all debt securities of the
affected series to be due and payable. (Section 6.01)

If an event of default under clause (e) above occurs, the Trustee or the
holders of at least 25% in aggregate principal amount of all the debt securities
then outstanding (voting as one class) may declare the principal (or, in the
case of discounted debt securities, the amount specified in their terms) of all
outstanding debt securities not already due and payable to be due and payable.
(Section 6.01)

If the principal amount of debt securities has been declared due and
payable, the holders of a majority in aggregate principal amount of the
outstanding debt securities of the applicable series (or of all

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the outstanding debt securities) may waive any event of default with respect to
that series (or with respect to all outstanding debt securities) if:

(i) The Company deposits with the Trustee all required payments on the
debt securities, plus certain fees, expenses, disbursements and advances of
the Trustee and

(ii) all defaults under the Indenture have been remedied. (Section
6.01)

The holders of a majority in aggregate principal amount of the debt
securities of a particular series may also waive any default with respect to
that series and its consequences, except a default:

(i) in the payment of principal of, or any premium, interest or
additional amounts on, any debt securities of that series or

(ii) in respect of a covenant or provision in the Indenture that may
not be modified without the consent of the holders of each outstanding debt
security that would be affected by the modification. (Section 6.06)

The Indenture provides that the Trustee may withhold notice of any default
to the securityholders (except for default in the payment of principal or any
premium, interest or additional amounts) if it considers it in the interests of
the securityholders to do so. (Section 6.07)

Subject to the provisions of the Indenture relating to the duties of the
Trustee when an event of default occurs, the Trustee is not obligated to
exercise any of its rights or powers under the Indenture at the request, order
or direction of any of the securityholders, unless those securityholders have
offered to the Trustee reasonable indemnity. (Sections 7.01 and 7.02)

Subject to such provisions for the indemnification of the Trustee and to
certain other limitations, the holders of a majority in aggregate principal
amount of the debt securities of all series affected by the occurrence of an
event of default (voting as one class) at the time outstanding may direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee. (Section
6.06)

CONCERNING THE TRUSTEE

The First National Bank of Chicago is the Trustee under the Indenture. The
First National Bank of Chicago acts as depositary for funds of, makes loans to,
acts as trustee and performs certain other services for, the Company and certain
of its subsidiaries and affiliates in the normal course of its business.

PLAN OF DISTRIBUTION

We may sell the securities from time to time: (i) directly to purchasers,
(ii) through agents, (iii) through underwriters or dealers or (iv) through a
combination of these methods.

GENERAL

Underwriters, dealers, agents and remarketing firms that participate in the
distribution of the offered securities may be "underwriters" as defined in the
Securities Act of 1933, as amended. Any discounts or commissions they receive
from us and any profits they receive on the resale of the offered securities may
be treated as underwriting discounts and commissions under the Securities Act of
1933, as amended. We will identify any underwriters, agents or dealers and
describe their commissions, fees or discounts in the applicable prospectus
supplement or pricing supplement.

AGENTS

We may designate agents to sell the securities. The agents will agree to
use their best efforts to solicit purchases for the period of their appointment.

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UNDERWRITERS

If underwriters are used in a sale, they will acquire the offered
securities for their own account. The underwriters may resell the securities in
one or more transactions, including negotiated transactions. These sales will be
made at a fixed public offering price or at varying prices determined at the
time of the sale. We may offer the securities to the public through an
underwriting syndicate or through a single underwriter.

Unless the applicable prospectus supplement or pricing supplement states
otherwise, the obligations of the underwriters to purchase the offered
securities will be subject to certain conditions contained in an underwriting
agreement that the Company and the underwriters will enter into. The
underwriters will be obligated to purchase all of the securities of the series
offered if any of the securities are purchased, unless the applicable prospectus
supplement or pricing supplement says otherwise. Any initial public offering
price and any discounts or concessions allowed, re-allowed or paid to dealers
may be changed from time to time.

DEALERS

We may sell the offered securities to dealers as principals, who may then
resell such securities to the public either at varying prices determined by such
dealers or at a fixed offering price agreed to with the Company.

REMARKETING FIRMS

We may sell securities to one or more remarketing firms, acting as
principals for their own accounts or as agents for the Company, who will
remarket the securities upon purchasing them in accordance with a redemption or
repayment pursuant to the terms of such securities.

DIRECT SALES

We may choose to sell the offered securities directly. In this case, no
underwriters or agents would be involved.

INSTITUTIONAL PURCHASERS

We may authorize agents, dealers or underwriters to solicit certain
institutional investors to purchase offered securities on a delayed delivery
basis pursuant to delayed delivery contracts providing for payment and delivery
on a specified future date. The applicable prospectus supplement or pricing
supplement will provide the details of any such arrangement, including the
offering price and commissions payable on the solicitations.

We will enter into such delayed delivery contracts only with institutional
purchasers that we approve. Such institutions may include commercial and savings
banks, insurance companies, pension funds, investment companies and educational
and charitable institutions.

INDEMNIFICATION

We may have agreements with agents, underwriters, dealers and remarketing
firms to indemnify them against certain civil liabilities, including liabilities
under the Securities Act of 1933, as amended. Agents, underwriters, dealers and
remarketing firms, and their affiliates, may engage in transactions with, or
perform services for, us in the ordinary course of business. This includes
commercial banking and investment banking transactions.

MARKET MAKING, STABILIZATION AND OTHER TRANSACTIONS

Each series of offered debt securities will be a new issue and will have no
established trading market. We may elect to list any series of offered debt
securities on an exchange. Any underwriters that we use in the sale of offered
securities may make a market in such securities, but may discontinue such market

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making at any time without notice. Therefore, we cannot assure that the
securities will have a liquid trading market.

Any underwriter may engage in stabilizing transactions, syndicate covering
transactions and penalty bids in accordance with Rule 104 under the Securities
Exchange Act of 1934, as amended. Stabilizing transactions permit bids to
purchase the underlying security so long as the stabilizing bids do not exceed a
specified maximum. Syndicate covering transactions involve purchases of the
securities in the open market after the distribution has been completed in order
to cover syndicate short positions. Penalty bids permit the underwriters to
reclaim a selling concession from a syndicate member when the securities
originally sold by such syndicate member are purchased in a syndicate covering
transaction to cover syndicate short positions. Such stabilizing transactions,
syndicate covering transactions and penalty bids may cause the price of the
securities to be higher than it would otherwise be in the absence of such
transactions. The underwriters may, if they commence these transactions,
discontinue them at any time.

EXPERTS

The financial statements incorporated by reference in this prospectus from
the Company's Annual Report on Form 10-K have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their report incorporated herein, and
have been so incorporated in reliance upon the report of that firm given upon
their authority as experts in accounting and auditing.

LEGAL OPINIONS

Unless we indicate otherwise in the applicable prospectus supplement,
Drinker Biddle & Reath LLP, Philadelphia, Pennsylvania, will issue an opinion
about the legality of the securities that we are offering in this prospectus. We
will also provide in the applicable prospectus supplement the name of counsel
that will issue an opinion as to certain legal matters for any underwriters,
dealers or agents.

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