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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Form 20-F

[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF
THE SECURITIES EXCHANGE ACT OF 1934

OR

[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from                      to

Commission File Number: 1-14852

GRUMA, S.A. de C.V.

(Exact name of Registrant as specified in its charter)


|                                                    |  |                                                                      
|--------------------------------------------------- |  | ---------------------------------------------------------------------
|N/A
(Translation of Registrants name into English) |  | United Mexican States
(Jurisdiction of incorporation or organization)

Calzada del Valle, Ote. 407
Colonia del Valle
San Pedro Garza García, Nuevo Léon
66220, México
(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

|                                                                                                                                       |  |                                                 
|-------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------
|Title of each class:                                                                                                                   |  | Name of exchange on which registered:           
|                                                                                                                                       |  |                                                 
|Series B Common Shares, without par value
American Depositary Shares, each
representing four Series B Common
Shares, without par value |  | New York Stock Exchange*
New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

7.625% Notes due 2007

Indicate the number of outstanding shares of each of the issuers
classes of capital or common stock as of the close of the period
covered by the annual report:

441,402,386 Series B Common Shares, without par value

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports) and (2) has been subject to such filing requirements
for the past 90 days.

Yes X      No

Indicate by check mark which financial statement item the registrant has
elected to follow:

Item 17      Item 18 X



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|*     Not for trading but only in connection with the registration of American
Depositary Shares, pursuant to the requirements of the Securities and Exchange
Commission.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------





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TABLE OF CONTENTS



|                                              |                                                                                       |  |  |  |  |  |  | 
|--------------------------------------------- | ------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                       
|                                              | ITEM 1. Identity of Directors, Senior Management and Advisors.                       
|                                              | ITEM 2. Offer Statistics and Expected Timetable.                                     
|                                              | ITEM 3. Key Information.                                                             
|                                              | ITEM 4. Information on the Company.                                                  
|                                              | ITEM 5. Operating And Financial Review And Prospects.                                
|                                              | ITEM 6. Directors, Senior Management and Employees.                                  
|                                              | ITEM 7. Major Shareholders And Related Party Transactions.                           
|                                              | ITEM 8. Financial Information.                                                       
|                                              | ITEM 9. The Offer And Listing.                                                       
|                                              | ITEM 10. Additional Information.                                                     
|                                              | ITEM 11. Quantitative And Qualitative Disclosures About Market Risk.                 
|                                              | ITEM 12.Description Of Securities Other Than Equity Securities.                      
|PART II                                      
|                                              | ITEM 13.Defaults, Dividend Arrearages And Delinquencies.                             
|                                              | ITEM 14.Material Modifications To The Rights Of Security Holders And Use Of Proceeds.
|                                              | ITEM 15. Controls and Procedures.                                                    
|                                              | ITEM 16. [Reserved].                                                                 
|PART III                                     
|                                              | ITEM 17. Financial Statements.                                                       
|                                              | ITEM 18. Financial Statements.                                                       
|                                              | ITEM 19. Exhibits.                                                                   
|SIGNATURE                                    
|EXHIBIT INDEX                                
|U.S. $300 MILLION LOAN AGREEMENT             
|STATEMENT OF COMPUTATION OF RATIO OF EARNINGS
|LIST OF PRINCIPAL SUBSIDIARIES               
|CERTIFICATION OF CHIEF EXECUTIVE OFFICER     
|CERTIFICATION OF CORPORATE OFFICER           



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TABLE OF CONTENTS

|         |  |                                                                              |  |      |    | 
|-------- |  | ---------------------------------------------------------------------------- |  | ---- | -- | 
|         |  |                                                                              |  | Page
|         |  |                                                                              |  |     
|PART I   |  |                                                                              |  |      | 3  | 
|ITEM 1.  |  | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS                        |  |      | 3  | 
|ITEM 2.  |  | OFFER STATISTICS AND EXPECTED TIMETABLE                                      |  |      | 3  | 
|ITEM 3.  |  | KEY INFORMATION                                                              |  |      | 3  | 
|ITEM 4.  |  | INFORMATION ON THE COMPANY                                                   |  |      | 16 | 
|ITEM 5.  |  | OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                 |  |      | 33 | 
|ITEM 6.  |  | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                   |  |      | 55 | 
|ITEM 7.  |  | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                            |  |      | 63 | 
|ITEM 8.  |  | FINANCIAL INFORMATION                                                        |  |      | 65 | 
|ITEM 9.  |  | THE OFFER AND LISTING                                                        |  |      | 67 | 
|ITEM 10. |  | ADDITIONAL INFORMATION                                                       |  |      | 68 | 
|ITEM 11. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                   |  |      | 81 | 
|ITEM 12. |  | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                       |  |      | 83 | 
|PART II  |  |                                                                              |  |      | 83 | 
|ITEM 13. |  | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                              |  |      | 83 | 
|ITEM 14. |  | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |  |      | 83 | 
|ITEM 15. |  | CONTROLS AND PROCEDURES                                                      |  |      | 84 | 
|ITEM 16. |  | [RESERVED]                                                                   |  |      | 84 | 
|PART III |  |                                                                              |  |      | 84 | 
|ITEM 17. |  | FINANCIAL STATEMENTS                                                         |  |      | 84 | 
|ITEM 18. |  | FINANCIAL STATEMENTS                                                         |  |      | 84 | 
|ITEM 19. |  | EXHIBITS                                                                     |  |      | 84 | 





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PRESENTATION OF FINANCIAL INFORMATION

Gruma, S.A. de C.V. is a corporation (sociedad anónima de capital
variable) organized under the laws of the United Mexican States, or Mexico.

In this Annual Report on Form 20-F, references to pesos or Ps. are to
Mexican pesos, and references to U.S. dollars, U.S.$, dollars or $ are
to United States dollars. We, our, us, our company, GRUMA and
similar expressions refer to Gruma, S.A. de C.V. and its consolidated
subsidiaries, except when the reference is specifically to Gruma, S.A. de C.V.
(parent company only) or the context otherwise requires.

This Annual Report contains our audited consolidated financial statements
as of December 31, 2001 and 2002 and for the years ended December 31, 2000,
2001 and 2002. The financial statements have been audited by
PricewaterhouseCoopers, independent accountants.

We publish our financial statements in pesos and prepare our consolidated
financial statements in accordance with accounting principles generally
accepted in Mexico, commonly referred to as Mexican GAAP. Mexican GAAP
differs in certain significant respects from accounting principles generally
accepted in the United States, commonly referred to as U.S. GAAP. See Note
20 to our audited consolidated financial statements for a description of the
principal differences between Mexican GAAP and U.S. GAAP applicable to these
financial statements and for a quantitative reconciliation of our consolidated
net income and stockholders equity to U.S. GAAP.

As the Mexican economy has experienced significant levels of inflation in
recent years, we are required under Mexican GAAP to recognize the effects of
inflation in our financial statements. Under Bulletin B-10, issued by the
Mexican Institute of Public Accountants, we are required to present our
financial information in inflation-adjusted monetary units to allow for more
accurate comparisons of financial line items over time and to mitigate the
distortive effects of inflation on our financial statements. Unless otherwise
indicated, all financial information in this Annual Report has been restated in
pesos of constant purchasing power as of December 31, 2002.

We are required to determine our monetary position gain/loss to reflect
the effect of inflation on our monetary assets and liabilities. We determine
our net monetary position by subtracting our monetary liabilities from our
monetary assets and then adjusting our net monetary position by the appropriate
inflation rate for the period with the resulting monetary gain or loss
reflected in earnings. In so doing, we can reflect the effect inflation is
having on our monetary items.

Pursuant to Bulletin B-15, we apply the actual inflation rate in the
relevant country of each non-Mexican subsidiary and then translate the
inflation-adjusted financial statements into pesos.

For the purposes of the quantitative reconciliation to U.S. GAAP, we have
restated the data as of December 31, 2001 and for years ended December 31, 2000
and 2001 in pesos of constant purchasing power as of December 31, 2002 using
the Mexican National Consumer Price Index, or NCPI, rather than the
international restatement factor in Bulletin B-15. For a more detailed
discussion of Mexican GAAP inflation accounting methodologies, see Item 5.
Operating and Financial Review and ProspectsManagements Discussion and
Analysis of Results of OperationsOverview of Accounting Presentation.

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MARKET SHARE AND OTHER INFORMATION

The information contained in this Annual Report regarding market share and
market position of corn flour, tortillas and wheat flour in Mexico, Venezuela,
Central America and the United States is presented for the twelve-month period
ended December 31, 2002. Market share and market position information for
Mexico and Central America is based primarily on our own estimates and internal
analysis. Market share and market position information for Venezuela is based
on data provided by Information Resource Inc. Market and market position
information for the United States is based on data from the Tortilla Industry
Association as well as our own estimates and internal analysis. While we
believe our internal research and estimates are reliable, they have not been
verified by any independent source and we cannot assure you as to their
accuracy.

All references to tons in this Annual Report refer to metric tons. One
metric ton equals 2,204 pounds. Estimates of production capacity contained
herein assume operation of the relevant facilities on the basis of 24 hours a
day, 360 days a year on three shifts and assume only regular intervals for
required maintenance.

FORWARD LOOKING STATEMENTS

This Annual Report includes forward-looking statements within the
meaning of Section 27A of the U.S. Securities Act of 1933, as amended, or the
Securities Act, and Section 21E of the Securities Exchange Act of 1934, as
amended, or the Exchange Act, including the statements about our plans,
strategies and prospects under Item 4. Information on the Company and Item
5. Operating and Financial Review and Prospects. Some of these statements
contain words such as believe, expect, intend, anticipate, estimate,
strategy, plans and other similar words. Although we believe that our
plans, intentions and expectations as reflected in or suggested by these
forward-looking statements are reasonable, we cannot assure you that these
plans, intentions or expectations will be achieved. Actual results could
differ materially from the forward-looking statements as a result of risks,
uncertainties and other factors discussed in Item 3. Key InformationRisk
Factors, Item 4. Information on the Company, Item 5. Operating and
Financial Review and Prospects and Item 11. Quantitative and Qualitative
Disclosures About Market Risk. These risks, uncertainties and factors
include: general economic and business conditions, including changes in the
Mexican peso/U.S. dollar exchange rate, the Venezuelan bolívar/U.S. dollar
exchange rate, and conditions that affect the price of corn and wheat;
potential changes in demand for our products; price and product competition;
and other factors discussed herein.

2



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PART I




ITEM 1. Identity of Directors, Senior Management and Advisors.

Not applicable.




ITEM 2. Offer Statistics and Expected Timetable.

Not applicable.




ITEM 3. Key Information.

SELECTED FINANCIAL DATA

The following tables present our selected consolidated financial data as
of and for each of the years indicated. The data as of December 31, 2001 and
2002 and for the years ended December 31, 2000, 2001 and 2002 are derived from
and should be read together with our financial statements included herein and
Item 5. Operating and Financial Review and Prospects.

Our consolidated financial statements are prepared in accordance with
Mexican GAAP, which differs from U.S. GAAP in certain significant respects.
Note 20 to the consolidated financial statements provides a description of
differences between Mexican GAAP and U.S. GAAP, as they relate to us, and
provides a reconciliation to U.S. GAAP of majority net income and total
stockholders equity.

Pursuant to Mexican GAAP, the consolidated financial statements and the
selected consolidated financial data set forth below restate the components of
stockholders equity using the NCPI factors and record gains and losses in
purchasing power from holding monetary assets or liabilities. Under Mexican
GAAP, non-monetary assets, with the exception of inventories and fixed assets
of non-Mexican origin, are restated using the NCPI factors. Inventories are
restated at current replacement costs while fixed assets of foreign origin are
restated by the inflation rate of the country of origin prior to translation to
pesos at the period-end exchange rate. Mexican GAAP also requires restatement
of all financial statements to pesos of constant purchasing power as of the
date of the most recent balance sheet presented, and accordingly all data in
the consolidated financial statements and in the selected consolidated
financial data set forth below have been restated in pesos of constant
purchasing power as of December 31, 2002. The effects of inflation accounting
under Mexican GAAP, other than for the use of a specific index for the
restatement of fixed assets of foreign origin, have not been reversed in the
reconciliation to U.S. GAAP. See Note 20 to our consolidated financial
statements.

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|                                                           |  |                                                          |               |      |  |      |               |      |  |      |               |   |  |  |               |   |  |  |               |  
|---------------------------------------------------------- |  | -------------------------------------------------------- | ------------- | ---- |  | ---- | ------------- | ---- |  | ---- | ------------- | - |  |  | ------------- | - |  |  | ------------- | -
|                                                           |  | 1998                                                     |               | 1999 |  | 2000 |               | 2001 |  | 2002
|                                                           |  |                                                          |               |      |  |      |               |      |  |     
|                                                           |  | (thousands of Mexican pesos of constant purchasing power
|                                                           |  | as of December 31, 2002, except per share amounts)      
|Income Statement Data:                                     |  |                                                          |               |      |  |      |               |      |  |      |               |   |  |  |               |   |  |  |               |  
|Mexican GAAP:                                              |  |                                                          |               |      |  |      |               |      |  |      |               |   |  |  |               |   |  |  |               |  
|Net sales(1)                                               |  |                                                          | Ps.16,961,079 |      |  |      | Ps.17,942,929 |      |  |      | Ps.19,250,949 |   |  |  | Ps.18,916,122 |   |  |  | Ps.19,174,407 |  
|Cost of sales                                              |  |                                                          | (10,769,230   | )    |  |      | (11,819,101   | )    |  |      | (12,273,048   | ) |  |  | (11,928,760   | ) |  |  | (11,992,006   | )
|Gross profit                                               |  |                                                          | 6,191,849     |      |  |      | 6,123,828     |      |  |      | 6,977,901     |   |  |  | 6,987,362     |   |  |  | 7,182,401     |  
|Selling, general and administrative expenses               |  |                                                          | (4,921,583    | )    |  |      | (5,709,528    | )    |  |      | (6,117,562    | ) |  |  | (6,011,588    | ) |  |  | (5,690,119    | )
|Operating income                                           |  |                                                          | 1,270,266     |      |  |      | 414,300       |      |  |      | 860,339       |   |  |  | 975,774       |   |  |  | 1,492,282     |  
|Net comprehensive financing income (cost):                 |  |                                                          |               |      |  |      |               |      |  |      |               |   |  |  |               |   |  |  |               |  
|Interest expense                                           |  |                                                          | (464,576      | )    |  |      | (708,342      | )    |  |      | (835,191      | ) |  |  | (670,183      | ) |  |  | (566,649      | )
|Interest income                                            |  |                                                          | 238,831       |      |  |      | 163,249       |      |  |      | 155,393       |   |  |  | 93,029        |   |  |  | 57,678        |  
|Monetary position gain (loss), net                         |  |                                                          | (15,505       | )    |  |      | 224,278       |      |  |      | 234,382       |   |  |  | 179,849       |   |  |  | 160,937       |  
|Foreign exchange gain (loss), net                          |  |                                                          | (73,670       | )    |  |      | 91,912        |      |  |      | (60,995       | ) |  |  | 99,964        |   |  |  | (263,095      | )
|Total net comprehensive financing income
(cost)            |  |                                                          | (314,920      | )    |  |      | (228,903      | )    |  |      | (506,411      | ) |  |  | (297,341      | ) |  |  | (611,129      | )
|Other (expenses) income, net                               |  |                                                          | (298,520      | )    |  |      | (184,021      | )    |  |      | 32,461        |   |  |  | 69,407        |   |  |  | 120,520       |  
|Income before income tax and
Other items                   |  |                                                          | 656,826       |      |  |      | 1,376         |      |  |      | 386,389       |   |  |  | 747,840       |   |  |  | 1,001,673     |  
|Income tax (current and deferred)(2)                       |  |                                                          | 73,984        |      |  |      | (287,968      | )    |  |      | (22,765       | ) |  |  | (275,765      | ) |  |  | (561,232      | )
|Employees statutory profit sharing
(current and deferred) |  |                                                          | (10,693       | )    |  |      | (2,363        | )    |  |      | 471           |   |  |  | (12,990       | ) |  |  | (12,938       | )
|Other items(3)                                             |  |                                                          | 84,668        |      |  |      | 85,027        |      |  |      | 72,876        |   |  |  | 64,021        |   |  |  | 162,017       |  
|Minority interest                                          |  |                                                          | (290,940      | )    |  |      | (120,254      | )    |  |      | (190,641      | ) |  |  | (191,117      | ) |  |  | (196,328      | )
|Majority net income (loss)                                 |  |                                                          | 513,845       |      |  |      | (324,182      | )    |  |      | 246,330       |   |  |  | 331,989       |   |  |  | 393,192       |  
|Per share data:                                            |  |                                                          |               |      |  |      |               |      |  |      |               |   |  |  |               |   |  |  |               |  
|Majority net income (loss) per share(4)                    |  |                                                          | 1.43          |      |  |      | (0.86         | )    |  |      | 0.57          |   |  |  | 0.77          |   |  |  | 0.88          |  
|U.S. GAAP:                                                 |  |                                                          |               |      |  |      |               |      |  |      |               |   |  |  |               |   |  |  |               |  
|Net sales                                                  |  |                                                          | 18,465,147    |      |  |      | 18,625,932    |      |  |      | 19,923,232    |   |  |  | 18,640,602    |   |  |  | 19,028,174    |  
|Operating income (loss)                                    |  |                                                          | 1,023,238     |      |  |      | (119,572      | )    |  |      | 815,194       |   |  |  | 1,214,623     |   |  |  | 1,429,500     |  
|Net income (loss)                                          |  |                                                          | 150,146       |      |  |      | (576,532      | )    |  |      | 71,378        |   |  |  | 199,862       |   |  |  | 309,891       |  
|Per share data:                                            |  |                                                          |               |      |  |      |               |      |  |      |               |   |  |  |               |   |  |  |               |  
|Net income (loss) per share(4)                             |  |                                                          | 0.42          |      |  |      | (1.53         | )    |  |      | 0.16          |   |  |  | 0.46          |   |  |  | 0.69          |  

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|                                                                      |                      |  |                                                                   |            |      |  |                                                          |            |      |  |               |            |   |  |               |           |   |  |               |           |  
|--------------------------------------------------------------------- | -------------------- |  | ----------------------------------------------------------------- | ---------- | ---- |  | -------------------------------------------------------- | ---------- | ---- |  | ------------- | ---------- | - |  | ------------- | --------- | - |  | ------------- | --------- | -
|                                                                      |                      |  | 1998                                                              |            | 1999 |  | 2000                                                     |            | 2001 |  | 2002         
|                                                                      |                      |  |                                                                   |            |      |  |                                                          |            |      |  |              
|                                                                      |                      |  |                                                                   |            |      |  | (thousands of Mexican pesos of constant purchasing power |            |      |  |              
|                                                                      |                      |  | as of December 31, 2002, except capital stock and operating data)
|Balance Sheet Data (at period end):                                   |                      |  |                                                                   |            |      |  |                                                          |            |      |  |               |            |   |  |               |           |   |  |               |          
|Mexican GAAP:                                                         |                      |  |                                                                   |            |      |  |                                                          |            |      |  |               |            |   |  |               |           |   |  |               |          
|Property, plant and equipment, net                                    |                      |  | Ps.11,515,967                                                     |            |      |  | Ps.13,143,605                                            |            |      |  | Ps.13,267,657 |            |   |  | Ps.12,606,574 |           |   |  | Ps.12,582,178 |          
|Total assets                                                          |                      |  | 21,146,252                                                        |            |      |  | 24,077,788                                               |            |      |  | 22,991,824    |            |   |  | 21,883,103    |           |   |  | 22,143,287    |          
|Short-term debt(5)                                                    |                      |  | 244,411                                                           |            |      |  | 350,068                                                  |            |      |  | 1,352,032     |            |   |  | 355,653       |           |   |  | 790,548       |          
|Long-term debt(5)                                                     |                      |  | 6,555,669                                                         |            |      |  | 7,663,091                                                |            |      |  | 6,174,350     |            |   |  | 6,628,044     |           |   |  | 6,052,935     |          
|Total liabilities                                                     |                      |  | 8,718,615                                                         |            |      |  | 10,444,100                                               |            |      |  | 10,542,801    |            |   |  | 9,721,990     |           |   |  | 10,110,263    |          
|Excess of book value over cost of
subsidiaries acquired, net          |                      |  |                                                                  |            |      |  | 328,230                                                  |            |      |  | 385,600       |            |   |  | 107,165       |           |   |  |              |          
|Capital stock                                                         |                      |  | 11,941,231                                                        |            |      |  | 13,530,346                                               |            |      |  | 13,473,996    |            |   |  | 13,481,692    |           |   |  | 13,436,608    |          
|Total stockholders equity(6)                                         |                      |  | 12,427,637                                                        |            |      |  | 13,305,458                                               |            |      |  | 12,063,423    |            |   |  | 12,053,948    |           |   |  | 12,033,024    |          
|U.S. GAAP:                                                            |                      |  |                                                                   |            |      |  |                                                          |            |      |  |               |            |   |  |               |           |   |  |               |          
|Total assets                                                          |                      |  | 22,929,005                                                        |            |      |  | 24,565,020                                               |            |      |  | 23,276,592    |            |   |  | 21,392,732    |           |   |  | 21,583,948    |          
|Long-term debt                                                        |                      |  | 7,490,995                                                         |            |      |  | 8,271,382                                                |            |      |  | 6,671,704     |            |   |  | 6,788,343     |           |   |  | 6,243,037     |          
|Capital stock                                                         |                      |  | 11,941,211                                                        |            |      |  | 13,530,324                                               |            |      |  | 13,473,974    |            |   |  | 13,481,692    |           |   |  | 13,436,608    |          
|Total stockholders equity                                            |                      |  | 9,764,160                                                         |            |      |  | 10,153,558                                               |            |      |  | 9,238,365     |            |   |  | 8,876,522     |           |   |  | 8,579,574     |          
|                                                                     
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|Other Financial Information:                                          |                      |  |                                                                   |            |      |  |                                                          |            |      |  |               |            |   |  |               |           |   |  |               |          
|Mexican GAAP:                                                         |                      |  |                                                                   |            |      |  |                                                          |            |      |  |               |            |   |  |               |           |   |  |               |          
|Capital expenditures                                                  |                      |  | 2,051,457                                                         |            |      |  | 2,796,642                                                |            |      |  | 1,610,947     |            |   |  | 690,214       |           |   |  | 556,477       |          
|Depreciation and amortization                                         |                      |  | 805,187                                                           |            |      |  | 1,056,085                                                |            |      |  | 792,256       |            |   |  | 828,287       |           |   |  | 986,851       |          
|Resources provided by (used in):                                      |                      |  |                                                                   |            |      |  |                                                          |            |      |  |               |            |   |  |               |           |   |  |               |          
|                                                                      | Operating activities |  |                                                                   | 255,614    |      |  |                                                          | 388,848    |      |  |               | 1,674,923  |   |  |               | 1,540,402 |   |  |               | 1,390,035 |  
|                                                                      | Financing activities |  |                                                                   | 918,397    |      |  |                                                          | 2,920,416  |      |  |               | (612,519   | ) |  |               | (984,153  | ) |  |               | (809,696  | )
|                                                                      | Investing activities |  |                                                                   | (3,051,880 | )    |  |                                                          | (3,264,343 | )    |  |               | (1,377,318 | ) |  |               | (270,391  | ) |  |               | (538,857  | )
|U.S. GAAP:                                                            |                      |  |                                                                   |            |      |  |                                                          |            |      |  |               |            |   |  |               |           |   |  |               |          
|Depreciation and amortization                                         |                      |  | 863,606                                                           |            |      |  | 1,168,507                                                |            |      |  | 1,044,089     |            |   |  | 1,142,004     |           |   |  | 1,035,850     |          
|Net cash provided by (used in):                                       |                      |  |                                                                   |            |      |  |                                                          |            |      |  |               |            |   |  |               |           |   |  |               |          
|                                                                      | Operating activities |  |                                                                   | 30,932     |      |  |                                                          | 285,414    |      |  |               | 1,456,356  |   |  |               | 1,283,664 |   |  |               | 965,934   |  
|                                                                      | Investing activities |  |                                                                   | (3,333,247 | )    |  |                                                          | (3,696,363 | )    |  |               | (1,550,396 | ) |  |               | (271,988  | ) |  |               | (541,600  | )
|                                                                      | Financing activities |  |                                                                   | 1,433,751  |      |  |                                                          | 3,507,678  |      |  |               | (174,353   | ) |  |               | (715,144  | ) |  |               | (561,196  | )
|                                                                     
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|                                                                     
|Operating Data:                                                       |                      |  |                                                                   |            |      |  |                                                          |            |      |  |               |            |   |  |               |           |   |  |               |          
|Sales volume (thousands of tons):                                     |                      |  |                                                                   |            |      |  |                                                          |            |      |  |               |            |   |  |               |           |   |  |               |          
|Gruma Corporation (corn flour and tortillas)                          |                      |  | 723                                                               |            |      |  | 799                                                      |            |      |  | 836           |            |   |  | 856           |           |   |  | 899           |          
|GIMSA (corn flour)                                                    |                      |  | 1,786                                                             |            |      |  | 1,547                                                    |            |      |  | 1,507         |            |   |  | 1,436         |           |   |  | 1,386         |          
|Venezuelan Operations (corn flour, wheat
flour and other products)    |                      |  |                                                                  |            |      |  | 221                                                      |            |      |  | 455           |            |   |  | 458           |           |   |  | 454           |          
|Molinera de México (wheat flour)                                      |                      |  | 245                                                               |            |      |  | 318                                                      |            |      |  | 480           |            |   |  | 489           |           |   |  | 536           |          
|Gruma Centro América (corn flour and other
products)                  |                      |  | 126                                                               |            |      |  | 137                                                      |            |      |  | 146           |            |   |  | 149           |           |   |  | 143           |          
|PRODISA (tortillas and bread)                                         |                      |  | 19                                                                |            |      |  | 30                                                       |            |      |  | 29            |            |   |  | 28            |           |   |  | 15            |          
|Production capacity (thousands of tons):                              |                      |  |                                                                   |            |      |  |                                                          |            |      |  |               |            |   |  |               |           |   |  |               |          
|Gruma Corporation (corn flour and tortillas)                          |                      |  | 1,065                                                             |            |      |  | 1,312                                                    |            |      |  | 1,329         |            |   |  | 1,335         |           |   |  | 1,346         |          
|GIMSA (corn flour)(7)                                                 |                      |  | 2,345                                                             |            |      |  | 2,345                                                    |            |      |  | 2,345         |            |   |  | 2,345         |           |   |  | 2,345         |          
|Venezuelan Operations (corn flour, wheat
flour and other products)(8) |                      |  |                                                                  |            |      |  | 789                                                      |            |      |  | 780           |            |   |  | 792           |           |   |  | 792           |          
|Molinera de México (wheat flour)                                      |                      |  | 495                                                               |            |      |  | 734                                                      |            |      |  | 752           |            |   |  | 752           |           |   |  | 752           |          
|Gruma Centro América (corn flour and other
products)                  |                      |  | 151                                                               |            |      |  | 163                                                      |            |      |  | 172           |            |   |  | 181           |           |   |  | 217           |          
|PRODISA (tortillas and bread)                                         |                      |  | 73                                                                |            |      |  | 73                                                       |            |      |  | 81            |            |   |  | 42            |           |   |  | 42            |          
|Number of employees                                                   |                      |  | 14,707                                                            |            |      |  | 16,513                                                   |            |      |  | 17,208        |            |   |  | 15,585        |           |   |  | 14,887        |          

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|(1) |  | Net sales for 1998 include complementary revenues received from the
Mexican government in connection with a government program that subsidized
the cost of corn flour and tortillas. This program was terminated on
December 31, 1998. Complementary revenues amounted to Ps.837 million for
the year ended December 31, 1998. See Item 5. Operating and Financial
Review and ProspectsManagements Discussion and Analysis of Financial
Condition and Results of OperationsFactors Affecting Financial Condition
and Results of OperationsEffects of Deregulation of the Mexican Tortilla
and Corn Flour Industry.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The consolidated provision for income taxes and profit sharing was a net
benefit of Ps.74 million in 1998, primarily as a result of the deferred
tax benefit recognized for the future tax benefits of the technological
and other rights which Gruma Corporation, our principal U.S. Subsidiary
(Gruma Corporation), purchased from one of our Mexican subsidiaries.
This benefit offset an increase in the current provision, which resulted
from higher asset tax payments made by Mexican subsidiaries in 1998.                                                                                                   
|   
|(3) |  | Other items include extraordinary items, equity in earnings of associated
companies and gain from sale of subsidiaries and associated companies
common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(4) |  | Based upon weighted average of outstanding shares of our common stock (in
millions), giving retroactive effect to the stock dividend declared in
April 1999, as follows: 359,910 shares for the year ended December 31,
1998; 377,456 shares for the year ended December 31, 1999; 435,515 shares
for the year ended December 31, 2000; 433,235 shares for the year ended
December 31, 2001; and 446,202 for the year ended December 31, 2002.                                                                                                                                                                          
|   
|(5) |  | Short-term debt consists of bank loans and the current portion of
long-term debt. Long-term debt consists of debentures and bank loans.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(6) |  | Total stockholders equity includes minority interests as follows:
Ps.2,492 million at December 31, 1998; Ps.2,946 million at December 31,
1999; Ps.2,573 million at December 31, 2000; Ps.2,514 million at December
31, 2001; and Ps.2,585 million at December 31, 2002.                                                                                                                                                                                                                                                                                                                                               
|   
|(7) |  | Includes 300,000 tons of temporarily idled production capacity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|(8) |  | Includes 46,170 tons of temporarily idled production capacity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

DIVIDENDS

Our ability to pay dividends is limited by Mexican law, our bylaws
(estatutos sociales) and by financial covenants contained in some of our credit
agreements. Because we are a holding company with no significant operations of
our own, we have distributable profits to pay dividends to the extent that we
receive dividends from our subsidiaries. Accordingly, there can be no
assurance that we will pay dividends or of the amount of any such dividends.

Pursuant to Mexican law and our bylaws, the declaration, amount and
payment of dividends are determined by a majority vote of the holders of the
outstanding shares represented at a duly convened shareholders meeting,
generally, but not necessarily, based on the recommendation of the board of
directors. The amount of any future dividend would depend on, among other
things, operating results, financial condition, cash requirements, losses for
prior fiscal years, future prospects, the extent to which debt obligations
impose restrictions on dividends and other factors deemed relevant by the board
of directors and the shareholders.

In addition, under Mexican law, companies may only pay dividends:



| |  |  | from earnings included in year-end financial statements that
are approved by shareholders at a duly convened meeting;                                                                    
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | after any existing losses applicable to prior years have been
made up or absorbed into capital;                                                                                          
|
| |  |  | after at least 5% of net profits for the relevant fiscal year
have been allocated to a legal reserve until the amount of the
reserve equals 20% of a companys paid-in capital stock; and
|
| |  |  | after shareholders have approved the payment of the relevant
dividends at a duly convened ordinary shareholders meeting.                                                                

Holders of our American Depositary Receipts, or ADRs, on the applicable
record date are entitled to receive dividends declared on the shares
represented by American Depositary Shares, or ADSs, evidenced by such ADRs.
The depositary will fix a record date for the holders of ADRs in respect of
each dividend distribution. We pay dividends in pesos and holders of ADSs will
receive dividends in U.S. dollars (after conversion by the depositary from
pesos, if not then restricted under applicable law) net of the fees, expenses,
taxes and governmental charges payable by holders under the laws of Mexico and
the terms of the deposit agreement.

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The ability of our subsidiaries to make distributions to us is limited by
the laws of each country in which they were incorporated and by their
constitutive documents. For example, our ability to repatriate dividends from
our Venezuelan Operations may be adversely affected by exchange controls and
other recent events. See Item 3. Risk FactorsRisks Related to
VenezuelaVenezuela Presents Significant Economic Uncertainty and Political
Risk. In the particular case of Gruma Corporation, our principal U.S.
subsidiary, its ability to pay dividends is subject to financial covenants
contained in some of its debt and lease agreements, including covenants which
limit the amount of dividend payments. Upon the occurrence of any default or
event of default under these credit and lease agreements, Gruma Corporation
generally is prohibited from making any dividend or other payments. See Item
5. Operating and Financial Review and ProspectsLiquidity and Capital
ResourcesIndebtedness.

In April 1999, we issued 5,882,717 series B shares in connection with the
capitalization of retained earnings of approximately Ps.135.6 million. In that
year we issued a stock dividend of one series B share for each 60 outstanding
series B shares. We did not pay dividends in 2000, 2001 or 2002. In 2003, we
paid dividends of Ps.287 million.

EXCHANGE RATE INFORMATION

Mexico has had a free market for foreign exchange since 1991. Prior to
December 1994, the Mexican central bank (Banco de México) kept the peso-U.S.
dollar exchange rate within a range prescribed by the government through
intervention in the foreign exchange market. In December 1994, the government
suspended intervention by Banco de Méxicoand allowed the peso to float freely
against the U.S. dollar. The peso declined sharply in December 1994 and
continued to fall under conditions of high volatility in 1995. In 1996 and
most of 1997, the peso fell more slowly and was less volatile. In the last
quarter of 1997 and for much of 1998, the foreign exchange markets were
volatile as a result of financial crises in Asia and Russia and financial
turmoil in countries including Brazil and Venezuela. The peso declined during
this period, but was relatively stable in 1999, 2000 and 2001. However,
economic and financial crises in Argentina and civil and political unrest in
Venezuela resulted in volatility in the foreign exchange markets in 2002,
including a decline in the value of the peso against the U.S. dollar. To date
in 2003, the foreign exchange markets have remained volatile due to
international developments, including events in Argentina and Venezuela as well
as the war in Iraq. There can be no assurance that the government will
maintain its current policies with regard to the peso or that the peso will not
depreciate or appreciate in the future.

The following table sets forth, for the periods indicated, the high, low,
average and period-end noon buying rate in New York City for cable transfers in
pesos published by the Federal Reserve Bank of New York, expressed in pesos per
U.S. dollar. The rates have not been restated in constant currency units.

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|                       |               |         |                                  |         |  |            |           |            |  |  |           |         |  |  |           |         | 
|---------------------- | ------------- | ------- | -------------------------------- | ------- |  | ---------- | --------- | ---------- |  |  | --------- | ------- |  |  | --------- | ------- | 
|                       |               |         | Noon Buying Rate (Ps. Per U.S.$)
|                       |               |         |                                 
|Year                   |               | High(1) |                                  | Low(1)  |  | Average(2) |           | Period End
|                       |               |         |                                  |         |  |            |           |           
|1998                   |               |         | Ps.10.6300                       |         |  |            | Ps.8.0400 |            |  |  | Ps.9.2425 |         |  |  | Ps.9.9010 |        
|1999                   |               |         | 10.6000                          |         |  |            | 9.2430    |            |  |  | 9.5630    |         |  |  | 9.4800    |        
|2000                   |               |         | 10.0870                          |         |  |            | 9.1825    |            |  |  | 9.4716    |         |  |  | 9.6180    |        
|2001                   |               |         | 9.9720                           |         |  |            | 8.9460    |            |  |  | 9.3255    |         |  |  | 9.1560    |        
|2002                   |               |         | 10.4250                          |         |  |            | 9.0005    |            |  |  | 9.7458    |         |  |  | 10.4250   |        
|2003 (through June 18) |               |         | 11.2350                          |         |  |            | 10.1130   |            |  |  | 10.6720   |         |  |  | 10.5980   |        
|                       | December 2002 |         |                                  | 10.4245 |  |            |           | 10.1025    |  |  |           | 10.2250 |  |  |           | 10.4250 | 
|                       | January 2003  |         |                                  | 10.9780 |  |            |           | 10.3210    |  |  |           | 10.6220 |  |  |           | 10.9020 | 
|                       | February 2003 |         |                                  | 11.0640 |  |            |           | 10.7740    |  |  |           | 10.9450 |  |  |           | 11.0285 | 
|                       | March 2003    |         |                                  | 11.2350 |  |            |           | 10.6610    |  |  |           | 10.9050 |  |  |           | 10.7820 | 
|                       | April 2003    |         |                                  | 10.7700 |  |            |           | 10.3080    |  |  |           | 10.5890 |  |  |           | 10.3080 | 
|                       | May 2003      |         |                                  | 10.4240 |  |            |           | 10.1130    |  |  |           | 10.2530 |  |  |           | 10.3400 | 
|                       | June 2003(3)  |         |                                  | 10.7390 |  |            |           | 10.2440    |  |  |           | 10.5220 |  |  |           | 10.5980 | 



---

|(1) |  | Rates shown are the actual low and high, on a day-by-day basis for each
period.
|--- |  | -------------------------------------------------------------------------------
|   
|(2) |  | Average of month-end rates.                                                    
|   
|(3) |  | Through June 18, 2003.                                                         

On June 18, 2003, the noon buying rate for pesos was Ps.10.5980 to
U.S.$1.00.

RISK FACTORS

Risks Relating to Mexico

Our Business Operations Could Be Affected by Economic Conditions in Mexico

We are a Mexican company with a significant portion of our consolidated
assets located in Mexico and 35% of our consolidated net sales derived from our
Mexican operations. As a result, Mexican economic conditions could impact our
sales and profitability.

In December 1994, Mexico experienced an economic crisis characterized by
exchange rate instability and significant devaluation of the peso, increased
inflation, high domestic interest rates, a substantial outflow of capital,
negative economic growth, reduced consumer purchasing power and high
unemployment. In addition, the financial crises in 1998 and early 1999 in
Asia, Russia and Latin America resulted in instability in the foreign exchange
markets and international financial markets. These events resulted in limited
liquidity for the Mexican government and for local corporations as well as an
increase in interest rates in Mexico. The recent economic and financial crises
in Argentina and recent civil and political unrest in Venezuela could produce
similar results. See Adverse Developments in Other Emerging Market Countries
May Affect Mexico or the Price of Our Securities. Although the Mexican
economy declined by 0.3% in 2001, the Mexican economy grew by 0.9% in 2002 and
by 2.3% in the first quarter of 2003. In April 2003, Banco de Méxicodecreased
the official growth forecast for 2003 to 2.4% from its initial prediction of
3.0%.

Our Business Operations Could Be Affected by Government Policies in Mexico

The Mexican government has exercised, and continues to exercise,
significant influence over the Mexican economy. Mexican governmental actions
concerning the economy could have a significant effect on Mexican private
sector entities, as well as on market conditions, prices and returns on
securities of Mexican issuers, including our securities.

On December 1, 2000, Vicente Fox of the Partido Acción Nacional(National
Action Party, or PAN) was inaugurated as president of Mexico, ending more than
70 years of presidential rule by the Partido Revolucionario Institucional
(Institutional Revolutionary Party, or PRI). Neither the PRI nor the PAN
succeeded in securing a majority in the Congress or Senate. Congressional
elections will be held in July 2003 and may result in the PRI or the PAN
securing a majority in the Congress. The acquisition of control of the
Congress by the PRI or PAN could

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result in changes in Mexicos economic and other policies that may
adversely affect our business and results of operations.

In the case of our sales of corn flour, governmental policies have
affected us negatively and may continue to do so. The elimination of the
tortilla subsidy for consumers, coupled with the governments decision to close
Compañía Nacional de Subsistencias Populares, or CONASUPO, which resulted in
the sale of its corn reserves at below market prices, reduced sales and hurt
profits in 1999. In the months leading up to the July 2000 presidential
election, the government took other steps that further reduced corn prices,
such as increasing the number of corn import permits issued to corn traders.
These actions drove down the domestic price of corn, which further reduced
sales of corn flour. During 2001, 2002 and 2003, the Mexican government issued
import permits based upon the availability of domestic corn, which contributed
to the stability of domestic corn prices during this period. In 2003, however,
the number of import permits issued by the Mexican government has decreased due
to sufficient availability of domestic corn. See Item 5. Operating and
Financial Review and ProspectsManagements Discussion and Analysis of
Financial Condition and Results of OperationsFactors Affecting Financial
Condition and Results of OperationsEffects of Deregulation of the Mexican
Tortilla and Corn Flour Industry.

The level of environmental regulation and enforcement in Mexico has
increased in recent years. The Comision Nacional del Agua, or CNA, has brought
enforcement proceedings against us for water discharges from two of our
facilities in Mexico. While we are vigorously defending this action, we cannot
assure you that we will succeed or that further actions of this type will not
be brought against us. We expect the trend toward greater environmental
regulation and enforcement to continue and to be accelerated by international
agreements between Mexico and the United States. The promulgation of new
environmental regulations or higher levels of enforcement may adversely affect
us.

Devaluations of the Mexican Peso Affect our Financial Performance

The peso has depreciated substantially against the U.S. dollar in the past
and may depreciate significantly in the future. As of December 31, 2002, 98%
of our debt obligations were denominated in U.S. dollars. However, we generate
48% of our revenues in U.S. dollars which in 2002 represented 132% of our then
outstanding debt obligations. While the dollar revenues we earn may act as a
natural hedge for part of our dollar-denominated debt obligations, we have not
entered into derivative contracts to hedge our foreign currency risk.
Therefore, we remain exposed to foreign exchange risks that could affect our
ability to meet our obligations and result in foreign exchange losses on our
dollar-denominated obligations.

The peso depreciation of 1994 to 1996 resulted in an aggregate net foreign
exchange loss of Ps.295 million over this three-year period. We posted net
foreign exchange losses in 2000 of Ps.61 million, net foreign exchange gains of
Ps.100 million in 2001 and net foreign exchange losses of Ps.263 million in
2002. Any significant decrease in the value of the peso relative to the U.S.
dollar in the near term may have an adverse effect on our liquidity and on our
ability to meet our dollar-denominated debt obligations.

High Levels of Inflation and High Interest Rates in Mexico Could Adversely
Affect the Business Climate in Mexico and our Financial Condition and Results
of Operations

Mexico has experienced high levels of inflation in recent years. The
annual rate of inflation, as measured by changes in the National Consumer Price
Index, was 8.96% for 2000, 4.40% for 2001 and 5.70% for 2002. From January
through May 2003, the inflation rate was 1.16%. On June 18, 2003, the 28-day
CETES rate was 5.31%. While the substantial part of our debt is
dollar-denominated at this time, high interest rates in Mexico may adversely
affect the business climate in Mexico generally and our financing costs in the
future and thus our financial condition and results of operations.

Adverse Developments in Other Emerging Market Countries May Affect Mexico or
the Price of Our Securities

We are a Mexican company with substantial operations in Mexico, Venezuela
and Central America. The prices of securities issued or guaranteed by Mexican
companies have been, to varying degrees, and the Mexican economy has been,
influenced by economic and market conditions in other emerging market
countries, particularly in Latin America. Although economic, political and
other conditions are different in each country, investors

9



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reactions to developments in one country may affect the securities of
issuers or guarantors in other countries, including Mexico.

In late October 1997, prices of Mexican equity securities dropped
substantially, precipitated by a sharp drop in value of Asian markets.
Similarly, in the second half of 1998, prices of Mexican securities were
adversely affected by the economic crises in Russia and in Brazil.

Argentinas insolvency and recent default on its public debt, which
deepened the existing financial, economic, and political crises in that
country, may adversely affect Latin America generally or securities of issuers
or guarantors in other Latin American countries or with operations in other
Latin American countries. To the extent that the Argentine government is
unsuccessful in preventing further economic decline, the crisis in Argentina
may adversely affect issuers or guarantors in other Latin American countries or
with operations in other Latin American countries.

Events in Venezuela, where we derived 11.6% of our net sales in 2002, may
adversely affect us. In recent years, Venezuela has experienced considerable
volatility and depreciation of its currency, high interest rates, political
instability and civil unrest. In February 2002, the government abandoned its
policy of locking the Venezuelan bolívar within an exchange rate band in favor
of a free floating exchange rate system, resulting in an immediate 35%
depreciation of the Venezuelan bolívar. The April 2002 coup, which ousted
President Hugo Chávez from office for two days, marked the climax of the
political instability that continued throughout the remainder of 2002. In
addition, a nation-wide general strike that began in early December 2002 and
lasted for approximately two months has caused a significant reduction in oil
production in Venezuela, and has had a material adverse effect on Venezuelas
oil-dependent economy. In 2002, inflation in Venezuela reached 31.2%, the
Venezuelan bolívar depreciated 85.1% against the U.S. dollar and Venezuelas
gross domestic product decreased 8.9%. More recently, in February 2003, in
response to the general strike and in an effort to shore up the economy and
control inflation, Venezuelan authorities imposed foreign exchange and price
controls. Further economic stagnation in the private sector is expected to
result as a consequence of these market distortions. There is a risk that a
continuation or worsening of these conditions could adversely affect us or
Mexico, generally, or issuers or guarantors in other countries, including
Mexico.

The market value of our shares and ADSs may be adversely affected by the
events in Argentina and Venezuela as well as other events in other countries.

Terrorist Attacks and Certain Actions Taken by the United States or Others
Could Adversely Affect Economic Conditions Globally, Which May Have a Negative
Affect on Our Business

The terrorist attacks on September 11, 2001 depressed economic activity in
the United States and globally, including in Mexico. It is not certain how
long these economic conditions will continue. If additional terrorist attacks
occur, the post-war situation in Iraq worsens or other wars are declared by the
United States or others, economic conditions in the United States and
internationally are likely to deteriorate. Our business, financial condition
and results of operations may be materially and adversely affected as a result
of any such actions. These events could also adversely affect the market value
of our shares and ADSs.

You May Be Unable to Enforce Judgments Against Us in Mexican Courts

We are a Mexican corporation (sociedad anónima de capital variable). Most
of our directors and executive officers are residents of Mexico, and a
significant portion of the assets of our directors and executive officers, and
a significant portion of our assets, are located in Mexico. You may experience
difficulty in effecting service of process upon our company or our directors
and executive officers in the United States, or, more generally, outside of
Mexico and in enforcing civil judgments of non-Mexican courts in Mexico,
including judgments predicated on civil liability under U.S. federal securities
laws, against us, or our directors and executive officers. We have been
advised by Salvador Vargas Guajardo, Esq., our General Counsel, that there is
doubt as to the enforceability in original actions in Mexican courts of
liabilities predicated solely on the U.S. federal securities laws.

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Differences Between Mexican GAAP and U.S. GAAP May Have an Impact on the
Presentation of Our Financial Information

Our annual audited consolidated financial statements are prepared in
accordance with Mexican GAAP, which differ in some significant respects from
U.S. GAAP. Financial results reported using Mexican GAAP may differ
substantially from those results that would have been obtained using U.S. GAAP.
We are required, however, to file an annual report on Form 20-F containing
financial statements reconciled to U.S. GAAP, although this filing only
contains year-end financial statements reconciled to U.S. GAAP for our three
most recent fiscal years. See Note 20 to our audited consolidated financial
statements.

Risks Relating to Our Company

The Presence of Genetically Altered Corn and Wheat in Our Products May Have a
Negative Impact on Our Sales, Profits or Stock Price

As we do not grow our own corn or wheat, we are required to buy these
items from various producers in the United States, Mexico and elsewhere.
Although we only buy corn and wheat from farmers and grain elevators who agree
to supply us with approved varieties of grain and we have developed a protocol
to test and monitor our grain for certain strains of bacteria and chemicals
that have not been approved for human consumption, we may unwittingly buy
genetically modified corn that is not approved for human consumption. This may
result in costly recalls and subject us to lawsuits.

In recent years, various claims have been alleged, mostly in the United
States and the European Union, that genetically modified foods are unsafe for
human consumption, pose risks of damage to the environment and create legal,
social and ethical dilemmas. Some countries, particularly in the European
Union, have instituted a de facto moratorium on the import of grain produced
from genetically modified seeds. Some countries have imposed labeling
requirements on genetically modified agricultural and food products, which may
affect the acceptance of these products. To the extent that we may be
perceived to be a seller of genetically modified foods, this may have a
significant negative impact on our sales, profits or stock price or may force
us to pay a premium for non-genetically modified foods.

Claims Related to the Alleged
Presence of StarLink Yellow Corn in Cornmeal
Sold May Have a Significant Effect on Our Profitability

In October 2000, two of our U.S. subsidiaries initiated a voluntary recall
of all yellow corn products, replacing them with products made from white corn
because of the possibility that the yellow corn products may have contained
StarLink, a protein not approved for human consumption in the United States.
Because of this, for a time we sold only products made from white corn in the
U.S., which is more expensive than yellow corn.

Since that date we have been sued by various parties alleging damages due
to the alleged presence of this protein. We cannot assure you that we will not
be subject to additional suits regarding this matter or similar matters in the
future. However, this risk has been reduced by our implementation of a
stringent testing protocol, our agreement with a third party to indemnify us
for consumer claims alleging the presence of StarLink yellow corn, and the
Cry9C protein, in our products and the Environmental Protection Agencys
promulgation of the Plant Incorporated Protectant Rule, or PIP Rule, which
states that the detection of DNA tracks of the Cry9C protein in products will
no longer provide, by itself, a basis for government intervention.

Further Downgrades of Our Debt May Increase Our Financing Costs

In November 1999, Standard & Poors lowered the rating on our U.S.$250
million unsecured notes due 2007 from triple-B-minus to double-B-plus. In
September 2000, Moodys downgraded our debt from Ba1 to Ba2. Additionally, in
May 2001, Standard & Poors lowered our corporate credit rating to double-B
from double-B-plus. Although Standard & Poors and Moodys changed our outlook
from negative to stable in April 2002 and June 2002, respectively, Standard &
Poors changed our outlook from stable to positive in December 2002 and
Standard & Poors raised our corporate credit rating to double-B-plus in June
2003, future downgrades or changes in outlook could cause our costs with
respect to new debt to increase which could ultimately affect our stock price
and increase our financing costs.

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Fluctuations in the Cost and Availability of Corn and, to a Lesser Extent,
Wheat May Affect Our Financial Performance

Our financial performance depends upon the price and availability of corn
and, to a lesser extent, wheat flour and wheat as each raw material represented
29%, 16% and 13% of our cost of sales in 2002, respectively. Mexican and world
markets have experienced periods of over-supply and shortage of corn and wheat,
some of which have caused adverse effects on our results of operations.
Because of this volatility, we may not always be able to pass along our
increased costs to our customers in the form of price increases. We cannot
always predict whether or when shortages or over-supply of corn and wheat will
occur. In addition, as described above, future Mexican or other governmental
actions could affect the price and availability of corn and wheat. Any adverse
developments in domestic and international corn and wheat markets could have a
material adverse effect upon our business, financial condition, results of
operations and prospects.

We Have Suffered Losses at PRODISA, Our Mexican Packaged Tortilla Operations

We have suffered operating losses at PRODISA, our packaged tortilla
operations in Mexico, amounting to Ps.302 million in 2000, Ps.228 million in
2001 and Ps.76 million in 2002. PRODISAs operating losses in 2000 and 2001
resulted primarily from the operation of the bread business which was
discontinued in November 2001. Although PRODISA reported earnings improvements
in 2002, we cannot assure you that this trend will continue.

Risks Related to Venezuela

Venezuela Presents Significant Economic Uncertainty and Political Risk

Our operations in Venezuela accounted for approximately 11.6% of our net
sales in 2002. The current president, Hugo Chávez, who led one of two 1992
coup attempts, was elected in December 1998. The new constitution, brought
into force in December 1999, required new elections, which were held on July
20, 2000. Chávez was re-elected for a six-year term. His election, as a
candidate of the Movimiento Quinta República, or MRV, represents a radical
disenfranchisement of the Venezuelan population from traditional political
parties. Subsequent congressional elections failed to result in the MRV
gaining decisive control of the legislative body. Therefore, it is difficult
and premature to determine the nature of new policies this administration will
adopt towards the private sector and our business in particular. Our financial
condition and results of operations may be adversely affected by such policies.

Historically, the Venezuelan government has exercised significant
influence over the Venezuelan economy. Although the government has, during the
last five years, intermittently undertaken reform programs to lessen its role
in the economy, the government continues to exert influence over the economy.
Such policies deal with controlling inflation and adjusting the value of the
bolívar, the Venezuelan currency. Government actions are likely to continue to
have a major effect on Venezuelan entities, market conditions, prices and
returns on securities carrying Venezuelan risks.

On February 12, 2002, Venezuelas government floated its currency, ending
a five-year-old regime that permitted the bolívar to trade only within a fixed
band. The Venezuelan government took this step as a result of severe strains
on the exchange rate and a substantial erosion in international reserves.
Capital flight, inflation, a recession and the devaluation of the bolívar have
been the result. The bolívar depreciated significantly against the U.S. dollar
as a result of this action. On February 11, 2002, the noon buying rate in New
York City for cable transfers in bolívars published by the Federal Reserve Bank
of New York was 769.00 to U.S.$1.00 and on December 31, 2002, the noon buying
rate for bolívars was 1,392.00 to U.S.$1.00. In response to the nation-wide
general strike and in an effort to shore up the economy and control inflation,
Venezuelan authorities imposed foreign exchange and price controls in early
2003. Foreign exchange controls could limit our ability to convert bolívars
into other currencies and transfer funds out of Venezuela. On February 6,
2003, the Venezuelan government set a single fixed exchange rate for the
bolívar against the U.S. dollar of 1,600.00 bolívars to U.S.$1.00 (on February
5, 2003, the noon buying rate for bolívars was 1,924.00 to U.S.$1.00). On
February 11, 2003, the Venezuelan government established price controls on
products such as corn flour and wheat flour. Because a portion of our sales
are denominated in bolívars, our Venezuelan Operations produce products that
are subject to price controls and we may have difficulties repatriating
dividends from our Venezuelan Operations due to exchange controls, our
financial condition and results of operations have been and may continue to be
adversely affected.

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Recent Civil and Political Unrest in Venezuela Has Had and May Continue to Have
An Adverse Impact on Our Operations

In recent years, political instability and civil unrest have plagued
Venezuela. See Risks Relating to MexicoAdverse Developments in Other
Emerging Market Countries May Affect Mexico or the Price of Our Securities.
The severe civil and political unrest in Venezuela presents a risk to our
business that we cannot control and that cannot be accurately measured or
estimated. For example, as a result of the nation-wide general strike that
began in early December 2002, our Venezuelan Operations temporarily suspended
operations for an average of 14 days. The situation in Venezuela remains
unstable and a continuation or worsening of the political instability and civil
unrest in that country could materially and adversely impact our business,
operations, financial condition and results of operations.

Risks Related to the United States

We May Be Unable to Maintain Our U.S. Profit Margin in the Face of a
Consolidated Retail Environment

Net sales in the U.S. constituted 48% of our total sales in 2002. As the
retail grocery trade continues to consolidate and our retail customers grow
larger and become more sophisticated, our retail customers demand lower pricing
and increased promotional programs. There is a risk that we will not be able
to maintain our U.S. profit margin in this environment.

Risks Related to Our Controlling Shareholders and Capital Structure

Holders of ADSs May Not Be Able to Vote at our Shareholders Meetings

Our shares are traded on the New York Stock Exchange in the form of ADSs.
There can be no assurance that holders of our shares through ADSs will receive
notices of shareholder meetings from our ADS depositary with sufficient time to
enable such holders to return voting instructions to our ADS depositary in a
timely manner. Under certain circumstances, a person designated by us may
receive a proxy to vote the shares underlying the ADSs at our discretion at a
shareholder meeting.

Holders of ADSs Are Not Entitled to Attend Shareholder Meetings, and They May
Only Vote Through the Depositary

Under Mexican law, a shareholder is required to deposit its shares with a
Mexican custodian in order to attend a shareholders meeting. A holder of ADSs
will not be able to meet this requirement, and accordingly is not entitled to
attend shareholders meetings. A holder of ADSs is entitled to instruct the
depositary as to how to vote the shares represented by ADSs, in accordance with
procedures provided for in the deposit agreement, but a holder of ADSs will not
be able to vote its shares directly at a shareholders meeting or to appoint a
proxy to do so. In addition, such voting instructions may be limited to
matters enumerated in the agenda contained in the notice to shareholders and
with respect to which information is available prior to the shareholders
meeting.

Holders of ADSs May Not Be Able to Participate in Any Future Preemptive Rights
Offering and as a Result May Be Subject to a Dilution of Equity Interest

Under Mexican law, if we issue new shares for cash as a part of a capital
increase, we must generally grant our shareholders the right to purchase a
sufficient number of shares to maintain their existing ownership percentage.
Rights to purchase shares in these circumstances are known as preemptive
rights. We may not legally be permitted to allow holders of our shares through
ADSs in the United States to exercise any preemptive rights in any future
capital increases unless (i) we file a registration statement with the U.S.
Securities and Exchange Commission, or SEC, with respect to that future
issuance of shares or (ii) the offering qualifies for an exemption from the
registration requirements of the Securities Act. At the time of any future
capital increase, we will evaluate the costs and potential liabilities
associated with filing a registration statement with the SEC, as well as the
benefits of preemptive rights to holders of our shares through ADSs in the
United States and any other factors that we consider important in determining
whether to file a registration statement.

We are under no obligation to, and there can be no assurance that we will,
file a registration statement with the SEC to allow holders of our shares
through ADSs in the United States to participate in a preemptive rights
offering. In addition, under current Mexican law, sales by the ADS depositary
of preemptive rights and distribution

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of the proceeds from such sales to the holders of our shares through ADSs
is not possible. As a result, the equity interest of holders of our shares
through ADSs would be diluted proportionately and such holders may not receive
any economic compensation. See Item 10. Additional
InformationBylawsPreemptive Rights.

The Protections Afforded to Minority Shareholders in Mexico Are Different From
Those in the United States

Under Mexican law, the protections afforded to minority shareholders are
different from those in the United States. In particular, the law concerning
fiduciary duties of directors and controlling shareholders is not well
developed and there are different procedural requirements for bringing
shareholder lawsuits. As a result, in practice it may be more difficult for
our minority shareholders to enforce their rights against us or our directors
or controlling shareholders than it would be for shareholders of a U.S.
company.

We Have Significant Transactions With Affiliates That Could Create Potential
Conflicts of Interest

We have obtained loans from a subsidiary of Grupo Financiero Banorte, S.A.
de C.V., a financial institution in which we own over 11% of its capital stock.
We purchase some of our inventory ingredients from our shareholder and
associate Archer-Daniels-Midland Company, or Archer-Daniels-Midland. During
2000, 2001 and 2002, we purchased U.S.$75 million, U.S.$90 million and U.S. $84
million, respectively, from Archer-Daniels-Midland. Transactions with
affiliates may create the potential for conflicts of interest. See Item 7.
Major Shareholders and Related Party TransactionsRelated Party Transactions.

Exchange Rate Fluctuations May Affect the Value of Our Shares

Fluctuations in the exchange rate between the Peso and the U.S. Dollar
will affect the U.S. Dollar value of an investment in our shares and of
dividend and other distribution payments on those shares. See Item 3. Key
InformationExchange Rate Information.

Our Bylaws Restrict the Ability of Non-Mexican Shareholders to Invoke the
Protection of Their Governments With Respect to Their Rights as Shareholders

As required by Mexican law, our bylaws provide that non-Mexican
shareholders shall be considered as Mexican in respect of their ownership
interests in Gruma, S.A. de C.V. and shall be deemed to have agreed not to
invoke the protection of their governments in certain circumstances. Under
this provision, a non-Mexican shareholder is deemed to have agreed not to
invoke the protection of its own government by asking such government to
interpose a diplomatic claim against the Mexican government with respect to the
shareholders rights as a shareholder, but is not deemed to have waived any
other rights it may have, including any rights under the U.S. securities laws,
with respect to its investment in Gruma, S.A. de C.V. If you invoke such
governmental protection in violation of this agreement, your shares could be
forfeited to the Mexican government.

Our Controlling Shareholder Exerts Substantial Control Over Our Company

As of April 30, 2003, Roberto González Barrera controlled directly or
indirectly approximately 53.5% of our outstanding shares. Consequently, Mr.
González Barrera has the power to elect the majority of our directors and to
determine the outcome of most actions requiring approval of our stockholders.
The interests of Mr. González Barrera may differ from those of our other
shareholders. Mr. González Barreras holdings are described under Item 7.
Major Shareholders and Related Party TransactionsMajor Shareholders.

Mr. González Barrera has pledged part of his shares in our company to
secure some of his borrowings. If the lenders enforce their rights against any
or all of these shares, Mr. González Barrera could lose control over us and a
change of control could result. In addition, this could trigger a default in
one of our credit agreements and have a material adverse effect upon our
business, financial condition, results of operations and prospects. For more
information about this pledge, see Item 7. Major Shareholders and Related
Party Transactions.

Archer-Daniels-Midland, Our Strategic Partner, Has Influence Over Some
Corporate Decisions

Archer-Daniels-Midland owns, directly or indirectly, approximately 29.7%
of our outstanding shares. However, a portion of such interest is held through
a Mexican corporation jointly owned with Mr. González Barrera, who has the sole
authority to determine how those shares are voted. Thus,
Archer-Daniels-Midland only has the

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right to vote 24.1% of our outstanding shares. In addition,
Archer-Daniels-Midland has the right to nominate two of the 14 members of our
board of directors and their corresponding alternates. Subject to certain
requirements under Mexican law, Archer-Daniels-Midland may also: initiate
civil lawsuits against members of the board of directors, members of the audit
committee, and statutory auditors for breach of duty; appoint a statutory
auditor; judicially oppose resolutions adopted at shareholder meetings; request
the deferral of any vote regarding an issue about which it does not believe it
has been sufficiently informed. As a result, Archer-Daniels-Midland may
influence the outcome of actions requiring the approval of our shareholders or
our board of directors. Mr. González Barrera and Archer-Daniels-Midland have
also granted each other rights of first refusal in respect of their shares in
our company, subject to specified conditions.

Our Relationship With Archer-Daniels-Midland Could Become Adverse and Hurt Our
Performance

Archer-Daniels-Midland owns, directly or indirectly, approximately 29.7%
of our outstanding shares and an interest of 5% in Molinos Nacionales, C.A., or
MONACA, 40.0% in Molinera de México, S.A. de C.V., or Molinera de México, and
20% in Azteca Milling, L.P., or Azteca Milling. These subsidiaries account for
33% of our revenue. Although we own a majority ownership interest in these
subsidiaries, in each of Azteca Milling and Molinera de Mexico we are required
to obtain the consent and cooperation of Archer-Daniels-Midland with respect to
certain matters in order to increase our capital expenditures and to implement
and expand upon our business strategies.

We cannot assure you that our relationships with Archer-Daniels-Midland
will be harmonious and successful. Disagreements with Archer-Daniels-Midland
could affect the execution of our strategy and, as a result, we may be placed
at a competitive disadvantage.

We Are a Holding Company and Depend Upon Dividends and Other Funds From
Subsidiaries to Service Our Debt

We are a holding company with no significant assets other than the shares
of our subsidiaries. As a result, our ability to meet our debt service
obligations depends primarily upon our receiving sufficient funds from our
subsidiaries. Under Mexican law, companies may only pay dividends:



| |  |  | from earnings included in year-end financial statements that
are approved by shareholders at a duly convened meeting;                                                                    
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | after any existing losses applicable to prior years have been
made up or absorbed into capital;                                                                                          
|
| |  |  | after at least 5% of net profits for the relevant fiscal year
have been allocated to a legal reserve until the amount of the
reserve equals 20% of a companys paid-in capital stock; and
|
| |  |  | after shareholders have approved the payment of the relevant
dividends at a duly convened meeting.                                                                                       

In addition, Gruma Corporation is subject to covenants in some of its debt
and lease agreements which partially restrict the amount of dividends that can
be paid, limit advances or loans to us, and require the maintenance of
specified financial ratios and balances. For additional information concerning
these restrictions on inter-company transfers, see Item 3. Key
InformationDividends and Item 5. Operating and Financial Review and
ProspectsLiquidity and Capital Resources.

We own approximately 83.2% of the outstanding shares of Grupo Industrial
Maseca, S.A. de C.V., or GIMSA, 95% of MONACA, 50% of Derivados de Maíz
Seleccionado, S.A. or DEMASECA, 80% of Azteca Milling (through Gruma
Corporation) and 60% of Molinera de México. Accordingly, we are entitled to
receive only our pro ratashare of any of these subsidiaries dividends.

Our ability to repatriate dividends from our Venezuelan Operations may be
adversely affected by exchange controls and other recent events. See Item 3.
Risk FactorsRisks Related to VenezuelaVenezuela Presents Significant Economic
Uncertainty and Political Risk.

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ITEM 4. Information on the Company.

DESCRIPTION OF BUSINESS

We are one of the largest corn flour and tortilla producers and
distributors in the world. Based on production and sales volumes, we are one
of the leading producers and distributors of corn flour and tortillas in the
United States, the leading producer of corn flour and one of the leading
producers of wheat flour in Mexico and the second largest producer of corn
flour and wheat flour in Venezuela. We are also the largest producer of corn
flour and tortillas in Central America.

Our focus has been and continues to be the efficient and profitable
expansion of our core businesscorn flour, tortilla, and wheat flour
production. We pioneered the dry corn flour method of tortilla production,
which offers several advantages over the centuries-old traditional wet dough
method. These advantages include higher production yields, reduced production
costs, more uniform quality and longer shelf life. The corn flour method of
production offers significant opportunities for growth. Using our technology
and know-how, we hope to encourage tortilla and tortilla chip producers in
Mexico, Central America and the United States to convert to the corn flour
method of tortilla and tortilla chip production. As a result of these efforts,
we have become one of the leading tortilla producers in the United States and
have been increasing the strength of our brand name. In addition, we hope to
increase the presence of other areas of our business, including packaged
tortillas in the United States, Mexico, Central America and Europe and wheat
flour in Mexico and Venezuela.

The following table sets forth our revenues by geographic market for years
ended December 31, 2000, 2001 and 2002.

|                                             |  |                                                    |        |      |  |      |        |  |  |     |        | 
|-------------------------------------------- |  | -------------------------------------------------- | ------ | ---- |  | ---- | ------ |  |  | --- | ------ | 
|                                             |  | Year ended December 31,                           
|                                             |  |                                                   
|                                             |  | 2000                                               |        | 2001 |  | 2002
|                                             |  |                                                    |        |      |  |     
|                                             |  | (in millions of Pesos of constant purchasing power
|                                             |  | as of December 31, 2002)                          
|United States (includes
European operations) |  | Ps.                                                | 8,986  |      |  | Ps.  | 8,822  |  |  | Ps. | 9,276  | 
|Mexico                                       |  |                                                    | 6,847  |      |  |      | 6,913  |  |  |     | 6,617  | 
|Venezuela                                    |  |                                                    | 2,238  |      |  |      | 1,996  |  |  |     | 2,231  | 
|Central America                              |  |                                                    | 1,180  |      |  |      | 1,185  |  |  |     | 1,051  | 
|                                             |  |                                                    |        |      |  |      |        |  |  |     |        | 
|Total                                        |  | Ps.                                                | 19,251 |      |  | Ps.  | 18,916 |  |  | Ps. | 19,174 | 
|                                             |  |                                                    |        |      |  |      |        |  |  |     |        | 

History and Developmental Highlights

Gruma, S.A. de C.V. is a corporation (sociedad anónima de capital
variable)registered in Monterrey, Mexico under the Ley General de Sociedades
Mercantiles, or the Mexican Companies Law on December 24, 1971 with a corporate
life of 99 years. Our full legal name is Gruma, S.A. de C.V., but we are also
known by our commercial names: Gruma and Maseca. The address of our principal
executive office is Calzada del Valle Ote. 407, Colonia del Valle, San Pedro
Garza García, Nuevo León, 66220 México and our telephone number is (52)
818-3-99-33-00. Our legal domicile is Reforma No. 300, 6° Piso, Col. Juárez,
México D.F., CP 06600.

We were founded in 1949, when Roberto González Barrera, the Chairman of
our board of directors and Chief Executive Officer, started producing and
selling corn flour in Northeastern Mexico as an alternative ingredient in
producing tortillas. For more than 50 years, we have revolutionized the manner
and the scale in which tortilla and other corn products are produced within
Mexico and other countries.

Prior to our founding, all corn tortillas were made using a rudimentary
process. The principal ingredient in tortillas is corn dough, which can be
prepared in one of two ways: by the traditional method in which a batch of corn
is boiled in a limestone solution, following which the wet cooked corn is
milled into corn dough, or by using dry corn flour that can be made into dough
by adding water (the corn flour method). We believe that the preparation of
tortillas using the corn flour method presents major advantages, including
greater efficiency and higher quality.

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For the manufacture of corn flour, we developed a method of utilizing
sophisticated hammer mills that grind corn into very fine flour named
Maseca®.
The Maseca corn flour is then carefully sifted through a series of selected
screens, combined with water and other custom ingredients and then baked. This
unique process makes our tortillas consistent and readily available. This
process has been a significant impetus for growth, resulting in expanding corn
flour and tortilla production and sales throughout Mexico, the United States,
Central America, Venezuela and Europe. In addition, we have diversified our
product mix to include wheat flour in Mexico and Venezuela.

The following are some significant historical highlights:



| |  |  | In 1949, we founded GIMSA, which is engaged principally in
the production, distribution and sale of corn flour in Mexico.
GIMSAs corn flour is used mainly in the preparation of tortillas
and other related products. GIMSA pioneered the dry corn flour
method of producing tortillas, which results in greater efficiency
and product consistency in contrast to the centuries-old wet corn
dough method. We are now the largest corn flour producer in Mexico,
with a corn flour market share of approximately 73% in 2002. We
estimate that our corn flour is used in 36% of the corn tortillas
consumed in Mexico.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | In 1972, we entered the Central American market with our
first operations in Costa Rica. Today, we produce and sell corn
flour in Costa Rica, Guatemala, Honduras and El Salvador, and export
corn flour to Nicaragua. To a lesser extent, we now produce in
Central America tortillas and snacks and also cultivate and sell
hearts of palm and process and sell rice.                                                                                                                                                                                                                                                  
|
| |  |  | In 1977, we entered the U.S. market. Our operations have
grown to include products such as tortillas, corn flour and other
tortilla related products. We are one of the largest producers and
distributors of corn flour and packaged tortillas in the United
States.                                                                                                                                                                                                                                                                                                                                                    
|
| |  |  | In 1993, we entered the Venezuelan corn flour market through
an investment in DEMASECA, a Venezuelan corporation producing corn
flour. We increased our beneficial ownership in 1998 to 50%. In
August 1999, with the acquisition of MONACA, the second largest corn
flour and wheat flour producer in Venezuela at the time, we
significantly strengthened our presence in the Venezuelan market.
In 2002, we continued to be the second largest corn flour and wheat
flour producer in that country.                                                                                                                   
|
| |  |  | In 1994, we began our packaged tortilla operations in Mexico
as part of our strategy to broaden our product lines in Mexico,
achieve vertical integration of our corn flour operations and
capitalize upon our experience in producing and distributing
packaged tortillas in the United States.                                                                                                                                                                                                                                                                                                                         
|
| |  |  | In 1996, we strengthened our position in the U.S. corn flour
market through an association with Archer-Daniels-Midland. Through
this association we combined our existing U.S. corn flour operations
and strengthened our position in the U.S. corn flour market. This
association also allowed us to enter the Mexican wheat flour market
by acquiring a 60% ownership interest in Archer-Daniels-Midlands
Mexican wheat flour operations. We have expanded our presence in
this market by acquiring all or part of several additional wheat
mills.                                                                    
|
| |  |  | From 1997 through 2000, we initiated a significant plant
expansion program. During this period, we acquired several wheat
flour plants in Mexico. We also expanded two existing corn flour
plants and built a bread plant in Mexico. We acquired two existing
tortilla plants and built three tortilla plants in the United
States. We also expanded a corn flour plant in Honduras, built a
corn flour plant in El Salvador and built a frozen bread plant in
Costa Rica. We also completed construction of a tortilla plant in
Coventry, England.                                                                      
|
| |  |  | In 2001 and 2002, as a result of our comprehensive review of
our portfolio, we discontinued our bread operations in Mexico,
Central America and the United States. In November 2001, we sold
our bread business in Central America and the bread manufacturing
equipment of our Mexican operations. In 2002, we sold certain
assets of our bread operations in the United States for U.S.$0.3
million.                                                                                                                                                                                                                   

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Subsidiaries

We are a holding company and conduct our operations through subsidiaries.
The table below sets forth our principal subsidiaries.

|                                                              |  |               |  |                 |  |            |     |           |  |                    |  |                    |  |                  |  | 
|------------------------------------------------------------- |  | ------------- |  | --------------- |  | ---------- | --- | --------- |  | ------------------ |  | ------------------ |  | ---------------- |  | 
|                                                              |  | Principal     |  | Jurisdiction of |  | Percentage |     | Products/
|Name of Company                                               |  | Markets       |  | Incorporation   |  | Owned(1)   |     | Services 
|                                                              |  |               |  |                 |  |            |     |          
|Mexican Operations                                            |  |               |  |                 |  |            |     |           |  |                    |  |                    |  |                  |  | 
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|Grupo Industrial Maseca, S.A. de C.V. (GIMSA)               |  | Mexico        |  | Mexico          |  |            | 83  | %         |  | Corn flour        
|Molinera de México, S.A. de C.V.
(Molinera de México)       |  | Mexico        |  | Mexico          |  |            | 60  |           |  | Wheat flour       
|Productos y Distribuidora Azteca, S.A. de
C.V. (PRODISA)    |  | Mexico        |  | Mexico          |  |            | 100 |           |  | Packaged tortillas
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|U.S. Operations                                               |  |               |  |                 |  |            |     |           |  |                    |  |                    |  |                  |  | 
|Gruma Corporation                                             |  | United States |  | Nevada          |  |            | 100 |           |  | Packaged          
|                                                              |  |               |  |                 |  |            |     |           |  |                    |  |                    |  | tortillas, Other
|                                                              |  |               |  |                 |  |            |     |           |  |                    |  |                    |  | tortilla related
|                                                              |  |               |  |                 |  |            |     |           |  |                    |  |                    |  | products        
|Azteca Milling(2)                                             |  | United States |  | Texas           |  |            | 80  |           |  | Corn flour        
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|Central American Operation                                    |  |               |  |                 |  |            |     |           |  |                    |  |                    |  |                  |  | 
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|Gruma Centro América, S.A.                                    |  | Costa Rica,   |  | Costa Rica      |  |            | 100 |           |  | Corn flour,       
|                                                              |  | Honduras,     |  |                 |  |            |     |           |  |                    |  | Packaged          
|                                                              |  | Guatemala, El |  |                 |  |            |     |           |  |                    |  | tortillas, Snacks,
|                                                              |  | Salvador,     |  |                 |  |            |     |           |  |                    |  | Hearts of Palm,   
|                                                              |  | Nicaragua     |  |                 |  |            |     |           |  |                    |  | Rice              
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|Venezuelan Operations(3)                                      |  |               |  |                 |  |            |     |           |  |                    |  |                    |  |                  |  | 
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|Molinos Nacionales, C.A. (MONACA)                           |  | Venezuela     |  | Venezuela       |  |            | 95  |           |  | Corn flour,       
|                                                              |  |               |  |                 |  |            |     |           |  |                    |  |                    |  | Wheat flour,    
|                                                              |  |               |  |                 |  |            |     |           |  |                    |  |                    |  | Other products  
|Derivados de Maíz Seleccionado, C.A
(DEMASECA)              |  | Venezuela     |  | Venezuela       |  |            | 50  |           |  | Corn flour        
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|Other Subsidiaries                                            |  |               |  |                 |  |            |     |           |  |                    |  |                    |  |                  |  | 
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|                                                             
|Investigación de Tecnología Avanzada,
S.A. de C.V. (INTASA) |  | Mexico        |  | Mexico          |  |            | 100 | %         |  | Construction,     
|                                                              |  |               |  |                 |  |            |     |           |  |                    |  |                    |  | Technology and  
|                                                              |  |               |  |                 |  |            |     |           |  |                    |  |                    |  | Equipment       
|                                                              |  |               |  |                 |  |            |     |           |  |                    |  |                    |  | operations      



---

|(1) |  | Percentage of equity capital owned by us directly or indirectly through
subsidiaries.                
|--- |  | -----------------------------------------------------------------------------------------------------
|(2) |  | A limited partnership between Gruma Corporation (80%) and
Archer-Daniels-Midland (20%).              
|(3) |  | Together these subsidiaries are referred to as our Venezuelan Operations
or Venezuela operations.

18



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Our subsidiaries accounted for the following percentages and amount of our
net sales in millions of pesos of constant purchasing power as of December 31,
2002 for the years ended December 31, 2000, 2001 and 2002.

|                          |  |                         |          |              |  |             |    |              |  |             |       |              |  |  |    |   |  |  |          |   |  |  |    |  
|------------------------- |  | ----------------------- | -------- | ------------ |  | ----------- | -- | ------------ |  | ----------- | ----- | ------------ |  |  | -- | - |  |  | -------- | - |  |  | -- | -
|                          |  | Year ended December 31,
|                          |  |                        
|                          |  | 2000                    |          | 2001         |  | 2002       
|                          |  |                         |          |              |  |            
|                          |  | In Millions             |          | Percentage   |  | In Millions |    | Percentage   |  | In Millions |       | Percentage  
|                          |  | of Pesos                |          | of Net Sales |  | of Pesos    |    | of Net Sales |  | of Pesos    |       | of Net Sales
|                          |  |                         |          |              |  |             |    |              |  |             |       |             
|Gruma Corporation         |  |                         | Ps.8,660 |              |  |             | 45 | %            |  |             | 8,822 |              |  |  | 47 | % |  |  | Ps.9,276 |   |  |  | 48 | %
|GIMSA                     |  |                         | 5,271    |              |  |             | 27 |              |  |             | 4,947 |              |  |  | 26 |   |  |  | 4,763    |   |  |  | 25 | %
|Venezuelan Operations     |  |                         | 2,238    |              |  |             | 12 |              |  |             | 1,996 |              |  |  | 11 |   |  |  | 2,231    |   |  |  | 12 | %
|Molinera de México        |  |                         | 1,510    |              |  |             | 8  |              |  |             | 1,547 |              |  |  | 8  |   |  |  | 1,721    |   |  |  | 9  | %
|Gruma Centro América      |  |                         | 1,180    |              |  |             | 6  |              |  |             | 1,185 |              |  |  | 6  |   |  |  | 1,051    |   |  |  | 5  | %
|PRODISA                   |  |                         | 407      |              |  |             | 2  |              |  |             | 401   |              |  |  | 2  |   |  |  | 187      |   |  |  | 1  | %
|Others (and eliminations) |  |                         | (16      | )            |  |             | 0  |              |  |             | 17    |              |  |  | 0  |   |  |  | (53      | ) |  |  | 0  |  

Association with Archer-Daniels-Midland

We entered into an association with Archer-Daniels-Midland in September
1996. Archer-Daniels-Midland is one of the worlds largest corn refiners, oil
seed processors and flour millers and produces, processes, transports and
exports agricultural products worldwide. Through our partnership we have
improved our position in the U.S. corn flour market and gained an immediate
presence in, and a new avenue for growth through, the Mexican wheat flour
market.

As a result of this association, we received 80% ownership of our combined
U.S. corn flour operations and 60% of Archer-Daniels-Midlands Mexican wheat
milling operations. We also gained exclusive rights from
Archer-Daniels-Midland in specified corn flour and wheat flour markets. In
return, Archer-Daniels-Midland received approximately 22% of our total
outstanding shares, and 20% ownership of our combined U.S. corn flour
operations. Archer-Daniels-Midland also obtained the right to designate two of
the 14 members of our board of directors and their corresponding alternates.
We and Archer-Daniels-Midland, exclusively through our jointly-owned
enterprises, produce and distribute wheat flour in Mexico and corn flour in the
United States. Currently, Archer-Daniels-Midland owns, directly or indirectly,
approximately 29.7% of our outstanding shares. See Item 3. Key
InformationRisk FactorsRisks Relating to Our Controlling Shareholders and
Capital StructureArcher-Daniels-Midland, Our Strategic Partner, Has Influence
Over Some Corporate Decisions.

Strategy

Our strategy for growth is to focus on our core businessthe manufacturing
of tortillas, corn flour and wheat flourand to capitalize upon our leading
positions in the corn flour and tortilla industries. Our strategy includes the
following key elements:



| |  |  | Encourage Transition from Traditional Cooked-Corn Method to
Corn Flour Method: We continue to view the transition from the
traditional method to the corn flour method of making tortillas as
the primary opportunity for increased corn flour sales. We will
continue to encourage this transition through improving customer
service, advertising and promoting our MASECA® brand corn flour, as
well as leveraging off of its manufacturing capacity and
distribution networks in Mexico, the United States, Central America
and Venezuela.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Expand in the Growing Retail and Food Service Tortilla
Markets in the United States and Elsewhere: We believe that the
size and growth of the U.S. retail and food service tortilla markets
offer significant opportunities for expansion. We also believe new
markets in other countries offer us significant opportunities.                                                                                                                                                                                                                 
|
| |  |  | Develop the First National Tortilla Brand in the United
States: We intend to complete the process of establishing Gruma
Corporations MISSION® tortilla brand as the first national tortilla
brand by                                                                                                                                                                                                                                                                                                                                         

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| |   |  | increasing our efforts at building brand name recognition and by
further expanding and utilizing Gruma Corporations distribution
network, first in our existing markets, where we believe there is
potential for further growth, and second, in markets where Gruma
Corporation currently does not have a significant presence but where
we believe strong demand for tortillas already exists.                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Improve Operating Efficiencies: We have significant cost and
expense reduction opportunities in our administrative areas that
should allow us to improve margins and cash flow in the mid-term.
One of the ways in which we are accomplishing this is by
implementing shared services within our operations in order to
achieve greater efficiencies through synergies in information
technology, accounting, cash management and supply chain management
systems. We expect that these efforts will enable us to achieve
significant savings and greater profitability. We also intend to
continue our research and development efforts in order to further
improve the efficiency of our proprietary corn flour and tortilla
production technology, which we believe provides us a significant
advantage over our competitors.
|
| |  |  | Capitalize on Our Existing Infrastructure: We intend to
pursue a profitable growth strategy and capitalize on existing
infrastructure and continue our drive to improve operational
efficiencies. Since most of our subsidiaries already have sufficient
installed capacity, we anticipate that most of our capital
expenditures in 2003 will be used for technology upgrades. We also
anticipate that additional production capacity will be provided
primarily by adding new production lines at some of our existing
facilities.                                                                                                                                                                                                                                                                                             

U.S. and European Operations

Overview

We conduct our United States and European operations principally through
our subsidiary Gruma Corporation, which manufactures and distributes corn
flour, packaged tortillas and related products. Gruma Corporation commenced
operations in the United States in 1977, initially developing a presence in
certain major tortilla consumption markets by acquiring small tortilla
manufacturers and converting their production processes from the traditional
wet corn dough method to our dry corn flour method. Eventually, we began to
build our own state-of-the-art tortilla plants in certain major tortilla
consumption markets. We have vertically integrated our operations by (1)
building corn flour manufacturing facilities in the United States, (2)
establishing corn purchasing operations, (3) developing marketing and
advertising campaigns to develop brand name recognition, (4) expanding
distribution networks for corn flour and our tortilla products, and (5) using
our technology to design and build proprietary tortilla manufacturing machinery
for use in our U.S. and European operations.

In September 1996, we combined our U.S. corn flour milling operations with
Archer-Daniels-Midlands corn flour milling operations into a newly formed
limited partnership, known as Azteca Milling, L.P., in which Gruma Corporation
holds an 80% interest.

During 2000, Gruma Corporation opened its first European tortilla plant in
Coventry, England, initiating our entry into the European market.

Gruma Corporation

Gruma Corporation operates primarily through its Mission Foods division
and Azteca Milling, L.P., a limited partnership between Gruma Corporation (80%)
and Archer-Daniels-Midland (20%). Gruma Corporation is one of the leading
manufacturers and distributors of packaged tortillas and related products
throughout the United States and Europe through its Mission Foods division.
Gruma Corporation is one of the leading producers of corn flour in the United
States through Azteca Milling, L.P. Gruma Corporations tortilla and related
products operations will be referred to below as Mission Foods. Gruma
Corporations corn flour operation will be referred to as Azteca Milling.

Principal Products. Mission Foods manufactures and distributes packaged
corn and wheat tortillas and related products (which include tortilla chips)
under the MISSION® and GUERRERO® brand names in the United States. By
continuing to build MISSION® into a strong national brand and GUERRERO® into a
strong affiliated Hispanic brand, Mission Foods expects to increase market
penetration, brand awareness and profitability. Azteca Milling manufactures
and distributes corn flour in the United States under the MASECA® brand.

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Sales and Marketing. Mission Foods serves both retail and food service
customers. Retail customers, which represent most of our business, include
supermarkets, smaller independent stores and convenience stores, while food
service customers include major chain restaurants, food service distributors,
schools, hospitals and the military. Mission Foods is a major supplier of
tortillas to Taco Bell, the largest Mexican food restaurant chain in the United
States. For a discussion of litigation involving Taco Bell and other
purchasers, see Item 8. Financial InformationLegal Proceedings.

In the tortilla market, Mission Foods current marketing strategy is to
increase consumer awareness of tortilla products in general, as well as enhance
our position in the major retail and food service tortilla markets in the
United States and Europe. Mission Foods promotes its products primarily
through cooperative advertising programs with supermarkets as well as radio and
television advertising, targeting both Hispanic and non-Hispanic populations.
In addition, Mission Foods has combined tortilla production with recreation
through the creation of an authentic tortilla factory attraction at
Disneylands California Adventure Park in Anaheim, California. The factory is
a working facility that produces corn flour and wheat flour tortillas, where
guests are able to watch the production process as well as taste the results.
We believe these efforts have contributed to greater consumer awareness.
Mission Foods also targets food service companies and works with restaurants,
institutions and distributors to address their individual needs and provide
them with a full line of products. Mission Foods continuously attempts to
identify new customers and markets for its tortillas and related products in
the United States and Europe.

Azteca Milling distributes approximately 35% of the corn flour it produces
to Mission Foods plants throughout the United States and Europe. Azteca
Millings third-party customers consist largely of other tortilla
manufacturers, snack food producers, and retail customers. Azteca Milling
sells corn flour in various quantities, ranging from four-pound retail packages
to bulk railcar loads.

We anticipate continued growth in the U.S. market for corn flour,
tortillas, and related products. In dollar terms, Gruma Corporations net
sales have increased at a compounded annual rate of 7.1% between 1998 and 2002.
We believe that the growing consumption of Mexican-style foods by
non-Hispanics in the United States and Europe will continue to increase demand
for tortillas and tortilla related products. Growth in recent years in the
corn flour market is attributable to this increase of corn tortilla and
tortilla chip consumption in the U.S. market as well as the conversion of
tortilla and tortilla chip producers from the wet dough process to our dry corn
flour method.

Competition and Market Share. The increase in tortilla and tortilla chip
consumption translated into a U.S. tortilla market of approximately U.S.$4.2
billion in total sales in 2002 and a U.S. tortilla chip market of approximately
U.S.$1.0 billion in total sales in 2002 (excluding sales by businesses that
produce only tortilla chips, which businesses also compete with Mission Foods),
according to the Tortilla Industry Association. The tortilla market is highly
fragmented, regional in nature and extremely competitive. Mission Foods main
competitors are hundreds of tortilla producers, who manufacture locally or
regionally and tend to be sole proprietorships. In addition, a few large
companies have tortilla manufacturing divisions that compete with Mission
Foods. These companies include ConAgra, Bimbo and Harvest States. We believe
Mission Foods was one of the leading manufacturers and distributors of packaged
tortillas and related products throughout the United States and Europe in 2002.

Competitors within the corn flour milling industry include independent
milling operations as well as corn flour milling divisions of large companies,
such as Cargill and Minsa. Azteca Milling competes with other corn flour
manufacturers in the United States primarily on the basis of superior quality,
technical support, customer service and brand recognition. We believe Azteca
Milling was one of the leading producers of corn flour in the United States in
2002.

Operation and Capital Expenditures. Annual production capacity for Azteca
Milling and Mission Foods is estimated at 1.3 million tons, with an average
utilization of 83% in 2002. Capital expenditures for the past three years were
U.S.$154.5 million. Gruma Corporations capital expenditures for 2003 will be
primarily used for certain manufacturing and technology upgrades.

Mission Foods produces its packaged tortillas and other related products
at 13 manufacturing facilities located primarily in large population centers in
the eastern, western and southwestern United States and one plant in

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Coventry, England. All of Mission Foods plants in the United States are
certified by the American Institute of Baking. Mission Foods tortilla plant
in England is certified by the British Retail Consortium.

Azteca Milling produces corn flour at six plants located in Amarillo,
Edinburg and Plainview, Texas; Evansville, Indiana; Henderson, Kentucky; and
Madera, California. All plants are located within important corn growing
areas. Because of Azteca Millings state of the art processing equipment, we
are the only corn milling company to achieve ISO 9002 certification as well as
certification by the American Institute of Baking. As of April 2003, Azteca
Milling has three mills that are ISO 9002 certified while two mills are in the
process of obtaining certification.

Raw Materials. Corn is the principal raw material used in the production
of corn flour, which is purchased from local producers or, if market conditions
require, U.S. or international spot markets. Azteca Milling buys corn only
from farmers and grain elevators that agree to supply approved varieties of
corn. Azteca Milling tests and monitors the raw materials for certain strains
of bacteria and chemicals not approved for human consumption. In addition,
Azteca Milling has implemented certain testing protocols to identify
genetically modified proteins in raw materials it purchases to ensure safety.

Because corn prices tend to be somewhat volatile, Azteca Milling engages
in a variety of non-speculative hedging activities in connection with the
purchase of its corn supplies, including the purchase of corn futures
contracts. In so doing, Azteca Milling attempts to assure corn availability
approximately 12 months in advance of harvest time as well as guard against
price volatility. The Texas Panhandle currently is the single largest source
of food-grade corn. Azteca Milling is also involved in short-term contracts
for corn procurement with many corn suppliers. Where suppliers fail to
deliver, Azteca Milling can easily access the spot markets. Azteca Milling
does not anticipate any difficulties in securing adequate corn supplies in the
future.

Corn flour for Mission Foods products is supplied almost entirely by
Azteca Milling. Wheat flour for the production of wheat tortillas is purchased
from third party producers at prices prevailing in the commodities markets.
Because wheat flour prices tend to be somewhat volatile, Mission Foods engages
in a variety of non-speculative hedging activities in connection with the
purchase of wheat flour, including the purchase of wheat futures contracts.
Mission Foods believes the market for wheat flour in the United States is
sufficiently large and competitive to ensure that wheat flour will be available
at competitive prices to supply Mission Foods needs.

Distribution. An important element of Mission Foods sales growth has
been the expansion and improvement of its tortilla distribution network,
including a direct-store-delivery system to distribute most of its products.
Tortillas and other freshly made products are generally delivered daily to
customers. In keeping with industry practice, Mission Foods generally does not
have written sales agreements with its customers. Mission Foods has also
developed a food service distribution network on the west and east coasts of
the United States, and in certain areas of the midwestern United States.

The vast majority of corn flour produced by Azteca Milling is sold to
trade customers in bulk and is delivered directly from the plants to the
customer. Azteca Millings retail customers are primarily serviced by a
network of distributors, although a few large retail customers have their corn
flour delivered directly to them from the plants.

Mexican Operations

Overview

Our largest business in Mexico is the manufacture and sale of corn flour,
which we conduct through our subsidiary GIMSA. Through our association with
Archer-Daniels-Midland, we have also entered the wheat milling business in
Mexico. In addition, PRODISA engages in packaged tortilla manufacturing and
distribution. Our other subsidiaries conduct research and development
regarding corn flour and tortilla manufacturing equipment, produce machinery
for corn flour and tortilla production and construct our corn flour
manufacturing facilities.

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GIMSACorn Flour Operation

Principal Products.GIMSA produces, distributes and sells corn flour in
Mexico, which is then used in the preparation of tortillas and other related
products. In 2002, GIMSA had net sales of Ps.4,763 million. GIMSA is the
largest corn flour producer in Mexico, with a corn flour market share of
approximately 73% in 2002. GIMSA estimates that its corn flour is used in 36%
of the corn tortillas consumed in Mexico. It sells corn flour in Mexico under
the brand name MASECA®. MASECA® flour is a ready-mixed corn flour that becomes
a dough when water is added. This corn dough can then be pressed to an
appropriate thickness, cut to shape and cooked to produce tortillas and similar
food products.

GIMSA produces over 40 varieties of corn flour for the manufacture of
different food products. It sells corn flour to tortilla and tortilla chip
manufacturers as well as in the retail market. GIMSAs principal corn flour
product is a standard fine-textured, white flour used to manufacture tortillas.

Sales and Marketing. GIMSA sells packaged corn flour in bulk 20-kilogram
sacks in the wholesale market, principally to thousands of tortilla
manufacturers, and one-kilogram packages in the retail market.

The following table sets forth GIMSAs bulk and retail sales volumes of
corn flour in Mexico for the periods indicated.

|       |  |                         |           |      |  |      |     |   |  |      |           |   |  |  |     |  |  |  |           |  |  |  |     | 
|------ |  | ----------------------- | --------- | ---- |  | ---- | --- | - |  | ---- | --------- | - |  |  | --- |  |  |  | --------- |  |  |  | --- | 
|       |  | Year Ended December 31,
|       |  |                        
|       |  | 2000                    |           | 2001 |  | 2002 |     |   |  |     
|       |  |                         |           |      |  |      |     |   |  |     
|       |  | Tons                    |           | %    |  | Tons |     | % |  | Tons |           | %
|       |  |                         |           |      |  |      |     |   |  |      |           |  
|Bulk   |  |                         | 1,265,489 |      |  |      | 84  |   |  |      | 1,217,197 |   |  |  | 85  |  |  |  | 1,179,186 |  |  |  | 85  | 
|Retail |  |                         | 241,565   |      |  |      | 16  |   |  |      | 219,033   |   |  |  | 15  |  |  |  | 206,344   |  |  |  | 15  | 
|       |  |                         |           |      |  |      |     |   |  |      |           |   |  |  |     |  |  |  |           |  |  |  |     | 
|       |  |                         | 1,507,054 |      |  |      | 100 |   |  |      | 1,436,230 |   |  |  | 100 |  |  |  | 1,385,530 |  |  |  | 100 | 
|       |  |                         |           |      |  |      |     |   |  |      |           |   |  |  |     |  |  |  |           |  |  |  |     | 

GIMSAs customer base is comprised primarily of small tortilla producers,
or tortillerías, which purchase corn flour in bulk and produce tortillas on
their premises, which are then sold locally. Retail sales, representing a
minor portion of revenues, are channeled to two distinct markets: urban centers
and rural areas. Sales to urban consumers are made mostly through supermarket
chains that use their own distribution networks to distribute MASECA® flour or
through wholesalers who sell the product to smaller grocery stores throughout
Mexico. Sales to rural consumers are made principally through the Mexican
governments social and distribution program Distribuidora Conasupo, S.A.,or
DICONSA, which consists of a network of small government-owned stores and which
supplies rural areas with basic food products. GIMSAs sales representatives
are mainly concerned with promoting the dry corn flour method to tortilla
producers. Mexicos tortilla industry is highly fragmented, consisting mostly
of tortillerías, of which approximately 51% continue to utilize, in our
opinion, the relatively inefficient wet corn dough method of tortilla
production. We estimate that the traditional wet corn dough method accounts for
approximately one-half of all tortillas produced in Mexico. Tortilla producers
that do not utilize corn flour buy the wet dough from dough producers or buy
and mill their own corn and produce tortillas themselves.

This traditional method is a rudimentary practice requiring more energy,
time and labor since it involves cooking the corn in water and with lime,
milling the cooked corn, creating and shaping the dough, and then making
tortillas from that dough. We pioneered the dry corn flour method in which we
mill the raw corn in its facilities into corn flour. Tortilla producers and
consumers may then simply add water to transform the flour into tortilla dough.
We believe the preparation of tortillas using the dry corn flour method
possesses several advantages over the traditional method. Our internal studies
show that the dry corn flour method consumes less water, electricity, fuel and
labor. We estimate that one kilogram of corn processed through the corn flour
method yields more tortillas on average than a similar amount of corn processed
using the traditional method. Corn flour is also transported more easily than
wet corn dough and has a shelf life of approximately three months, compared
with one or two days for wet corn dough. The market for wet corn dough is
limited due to the perishable nature of the product, restricting sales of most
wet corn dough producers to their immediate geographic areas. Additionally,
the corn flours longer shelf life makes it easier for consumers in rural areas
to produce their own tortillas, as tortilleríasare relatively scarce.

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We strongly believe in the superiority of our dry corn flour method and,
thus also, believe that we have substantial opportunities for growth by
encouraging a transition to our method. Corn flour is primarily used to
produce corn tortillas, a principal staple of the Mexican diet. In fact, in
2002, corn flour for tortilla manufacturing accounted for approximately 95% of
our total corn flour sales volume in Mexico, with the balance being used for
the manufacture of tortilla chips. The tortilla industry is one of the largest
industries in Mexico as tortillas constitute the single largest component of
Mexicos food industry. Reluctance to abandon traditional practice,
particularly in central and southern Mexico, and decreases in corn prices and
increases in tortilla prices, which have allowed tortilla makers to improve
margins, are major factors in preventing the widespread conversion of
tortilleríasto the corn flour method.

GIMSA has embarked on several programs to promote corn flour sales to
tortilla producers and consumers. GIMSA offers incentives to potential
customers, such as small independent tortillerías, to convert to the corn flour
method from the traditional wet corn dough method. The incentives GIMSA offers
include new, easy to use equipment designed specifically for small-volume
users, financing, and individualized training. For example, in order to assist
traditional tortilla producers in making the transition to corn flour, GIMSA
also sells specially designed mixers made by Tecnomaíz, S.A. de C.V., or
Tecnomaíz, one of our research and development subsidiaries. For more
information about our research and development department, see
MiscellaneousINTASATechnology and Equipment Operations. These incentives
are helping GIMSA tap into a significant potential market. GIMSA also helps
its tortilleríacustomers to improve sales by directing consumer promotions to
heighten the desirability of their products and increase consumption, which, in
turn, should increase corn flour sales. These efforts to improve sales include
prime time advertising on television as well as radio, magazine and billboard
advertising. In 2003, we intend to have GIMSAs specialized sales teams
continue their efforts to provide better and more individualized service to
different types of customers.

GIMSA has also developed the in-store tortillería concept, which
involves the on-site manufacture and sale of tortillas in supermarkets using
MASECA® brand corn flour and machinery supplied by our technology and equipment
operations. Through this promotion, GIMSA seeks to increase consumer exposure
to, and acceptance of, tortillas made with corn flour. As of December 31,
2002, 78% of supermarkets throughout Mexico hosted GIMSAs in-store
tortillerías.

The demand for corn flour varies slightly with the seasons. After the
May/June and December harvests, when corn is more abundant and thus less
expensive, tortilla producers are more inclined to purchase corn and use the
traditional method. In the months immediately preceding such harvests, corn is
more costly and in shorter supply and more tortilla producers then employ the
dry corn flour method of production.

Competition and Market Share. We face competition on three levelsfrom
other corn flour producers, from sellers of wet corn dough and from the many
tortilleríasthat produce their own wet corn dough on their premises. Our
estimates indicate that 51% of tortilla producers continue to use the
traditional wet corn dough method.

Our principal competitors in the corn flour production market are Grupo
Minsa, S.A. de C.V., previously known as Maíz Industrializado Conasupo, S.A. de
C.V., or MICONSA, and regional corn flour producers. We estimate that our
market share of corn flour sales in Mexico during 2002 was approximately 73%,
and that Grupo Minsa, S.A. de C.V. and regional corn flour producers accounted
for 20% and 7% of the market, respectively. We compete against other corn
flour manufacturers on the basis of quality, brand recognition, technology,
customer service and nationwide coverage. We believe that GIMSA has certain
competitive advantages resulting from its proprietary technology, greater
economies of scale and broad geographic coverage, which may afford it
opportunities to more effectively source raw materials and reduce
transportation costs.

Operations and Capital Expenditures. GIMSA currently owns 18 corn flour
mills, two of which are temporarily closed. The Chalco plant has been inactive
since October 1999 while the Zamora plant has been inactive since July 2000.
GIMSA has temporarily shifted production to other plants to achieve savings in
overhead costs. All of GIMSAs plants are located throughout Mexico, typically
within corn growing regions and those of large tortilla consumption.

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As a result of construction and expansion of our plants, we increased our
installed corn flour manufacturing capacity from approximately 1.0 million tons
per year as of January 1, 1990 to 2.3 million tons per year as of December 31,
2002. Most of this construction and expansion took place between 1992 and
1995. In 2000, GIMSA spent U.S.$4.5 million, primarily to upgrade its corn
flour production processes and acquire computer and transportation equipment.
In 2001, GIMSA spent U.S.$0.4 million, primarily to upgrade its corn flour
production processes. In 2002, GIMSA spent U.S.$2.9 million primarily to
upgrade its corn flour production processes. GIMSA expects capital
expenditures for 2003 of approximately U.S.$11 million for technology upgrades.

We believe we have the most extensive nationwide corn purchasing and corn
flour distribution capabilities of any corn flour producer in Mexico, providing
us with a significant competitive advantage. To enhance our presence in
particular geographic areas, we have transferred a minority interest in certain
subsidiaries to local investors, unions and development agencies. Pursuant to
an agreement between GIMSA and Investigación de Tecnología Avanzada, or INTASA,
our wholly-owned subsidiary, INTASA provides technical assistance to each of
GIMSAs operating subsidiaries for which each pays to INTASA a fee equal to
0.5% of its consolidated net sales. Each of GIMSAs corn flour facilities uses
proprietary technology developed by our technology and equipment operations.
For more information about our in-house technology and design initiatives, see
MiscellaneousINTASATechnology and Equipment Operations.

Raw Materials. Corn is the principal raw material required for the
production of corn flour, and constituted approximately 66% of GIMSAs cost of
sales for 2002. We purchase corn primarily from Mexican growers and grain
elevators, or if domestic supply proves insufficient, from world markets at
international prices under import permits granted by the Mexican government.
Our purchases are made on a spot basis pursuant to short-term contractual
arrangements, which are generally in the form of oral agreements entered into
at the beginning of the harvest. Compañía Nacional Almacenadora, S.A. de C.V.,
a subsidiary of GIMSA, contracts for and purchases the corn, and also monitors,
selects, handles and ships the corn.

We believe that the diverse geographic locations of GIMSAs production
facilities in Mexico enables GIMSA to achieve savings in raw material
transportation and handling. In addition, by sourcing corn locally for its
plants, GIMSA is better able to communicate with local growers concerning the
size and quality of the corn crop and is better able to maintain quality
control. In Mexico, GIMSA purchases corn for cash in order to strengthen its
ability to obtain the highest quality corn on the best terms.

Traditionally, domestic corn prices in Mexico tend to be higher than those
abroad, but do follow trends in the international market. During most periods,
the price at which GIMSA purchases corn depends on the international corn
market. As a result, corn prices are sometimes unstable and volatile. In
certain periods in the past, however, these fluctuations have been
significantly affected by government regulations and policies. The Mexican
governments decision to discontinue the subsidy program for tortilla consumers
in 1999 and to increase corn imports and support for corn growers in 1999 and
2000, resulted in drastic decreases in corn prices at that time. In 1998, the
average prices for GIMSAs corn purchases in Mexico and abroad were
approximately Ps.1,974 per ton. In 1999, however, corn prices fell to an
average of Ps.1,631 per ton. In 2000, the price of corn decreased dramatically
to an average of Ps.1,296 per ton. In 2001, corn prices remained stable at
about an average of Ps.1,289 per ton. In 2002, corn prices generally remained
stable through October but increased to approximately Ps.1,550 per ton
beginning in November, reflecting an international trend. For more information
regarding the governments effect on corn prices, see Item 5. Operating and
Financial Review and ProspectsManagements Discussion and Analysis of
Financial Condition and Results of OperationsFactors Affecting Financial
Condition and Results of OperationsEffects of Deregulation of the Mexican
Tortilla and Corn Flour Industry.

In addition to corn, the other principal materials and resources used in
the production of corn flour are packaging materials, water, lime and energy.
GIMSA believes that its sources of supply for these materials and resources are
adequate, although energy and packaging costs tend to be volatile.

Distribution. GIMSAs products are distributed through independent
transport firms contracted by GIMSA. Most of GIMSAs sales are made
free-on-board at GIMSAs plants, in particular those to tortilla manufacturers.
With respect to other sales, in particular retail sales (one-kilogram
packages) to the Mexican government and large supermarket chains, GIMSA pays
the freight cost.

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Molinera de MéxicoWheat Flour Operation

Principal Products. In 1996, we entered the wheat milling market in
Mexico by acquiring a 60% ownership interest in Archer-Daniels-Midlands wheat
flour operation, Molinera de México. Molineras main product is wheat flour,
although it also produces and sells wheat bran. Our flour brands are
REPOSADA®, PODEROSA® and SELECTA®, among others.

Sales and Marketing. In 2002, approximately 92% of Molineras wheat flour
production was sold in bulk and 8% was sold in one-kilogram packages for the
retail segment. Most of the bulk sales are made to thousands of bakeries and,
to a lesser extent, to cookie and pasta manufacturers. Most of the
one-kilogram package sales are made to large supermarkets and wholesalers
throughout Mexico. Through wholesalers, our products are distributed to small
grocery stores. Molineras sales are seasonal in that higher sales volumes are
achieved in the fourth and first quarters during the winter, when, we believe,
per capita consumption of wheat-based products, especially bread and cookies,
increases due in part to the celebration of holidays that take place during
these quarters.

Our marketing strategy depends on the type of customer and region.
Overall, our aim is to offer products according to customers specifications as
well as technical support. We are trying to increase our market share in
bakeries by offering products with consistent quality. Our marketing strategy
in 2002 focused on increasing Molineras market share with respect to the
supermarket in-store bakery segment which are replacing small independent
bakeries in a nationwide trend. At December 31, 2002, Molinera distributed its
products to 53% of supermarket in-store bakeries in Mexico compared to 23% at
December 31, 2001. In the retail segment we target small grocery stores,
through wholesalers, and supermarkets, through centralized and national level
negotiations. Additionally, we are looking to capture significant market share
nationwide. We are focusing on improving customer service, continuing to
increase our distribution of products to supermarkets in-store bakeries, and
developing new types of pre-mixed flours for the supermarket in-store bakery
segment. We provide direct delivery to supermarkets, supermarkets in-store
bakeries, wholesalers, industrial customers and some large bakeries. Most
small bakeries and small grocery stores are served by wholesalers.

Competition and Market Share. We are one of Mexicos largest wheat flour
producers, with a market share in 2002 of approximately 15% of a total
estimated wheat flour market of U.S.$950 million. Molinera de México competes
with many small wheat flour producers. We believe the wheat flour industry is
highly fragmented and estimate that there are more than a hundred participants.
Our main competitors are Trimex, La Espiga and Elizondo.

Operations and Capital Expenditures.At the time we acquired our interest
in Molinera, the operation consisted of two production facilities having an
aggregate estimated annual production capacity of 157,000 tons. From September
1997 through January 2000, we increased our production capacity by 357% from
157,000 to 717,000 tons through acquisitions of wheat flour mills and companies
operating in the wheat flour and related products market. Today we own and
operate nine wheat flour plants, in one of which we hold only a 40% ownership
interest. The facilities average extent of utilization is estimated at 75%
for 2002.

In September 1997, Molinera de México acquired three wheat mills in
Mexico. Two of these mills were closed in 1999 after determining that it would
be more efficient to increase capacity utilization elsewhere. In June 1998,
Molinera de México acquired a 40% ownership of a wheat flour mill in Monterrey,
Mexico. In August 1998, Molinera de México acquired a wheat flour mill in
Celaya, Guanajuato. In July 1999, we acquired three additional wheat flour
mills in the states of Sonora, Chihuahua and Baja California Sur. In January
2000, we acquired La Asunción, a wheat flour mill in Puebla, which allowed us
to strengthen our leadership position in the wheat flour industry and achieve
nationwide coverage. We have also acquired the wheat flour brands REPOSADA®,
PODEROSA®, SELECTA®, and MONTERREY®, among others. These acquisitions, in
addition to technology upgrades, amounted to capital expenditures totaling
U.S.$48.1 million from 2000 through 2002. Most of Molinera de Méxicos capital
expenditures in 2003 will be used for capacity expansions and, to a lesser
extent, technology upgrades.

Raw Materials.Wheat is the principal raw material required for the
production of wheat flour. Molinera de México purchases approximately 23% of
its wheat from Mexican growers, and 77% from world markets. Molinera de México
purchases from local farmers, farmers associations and trading companies. In
the case of domestic wheat, purchases are made pursuant to short-term oral
arrangements, the terms of which are negotiated at

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the time of execution. These arrangements are usually made approximately
two months in advance of the beginning of the harvest. In the case of imported
wheat, which we import from the United States and Canada through several
trading companies, purchases are made based on short-term requirements, with
the aim of maintaining low levels of inventories.

In recent years the price of wheat domestically and abroad has been
volatile. Volatility is due to the availability of wheat, which depends on
various factors including the size of the harvest (which depends in large part
on the weather).

PRODISAPackaged Tortilla Operation

Principal Products. We began our packaged tortilla operations through
PRODISA in Mexico in 1994 as part of our strategy to broaden our product lines
in Mexico, achieve vertical integration of our corn flour operations, and
capitalize upon our experience and investments in the United States in
producing and distributing packaged tortillas. Our packaged tortillas are
marketed under the MISION® and TORTI RICA® brand names. In 1998, we broadened
our business to include the production and distribution of bread under the
BREDDY® brand name. In November 2001, as part of our strategy to improve
profitability and build on our core business, we discontinued our bread
business and sold the bread manufacturing equipment.

Sales and Marketing. In 1994, we entered the packaged tortilla business
in Mexico because we perceived a great potential for growth in this market. In
late 1996 and early 1997, we decided to focus our efforts initially in the
northeastern region of Mexico and in the state of Baja California. PRODISAs
sales volume during 2002 was 15,439 tons, of which approximately 45% was for
supermarkets, 6% was for convenience stores and 49% was for small grocery
stores.

Competition and Market Share. In the tortilla industry, PRODISA competes
against thousands of tortilla manufacturers. We believe PRODISA had a 1%
market share of the total tortilla industry, inclusive of packaged and
non-packaged tortillas, in Mexico, and approximately 28% of the packaged
tortilla market in the Monterrey metropolitan area in 2002.

Operation and Capital Expenditures. We currently operate two tortilla
plants, which have a combined annual production capacity of 42,000 tons as of
December 31, 2002, and average extent of utilization of 37%.

Capital expenditures for the past three years were U.S.$3.5 million. We
expect that our capital expenditures in 2003 will be focused on technology
upgrades.

Raw Materials. The principal raw material, corn flour, is supplied
internally by GIMSA. The availability of corn flour and the volatility of its
price are thus subject to the same factors that affect GIMSAs operation. See
Mexican OperationsGIMSACorn Flour OperationRaw Materials.

Distribution. PRODISAs products are distributed to our 10 warehouses
throughout northeastern Mexico and three warehouses in Baja California
(northwestern Mexico). The goods are then distributed with our delivery trucks
to customers. Frequency of delivery depends upon the customer; supermarkets
receive daily deliveries while smaller stores receive these products three
times a week.

Central American Operations

Overview

In 1973, we entered the Costa Rican corn flour market. Our operations
since then have expanded into Guatemala, Honduras, El Salvador, and Nicaragua.
We believe that the Central American market affords opportunities to enhance
our overall financial performance, and that our operations in Central America
have enabled us to gain experience in activities that we do not engage in
elsewhere.

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Gruma Centro América

Principal Products. Gruma Centro América produces corn flour, and to a
lesser extent tortillas and snacks. We also cultivate and sell hearts of palm
and process and sell rice. We sell corn flour in Costa Rica under the MASECA®,
TORTIMASA® and MASARICA® brands. In Costa Rica, we sell packaged tortillas
under the TORTI RICA® brand. We operate a Costa Rican snack operation which
manufactures tortilla chips, potato chips and similar products under the TOSTY®
brand. We cultivate and sell hearts of palm and process and sell rice in Costa
Rica. Hearts of palm are exported to numerous European countries as well as the
United States and Canada. In November 2001, as part of our strategy to improve
profitability and build on our core competencies, we sold our Central American
bread business.

Sales and Marketing. The largest portion of Gruma Centro Américas net
sales in 2002 derived from the production and distribution of corn flour at
47%. During the same period, tortillas and snacks each accounted for 29% of
net sales, hearts of palm accounted for 15%, and rice accounted for 9%. In
2002, Gruma Centro América sold an aggregate of 111,000 tons of corn flour in
Central America, making us the largest producer of corn flour in the region.
During 2002, the aggregate sales volume for all other products was 32,000 tons.

Gruma Centro América sells bulk and retail corn flour. Bulk corn flour is
sold predominantly to small tortilla manufacturers through direct delivery and
wholesalers. Supermarkets make up the customer base for retail corn flour.
Bulk sales volume represented 68% and retail sales represented 32% of Gruma
Centro Américas corn flour sales volume during 2002. Typically, corn flour
sales volume is lower during the second quarter of the year due to higher
availability and lower prices of corn.

The total potential corn flour market in Central America is estimated at
U.S.$460 million. We believe that there is significant potential for growth in
Central America as corn flour is used in only 25% of all tortilla production;
the majority of tortilla manufacturers use the wet dough method. In other
product areas we are conducting ongoing surveys and research of current and
potential customers to determine market demand and needs.

Competition and Market Share. We estimate that Gruma Centro Américas
corn flour sales constituted approximately 69% of total corn flour sales in
Central America in 2002 and that our corn flour is used in 17% of the corn
tortillas consumed in Central America. In Costa Rica we estimate we had 87% of
the packaged tortilla market, 32% of the snack market and 9% of the rice market
in 2002.

Our main competitors within the corn flour industry are Minsa, Del Comal and Instamasa.

Operations and Capital Expenditures.We have in corn flour production an
installed capacity of 175,000 tons, with an average utilization of 63% during
2002. Total annual production capacity, including other products, represents
217,000 tons as of December 31, 2002 and total average extent of utilization
was approximately 66% during 2002. Throughout the region we operate four corn
flour plants in Costa Rica, Honduras, Guatemala and El Salvador. In Costa
Rica, we also have one plant producing packaged tortillas, one plant producing
snacks, one plant processing hearts of palm and one plant processing rice. In
Nicaragua we have one small tortilla plant.

In 2000, we completed construction of our frozen bread plant in Costa Rica
with a capacity of 200,000 units per day. The frozen bread plant was sold in
November 2001 together with the rest of the bread operations in Costa Rica. In
2001, we expanded our corn flour capacity in El Salvador, which increased
overall corn flour capacity by 26% by the beginning of 2002. Total capital
expenditures for the past three years was approximately U.S.$29.0 million.
Capital expenditures for 2003 will be mostly oriented to technical upgrades.

Raw Materials. Corn is the most important raw material needed in our
operations and is obtained primarily from local growers. However, when
domestic supply is insufficient, we turn to the international markets through
import permits granted by the governments of countries in which we have corn
flour plants. Price fluctuation and volatility are subject to domestic
conditions, such as annual crop results, and to a lesser extent, international
conditions.

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Venezuelan Operations

Overview

In 1998, we increased to 50% our beneficial ownership in DEMASECA, our
corn flour operation. Local investors own the remaining 50% interest. In
August 1999, we acquired DAMCA International Corporation, a Delaware
corporation which owned 100% of MONACA, Venezuelas second largest corn and
wheat flour producer at that time, for approximately U.S.$99 million.
Thereafter, we sold 5% of MONACA to Archer-Daniels-Midland for approximately
U.S.$4.8 million. We believe this acquisition enhanced our existing
grain-based products business in Venezuela. DEMASECA and MONACA are
collectively referred to as our Venezuelan Operations.

In recent years, Venezuela has experienced considerable volatility and
depreciation of its currency, high interest rates, political instability and
declining asset values. Recently, in response to the general strike and in an
effort to shore up the economy and control inflation, the Venezuelan
authorities imposed foreign exchange and price controls. Further economic
stagnation is expected to result as a consequence of these market distortions.
These developments have had and may continue to have an adverse effect on us.

DEMASECA and MONACA

Principal Products. Our Venezuelan Operations produce and distribute corn
flour as well as wheat flour, rice and other products. We sell corn flour
under the brand names JUANA®, TIA BERTA® and DECASA®. We sell wheat flour
under the ROBIN HOOD® and POLAR® brand and rice under the MONICA® brand.

Sales and Marketing.In 2002, combined consumption of corn flour, wheat
flour and other grain-based products, such as rice and oats, in Venezuela
totaled 1.6 million tons, representing an estimated U.S.$0.8 billion per year.
Venezuelans use corn flour to produce and consume arepas, which are made in the
home or in restaurants for personal consumption rather than manufactured by
specialty shops or other large manufacturers for sale and profit. In 2002, we
sold corn flour only in the retail market in one and two kilogram bags to
independent distributors, supermarkets and wholesalers. We sell wheat flour to
both industrial customers and retailers, distributing in 45 kilogram bags and
in one kilogram bags. Sales to industrial customers like bakeries made up 79%
of our total wheat flour sales volume in 2002. The remaining 21% of sales in
2002 were in the retail market, which refers to independent distributors,
supermarkets and wholesalers. Sales fluctuate seasonally as demand for
flour-based products is lower during those months when most schools are closed
for vacation. In addition, sales are higher in November as customers build
inventory to satisfy increased demand during the holiday season in December.

Competition and Market Share. With the MONACA acquisition, we
significantly increased our share of the corn flour market and entered the
wheat flour market. In 2002, we had 34.1% of the corn flour market and 32.8%
of the wheat flour market. As of December 31, 2002, we are the second largest
corn flour and wheat flour producer and the third largest food producer in
Venezuela. During 2002, sales volumes for our Venezuelan Operations were
251,257 tons of corn flour, 179,843 tons of wheat flour and approximately
22,771 tons of other products.

In corn flour, our main competitor is Grupo Polar, C.A., which occupied
approximately 54.5% of the market in 2002. In wheat flour, our principal
competitor is Cargill, which we believe held approximately 36.3% of the market
in 2002.

Operation and Capital Expenditures. We operate six corn flour, four wheat
flour and three other products plants in Venezuela with an annual production
capacity of 792,000 tons as of December 31, 2002 and an average extent of
utilization of approximately 57% during 2002. However, one corn flour plant,
representing 46,170 tons, is temporarily idle.

Capital expenditures for the past three years were U.S.$16.6 million.
Capital expenditures for 2003 are expected to be focused on technology
upgrades, which are expected to be financed with cash flow from our Venezuelan
Operations.

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Raw Materials. Corn and, to a lesser extent, wheat are our most important
raw materials. Corn is purchased in Venezuela and is subject to the corn
markets volatility. All wheat is purchased from the U.S. and Canada with its
availability and price volatility dependent upon those markets.

Miscellaneous

INTASATechnology and Equipment Operations

Since 1976 our technology and equipment operations have been conducted
principally through INTASA, which has two subsidiaries: Tecnomaíz, S.A., or
Tecnomaíz, and Constructora Industrial Agropecuaria, S.A. de C.V., or CIASA.
The principal activity of these subsidiaries is to provide research and
development, equipment, and construction services to us and equipment to third
parties. Through Tecnomaíz, we engage in the design, manufacture and sale of
machines for the production of tortillas and tortilla chips. The machinery for
the tortilla industry includes a range of capacities, from machines that make
50 to 300 corn tortillas per minute to dough mixers. The equipment is sold
under the TORTEC® and BATITEC® trademarks in Mexico. Tecnomaíz also
manufactures high volume energy efficient corn and wheat tortilla systems that
can produce up to 1,200 corn tortillas and 400 wheat tortillas per minute.

We carry out proprietary technological research and development for corn
milling and tortilla production as well as all engineering, plant design and
construction through INTASA and CIASA. These companies administer and
supervise the design and construction of our new plants and also provide
advisory services and training to employees of our corn flour and tortilla
manufacturing facilities. We manufacture corn tortilla-making machines for
sale to tortilla manufacturers and for use in in-store tortillerías, as well
as high-capacity corn and wheat tortilla-makers that are supplied only to us.
We have invested approximately Ps.144 million in research and development
during the period from January 1, 1998 through December 31, 2002, including
Ps.9 million during 2002.

Banorte Investment

In June 1992, we made an investment in Banco Mercantil del Norte, S.A., or
Banorte, a Mexican bank privatized by the Mexican government in 1992. We
purchased 10.1% of Banortes share capital by bidding in conjunction with a
group of investors, led by the Chairman of our board of directors and Chief
Executive Officer, Mr. González Barrera. In September 1993, these shares were
exchanged for an interest in Grupo Financiero Banorte, S.A. de C.V., or
GFNorte, a Mexican financial services holding company and Banortes parent. In
addition, we acquired Ps.98.5 million (in nominal terms) of GFNorte debentures,
which were converted into shares of GFNorte in December 2000. As of December
31, 2002, we owned 11.1% of the outstanding shares of GFNorte. Approximately
6% or Ps.1,242 million of our total assets are invested in Banorte. In
accordance with Mexican GAAP, GFNortes results of operations are accounted for
in our consolidated results of operations using the equity method of
accounting.

CAPITAL EXPENDITURES AND DIVESTITURES

Our capital expenditures for 2000, 2001 and 2002 were U.S.$146 million,
U.S.$68 million and U.S.$64 million, respectively. Our capital expenditures
include investments in property, plant and equipment, acquisitions of new
plants and brands and investments in common stock. In 2000, we completed our
four-year expansion program that required a capital expenditure of
approximately U.S.$800 million. This large expansion program was financed
primarily through borrowed funds and capital contributions. Since these
expenditures allowed us to expand our production capacity, in 2001 and 2002 we
focused on more moderate growth, thereby lowering our capital expenditures. We
greatly reduced capital expenditures in 2001 and 2002 as a result of the
completion of our 19972000 investment program. Investments of approximately
U.S.$68 million in 2001 (including a U.S.$17 million early lease buyout option
on certain of Gruma Corporations production equipment) and U.S.$64 million in
2002 were significantly lower than the approximately U.S.$146 million reported
in 2000 and were mostly applied to technology upgrades. In 2003, we expect our
capital expenditures to be approximately U.S.$70 million, mainly for technology
upgrades. We anticipate financing these expenditures through our own cash
flows. For more information on capital expenditures please refer to the
specific subsidiary.

The following table sets forth the aggregate amount of our capital
expenditures during the periods indicated.

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|                        |  |                                  |       |      |  |      |      |  |  |   |      | 
|----------------------- |  | -------------------------------- | ----- | ---- |  | ---- | ---- |  |  | - | ---- | 
|                        |  | Year ended December 31,         
|                        |  |                                 
|                        |  | 2000                             |       | 2001 |  | 2002
|                        |  |                                  |       |      |  |     
|                        |  | (in millions of U.S. dollars(1))
|Gruma Corporation       |  | $                                | 67.6  |      |  | $    | 43.3 |  |  | $ | 43.6 | 
|GIMSA                   |  |                                  | 4.5   |      |  |      | 0.4  |  |  |   | 5.4  | 
|Venezuelan Operations   |  |                                  | 6.9   |      |  |      | 6.3  |  |  |   | 3.4  | 
|Molinera de México      |  |                                  | 40.7  |      |  |      | 4.4  |  |  |   | 3.0  | 
|Gruma Centro América    |  |                                  | 16.6  |      |  |      | 6.2  |  |  |   | 6.2  | 
|PRODISA                 |  |                                  | 1.9   |      |  |      | 0.9  |  |  |   | 0.7  | 
|Others and eliminations |  |                                  | 8.2   |      |  |      | 6.8  |  |  |   | 1.4  | 
|                        |  |                                  |       |      |  |      |      |  |  |   |      | 
|Total consolidated      |  | $                                | 146.4 |      |  | $    | 68.4 |  |  | $ | 63.7 | 
|                        |  |                                  |       |      |  |      |      |  |  |   |      | 



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|(1) |  | Amounts in respect of some of the capital expenditures were
paid for in currencies other than the U.S. dollar. These amounts
were translated into U.S. dollars at the exchange rate in effect on
the dates on which a given capital expenditure was made. As a
result, U.S. dollar amounts presented in the table above may not be
comparable to data contained elsewhere in this Annual Report.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

For more information on capital expenditures for each subsidiary, please
see the sections entitled Operation and Capital Expenditures under the
relevant sections above.

REGULATION

Mexican Regulation

Corn and Tortilla Subsidies and Import Policies

Due in part to the importance of tortillas in the Mexican diet, the
Mexican government has enacted various policies that have distorted the corn
and tortilla markets. Prior to January 1, 1999, the government subsidized corn
purchases made by tortilla producers and set retail tortilla prices. Although
the subsidies and price controls were dismantled at that time, the government
took other measures that affected the price of corn and tortillas. These
included the closing of CONASUPO, which resulted in the sale of its significant
corn reserves, the increased distribution of corn import permits and increased
funding for support programs for corn growers. For more information on these
policies and their effect on our costs and sales, see Item 5. Operating and
Financial Review and ProspectsManagements Discussion and Analysis of
Financial Condition and Results of OperationsFactors Affecting Financial
Condition and Results of OperationsEffects of Deregulation of the Mexican
Tortilla and Corn Flour Industry.

Environmental Regulations

Our Mexican operations are subject to Mexican federal, state and municipal
laws and regulations relating to the protection of the environment. The
principal federal environmental laws are the Ley General de Equilibrio
Ecológico y Protección al Ambiente(the General Law of Ecological Equilibrium
and Protection of the Environment, or the Mexican Environmental Law), which is
enforced by the Secretaría de Medio Ambiente y Recursos Naturales(the Ministry
of the Environment and Natural Resources, or SEMARNAT) and the Ley Federal de
Derechos(the Mexican Federal Law of Governmental Fees). Under the Mexican
Environmental Law, each of our facilities engaged in the production of corn
flour, wheat flour, and packaged tortillas is required to obtain an operating
license from SEMARNAT upon initiating operations, and then annually submit a
certificate of operation to maintain the operating license. Furthermore, the
Mexican Federal Law of Governmental Fees requires that Mexican manufacturing
plants pay a fee for the discharge of residual waste water to drainage. Rules
have been promulgated concerning hazardous substances and water, air and noise
pollution. In particular, Mexican environmental laws and regulations require
that Mexican companies file periodic reports with respect to air and water
emissions and hazardous wastes. They establish standards for waste water
discharge. We must also comply with zoning regulations as well and rules
regarding health, working conditions and commercial matters. SEMARNAT and the
Federal Bureau of Environmental Protection can bring administrative and
criminal proceedings against companies that violate environmental laws, as well
as close non-complying facilities.

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We believe we are currently in compliance in all material respects with
all applicable Mexican environmental regulations. The level of environmental
regulation and enforcement in Mexico has increased in recent years. We expect
this trend to continue and to be accelerated by international agreements
between Mexico and the United States. To the extent that new environmental
regulations are promulgated in Mexico, we may be required to incur additional
remedial capital expenditures to comply. Management is not aware of any
pending regulatory changes that would require additional remedial capital
expenditures in a significant amount.

Competition Regulations

The Ley Federal de Competencia Económica(the Federal Economic Competition
Law or the Mexican Competition Law), was approved by the Mexican Congress and
published in the Diario Oficial de la Federaciónon December 24, 1992 and
became effective on June 22, 1993. The Mexican Competition Law and the
Reglamento de la Ley Federal de Competencia Económica(the Regulations of the
Mexican Competition Law), effective as of March 5, 1998, regulate monopolies
and monopolistic practices and require Mexican government approval of certain
mergers and acquisitions. The Mexican Competition Law grants government the
authority to establish price controls for products and services of national
interest qualified as such by Presidential decree, and established the Comisión
Federal de Competencia, or Federal Competition Commission, to enforce the law.
Mergers and acquisitions and other transactions that may restrain trade or that
may result in monopolistic or anti-competitive practices or combinations must
be approved by the Federal Competition Commission. The Mexican Competition Law
may potentially limit our business combinations, mergers and acquisitions and
may subject us to greater scrutiny in the future in light of our market
presence, although it has had little effect on our operations, and we do not
believe that this legislation will have a material adverse effect on our
existing or developing business operations.

U.S. Federal and State Regulations

Gruma Corporation is subject to regulation by various federal and state
agencies, including the Food and Drug Administration, the Occupational Safety
and Health Administration, the Federal Trade Commission, the Environmental
Protection Agency and the Texas Department of Agriculture. We believe that we
are in compliance in all material respects with all environmental and other
legal requirements. Our food manufacturing and distribution facilities are
subject to periodic inspection by various public health agencies, and the
equipment utilized in these facilities must generally be governmentally
approved prior to operation.

Central America and Venezuela

Gruma Centro América and our Venezuelan Operations are subject to
regulation in each country in which they operate. We believe that Gruma Centro
América and our Venezuelan Operations are currently in compliance with all
applicable legal requirements in all material respects.

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ITEM 5. Operating And Financial Review And Prospects.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.

You should read the following discussion in conjunction with our financial
statements and the notes thereto contained elsewhere herein. Our financial
statements have been prepared in accordance with Mexican GAAP, which differ in
some significant respects from U.S. GAAP. See Note 20 to our financial
statements for a description of the principal differences between Mexican GAAP
and U.S. GAAP applicable to our financial statements and a quantitative
reconciliation to U.S. GAAP of our majority net income and stockholders
equity. For more information about our financial statements in general, see
Presentation of Financial Information.

Overview of Accounting Presentation

Effects of Inflation

Mexican GAAP requires that financial statements recognize the effects of
inflation in accordance with Bulletins B-10 and B-15 issued by the Mexican
Institute of Public Accountants. The purpose of this methodology is to present
all information in comparable monetary units and thereby mitigate the
distortive effect of inflation in the financial statements. Unless otherwise
stated herein, the financial statements and other financial data in this Annual
Report have been restated in pesos of constant purchasing power as of December
31, 2002.

We restate all non-monetary assets using the Mexican National Consumer
Price Index, except inventories, which are restated using actual replacement
costs, and fixed assets of non-Mexican origin, which may be restated using a
specified index which considers the consumer price index of the relevant
foreign country and the fluctuations of the exchange rate between the Mexican
peso and the currency of such foreign country.

Bulletin B-15 prescribes the methodology for restating and translating the
financial statements of a Mexican companys non-Mexican subsidiaries into
Mexican GAAP for purposes of recognizing the effects of inflation in such
financial statements. Bulletin B-15 requires, among other things, that local
currency-based financial statements of a non-Mexican subsidiary of a Mexican
company for a particular period be (1) restated by using the relevant inflation
rate in the relevant foreign country and (2) then translated into pesos.

Bulletin B-15 also requires that inflation rates in foreign countries be
used in calculating monetary position gains or losses on a consolidated basis.
In addition, Bulletin B-15 provides that the consolidated financial statements
of a Mexican company for all periods prior to the most recent period are to be
restated in pesos of constant purchasing power. This restatement may be
accomplished by using an international restatement factor, which takes into
account the inflation rates, exchange rate movements and relative net sales in
Mexico and the other countries in which the company and its subsidiaries
operate, rather than using the inflation rate in Mexico.

For comparison purposes, the following table sets forth, for each of the
three years ended December 31, 2002:



| |  |  | the international restatement factor used to restate the
financial statements data for each of these periods to pesos of
constant purchasing power as of December 31, 2002;                                                                                                                                                                                                                 
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the cumulative Mexican National Consumer Price Index for each
period which, in the absence of Bulletin B-15, would have been used
to restate the financial statements to pesos of constant purchasing
power as of December 31, 2002; and                                                                                                                                                    
|
| |  |  | the comparison factor for each period which represents the
index that must be applied to the financial statements for each
period (which have been restated using the international restatement

factor) in order to restate the financial statements and financial
data in December 31, 2002 pesos of constant purchasing power using
the cumulative Mexican National Consumer Price Index.

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|                                 |  |                    |      |                    |  |            |       |  |  |  |        | 
|-------------------------------- |  | ------------------ | ---- | ------------------ |  | ---------- | ----- |  |  |  | ------ | 
|                                 |  | Cumulative         |      | Cumulative Mexican |  |            |       | 
|Financial data in                |  | International      |      | National Consumer  |  | Comparison
|Mexican pesos as of December 31, |  | Restatement Factor |      | Price Index        |  | Factor    
|                                 |  |                    |      |                    |  |           
|2000                             |  |                    | 5.78 |                    |  |            | 10.41 |  |  |  | 1.0438 | 
|2001                             |  |                    | 6.15 |                    |  |            | 5.70  |  |  |  | 0.9958 | 
|2002                             |  |                    |     |                    |  |            |      |  |  |  | 1.0000 | 

In future periods, the application of U.S. inflation rates could have a
substantial effect on our reported results of operations and financial
condition if such rates are lower than inflation rates in Mexico, assuming that
we maintain significant U.S. dollar-denominated debt and other liabilities and
assuming that all other relevant variables, such as foreign exchange rates,
remain constant. In addition, because Gruma Corporation, our principal U.S.
subsidiary, generates a significant portion of our consolidated net sales in
U.S. dollars, Bulletin B-15 could result in decreased net sales in peso terms,
again relative to prior periods. By contrast, if U.S. and other non-Mexican
inflation rates exceed inflation rates in Mexico in future periods, then our
monetary position gain and net sales as they relate to foreign subsidiaries
would tend to increase in comparison to prior periods.

Effects of Devaluation

Because a significant portion of our net sales are generated in U.S.
dollars, changes in the peso/dollar exchange rate can have a significant effect
upon our results of operations as reported in pesos. When the peso depreciates
against the U.S. dollar, Gruma Corporations net sales in U.S. dollars
represent a larger portion of our net sales in peso terms than when the peso
appreciates against the U.S. dollar. And when the peso appreciates against the
dollar, Gruma Corporations net sales in U.S. dollars represent a smaller
portion of our net sales in peso terms than when the peso depreciates against
the dollar. For a description of the peso/U.S. dollar exchange rate see Item
3. Key InformationExchange Rate Information.

In addition to the above, our net income may be affected by changes in our
foreign exchange gain or loss, which may be affected by significant variations
in the peso/dollar exchange rate. In 2000, we recorded a net foreign exchange
loss of Ps.61 million. During 2001, we recorded a net foreign exchange gain of
Ps.100 million. In 2002, we recorded a net foreign exchange loss of Ps.263
million.

Critical Accounting Policies

Managements Discussion and Analysis of Financial Condition and Results of
Operations discusses our consolidated financial statements, which have been
prepared in accordance with Mexican GAAP as promulgated by the Mexican
Institute of Public Accountants. A reconciliation from Mexican GAAP to U.S.
GAAP of majority net income and total stockholders equity is included in Note
20 to our consolidated financial statements. The preparation of these
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements, as
well as the reported amounts of revenues and expenses during the reporting
period.

In response to the SECs Release No. 33-8040, Cautionary Advice Regarding
Disclosure About Critical Accounting Policies, we identified the most critical
accounting principles that involve a higher degree of judgment and complexity
and that management believes are important to a more complete understanding of
our financial position and results of operations. These policies are outlined
below.

Additional accounting policies that are also used in the preparation of
our financial statements are outlined in the notes to our consolidated
financial statements included in this Annual Report.

Property, Plant and Equipment

We depreciate our property, plant and equipment over their respective
estimated useful lives. Useful lives are based on managements estimates of
the period that the assets will continue to support production requirements or
generate sales of our products and are adjusted when those estimates change.
Estimates are based on the nature of the asset, historical usage with
consideration given to technological changes, our current strategy, as well as

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engineering studies. To the extent that our estimates are incorrect, our
periodic depreciation expense or carrying value of our assets may be impacted.

We also evaluate the carrying value of property, plant and equipment to be
held and used and any assets to be disposed of, when events or circumstances
suggest that the carrying value may not be recoverable, such as temporary shut
downs or permanent closures of plants. Such reviews have been necessary in
recent years. Impairment losses for equipment held and used are recorded when
the undiscounted cash flows estimated to be generated by those assets are less
than their carrying amount. The estimates of undiscounted cash flows take into
consideration expectations of future macroeconomic conditions as well as our
internal strategic plans. Therefore, inherent in the estimated future cash
flows is a certain level of risk which we have considered in our valuation;
nevertheless, actual future results may differ. Should impairment exist, the
amount of the loss is then quantified by comparing the carrying amount of the
assets to the weighted discounted cash flows. For assets to be disposed of, we
assess whether machinery or equipment can be used at other facilities and, if
not, estimate the proceeds to be realized upon sale of the assets. Primarily
as a result of plan rationalization, certain facilities and equipment are not
currently in use in operations. We have recorded impairment losses related to
certain unused assets and such losses may potentially occur in the future.

Goodwill and Other Intangible Assets

Under Mexican GAAP, goodwill and other intangible assets are amortized on
a straight-line basis over estimated useful lives. We assess the
recoverability of goodwill and intangible assets whenever events or changes in
circumstances indicate that expected future undiscounted cash flows may not be
sufficient to support the carrying amount of an asset. Estimates of future
cash flow involve considerable management judgment. These estimates are based
on historical data, anticipated market conditions and management plans.

Under U.S. GAAP, effective January 1, 2002, we applied FAS 142. Under
FAS 142, goodwill and certain other intangible assets deemed to have an
indefinite useful life are no longer being amortized, but are subject to annual
impairment testing.

The identification and measure of goodwill and unamortized intangible
assets impairment involves the estimation of fair value of the reporting units.
Determining the fair value of a reporting unit under the first step of the
goodwill impairment test and determining the fair value of individual assets
and liabilities of a reporting unit (including unrecognized intangible assets)
under the second step of the goodwill impairment test is judgmental in nature
and often involves the use of significant estimates and assumptions.
Similarly, estimates and assumptions are used in determining the fair value of
other intangible assets. These estimates and assumptions could have a
significant impact on whether or not an impairment charge is recognized and
also the magnitude of any such charge. We perform internal valuation analyses
and consider relevant internal data as well as other market information that is
publicly available. Estimates of fair value are primarily determined using
discounted cash flows and market comparisons. These approaches use significant
estimates and assumptions including projected future cash flows (including
time), a discount rate reflecting the risk inherent in future cash flows, a
perpetual growth rate, determination of appropriate market comparables and the
determination of whether a premium or discount should be applied to
comparables. Inherent in these estimates and assumptions is a certain level of
risk which we believe we have considered in our valuation. Nevertheless, if
future actual results differ from estimates, a possible impairment charge may
be recognized in future periods related to the write-down of the carrying value
of goodwill and other intangibles.

Deferred Income Taxes

Under both Mexican and U.S. GAAP, we record deferred income tax assets and
liabilities using enacted tax rates for the effect of temporary differences
between the book and tax basis of assets and liabilities. If enacted tax rates
change, we adjust the deferred tax assets and liabilities through the provision
for income taxes in the period of change, to reflect the enacted tax rate
expected to be in effect when the deferred tax items reverse. We also record a
valuation allowance to reduce our deferred tax assets to the amount that is
more likely than not to be realized. While we have considered future taxable
income and ongoing prudent and feasible tax planning strategies in assessing
the need for the valuation allowance, in the event we were to determine that we
would be able to realize our deferred tax assets in the future in excess of the
net recorded amount, an adjustment to the deferred tax asset would increase
income in the period such determination was made. Should we determine that we
would not be able to realize all or

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part of our net deferred tax asset in the future, an adjustment to the
deferred tax asset would be charged to income in the period such determination
was made.

Factors Affecting Financial Condition and Results of Operations

General

In recent years, our financial condition and results of operations have
been significantly influenced by the following factors:



| |  |  | level of demand for tortillas;                                                
| | - |  | ------------------------------------------------------------------------------
|
| |  |  | effects of government polices on the Mexican tortilla and corn flour industry;
|
| |  |  | costs of energy;                                                              
|
| |  |  | cost of corn and wheat; and                                                   
|
| |  |  | our acquisitions, plant expansions and divestitures.                          

Effects of Deregulation of the Mexican Tortilla and Corn Flour Industry

Because of the importance of tortillas as a principal staple in the
Mexican diet, the Mexican government has regulated the domestic corn, corn
flour and tortilla industry, in one form or another, for approximately thirty
years. As discussed below, we had expected to benefit greatly from the
significant liberalization of the tortilla and corn flour industry in 1999 and
invested heavily in new plants as a result. Instead the Mexican government has
pursued policies, particularly in 1999 and 2000, that have distorted the corn
flour and tortilla markets and negatively affected our results of operations.

Complementary Revenues for Corn Flour Used to Make Tortillas

Until December 31, 1998, the Mexican government, in recognition of the
importance of tortillas as a principal staple in the Mexican diet, established
below market tortilla prices and consequently regulated corn flour prices and
paid complementary revenues to corn flour producers, subject to specified
volume ceilings. The Mexican government established corn flour prices below
market pricing levels, and at times, below the cost of production, allowing
corn flour producers to sell corn flour to tortilla manufacturers at prices
lower than actual production cost. Under this program, the Mexican government:



| |  |  | paid corn flour producers, including GIMSA, complementary
revenues equal to the difference between the market price for corn
and the governments subsidized price, based on an established
formula; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | set monthly ceilings for each corn flour producer on the
volume of corn flour for which it would pay complementary revenues.                                                                            

At times, the Mexican governments prices and/or ceilings were too low to
reflect demand, so that GIMSA had to choose whether to sell its corn flour at a
price below its actual production cost or not to sell corn flour at all.

Complementary revenues accounted for 5.1% of our consolidated net sales
and 12.2% of GIMSAs net sales in 1998.

Effective as of December 31, 1998, the Mexican government deregulated the
corn flour and tortilla industry and, in particular, terminated the
complementary revenue program and allowed the prices of corn flour and
tortillas to be determined by competition and other market conditions. The
termination of this program, combined with the other market-distortive effects
described below, has negatively affected the transition to competitive corn and
corn flour markets and has negatively affected our results of operations.

Commercialization Program

Since December 1996, ASERCA, a Mexican government agency, has maintained a
separate program designed to promote the purchase of corn in certain regions of
Mexico. Under this program, called the

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commercialization program, the Mexican government provides payments to
corn purchasers based partly on international corn prices. The net effect is
that these purchasers receive corn below the domestic market price of corn. The
reimbursements vary depending upon the size of the corn harvest in Mexicos
various growing regions. With the exception of the winter harvest of 1999, the
amount of corn available under this program has been small.

Since mid-2001, corn growers have sold corn at market prices. In some
regions, these corn growers receive direct economic support from the Mexican
government. In addition, in order to keep domestic corn prices competitive
with imported corn prices, corn purchasers in some regions are reimbursed for
transportation and warehousing costs by the Mexican government.

During the two years that both the complementary revenue and the
commercialization program were in place, corn flour and corn dough producers
received two distinct payments from the government. Since the end of the
complementary revenues program, corn buyers are only reimbursed under the
commercialization program.

Deregulation of the Corn Flour and Tortilla Markets

With the deregulation of the corn flour and tortilla markets on January 1,
1999, we believed GIMSA was well positioned for growth. As tortilla prices
were no longer to be set by the government, we anticipated a price war among
tortilla producers that would accelerate the switch to the more efficient dry
corn flour method in an effort to reduce costs. In addition, we expected
tortilla producers to look for ways to cut costs as corn flour and corn dough
prices were expected to increase with the closing of CONASUPO. In anticipation
of this closing and a possible shortage of corn, we built large corn
inventories in the end of 1998 and the beginning of 1999. With these large
purchases, GIMSA had far in excess of its normal reserves for that time of
year.

In connection with the deregulation, the Mexican government accelerated
the sale of its remaining corn inventories during 1999, creating a surplus of
corn in the Mexican market. In addition, in order to ensure adequate corn
supply for tortilla manufacturing during the transition to a competitive
market, the Mexican government issued import permits for over 473,000 tons of
corn for traditional tortilla production mostly in the first half of 1999. Due
to the resulting over-supply of corn, domestic corn prices were depressed in
most of 1999. The large corn inventories that GIMSA had at the end of 1998 and
the beginning of 1999 were purchased at prices that turned out to be higher
than those prevailing in the market during most of 1999. During most of 1999,
GIMSA was unable to increase its corn flour prices because many of its current
and potential customers substituted raw corn for corn flour in making tortillas
due to the low price of raw corn.

In 2000, the governments decision to increase corn imports and support
for corn growers resulted in drastic decreases in corn prices, which fell
approximately 21% in 2000. This in turn drove down corn flour prices. As a
result of this reduction in the price of raw corn, tortilla producers continued
to switch from corn flour to raw corn. This trend continued in 2001 and 2002,
although to a lesser extent, during which time corn prices fell approximately
0.5% and 0.4%, respectively.

Despite the drop in corn and corn flour prices, tortilla prices
drastically increased after January 1, 1999 and have remained higher through
June of 2003. During this period, tortilla prices have increased approximately
87% while inflation has increased approximately 37%. This caused an estimated
decrease in demand for tortillas which also negatively affected our sales
volume.

RESULTS OF OPERATIONS

The following table sets forth our consolidated income statement data on a
Mexican GAAP basis for the years ended December 31, 2000, 2001 and 2002,
expressed as a percentage of net sales. All financial information has been
prepared under the Bulletin B-15 methodology. For a description of the method,
see Presentation of Financial Information and Overview of Accounting
Presentation.

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|                                                           |  |                         |       |      |  |      |       |   |  |  |       |  
|---------------------------------------------------------- |  | ----------------------- | ----- | ---- |  | ---- | ----- | - |  |  | ----- | -
|                                                           |  | Year Ended December 31,
|                                                           |  |                        
|                                                           |  | 2000                    |       | 2001 |  | 2002
|                                                           |  |                         |       |      |  |     
|Income Statement Data                                      |  |                         |       |      |  |      |       |   |  |  |       |  
|Net sales                                                  |  |                         | 100.0 | %    |  |      | 100.0 | % |  |  | 100.0 | %
|Cost of sales                                              |  |                         | 63.8  |      |  |      | 63.1  |   |  |  | 62.5  |  
|Gross profit                                               |  |                         | 36.2  |      |  |      | 36.9  |   |  |  | 37.5  |  
|Selling, general and administrative expenses               |  |                         | 31.8  |      |  |      | 31.8  |   |  |  | 29.7  |  
|Operating income                                           |  |                         | 4.5   |      |  |      | 5.2   |   |  |  | 7.8   |  
|Net comprehensive financing cost                           |  |                         | (2.6  | )    |  |      | (1.6  | ) |  |  | (3.2  | )
|Other income (expenses), net                               |  |                         | (0.2  | )    |  |      | (0.4  | ) |  |  | (0.6  | )
|Income taxes (current and deferred)                        |  |                         | 0.1   |      |  |      | 1.5   |   |  |  | 2.9   |  
|Employees statutory profit sharing
(current and deferred) |  |                         | 0.0   |      |  |      | 0.1   |   |  |  | 0.1   |  
|Other items                                                |  |                         | 0.4   |      |  |      | 0.3   |   |  |  | 0.8   |  
|Minority interest                                          |  |                         | 1.0   |      |  |      | 1.0   |   |  |  | 1.0   |  
|Majority net (loss) income                                 |  |                         | 1.3   |      |  |      | 1.8   |   |  |  | 2.1   |  

The following table sets forth our net sales and operating income as
represented by our principal subsidiaries for 2000, 2001 and 2002. Financial
information with respect to GIMSA includes sales of Ps.38 million, Ps.35
million and Ps.29 million in 2000, 2001 and 2002, respectively, in corn flour
to PRODISA; financial information with respect to Molinera de México includes
sales of Ps.21 million, Ps.28 million and Ps.4 million in 2000, 2001 and 2002,
respectively, to PRODISA; financial information with respect to PRODISA
includes sales of Ps.26 million, Ps.34 million and Ps.38 million in 2000, 2001
and 2002, respectively, in tortilla related products to Gruma Corporation; and
financial information with respect to INTASA includes sales of Ps.556 million,
Ps.290 million and Ps.292 million in 2000, 2001 and 2002, respectively, in
technological support to certain subsidiaries of Gruma, S.A. de C.V. In the
process of consolidation, all intra-company transactions are eliminated from
the financial statements. Financial information included with respect to Gruma
Corporation has been adjusted to eliminate substantial intra-company sales by
Gruma Corporations corn flour milling unit, Azteca Milling, to its tortilla
and related products business, Mission Foods.

|                        |  |                                                                             |           |           |  |       |        |           |  |       |           |           |  |  |        |   |  |  |           |   |  |  |          |  
|----------------------- |  | --------------------------------------------------------------------------- | --------- | --------- |  | ----- | ------ | --------- |  | ----- | --------- | --------- |  |  | ------ | - |  |  | --------- | - |  |  | -------- | -
|                        |  | Year Ended December 31,                                                    
|                        |  |                                                                            
|                        |  | 2000                                                                        |           | 2001      |  | 2002 
|                        |  |                                                                             |           |           |  |      
|                        |  | Net                                                                         |           | Operating |  | Net   |        | Operating |  | Net   |           | Operating
|                        |  | Sales                                                                       |           | Income    |  | Sales |        | Income    |  | Sales |           | Income   
|                        |  |                                                                             |           |           |  |       |        |           |  |       |           |          
|                        |  | (in millions of pesos of constant purchasing power as of December 31, 2002)
|Gruma Corporation       |  |                                                                             | Ps.8,660  |           |  |       | Ps.451 |           |  |       | Ps.8,822  |           |  |  | Ps.599 |   |  |  | Ps.9,276  |   |  |  | Ps.797   |  
|GIMSA                   |  |                                                                             | 5,271     |           |  |       | 580    |           |  |       | 4,947     |           |  |  | 558    |   |  |  | 4,763     |   |  |  | 507      |  
|Venezuelan Operations   |  |                                                                             | 2,238     |           |  |       | 218    |           |  |       | 1,996     |           |  |  | 153    |   |  |  | 2,231     |   |  |  | 241      |  
|Molinera de México      |  |                                                                             | 1,510     |           |  |       | (43    | )         |  |       | 1,547     |           |  |  | 13     |   |  |  | 1,721     |   |  |  | 18       |  
|Gruma Centro América    |  |                                                                             | 1,180     |           |  |       | 32     |           |  |       | 1,185     |           |  |  | (8     | ) |  |  | 1,051     |   |  |  | 31       |  
|PRODISA                 |  |                                                                             | 407       |           |  |       | (302   | )         |  |       | 401       |           |  |  | (228   | ) |  |  | 187       |   |  |  | (76      | )
|Others and eliminations |  |                                                                             | (16       | )         |  |       | (74    | )         |  |       | 17        |           |  |  | (112   | ) |  |  | (53       | ) |  |  | (28      | )
|                        |  |                                                                             |           |           |  |       |        |           |  |       |           |           |  |  |        |   |  |  |           |   |  |  |          |  
|Total                   |  |                                                                             | Ps.19,251 |           |  |       | Ps.860 |           |  |       | Ps.18,915 |           |  |  | Ps.976 |   |  |  | Ps.19,174 |   |  |  | Ps.1,492 |  
|                        |  |                                                                             |           |           |  |       |        |           |  |       |           |           |  |  |        |   |  |  |           |   |  |  |          |  

Year Ended December 31, 2002 Compared with Year Ended December 31, 2001

Net Sales

Overview: Net sales increased by 1.4% to Ps.19,174 million in 2002
compared to Ps.18,916 million in 2001. The increase in net sales resulted from
higher net sales associated with higher volume at Gruma Corporation and
Molinera de México as well as higher net sales associated with price increases
at our Venezuelan Operations, partially offset by lower sales volume at GIMSA,
Gruma Centro América and PRODISA (which, in the case of Gruma Centro América
and PRODISA, resulted from the discontinuation of the bread operations in
2001). In 2002, 65.5% of our consolidated net sales were derived from our
non-Mexican operations.

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Net Sales by Subsidiary: By major subsidiary, the percentages of
consolidated net sales in 2002 and 2001 were as follows:

|                        |  |                                      |      |      |  |  |      |  
|----------------------- |  | ------------------------------------ | ---- | ---- |  |  | ---- | -
|                        |  | Percentage of Consolidated Net Sales
|                        |  |                                     
|Subsidiary              |  | 2002                                 |      | 2001
|                        |  |                                      |      |     
|Gruma Corporation       |  |                                      | 48.4 | %    |  |  | 46.6 | %
|GIMSA                   |  |                                      | 24.8 |      |  |  | 26.2 |  
|Venezuelan Operations   |  |                                      | 11.6 |      |  |  | 10.6 |  
|Molinera de México      |  |                                      | 9.0  |      |  |  | 8.2  |  
|Gruma Centro América    |  |                                      | 5.5  |      |  |  | 6.3  |  
|PRODISA                 |  |                                      | 1.0  |      |  |  | 2.1  |  
|Others and eliminations |  |                                      | (0.3 | )    |  |  | 0.0  |  

Gruma Corporations net sales increased 5.1% to Ps.9,276 million in 2002
compared to Ps.8,822 million in 2001 primarily reflecting higher sales volume
and relatively stable prices. Gruma Corporations combined corn flour and
tortilla sales volume increased by 5.1% to 899,000 tons in 2002 from 856,000
tons in 2001. Individually, corn flour sales volume increased 7.0% while
tortilla sales volume increased 3.9%. The growth in corn flour and tortilla
sales volume was partially due to Gruma Corporations resumed production in
October 2001 of yellow-corn products that it had previously suspended the sale
of due to the possible presence of the StarLink protein. The resumption in
production followed the implementation of a more rigorous program designed to
identify genetically modified organisms in corn supplies in order to ensure
product safety. In 2002, the company began to recover some of the yellow corn
product sales it lost as a result of the voluntary recall. See Item 8.
Financial InformationLegal Proceedings.

Other factors causing Gruma Corporations corn flour sales volume to
increase included:



| |  |  | strong demand from new and existing U.S. manufacturers of
conventional products such as tortillas and tortilla chips as well
as new products such as snacks and bakery products; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | improved retail sales coverage resulting from changes to
Gruma Corporations wholesaler and distributor network.                                                                    

Other factors causing Gruma Corporations tortilla sales volume to
increase included:



| |  |  | increased sales to a major customer that expanded through
recent acquisitions to whom Gruma Corporation is a preferred
supplier;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | increased exports; and                                                                                                          
|
| |  |  | new business relationships with two restaurant chains based
in the Midwest, which began during third quarter 2002.              

GIMSAs net sales decreased by 3.7% to Ps.4,763 million in 2002 compared
with Ps.4,947 million in 2001. The decrease in net sales resulted from lower
sales volume. Sales volume decreased 3.5% in 2002 to 1,386,000 tons from
1,436,000 tons in 2001 due to a combination of factors, including:



| |  |  | a 3.1% decrease in bulk sales volume (which represented 85.1%
of total sales volume in 2002) resulting from our efforts to limit
our customers to those with low-risk credit profiles. We are
continuing to focus on increasing sales to these customers and are
providing such customers with incentives to increase the percentage
of corn flour used in their raw-material mix; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | a 5.8% decrease in 2002 in sales volume of one-kilogram
consumer retail packages of corn flour (which represented 14.9% of
total sales volume in 2002) reflecting lower sales to DICONSA caused
by DICONSAs restructuring of operations, which resulted in an
increase in the prices of goods DICONSA sells to the public and a
reduction in DICONSA branches and regional coverage. 

39



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Net sales from our Venezuelan Operations increased 11.8% to Ps.2,231
million in 2002 compared to Ps.1,996 million in 2001, reflecting significant
price increases implemented throughout the year in order to offset sizeable
increases in the cost of grains, particularly wheat. Sales volume from our
Venezuelan Operations decreased by 0.9% in 2002 to 454,000 tons from 458,000
tons in 2001, which decrease was driven mainly by a 4.6% decline in wheat flour
volume due primarily to a temporary suspension of operations in December 2002
due to the nation-wide general strike in Venezuela and, to a lesser extent,
lower per-capita consumption stemming from lower consumer purchasing power
coupled with higher prices. The decrease in sales volume from our Venezuelan
Operations was partially offset by a 3.4% increase in sales of corn flour to be
repackaged and resold under private labels.

Molinera de Méxicos net sales increased 11.2% to Ps.1,721 million in 2002
from Ps.1,547 million in 2001 reflecting a 9.7% increase in sales volume and,
to a lesser extent, an increase in wheat flour prices implemented in connection
with an increase in the cost of wheat. The increase in sales volume to 536,000
tons in 2002 from 489,000 tons in 2001 reflected:



| |  |  | increased sales to Mexicos largest cookie maker;                                     
| | - |  | --------------------------------------------------------------------------------------
|
| |  |  | continuing initiatives designed to enhance sales to supermarket in-store bakeries; and
|
| |  |  | new supply contracts based on our commitment to customer service and quality.         

Gruma Centro Américas net sales decreased 11.3% to Ps.1,051 million in
2002 from Ps.1,185 million in 2001 reflecting the discontinuation of its bread
operations in November 2001. Gruma Centro Américas sales volume decreased
4.1% in 2002 to 143,000 tons from 149,000 tons in 2001 for the same reason.
Net sales declined more than sales volume because Gruma Centro Américas bread
products sold at a much higher price per ton than corn flour, which is our main
product line in Central America.

PRODISAs net sales decreased 53.4% to Ps.187 million in 2002 from Ps.401
million in 2001. Sales volume decreased 44.2% in 2002 to 15,000 tons from
28,000 tons in 2001 reflecting the discontinuation of the bread operations in
November 2001.

Cost of Sales

Overview: Our total cost of sales increased 0.5%, commensurate with a
0.5% increase in total sales volume, to Ps.11,992 million in 2002 from
Ps.11,929 million in 2001. As a percentage of net sales, our total cost of
sales improved to 62.5% from 63.1%, resulting primarily from better performance
of our Venezuelan Operations. Our Venezuelan Operations benefited from making
most corn purchases before industry-wide price increases associated with the
devaluation of the bolívar and from increasing the price of corn flour
throughout the year. To a lesser extent, the discontinuation of Gruma Centro
Américas bread operations also contributed to the consolidated improvement.

Cost of Sales by Subsidiary: Gruma Corporations cost of sales increased
4.8% to Ps.5,015 million in 2002 compared to Ps.4,783 million in 2001,
commensurate with the 5.1% increase in sales volume. Cost of sales as a
percentage of net sales decreased to 54.1% from 54.2% mainly as a result of
better absorption of fixed costs related to higher sales volume.

GIMSAs cost of sales as a percentage of net sales increased to 70.4% in
2002 from 69.9% in 2001 due primarily to:



| |  |  | lower absorption of fixed costs as a result of lower sales volume; and                                                                                                    
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | an increase in expenses associated with corn procurement, due to:                                                                                                         
|
| |   |  |      insufficient corn supplies in certain regions of Mexico in the fourth quarter of 2002; and                                                                          
|
| |   |  |      higher corn transportation and warehousing costs due to
the absence in 2002 of governmental support GIMSA received in
2001 to compensate it for using domestic corn.

40



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In absolute terms, GIMSAs cost of sales decreased 3.0%, commensurate with
the 3.5% decline in sales volume, to Ps.3,352 million in 2002 from Ps.3,457
million in 2001.

Cost of sales of our Venezuelan Operations increased 9.8% to Ps.1,586
million in 2002 from Ps.1,445 million in 2001, largely as a result of
significant increases in raw material costs. Cost of sales as a percentage of
net sales improved to 71.1% from 72.4%. Despite significant increases in the
cost of raw materials (especially wheat, which is imported to Venezuela), our
Venezuelan Operations improved gross margin as a result of making most corn
purchases before industry-wide price increases associated with the devaluation
of the bolívar and by increasing the price of corn flour throughout the year.

Cost of sales of Molinera de México increased 11.6% to Ps.1,377 million in
2002 compared to Ps.1,234 million in 2001. Cost of sales as a percentage of
net sales increased to 80.0% from 79.8% due to a change in sales mix favoring
bulk presentation and, consequently, lower prices.

Gruma Centro Américas cost of sales decreased 12.6% to Ps.678 million in
2002 compared to Ps.775 million in 2001 as a result of the 4.1% decrease in
sales volume and the discontinuation of the bread operations. Cost of sales as
a percentage of net sales improved to 64.5% in 2002 from 65.4% in 2001 in
connection with the discontinuation of the bread operations.

PRODISAs cost of sales decreased 52.1% to Ps.128 million in 2002 compared
to Ps.268 million in 2001 as a result of the 44.2% decrease in sales volume due
to the discontinuation of the bread operations. Cost of sales as a percentage
of net sales increased to 68.7% in 2002 from 66.8% in 2001 reflecting the
discontinuation of the bread operations.

Gross Profit

As a result of the above factors, our gross profit increased by 2.8% to
Ps.7,182 million in 2002 compared with Ps.6,987 million in 2001 and our gross
margin improved to 37.5% from 36.9%.

Selling, General and Administrative Expenses

Overview: Our selling, general and administrative expenses, or SG&A
expenses, decreased 5.3% to Ps.5,690 million in 2002 from Ps.6,012 million in
2001 due in large part to the discontinuation of the bread operations and, to a
lesser extent, lower administrative expenses incurred by our corporate offices
and lower expenses of GIMSA. SG&A expenses as a percentage of net sales
decreased to 29.7% in 2002 from 31.8% in 2001. The decrease in SG&A expenses
as a percentage of net sales was driven mainly by the discontinuation of the
bread operations and, to a lesser extent, better expense absorption and
containment within Gruma Corporation and our Venezuelan Operations.

SG&A Expenses by Subsidiary: SG&A expenses of Gruma Corporation increased
0.7% to Ps.3,464 million in 2002 from Ps.3,440 million in 2001 mainly as a
result of an increase in variable distribution expenses relating to the
tortilla business and an increase in expenses relating to the promotion of the
corn flour business. SG&A expenses as a percentage of net sales decreased to
37.3% in 2002 from 39.0% in 2001, an improvement driven by an increase in sales
volume.

GIMSAs SG&A expenses as a percentage of net sales increased to 19.0% in
2002 from 18.8% in 2001 due to lower sales volume. In absolute terms, SG&A
expenses decreased 3.0% to Ps.903 million in 2002 from Ps.931 million in 2001
due to the consolidation of administrative positions at our plants and lower
freight expenses as a result of decreased sales to DICONSA.

SG&A expenses of our Venezuelan Operations increased 1.2% to Ps.403
million in 2002 compared to Ps.398 million in 2001. SG&A expenses as a
percentage of net sales decreased to 18.1% in 2002 from 20.0% in 2001 due to:



| |  |  | increased net sales;                                           
| | - |  | ---------------------------------------------------------------
|
| |  |  | significant reductions in promotional and advertising expenses;

41



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| |  |  | the fact that distribution expenses increased at a slower rate than did inflation; and
| | - |  | --------------------------------------------------------------------------------------
|
| |  |  | to a lesser extent, headcount reduction.                                              

SG&A expenses of Molinera de México increased 8.5% to Ps.325 million in
2002 from Ps.300 million in 2001 due to an increase in selling expenses
(especially shipping costs) and the implementation of initiatives to increase
both supermarket sales and support for distributors. SG&A expenses as a
percentage of net sales decreased to 18.9% in 2002 from 19.4% in 2001 as a
result of higher net sales.

SG&A expenses of Gruma Centro América decreased 18.2% to Ps.342 million
in 2002 from Ps.418 million in 2001 due mainly to the discontinuation of the
bread operations. For the same reason, SG&A expenses as a percentage of net
sales decreased to 32.6% in 2002 compared to 35.3% in 2001.

SG&A expenses for PRODISA decreased 62.9% to Ps.134 million in 2002 from
Ps.361 million in 2001 and SG&A expenses as a percentage of net sales decreased
to 71.7% in 2002 from 90.0% in 2001, each as a result of the discontinuation of
the bread operations.

Operating Income

Overview: Operating income increased 52.9% to Ps.1,492 million in 2002
compared to Ps.976 million in 2001 and our consolidated operating margin
improved to 7.8% in 2002 from 5.2% in 2001 due primarily to:



| |  |  | higher sales volume with respect to, and better expense absorption within, Gruma Corporation;                                                                                                                     
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the discontinuation of the bread operations;                                                                                                                                                                      
|
| |  |  | our Venezuelan Operations improved performance resulting
from increased corn flour prices and from having purchased most of
its corn before industry-wide price increases followed the bolívars
devaluation; and
|
| |  |  | lower administrative expenses at GRUMAs corporate offices.                                                                                                                                                       

Operating Income by Subsidiary: Gruma Corporations operating income
increased 33.0% to Ps.797 million in 2002 compared to Ps.599 million in 2001
and its operating margin improved to 8.6% in 2002 compared to 6.8% in 2001 due
mainly to higher sales volume and better expense absorption.

GIMSAs operating income decreased 9.1% to Ps.507 million in 2002 compared
to Ps.558 million in 2001. GIMSAs operating margin declined to 10.7% in 2002
compared to 11.3% in 2001.

Operating income of our Venezuelan Operations increased 57.9% to Ps.241
million in 2002 compared to Ps.153 million in 2001 primarily due to
extraordinarily better performance as a result of increasing the price of corn
flour throughout the year and making most corn purchases before industry-wide
price increases associated with the devaluation of the bolívar. Operating
margin increased to 10.8% in 2002 compared to 7.7% in 2001.

Molinera de Méxicos operating income increased 35.9% to Ps.18 million in
2002 compared to Ps.13 million in 2001 due to higher sales volume and better
expense absorption. Operating margin improved to 1.1% in 2002 from 0.9% in
2001.

Gruma Centro Américas operating income increased to Ps.31 million in 2002
compared to an operating loss of Ps.8 million in 2001 primarily reflecting the
discontinuation of the bread business in November 2001.

PRODISAs operating loss decreased 66.8% to Ps.76 million in 2002 from an
operating loss of Ps.228 million in 2001 reflecting the discontinuation of the
bread operations in November 2001.

GRUMAs Other Subsidiaries had an operating loss of Ps.28 million in 2002
compared to an operating loss of Ps.112 million in 2001. This 75.3% decline in
operating loss resulted mainly from lower administrative expenses at corporate
headquarters.

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Net Comprehensive Financing Cost

Net comprehensive financing cost increased 105.5% to Ps.611 million in
2002 compared to Ps.297 million in 2001 due mainly to foreign exchange losses
associated with the devaluation of the peso, partially offset by lower interest
expenses as a result of a reduction in our debt. The components of
comprehensive financing cost, together with explanations of significant
changes, are detailed below.

|                              |  |                                   |      |          |  |        |       |   |  |     |      |   |  |   |  |                                                                         
|----------------------------- |  | --------------------------------- | ---- | -------- |  | ------ | ----- | - |  | --- | ---- | - |  | - |  | ------------------------------------------------------------------------
|                              |  | 2001                              |      | 2002     |  | Change |       |   |  |    
|                              |  |                                   |      |          |  |        |       |   |  |    
|                              |  | (in millions of pesos of constant |      |          |  |       
|                              |  | purchasing power as of            |      |          |  |       
|Items                         |  | December 31, 2002)                |      | Comments
|                              |  |                                   |      |         
|Interest Expense              |  | Ps.                               | 670  |          |  | Ps.    | 567   |   |  | Ps. | (104 | ) |  |  |  | Lower debt and lower average interest
rates                             
|Interest Income               |  |                                   | (93  | )        |  |        | (58   | ) |  |     | 35   |   |  |  |  | Lower average interest rates and lower
cash balances                    
|Foreign Exchange Loss (Gain)  |  |                                   | (100 | )        |  |        | 263   |   |  |     | 363  |   |  |  |  | Peso devaluation in
2002 versus peso appreciation in 2001               
|Monetary Position Loss (Gain) |  |                                   | (180 | )        |  |        | (161) |   |  |     | 19   |   |  |  |  | Lower net monetary
liability position resulting mainly from reduced debt
|Total                         |  | Ps.                               | 297  |          |  | Ps.    | 611   |   |  | Ps. | 314  |   |  |   |  |                                                                         
|                              |  |                                   |      |          |  |        |       |   |  |     |      |   |  |   |  |                                                                         

Other Income, Net

Other income, net, increased 73.6% in 2002 to Ps.121 million compared to
Ps.69 million in 2001, mostly because of the sale of certain nonproductive
assets. For a detailed description of items included in other expenses, net,
see Note 13 to our consolidated financial statements.

Taxes and Employees Profit Sharing

Provisions for income taxes and employee profit sharing increased to
Ps.574 million in 2002 from Ps.289 million in 2001, reflecting primarily:



| |  |  | higher pre-tax income at Gruma Corporation resulting from better financial performance; and
| | - |  | -------------------------------------------------------------------------------------------
|
| |  |  | higher deferred taxes as a result of the disposal of certain subsidiaries during 2002.     

Equity in Earnings of Associated Companies, Net

Our share of net income in unconsolidated associated companies represented
Ps.162 million in 2002, Ps.98 million more than in 2001, due to:



| |  |  | the completion by mid-2002 of the amortization of
deferred assets related to excess of cost of the acquisition over
book value of Banorte (previously reported under this item), and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | improved results of Banorte.                                                                                                                                                        

Majority Net Income

As a result of the above factors, our income before minority interest was
Ps.590 million in 2002 compared to Ps.523 million in 2001 and our majority net
income was Ps.393 million in 2002 compared to Ps.332 million in 2001.

Year Ended December 31, 2001 Compared with Year Ended December 31, 2000

Net Sales

Overview: Net sales decreased by 1.7% to Ps.18,916 million in 2001
compared to Ps.19,251 million in 2000 due to a 1.1% decrease in sales volume,
lower prices and the effect of the depreciation of the peso on our sales

43



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outside of Mexico. Lower prices in this period were the result of lower
corn and wheat costs which resulted in lower prices for corn and wheat products
industry-wide. GIMSAs net sales were particularly affected by lower sales
volumes and lower prices. Net sales of our Venezuelan Operations were affected
by lower sales prices. In 2001, 63.5% of our consolidated net sales were
derived from our non-Mexican operations.

Net Sales by Subsidiary: By major subsidiary, the percentages of
consolidated net sales in 2001 and 2000 were as follows:

|                        |  |                                      |      |      |  |  |      |  
|----------------------- |  | ------------------------------------ | ---- | ---- |  |  | ---- | -
|                        |  | Percentage of Consolidated Net Sales
|                        |  |                                     
|Subsidiary              |  | 2001                                 |      | 2000
|                        |  |                                      |      |     
|Gruma Corporation       |  |                                      | 46.6 | %    |  |  | 45.0 | %
|GIMSA                   |  |                                      | 26.2 |      |  |  | 27.4 |  
|Venezuelan Operations   |  |                                      | 10.6 |      |  |  | 11.6 |  
|Molinera de México      |  |                                      | 8.2  |      |  |  | 7.8  |  
|Gruma Centro América    |  |                                      | 6.3  |      |  |  | 6.1  |  
|PRODISA                 |  |                                      | 2.1  |      |  |  | 2.1  |  
|Others and eliminations |  |                                      | 0.0  |      |  |  | 0.0  |  

Gruma Corporations net sales increased 1.9% to Ps.8,822 million in 2001
compared to Ps.8,660 million in 2000 primarily reflecting higher sales volume.
Gruma Corporations combined corn flour and tortilla sales volume increased by
2.4% to 856,000 tons in 2001 from 836,000 tons in 2000. Sales volume growth
resulted from a 7.4% increase in corn flour sales volume due to improved retail
sales coverage resulting from changes to our wholesaler and distributor network
and, to a lesser extent, the continuing shift by manufacturers of tortillas and
tortilla related products from the traditional cooked corn nixtamalmethod to
the corn flour method of producing tortillas and tortilla related products.

The effect of this increase was offset by a 0.6% decrease in tortilla sales
volume due to Gruma Corporations decision to cease production of yellow corn
products in late 2000 to ensure product safety because of the possible presence
of the StarLink protein. With the implementation of a new program to identify
these proteins, Gruma Corporation reentered the market for yellow corn products
in November 2001. See Item 8. Financial InformationLegal Proceedings.

GIMSAs net sales decreased by 6.2% to Ps.4,947 million in 2001 compared
with Ps.5,271 million in 2000. The decrease in net sales resulted from lower
sales volume and, to a lesser extent, lower corn flour prices (resulting from
lower corn prices). GIMSAs sales volume decreased 4.7% in 2001 to 1,436,000
tons compared to 1,507,000 tons in 2000 due to a combination of factors,
including:



| |  |  | a 9.3% decrease in 2001 in sales volume of one-kilogram
consumer retail packages of corn flour (which represented 15.3% of
GIMSAs total sales volume in 2001) reflecting lower sales to
DICONSA; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | a 3.8% decrease in bulk sales volume (which represented 84.7%
of GIMSAs total sales volume in 2001) resulting from GIMSAs
decision to focus on achieving higher margins rather than volume
growth. 

Net sales from our Venezuelan Operations decreased 10.8% primarily as a
result of lower corn flour prices (reflecting increased competition). Sales
volume from our Venezuelan Operations increased by 0.8%. While corn flour
sales volume decreased 2.9% because of increased competition and lower sales to
Venezuelas government-sponsored programs (PROAL), this decrease was completely
offset by a 7.4% increase in wheat flour sales volume due to an expanded
distribution network and improved customer service and sales efforts.

Molinera de Méxicos net sales increased 2.5% to Ps.1,547 million in 2001
from Ps.1,510 million in 2000 reflecting a 1.8% increase in volume sales. This
increase in sales volume to 489,000 tons in 2001 from 480,000 tons in 2000
reflected higher levels of bulk sales as a result of more competitive pricing
made possible through greater efficiencies in wheat procurement and improved
sales force performance through greater geographic coverage and customer
segmentation by channel.

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Gruma Centro Américas net sales increased 0.4% to Ps.1,185 million in
2001 from Ps.1,180 million in 2000 reflecting higher sales volume. Gruma
Centro Américas sales volume increased 2.1% in 2001 to 149,000 tons from
146,000 tons in 2000 due mainly to higher corn flour and rice sales volume as a
result of stronger product promotion efforts.

Net sales of PRODISA decreased 1.6% to Ps.401 million in 2001 from Ps.407
million in 2000. Sales volume decreased 5.0% in 2001 to 28,000 tons from
29,000 tons in 2000 reflecting a 10.2% decline in tortilla sales volume due to
greater competition from tortilla makers supplying warm corn and wheat
tortillas and, to a lesser extent, the discontinuation of the bread operations
in November 2001. Net sales did not decline commensurately with the decrease
in sales volume due to our decision to change PRODISAs product mix to
emphasize higher priced bread varieties.

Cost of Sales

Overview: Our total cost of sales decreased 2.8% to Ps.11,929 million from
Ps.12,273 million in 2000. As a percentage of net sales, however, cost of
sales improved to 63.1% in 2001 from 63.8% in 2000, primarily due to better
performance of Gruma Corporation and, to a lesser extent, GIMSA and Molinera de
México. The primary reasons for improved performance were greater efficiencies
in transportation, warehousing and grain procurement.

Cost of Sales by Subsidiary: Gruma Corporations cost of sales increased
1.4% to Ps.4,783 million in 2001 compared to Ps.4,717 million in 2000
commensurate with the increase in sales volume. Cost of sales as a percentage
of net sales improved to 54.2% in 2001 from 54.5% in 2000 primarily as a result
of greater efficiencies in Gruma Corporations supply chain management and as a
result of lower warehousing costs.

GIMSAs cost of sales decreased 7.9% to Ps.3,457 million in 2001 from
Ps.3,754 million in 2000 due to:



| |  |  | lower corn costs and greater efficiencies in corn
procurement;                                                               
| | - |  | -----------------------------------------------------------------------------------------------------------------------------
|
| |  |  | lower transportation and warehousing costs due primarily to
governmental support to compensate GIMSA for using domestic corn;
|
| |  |  | decreased costs in 2001 compared to 2000 in connection with
the temporary closing of the Zamora plant in mid-2000; and       
|
| |  |  | lower energy costs.                                                                                                          

GIMSAs cost of sales as a percentage of net sales improved to 69.9% in
2001 from 71.2% in 2000 reflecting lower cost of sales and the fact that corn
costs declined at a higher rate than corn flour prices due to the strength of
GIMSAs brand name.

Cost of sales of our Venezuelan Operations decreased 10.6% to Ps.1,445
million in 2001 from Ps.1,617 million in 2000 due to higher average prices for
byproducts of corn flour and wheat flour production, which are credited to cost
of sales. Costs of sales as a percentage of net sales increased to 72.4% in
2001 from 72.2% in 2000 due to lower corn flour prices, reflecting increased
competition, and a shift in the market from corn flour to rice flour which is a
cheaper substitute and a lower margin product line for our Venezuelan
Operations.

Cost of sales of Molinera de México decreased 1.6% to Ps.1,234 million in
2001 compared to Ps.1,255 million in 2000. Cost of sales as a percentage of
net sales improved to 79.8% in 2001 from 83.1% in 2000 due to:



| |  |  | better wheat procurement and inventory management, resulting
in a decline in wheat costs of approximately 2% while wheat flour
prices increased 0.7%;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | better utilization of fixed costs due to higher sales volume;
and                                                                                    
|
| |  |  | lower information technology costs in 2001 compared to 2000
when the SAP system was implemented.                                                    

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Gruma Centro Américas cost of sales increased 2.9% to Ps.775 million in
2001 compared to Ps.753 million in 2000 mainly in connection with the increase
in sales volume. Cost of sales as a percentage of net sales increased to 65.4%
in 2001 from 63.8% in 2000 due to:



| |  |  | higher corn costs resulting from increased purchases of
domestic corn compared to imported corn because of greater supply,
which prevented Gruma Centro América from increasing corn flour
prices because of use of raw corn as a substitute for corn flour in
the market; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | an unfavorable shift in Gruma Centro Américas product mix to
lower gross margin products such as rice.                                                                                                                                                                       

PRODISAs cost of sales decreased 5.4% to Ps.268 million in 2001 compared
to Ps.283 million in 2000 due to lower sales volume. Cost of sales as a
percentage of net sales improved to 66.8% in 2001 from 69.6% in 2000 reflecting
the change in PRODISAs product mix to higher margin bread varieties.

Gross Profit

As a result of the above factors, our gross profit increased by 0.1% to
Ps.6,987 million in 2001 compared with Ps.6,978 million in 2000.

Selling, General and Administrative Expenses

Overview: Our SG&A expenses decreased 1.7% to Ps.6,012 million in 2001
from Ps.6,118 million in 2000 primarily due to lower expenses of Gruma
Corporation and, to a lesser extent, lower expenses of PRODISA reflecting
benefits of a restructuring plan initiated in October 2000 and implemented
throughout 2001. SG&A expenses as a percentage of net sales were substantially
unchanged at 31.8% in 2001 and 2000.

SG&A Expenses by Subsidiary: SG&A expenses of Gruma Corporation decreased
1.5% to Ps.3,440 million in 2001 from Ps.3,492 million in 2000 reflecting
depreciation of the peso. SG&A expenses as a percentage of net sales decreased
to 39.0% in 2001 from 40.3% in 2000 reflecting higher sales.

SG&A expenses of GIMSA decreased 0.7% to Ps.931 million in 2001 from
Ps.938 million in 2000 due to lower expenses for leasing computer equipment as
GIMSAs information technology system continued to yield savings and, to a
lesser extent, lower freight expenses due to decreased sales to DICONSA,
partially offset by a significant increase in advertising expenses due to the
nationwide advertising campaign for MASECA® brand corn flour that GIMSA
launched in July 2001. SG&A expenses as a percentage of net sales increased to
18.8% in 2001 compared to 17.8% in 2000 reflecting lower net sales.

SG&A expenses of our Venezuelan Operations decreased 1.2% to Ps.398
million in 2001 compared to Ps.403 million in 2000 due to the depreciation of
the peso. SG&A expenses as a percentage of net sales increased to 20.0% in
2001 compared to 18.0% in 2000 due to lower net sales.

SG&A expenses of Molinera de México were substantially unchanged at
Ps.300 million in 2001 compared to Ps.299 million in 2000. SG&A expenses as a
percentage of net sales improved to 19.4% in 2001 compared to 19.8% in 2000
reflecting higher net sales.

SG&A expenses of Gruma Centro América increased 5.7% to Ps.418 million in
2001 from Ps.396 million in 2000 due to higher depreciation in 2001 on frozen
bread equipment acquired in late 2000 and sold in connection with the sale of
our bread operations. SG&A expenses as a percentage of net sales increased to
35.3% in 2001 compared to 33.5% in 2000.

SG&A expenses for PRODISA decreased 15.3% to Ps.361 million in 2001 from
Ps.426 million in 2000 reflecting benefits from the restructuring plan
initiated in October 2000 to reduce SG&A expenses and increase distribution
efficiencies. Advertising expenses, particularly television advertising
expenses, were reduced and distribution expenses declined because inefficient
routes were eliminated and combined with other routes. SG&A expenses as a
percentage of net sales improved to 90.0% in 2001 compared to 104.6% in 2000.

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Operating Income

Overview: Operating income increased 13.4% to Ps.976 million compared to
Ps.860 million in 2000 due mainly to improved operating income of Gruma
Corporation as a result of greater efficiencies in its supply chain management,
lower warehousing cost and higher sales volume and, to a lesser extent,
improved operating income of PRODISA reflecting benefits of its comprehensive
restructuring plan. Our consolidated operating margin improved to 5.2% in 2001
compared to 4.5% in 2000.

Operating Income by Subsidiary: Gruma Corporations operating income
increased 32.9% to Ps.599 million in 2001 compared to Ps.451 million in 2000
and its operating margin improved to 6.8% compared to 5.2% in 2000 due mainly
to the aforementioned greater efficiencies in its supply chain management,
lower warehousing cost and higher sales volume.

GIMSAs operating income decreased 3.6% to Ps.558 million in 2001 compared
to Ps.579 million in 2000. However, GIMSAs operating margin increased to
11.3% in 2001 compared to 11.0% in 2000 due mainly to lower corn prices and
efficiencies in corn procurement.

Operating income of our Venezuelan Operations decreased 29.9% to Ps.153
million in 2001 compared to Ps.218 million in 2000. The operating margin for
our Venezuelan Operations decreased to 7.7% in 2001 compared to 9.7% in 2000
primarily due to lower corn flour prices.

Molinera de Méxicos operating income was Ps.14 million in 2001 compared
to an operating loss of Ps.43 million in 2000 primarily due to increases in net
sales and better wheat procurement and inventory management. Molinera de
Méxicos operating margin was 0.9% in 2001.

Gruma Centro América had an operating loss of Ps.8 million in 2001
compared to operating income of Ps.32 million in 2000 primarily reflecting
higher corn costs and higher expenses of its bread business.

PRODISAs operating loss decreased 24.6% in 2001 to Ps.228 million from
Ps.302 million in 2000 reflecting the change in PRODISAs product mix to
include more higher profit margin products and reflecting benefits of PRODISAs
comprehensive restructuring plan.

GRUMAs Other Subsidiaries had an operating loss of Ps.112 million in 2001
compared to operating loss of Ps.74 million in 2000.

Net Comprehensive Financing Cost

Net comprehensive financing cost decreased 41.3% to Ps.297 million in 2001
compared to Ps.506 million in 2000 due mostly to lower interest expense and to
foreign exchange gains. The components of comprehensive financing cost,
together with an explanation of the significant changes, is set forth in the
following chart:

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|                              |  |                                   |      |          |  |        |      |   |  |     |      |   |  |                                                                                                                                                                         
|----------------------------- |  | --------------------------------- | ---- | -------- |  | ------ | ---- | - |  | --- | ---- | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                              |  | 2000                              |      | 2001     |  | Change |      |  
|                              |  |                                   |      |          |  |        |      |  
|                              |  | (in millions of pesos of constant |      |         
|                              |  | purchasing power as of            |      |         
|Items                         |  | December 31, 2002)                |      | Comments
|                              |  |                                   |      |         
|Interest Expense              |  | Ps.                               | 835  |          |  | Ps.    | 670  |   |  | Ps. | (165 | ) |  |   Lower weighted-average interest
rates and, to a lesser extent,
appreciation of the peso                                                                              
|Interest Income               |  |                                   | (155 | )        |  |        | (93  | ) |  |     | 62   |   |  |   Lower weighted-average interest
rates                                                                                                                                
|Foreign Exchange Loss (Gain). |  |                                   | 61   |          |  |        | (100 | ) |  |     | (161 | ) |  |   Peso appreciation in 2001 versus
peso depreciation in 2000                                                                                                           
|Monetary Position Loss (Gain) |  |                                   | (234 | )        |  |        | (180 | ) |  |     | 55   |   |  |   Lower inflation rates and lower net
monetary liability position
resulting, in part, from the effect
of the appreciation of the peso on
dollar-denominated liabilities
|Total                         |  | Ps.                               | 506  |          |  | Ps.    | 297  |   |  | Ps. | (209 | ) |  |                                                                                                                                                                         
|                              |  |                                   |      |          |  |        |      |   |  |     |      |   |  |                                                                                                                                                                         

Other Income, Net

Other income, net, increased 113.8% in 2001 to Ps.69 million compared to Ps.32
million in 2000, resulting primarily from reorganization expenses and write-off
of idle assets during 2000. For a detailed description of items included in
other expenses, net, see Note 13 to our consolidated financial statements.

Taxes and Employees Profit Sharing

Provisions for income taxes and employee profit sharing increased to Ps.
289 million compared to Ps.22 million in 2000 primarily due to:



| |  |  | extraordinarily low taxable income in 2000 because of the
implementation of Bulletin D-4 Accounting Treatment of Income Tax,
Asset Tax and Employees; Statutory Profit Sharing; and                                                                                        
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | higher income tax provision in Gruma Corporation, resulting
mainly from better financial performance and higher tax rates
reflecting the absence in 2001 of net operating losses that were
available to Gruma Corporation in 2000 in connection with certain
mergers in 1999.

The new Mexican Income Tax Law, effective as of January 1, 2002, includes
a reduction of the current statutory tax rate from 35% to 32%. This change
will be implemented gradually during the next three years. For 2002 and 2003,
our statutory tax rate is expected to be 35% and 34%, respectively. See Note
14 to the consolidated financial statements for more information regarding this
change.

Equity in Earnings of Associated Companies, Net

Our share of net income in unconsolidated associated companies represented
Ps.64 million in 2001, Ps.9 million less than in 2000 reflecting lower income
of GFNorte.

Majority Net Income

As a result of the above factors, our income before minority interest was
Ps.523 million in 2001 compared to Ps.437 million in 2000 and our majority net
income was Ps.332 million in 2001 compared to Ps.246 million in 2000.

CONTRACTUAL OBLIGATIONS

As more fully disclosed in Note 12 D to the consolidated financial
statements, over the past years, we have entered into agreements with third
parties. Under Mexican GAAP, we have accounted for these instruments as equity
and consequently these instruments are not reflected as liabilities on our
balance sheet. Details of the arrangements are as follows:

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| |  |  | During 2002, we entered into an equity swap agreement with an
international financial institution with respect to 2,300,000 of our
own shares for a total amount of U.S.$2,590,000. At maturity we are
subject to pay a financial cost at the LIBOR rate plus 3.2% on the
contractual amount. The agreement matures in August 2003, at which
time the Company has the option to repurchase the shares at the
agreed price of U.S.$1.126071 per share or pay or receive the
difference between the agreed price and the market price.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | During 2002, we entered into two call option agreements with
an international financial institution with respect to 13,900,000 of
our own shares for a total amount of U.S.$13,244,000. One of these
agreements matured in January 2003. The other agreement matures in
December 2003. At maturity, we have the right to repurchase the
shares at nominal value.                                                                                                                                                                    

At the contractual termination of the above agreements, we will have the
option to purchase such shares and such decision will be based on various
factors, including the prevailing market price of our shares at the time and an
overall evaluation of our liquidity position.

In addition to the above arrangements, we have commitments under certain
firm contractual arrangements to make future payments for goods and services.
These firm commitments secure the future rights to various assets to be used in
the normal course of operations. For example, we are contractually committed
to make certain minimum lease payments for the use of property under operating
lease agreements. In accordance with Mexican GAAP, the future rights and
obligations pertaining to such firm commitments are not reflected as assets and
liabilities on the accompanying consolidated balance sheets. Additionally,
during 1995 and 1996, Gruma Corporation entered into several sale-leaseback
agreements for various production equipment located in two of its U.S. plants.
These agreements are accounted for as operating leases under Mexican GAAP.
Under U.S. GAAP these agreements would have been accounted for as capital
leases because a continuing involvement from the seller-lessee is present, and
consequently, the risks and benefits of the property are not transferred to the
buyer-lessor. The U.S. GAAP balance sheet as of December 31, 2001 and 2002
would reflect an increase in the fixed assets, net, balance of Ps.157,895 and
Ps.149,908 (net of accumulated depreciation of Ps.41,954 and Ps.53,014,
respectively), respectively, and an increase in the long-term debt balance of
Ps.199,848 and Ps.202,922, respectively. The average annual rental payments
under these leases, expiring in 2011, will be approximately U.S.$7 million,
based upon the financial statements for the year ended December 31, 2002. Each
agreement provides Gruma Corporation with a purchase option to acquire the
equipment at fair market value at the expiration of the leases, and also an
early purchase option, which permits Gruma Corporation to acquire the equipment
at fair market value approximately three-quarters through the lease term.

The following table summarizes separately our material firm commitments at
December 31, 2002 and the timing and effect that such obligations are expected
to have on our liquidity and cash flow in the future periods. In addition, the
table reflects the timing of principal and interest payments on outstanding
debt, which is discussed in Item 5. Operating and Financial Review and
Prospects  Liquidity and Capital Resources  Indebtedness. We expect to
fund the firm commitments with operating cash flow generated in the normal
course of business.

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|                   |  |                               |       |             |  |             |       |        |  |       |       |  |  |  |      |  |  |  |       | 
|------------------ |  | ----------------------------- | ----- | ----------- |  | ----------- | ----- | ------ |  | ----- | ----- |  |  |  | ---- |  |  |  | ----- | 
|Firm Commitments   |  |                               |       |             |  |             |       |        |  |       |       |  |  |  |      |  |  |  |       | 
|and                |  | Less than                     |       | From 1 to 3 |  | From 3 to 5 |       | Over 5 |  |       |       | 
|Outstanding Debt   |  | 1 Year                        |       | Years       |  | Years       |       | Years  |  | Total
|                   |  |                               |       |             |  |             |       |        |  |      
|                   |  | (in millions of U.S. dollars)
|Long-term debt     |  |                               |      |             |  |             | 303.9 |        |  |       | 263.5 |  |  |  | 12.3 |  |  |  | 579.8 | 
|Capital
lease(1)   |  |                               | 2.7   |             |  |             | 6.5   |        |  |       | 6.5   |  |  |  | 11.2 |  |  |  | 26.8  | 
|Operating
lease(1) |  |                               | 32.8  |             |  |             | 44.4  |        |  |       | 21.4  |  |  |  | 15.6 |  |  |  | 114.3 | 
|Purchase(2)        |  |                               | 71.5  |             |  |             |      |        |  |       |      |  |  |  |     |  |  |  | 71.5  | 
|Other(3)           |  |                               | 75.7  |             |  |             |      |        |  |       |      |  |  |  |     |  |  |  | 75.7  | 
|Total              |  |                               | 182.8 |             |  |             | 354.8 |        |  |       | 291.5 |  |  |  | 39.1 |  |  |  | 868.2 | 
|                   |  |                               |       |             |  |             |       |        |  |       |       |  |  |  |      |  |  |  |       | 



---

|(1) |  | Operating and capital lease obligations primarily relate to minimum lease
rental obligations for our real estate and operating equipment in
various locations.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) |  | Purchase obligations relate to our minimum commitments to purchase
commodities, raw materials, machinery and equipment.                                       
|(3) |  | Other firm commitments relate to equity derivative transactions,
short-term bank loans and the current portion of long-term debt.                             

LIQUIDITY AND CAPITAL RESOURCES

Our liquidity and capital resource requirements from 1998 to 2000
reflected a high level of capital expenditures in connection with the
construction and acquisition of additional facilities in Mexico, the United
States, Central America and Venezuela, as well as significant working capital
requirements. During 2000, 2001 and 2002, we decreased capital expenditures by
focusing on improving operating efficiencies. We anticipate that most of our
capital expenditures in 2003 will be used for technology upgrades. We plan to
achieve greater efficiencies in working capital requirements by reducing
inventory turnover and accounts receivable. We cannot assure you that these
efforts will be successful.

We fund our liquidity and capital resource requirements through a variety of sources, including:



| |  |  | cash generated from operations;                                                
| | - |  | -------------------------------------------------------------------------------
|
| |  |  | uncommitted short-term and long-term lines of credit;                          
|
| |  |  | committed medium-term facilities;                                              
|
| |  |  | offerings of medium- and long-term debt; and                                   
|
| |  |  | sales of our equity securities and those of our subsidiaries from time to time.

We believe that our overall sources of liquidity will continue to be
sufficient during the next 12 months to satisfy our foreseeable financial
obligations and operational requirements. The principal factors that could
decrease our sources of liquidity are a significant decrease in the demand for,
or price of, our products, each of which could limit the amount of cash
generated from operations, and a lowering of our corporate credit rating or any
other downgrade, which could increase our costs with respect to new debt and
cause our stock price to suffer. Our liquidity is also affected by factors
such as the depreciation or appreciation of the peso and changes in interest
rates. As discussed below, Gruma, S.A. de C.V. is subject to financial
covenants contained in some of its debt agreements which require it to maintain
certain financial ratios and balances on a consolidated basis and Gruma
Corporation is subject to financial covenants contained in some of its debt and
lease agreements which require it to maintain certain financial ratios and
balances on a consolidated basis. The interest that Gruma, S.A. de C.V. and
Gruma Corporation
pay on a portion of their debt may increase if they fail to comply with
these and other covenants. An increase in the interest that Gruma, S.A. de
C.V. pays on its debt could limit its ability to fund its liquidity and capital
resource

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requirements. Similarly, an increase in the interest that Gruma
Corporation pays on debt could limit Gruma Corporations ability to help
support our liquidity and capital resource requirements.

Mr. González Barrera has pledged part of his shares in our company to
secure some of his borrowings. If the lenders enforce their rights against any
or all of these shares, Mr. González Barrera could lose control over us and a
change of control could result. In addition, this could trigger a default in
one of our credit agreements and have a material adverse effect upon our
business, financial condition, results of operations and prospects. For more
information about this pledge, see Item 7. Major Shareholders and Related
Party Transactions.

We intend to mitigate liquidity risks by increasing revenues through
capitalizing on our existing infrastructure and production capacity and
pursuing moderate growth, but we cannot assure you that we will succeed in this
regard.

Working Capital

We define working capital as current assets, excluding restricted cash,
minus current liabilities, excluding short-term bank loans and current portion
of long-term debt. Our working capital as of the dates indicated was as
follows:

|                  |  |                  |  | 
|----------------- |  | ---------------- |  | 
|December 31, 2001 |  | Ps.3,496 million
|                  |  |                  |  | 
|December 31, 2002 |  | Ps.3,588 million

Indebtedness

In October 1997, GRUMA issued U.S.$250 million unsecured notes due 2007,
which were rated investment grade, or triple-B- minus, by Standard & Poors
and Ba2 by Moodys. In November 1999, Standard & Poors lowered the rating on
GRUMAs U.S.$250 million unsecured notes due 2007 from triple-B-minus to
double-B-plus. In September 2000, Moodys downgraded GRUMAs debt from Ba1 to
Ba2. Additionally, in May 2001, Standard & Poors lowered our corporate credit
rating to double-B from double-B-plus. Although Standard & Poors and Moodys
changed GRUMAs outlook from negative to stable in April 2002 and June 2002,
respectively, Standard & Poors changed GRUMAs outlook from stable to positive
in December 2002 and Standard & Poors raised our corporate credit rating to
double-B-plus in June 2003, future downgrades or changes in outlook could cause
GRUMAs debt costs to fluctuate which could ultimately affect our stock price.

Our indebtedness bears interest at fixed and floating rates. At December
31, 2002, approximately 41% of our outstanding indebtedness bore interest at
fixed rates and approximately 59% bore interest at floating rates, with almost
all floating-rate indebtedness bearing interest based on LIBOR. Although we
hedge our interest rate exposure, we do not hedge our foreign exchange rate
exposure because we believe that we have natural foreign exchange hedges
incorporated in our balance sheet. For more information about our interest
rate and foreign exchange rate exposures, see Item 11. Quantitative and
Qualitative Disclosures About Market Risk.

As of December 31, 2002, we had committed U.S. dollar-denominated
long-term lines of credit totaling Ps.731 million (approximately U.S.$70
million) available from banks in the United States of which none had been
drawn. As of the same date, we also had uncommitted short-term lines of credit
totaling Ps.3,085 million (approximately U.S.$296 million) available from
Mexican and international banks, of which we had drawn Ps.778 million. As of
December 31, 2002, long-term uncommitted revolving lines of credit totaling
Ps.1,232 million (approximately U.S.$118 million) from Mexican banks were
available to us, of which none had been drawn. Should we elect to utilize the
uncommitted lines of credit, we would have to negotiate the terms and
conditions at the time of use.

At December 31, 2002, we had total outstanding long-term debt aggregating
approximately Ps.6,053 million. All of our long-term debt at such date was
dollar-denominated. Our long-term debt includes U.S.$250 million, or Ps.2,610
million, of principal amount of the 7.625% Notes due 2007, which we issued in
October 1997.

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On December 18, 2002, we obtained a three-year term syndicated loan from a
syndicate of banks for which Bank of America, N.A. is acting as administrative
agent for U.S.$300 million at LIBOR plus a spread ranging from 87.5 to 162.5
basis points, based on our consolidated debt-to-EBITDA ratio. Total proceeds
were used to pay the remaining U.S.$300 million portion of our U.S.$400 million
syndicated loan due February 2004. In addition, we used available revolving
credit facilities at year end to prepay the U.S.$50 million syndicated loan due
February 2003.

The new syndicated loan is due in two installments: U.S.$50 million in
December 2004 and U.S.$250 million in December 2005. There is a committed
revolving sub-limit of up to U.S.$100 million which we can repay and reborrow
and which will be reduced to U.S.$75 million in December 2004. The committed
revolving sub-limit gives us additional flexibility to manage our debt.

The new syndicated loan also allowed us to extend average debt maturities
and substantially improve our debt profile. We also expect to achieve interest
expense reductions because interest rates on the new syndicated loan are more
competitive than were those on the previous syndicated loan.

Some of our credit agreements contain covenants that require us to maintain:



| |  |  | a ratio of consolidated total funded debt to EBITDA of not more than 3.5:1; and         
| | - |  | ----------------------------------------------------------------------------------------
|
| |  |  | a ratio of consolidated EBITDA to consolidated interest charges of not less than 2.50:1.

In addition, we may not incur additional indebtedness and may not pay
dividends if doing so would violate the terms of these covenants.

Gruma Corporation is also subject to covenants which limit the amount of
dividends that can be paid under certain circumstances. Both Gruma, S.A. de
C.V. and Gruma Corporation are also subject to covenants which limit the
amounts that may be advanced to, loaned to, or invested in, us under certain
circumstances. In addition, both Gruma, S.A. de C.V. and Gruma Corporation are
required to maintain certain financial ratios and balances. Upon the
occurrence of any default or event of default under its credit and lease
agreements, Gruma Corporation generally is prohibited from making any payments
to us or our other subsidiaries or affiliates. The covenants described above
and other covenants could limit our and Gruma Corporations ability to help
support our liquidity and capital resource requirements. We and Gruma
Corporation are currently in compliance with all of the covenants contained in
the debt and lease agreements.

During 1995 and 1996, Gruma Corporation entered into several
sale-leaseback agreements for various production equipment located in two of
its U.S. plants. These agreements are, under Mexican GAAP, accounted for as
operating leases. Average annual rental payments under these leases, expiring
in 2011, will be approximately U.S.$7 million, based upon the financial
statements for the year ended December 31, 2002. Each agreement provides Gruma
Corporation with a purchase option to acquire the equipment at fair market
value at the expiration of the leases, and also an early purchase option, which
permits Gruma Corporation to acquire the equipment at fair market value
approximately three-quarters of the lease term.

As of December 31, 2002, we had total cash and cash equivalents of Ps.453
million, including Ps.1 million in restricted cash. Restricted cash is
comprised primarily of undistributed proceeds from tax-exempt industrial
development bonds issued by Gruma Corporation held by a trustee available for
future purchases of certain plants and equipment.

The following table presents our amortization requirements with respect to
our total indebtedness as of May 12, 2003.

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|                    |  |                             |          | 
|------------------- |  | --------------------------- | -------- | 
|Year                |  | In Millions of U.S. Dollars
|                    |  |                            
|2003                |  |                             | U.S.$61  | 
|2004                |  |                             | 54       | 
|2005                |  |                             | 254      | 
|2006                |  |                             | 2        | 
|2007                |  |                             | 252      | 
|2008 and thereafter |  |                             | 12       | 
|                    |  |                             |          | 
|Total               |  |                             | U.S.$645 | 

The following table sets forth our ratios of consolidated debt to total
capitalization (i.e., consolidated debt plus total stockholders equity) and
consolidated liabilities to total stockholders equity as of the dates
indicated. For purposes of these ratios, consolidated debt includes short-term
debt.

|                  |  |                            |      |                      |  |                       |      | 
|----------------- |  | -------------------------- | ---- | -------------------- |  | --------------------- | ---- | 
|                  |  |                            |      |                      |  | Ratio of Consolidated
|                  |  | Ratio of Consolidated Debt |      | Liabilities to Total
|Date              |  | to Total Capitalization    |      | Stockholders' Equity
|                  |  |                            |      |                     
|December 31, 2001 |  |                            | 0.37 |                      |  |                       | 0.81 | 
|December 31, 2002 |  |                            | 0.36 |                      |  |                       | 0.84 | 

Capital Expenditures

After years of significant growth, we are pursuing a more moderate growth
strategy, which includes lower levels of capital expenditures in property,
plant and equipment primarily in connection with our expansion and technology
upgrades at manufacturing facilities. In 2002, we spent U.S.$64 million on
capital expenditures, primarily on technological upgrades for our production
equipment. We have budgeted approximately U.S.$70 million capital expenditures
for 2003. This includes approximately U.S.$11 million spent in the first
quarter of this year.

We expect to be able to fund our capital expenditures primarily from funds
from operations. We believe that funds from operations and our current bank
lines of credit will be sufficient to meet our anticipated capital expenditures
through the end of this year.

U.S. GAAP RECONCILIATION

Our consolidated financial statements are prepared in accordance with
Mexican GAAP, which differ in certain significant respects from U.S. GAAP.
Mexican GAAP financial statements recognize the effects of inflation, whereas
financial statements prepared under U.S. GAAP are presented on a historical
cost basis. We are not required to reverse many of the Mexican inflation
accounting adjustments when reconciling Mexican GAAP to U.S. GAAP, as these
adjustments provide a means of measuring the effects of price-level changes in
the inflationary Mexican economy. Accordingly, these inflation-adjusted
figures are considered a more meaningful presentation than historical
cost-based financial reporting for both Mexican and U.S. accounting purposes.

Net income (loss) under U.S. GAAP amounted to Ps.310 million in 2002,
Ps.200 million in 2001 and Ps.71 million in 2000, compared with majority net
income (loss) under Mexican GAAP of Ps.393 million in 2002, Ps.332 million in
2001, and Ps.246 million in 2000.

Stockholders equity under U.S. GAAP amounted to Ps.8,877 million in 2001
and Ps.8,580 million in 2002, compared with stockholders equity under Mexican
GAAP of Ps.12,054 million in 2001 and Ps.12,033 million in 2002. See Note 20
to our audited consolidated financial statements for a further discussion of
the adjustments under U.S. GAAP.

New Accounting Standards

New Accounting Pronouncements under Mexican GAAP

In November 2001, the Mexican Institute of Public Accountants issued
Bulletin C-9, Liabilities, Provisions, Contingent Assets and Liabilities, and
Commitments, which supersedes Bulletin C-9, Liabilities, and

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Bulletin C-12,
Contingencies and Commitments. This bulletin is effective as of January 1,
2003. Bulletin C-9 provides guidance for the valuation, recognition and
presentation of liabilities, provisions, contingent assets and liabilities, and
commitments. This bulletin includes detailed rules for provisions, the use of
present value, the consideration of future events for its valuation, the
accounting treatment for possible reimbursements and changes in the estimated
value of provisions. In addition, Bulletin C-9 establishes the accounting
treatment for redemption of obligations when it occurs in an earlier stage or
when it is substituted by a new issuance. Our management believes that the
adoption of Bulletin C-9 will not have a significant impact on our financial
statements.

In December 2001, the Mexican Institute of Public Accountants issued
Bulletin C-8, Intangible Assets. This bulletin defines intangible assets as
those costs incurred or those rights or privileges acquired that will generate
future economic benefits. In addition, it provides guidance for the deferral
of research and development costs and certain preoperating expenses, as well as
the rules for the amortization of intangible assets. This bulletin is
effective as of January 1, 2003. Our management believes that the adoption of
Bulletin C-9 will not have a significant impact on our financial statements.

In December 2002, the Mexican Institute of Public Accountants issued
Bulletin C-15 Impairment and Disposition of Long-Lived Assets, or Bulletin
C-15, which is effective for financial statements initiated in January 1, 2004;
although earlier adoption is encouraged. Bulletin C-15 provides guidance for
the identification of certain events that represent evidence of potential
impairment of long-lived assets, tangible and intangible. Bulletin C-15 also
provides guidance for the calculation and recognition of impairment losses and
their reversal and establishes presentation and disclosure requirements upon
the recognition of impairment losses and their reversal. Additionally,
Bulletin C-15 provides presentation and disclosure requirements for
discontinued operations. Our management is currently evaluating the potential
effects that the adoption of this pronouncement could have on our results of
operations and financial position.

Recently Issued U.S. Accounting Standards

In January 2003, the Financial Account Standards Board, or FASB, issued
FASB Interpretation No. 46 Consolidation of Variable Interest Entities, an
interpretation of ARB No. 51, Consolidated Financial Statements, or FIN No.
46. FIN No. 46 provides a new framework for identifying variable interest
entities, or VIEs, and determining when a company should include the assets,
liabilities, non-controlling interests and results of activities of a VIE in
its consolidated financial statements. FIN No. 46 is effective in 2003.
Adoption of this standard is not expected to materially affect our results of
operations or financial position.

Statement of Financial Accounting Standards No. 148, Accounting for
Stock-Based Compensation  Transition and Disclosure  an amendment of FASB
Statement No. 123, or SFAS No. 148, issued in December 2002, provides
alternative methods of transition for a voluntary change to the fair
value-based method of accounting for stock-based employee compensation. SFAS
No. 148 also amends the disclosure requirements of Statement of Financial
Account Standards No. 123, Accounting for Stock-Based Compensation, to
require prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. Adoption of this standard is
not expected to materially affect our results of operations or financial
position.

FASB Interpretation No. 45, Guarantors Accounting and Disclosure
Requirements for Guarantees, or FIN No. 45, was issued in November 2002. FIN
No. 45 requires that a liability be recognized at the inception of certain
guarantees for the fair value of the obligation, including the ongoing
obligation to stand ready to perform over the term of the guarantee.
Guarantees, as defined in FIN No. 45,
include contracts that contingently require a company to make payments to
a guaranteed party based on changes in an underlying that is related to an
asset, liability or equity security of the guaranteed party, performance
guarantees, indemnification agreements or indirect guarantees of indebtedness
of others. This new accounting is effective for certain guarantees issued or
modified after December 31, 2002. Adoption of this standard is not expected to
materially affect our results of operations or financial position.

In July 2002, the FASB issued Statement No. 146, Accounting for Costs
Associated with Exit or Disposal Activities, or SFAS No. 146. The standard
requires companies to recognize costs associated with exit or disposal
activities when they are incurred rather than at the date of a commitment to an
exit or disposal plan. Examples of

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costs covered by the standard include lease
termination costs and certain employee severance costs that are associated with
a restructuring, discontinued operation, plant costing, or other exit or
disposal activity. Previous accounting guidance was provided by Emerging Issue
Task Force Issue No. 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring), or Issue No. 94-3. SFAS No. 146 replaces
Issue No. 94-3. SFAS No. 146 is to be applied prospectively to exit or
disposal activities initiated after December 31, 2002. SFAS No. 146 is not
expected to have any material effect on our financial statements.

RESEARCH AND DEVELOPMENT

While our business does not depend heavily on development of new
technologies, we continuously engage in research and development activities
that focus on, among other things: increasing the efficiency of our proprietary
corn flour and tortilla production technology; maintaining high product
quality; developing new and improved products and manufacturing equipment;
increasing the shelf life of certain corn and wheat products; improving and
expanding our information technology system; engineering, plant design and
construction; and compliance with environmental regulations. We have obtained
38 patents in the United States since 1968, three of which were obtained during
the last three years. Fourteen of these patents are still in force and effect
and the rest have expired.

During the years ended December 31, 2000, 2001 and 2002, we spent Ps.39.2
million, Ps.21.4 million, and Ps.9.2 million, respectively, on research and
development activities. For more information about our research and
development activities, see Item 4. Information on the Company  Description
of Business  Miscellaneous  INTASA  Technology and Equipment Operations.

TREND INFORMATION

Our financial results will likely continue to be influenced by factors
such as changes in the level of consumer demand for tortillas and corn flour,
government policies regarding the Mexican tortilla and corn flour industry, and
the cost of corn and wheat. In addition, we expect our financial results in
2003 to be influenced by:



| |  |  | increased competition from traditional tortilla
manufacturers, which could limit our ability to grow;                                                                                                                                                   
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | exchange rate fluctuations, particularly increases and
decreases in the value of the Mexican peso relative to the
Venezuelan bolívar and U.S. dollar;                                                                                                   
|
| |  |  | civil and political unrest in Venezuela and the deteriorating
economic situation in that country, which may negatively affect the
profitability of our Venezuelan Operations and our ability to
repatriate dividends from our Venezuelan Operations; and
|
| |  |  | increases in Mexican food consumption by the non-Hispanic
population in the United States as well as projected increases in
Mexican food consumption in Europe and Asia, each of which could
increase sales.                                            




ITEM 6. Directors, Senior Management and Employees.

MANAGEMENT STRUCTURE

Our management is vested in our board of directors. Our day to day
operations are handled by our executive officers.

Directors

Our bylaws require that our board of directors be composed of a minimum of
five and a maximum of twenty directors, as decided at our Ordinary General
Shareholders Meeting. Pursuant to Mexican law, at least 25% of the members of
the board of directors must be independent. Under our bylaws and the
Archer-Daniels-Midland association, as long as Archer-Daniels-Midland owns at
least 20% of our capital stock, it will have the right to designate two of our
directors and their corresponding alternates. Archer-Daniels-Midland has
designated Allen Andreas, its Chairman and Chief Executive Officer, and Paul
Mulhollem, its President and Chief Operating Officer,

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as members of our board
of directors. Archer-Daniels-Midland has elected David J. Smith, its Senior
Vice President, Secretary, and General Counsel, and Douglas J. Schmalz, its
Senior Vice President and Chief Financial Officer, to serve as alternates for
Mr. Andreas and Mr. Mulhollem, respectively. In addition, under Mexican law,
any holder or group of holders representing 10% or more of our capital stock
may elect one director and its corresponding alternate.

The board of directors, which was elected at the Ordinary General
Shareholders Meeting held on April 30, 2003, currently consists of 14
directors, with each director having a corresponding alternate director. The
following table sets forth the current members of our board of directors, their
ages, years of service, principal occupations, outside directorships, other
business activities and experience, their directorship classifications as
defined in the Code of Best Corporate Practices promulgated by a committee
formed by the Mexican Entrepreneur Coordinating Board (Consejo Coordinador
Empresarial), and their alternates. The terms of their directorships are for
one year or until their appointed successors take office. The current
directors and their alternates do not have service contracts with us.

|                             |  |                        |  |  |                                                                                                                                                                                                                                                                                  | 
|---------------------------- |  | ---------------------- |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|Roberto González Barrera     |  | Age:                   |  |  | 72                                                                                                                                                                                                                                                                               | 
|                             |  | Years as Director:     |  |  | 21                                                                                                                                                                                                                                                                               | 
|                             |  | Principal Occupation:  |  |  | Chairman of the board of directors and Chief Executive
Officer of GRUMA and GIMSA                                                                                                                                                                                                | 
|                             |  | Outside Directorships: |  |  | Chairman of the board of directors of Grupo Financiero
Banorte, S.A. de C.V., since 1992.                                                                                                                                                                                        | 
|                             |  | Directorship Type:     |  |  | Shareholder, related                                                                                                                                                                                                                                                             | 
|                             |  | Alternate:             |  |  | Juan A. Quiroga García                                                                                                                                                                                                                                                           | 
|                             |  |                        |  |  |                                                                                                                                                                                                                                                                                  | 
|Allen Andreas                |  | Age:                   |  |  | 59                                                                                                                                                                                                                                                                               | 
|                             |  | Years as Director:     |  |  | 6                                                                                                                                                                                                                                                                                | 
|                             |  | Principal Occupation:  |  |  | Chairman and Chief Executive Officer of
Archer-Daniels-Midland Company                                                                                                                                                                                                           | 
|                             |  | Outside Directorships: |  |  | Member of the Supervisory Board of the A.C. Toepfer
International Group, The Trilateral Commission, and the
International Council on Agriculture, Food and Trade.                                                                                                                | 
|                             |  | Business Experience:   |  |  | Chief Financial Officer of European Operations and Vice
President and Counsel to the Executive Committee of
Archer-Daniels-Midland Company. Attorney for the United
States Treasury Department, and member of the Bar of the
State of Colorado and the American Bar Association. | 
|                             |  | Directorship Type:     |  |  | Shareholder, independent                                                                                                                                                                                                                                                         | 
|                             |  | Alternate:             |  |  | David J. Smith                                                                                                                                                                                                                                                                   | 
|                             |  |                        |  |  |                                                                                                                                                                                                                                                                                  | 
|Juan Antonio González Moreno |  | Age:                   |  |  | 45                                                                                                                                                                                                                                                                               | 
|                             |  | Years as Director:     |  |  | Since April 2003                                                                                                                                                                                                                                                                 | 
|                             |  | Principal Occupation:  |  |  | Senior Vice President of the tortilla business of Gruma
Corporation                                                                                                                                                                                                              | 
|                             |  | Business Experience:   |  |  | Several management positions within GRUMA, including
President of the corn flour operations of Gruma
Corporation and Chief Operating Officer of GIMSA.                                                                                                                           | 
|                             |  | Directorship Type:     |  |  | Related                                                                                                                                                                                                                                                                          | 
|                             |  | Alternate:             |  |  | Jairo Senise                                                                                                                                                                                                                                                                     | 
|                             |  |                        |  |  |                                                                                                                                                                                                                                                                                  | 
|Roberto González Moreno      |  | Age:                   |  |  | 51                                                                                                                                                                                                                                                                               | 
|                             |  | Years as Director:     |  |  | 16                                                                                                                                                                                                                                                                               | 
|                             |  | Principal Occupation:  |  |  | Chairman of the board of directors of Corporación Noble,
S.A. de C.V., and Noble Marketing International, Inc.                                                                                                                                                                   | 
|                             |  | Business Experience:   |  |  | Several management positions within GRUMA, including
Chief Operating Officer of GIMSA and Director of GRUMAs
former Fast Food Division. President of RGM Inc.,
Exportaciones El Parián, S.A.                                                                                    | 
|                             |  | Directorship Type:     |  |  | Related                                                                                                                                                                                                                                                                          | 
|                             |  | Alternate:             |  |  | José de la Peña Angelín                                                                                                                                                                                                                                                          | 

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|                          |  |                        |  |  |                                                                                                                                                                                                                                                                                                                                                                | 
|------------------------- |  | ---------------------- |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|Carlos Hank Rhon          |  | Age:                   |  |  | 55                                                                                                                                                                                                                                                                                                                                                             | 
|                          |  | Years as Director:     |  |  | 9                                                                                                                                                                                                                                                                                                                                                              | 
|                          |  | Principal Occupation:  |  |  | Chairman of the board of directors of Hermes, S.A. de
C.V.                                                                                                                                                                                                                                                                                                     | 
|                          |  | Outside Directorships: |  |  | Member of the board of directors of Mercedes Benz
México, S.A. de C.V.                                                                                                                                                                                                                                                                                         | 
|                          |  | Business Experience:   |  |  | Grupo Hermes S.A. de C.V., Grupo Financiero
Interacciones, S.A. de C.V., The Laredo National Bank,
South Texas National Bank and Chairman of Mercedes Benz
México, S.A. de C.V.                                                                                                                                                                                | 
|                          |  | Directorship Type:     |  |  | Related                                                                                                                                                                                                                                                                                                                                                        | 
|                          |  | Alternate:             |  |  | Edgar Valverde Rubizewsky                                                                                                                                                                                                                                                                                                                                      | 
|                          |  |                        |  |  |                                                                                                                                                                                                                                                                                                                                                                | 
|Roberto Hernández Ramírez |  | Age:                   |  |  | 61                                                                                                                                                                                                                                                                                                                                                             | 
|                          |  | Years as Director:     |  |  | 8                                                                                                                                                                                                                                                                                                                                                              | 
|                          |  | Principal Occupation:  |  |  | Chairman of the board of directors of Banco Nacional de
México, S.A.                                                                                                                                                                                                                                                                                           | 
|                          |  | Outside Directorships: |  |  | Member of the board of directors of Grupo Televisa, S.A.
de C.V., Ingenieros Civiles Asociados, S.A. (ICA), Grupo
Modelo, S.A. de C.V., and Müenchener de México, S.A. de
C.V.                                                                                                                                                                                 | 
|                          |  | Business Experience:   |  |  | Chief Executive Officer of Banco Nacional de México,
S.A. and Grupo Financiero Banamex-Accival, S.A. de C.V.,
Chairman of the board of directors of Grupo Financiero
Banamex-Accival, S.A. de C.V., Chairman of the Mexican
Stock Exchange, Chairman of the Mexican Banking
Association, Member of the board of directors of
Teléfonos de México, S.A. de C.V. | 
|                          |  | Directorship Type:     |  |  | Independent                                                                                                                                                                                                                                                                                                                                                    | 
|                          |  | Alternate:             |  |  | Esteban Malpica Fomperosa                                                                                                                                                                                                                                                                                                                                      | 
|                          |  |                        |  |  |                                                                                                                                                                                                                                                                                                                                                                | 
|Juan Manuel Ley López     |  | Age:                   |  |  | 70                                                                                                                                                                                                                                                                                                                                                             | 
|                          |  | Years as Director:     |  |  | 9                                                                                                                                                                                                                                                                                                                                                              | 
|                          |  | Principal Occupation:  |  |  | Chairman of Casa Ley, S.A. de C.V.                                                                                                                                                                                                                                                                                                                             | 
|                          |  | Outside Directorships: |  |  | Chairman of the Sinaloa-Baja California Consultant
Council and the National Association of Supermarket and
Retail Stores (ANTAD), and member of the board of
directors of Grupo Financiero Banamex Accival, S.A. de
C.V.                                                                                                                                       | 
|                          |  | Business Experience:   |  |  | Chief Executive Officer of Casa Ley, S.A. de C.V.,
consultant and instructor for junior business management
at Junior Business Management Institute(ICAMI-SINALOA)                                                                                                                                                                                           | 
|                          |  | Directorship Type:     |  |  | Independent                                                                                                                                                                                                                                                                                                                                                    | 
|                          |  | Alternate:             |  |  | Francisco Villarreal Vizcaíno                                                                                                                                                                                                                                                                                                                                  | 
|                          |  |                        |  |  |                                                                                                                                                                                                                                                                                                                                                                | 
|Eduardo Livas Cantú       |  | Age:                   |  |  | 60                                                                                                                                                                                                                                                                                                                                                             | 
|                          |  | Years as Director:     |  |  | 17                                                                                                                                                                                                                                                                                                                                                             | 
|                          |  | Principal Occupation:  |  |  | Consultant on financial and strategic issues and mergers
and acquisitions, Chairman and member of the audit
committee of GRUMA and GIMSA and member of the audit
committee and risk management committee of Grupo
Financiero Banorte, S.A. de C.V.                                                                                                             | 
|                          |  | Outside Directorships: |  |  | Member of the board of directors of Banorte, S.A. de
C.V., Bancentro, S.A. de C.V. and GIMSA, and alternate
member of the board of directors of Grupo Financiero
Banorte, S.A. de C.V.                                                                                                                                                                         | 
|                          |  | Business Experience:   |  |  | Several positions within GRUMA including Chief Financial
Officer, President of Gruma Corporation, Chief Executive
Officer of GRUMA and GIMSA                                                                                                                                                                                                                   | 
|                          |  | Directorship Type:     |  |  | Independent                                                                                                                                                                                                                                                                                                                                                    | 
|                          |  | Alternate:             |  |  | Alfredo Livas Cantú                                                                                                                                                                                                                                                                                                                                            | 

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|                        |  |                        |  |  |                                                                                                                                                                                                                            | 
|----------------------- |  | ---------------------- |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|Román Martínez Méndez   |  | Age:                   |  |  | 65                                                                                                                                                                                                                         | 
|                        |  | Years as Director:     |  |  | 1                                                                                                                                                                                                                          | 
|                        |  | Principal Occupation:  |  |  | President of Internal Auditing of Grupo Financiero
Banorte, S.A. de C.V.                                                                                                                                                   | 
|                        |  | Outside Directorships: |  |  | Member of the board of directors of Unión de Crédito
Monterrey, S.A. de C.V., Operadora de Fondos de
Inversión, S.A. de C.V.                                                                                               | 
|                        |  | Business Experience:   |  |  | Several management positions within GRUMA, including
Chief Internal Auditing Officer and Vice-President of
Controllership and Auditing                                                                                     | 
|                        |  | Directorship Type:     |  |  | Related                                                                                                                                                                                                                    | 
|                        |  | Alternate:             |  |  | Raúl Cavazos Morales                                                                                                                                                                                                       | 
|                        |  |                        |  |  |                                                                                                                                                                                                                            | 
|Paul B. Mulhollem       |  | Age:                   |  |  | 53                                                                                                                                                                                                                         | 
|                        |  | Years as Director:     |  |  | 1                                                                                                                                                                                                                          | 
|                        |  | Principal Occupation:  |  |  | President and Chief Operating Officer of
Archer-Daniels-Midland Company.                                                                                                                                                   | 
|                        |  | Outside Directorships: |  |  | Member of Agricore United, A.C.Toepfer International,
Golden Peanut Company.                                                                                                                                               | 
|                        |  | Business Experience:   |  |  | Several management positions within
Archer-Daniels-Midland Company, including Group Vice
President and Senior Vice President of
Archer-Daniels-Midland Companys Global Grain Operations                                   | 
|                        |  | Directorship Type:     |  |  | Shareholder, independent                                                                                                                                                                                                   | 
|                        |  | Alternate:             |  |  | Douglas J. Schmalz                                                                                                                                                                                                         | 
|                        |  |                        |  |  |                                                                                                                                                                                                                            | 
|Bernardo Quintana Isaac |  | Age:                   |  |  | 61                                                                                                                                                                                                                         | 
|                        |  | Years as Director:     |  |  | 8                                                                                                                                                                                                                          | 
|                        |  | Principal Occupation:  |  |  | Chairman of the board of directors of Empresas ICA,
Sociedad Controladora.                                                                                                                                                 | 
|                        |  | Outside Directorships: |  |  | Member of the board of directors of Teléfonos de México,
S.A. de C.V., Cementos Mexicanos, S.A. de C.V.                                                                                                                    | 
|                        |  | Business Experience:   |  |  | Executive Vice President and Vice President of the
Tourist and Urban Development Division for Grupo ICA                                                                                                                    | 
|                        |  | Directorship Type:     |  |  | Independent                                                                                                                                                                                                                | 
|                        |  | Alternate:             |  |  | Diego Quintana Kawage                                                                                                                                                                                                      | 
|                        |  |                        |  |  |                                                                                                                                                                                                                            | 
|Alfonso Romo Garza      |  | Age:                   |  |  | 52                                                                                                                                                                                                                         | 
|                        |  | Years as Director:     |  |  | 9                                                                                                                                                                                                                          | 
|                        |  | Principal Occupation:  |  |  | Chairman and Chief Executive Officer of Savia, S.A. de
C.V.                                                                                                                                                                | 
|                        |  | Outside Directorships: |  |  | Member of World Banks External Advisory Board for Latin
America and the Caribbean, member of the board of
directors of Donald Danforth Plant Science Center.                                                              | 
|                        |  | Business Experience:   |  |  | Director of Strategic Planning and Corporate Development
of Visa-Femsa. Founder of Pulsar International, S.A. de
C.V.                                                                                                      | 
|                        |  | Directorship Type:     |  |  | Independent                                                                                                                                                                                                                | 
|                        |  | Alternate:             |  |  | Adrián Rodríguez Macedo                                                                                                                                                                                                    | 
|                        |  |                        |  |  |                                                                                                                                                                                                                            | 
|Adrián Sada González    |  | Age:                   |  |  | 58                                                                                                                                                                                                                         | 
|                        |  | Years as Director:     |  |  | 9                                                                                                                                                                                                                          | 
|                        |  | Principal Occupation:  |  |  | Chairman of the board of directors of Vitro, S.A. de C.V.                                                                                                                                                                  | 
|                        |  | Outside Directorships: |  |  | Member of the board of directors of ALFA, S.A. de C.V.,
Cydsa, S.A. de C.V., and Regio Empresas S.A. de C.V.,
member of the Latin American Executive Board for the
University of Pennsylvanias Wharton School of Finance. | 
|                        |  | Business Experience:   |  |  | President of the Administrative Board of Grupo
Financiero Serfin, S.A. de C.V.                                                                                                                                             | 
|                        |  | Directorship Type:     |  |  | Independent                                                                                                                                                                                                                | 
|                        |  | Alternate:             |  |  | Manuel Güemes de la Vega                                                                                                                                                                                                   | 

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|                      |  |                        |  |  |                                                                                                                                                                                                                                                                     | 
|--------------------- |  | ---------------------- |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|Javier Vélez Bautista |  | Age:                   |  |  | 46                                                                                                                                                                                                                                                                  | 
|                      |  | Years as Director:     |  |  | 1                                                                                                                                                                                                                                                                   | 
|                      |  | Principal Occupation:  |  |  | Managing Director of Value Link Strategic Management.                                                                                                                                                                                                               | 
|                      |  | Outside Directorships: |  |  | Member of the board of directors of GIMSA, Grupo
Financiero Banorte, S.A. de C.V. and Banorte. Member of
the audit committees of GIMSA and Grupo Financiero
Banorte, S.A. de C.V. Member of the risk management
committee of Grupo Financiero Banorte, S.A. de C.V. | 
|                      |  | Business Experience:   |  |  | Several management positions within GRUMA including
Director of Finance and Planning of Gruma Corporation,
Chief Financial Officer and Chief of Staff of GRUMA                                                                                                      | 
|                      |  | Directorship Type:     |  |  | Independent                                                                                                                                                                                                                                                         | 
|                      |  | Alternate:             |  |  | Sergio García Boulle                                                                                                                                                                                                                                                | 

Mr. Roberto González Moreno and Mr. Juan Antonio González Moreno are the
sons of Mr. Roberto González Barrera. Mr. Carlos Hank Rhon is the son-in-law
of Mr. Roberto González Barrera.

Secretary

The secretary of the board of directors is Mr. Salvador Vargas Guajardo,
and his alternate is Mr. Guillermo Elizondo Ríos. Mr. Vargas Guajardo is not a
member of the board of directors.

Senior Management

The following table sets forth our executive officers, their ages, years
of service, current positions, and prior business experience:

|                         |  |                             |  |  |                                                                                                                                                                                                                                             | 
|------------------------ |  | --------------------------- |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|Roberto González Barrera |  | Age:                        |  |  | 72                                                                                                                                                                                                                                          | 
|                         |  | Years as Executive Officer: |  |  | 54                                                                                                                                                                                                                                          | 
|                         |  | Years at GRUMA:             |  |  | 54                                                                                                                                                                                                                                          | 
|                         |  | Current Position:           |  |  | Chairman of the board of
directors and Chief Executive
Officer of GRUMA                                                                                                                                                                     | 
|                         |  | Other Positions:            |  |  | Chief Executive Officer and
Chairman of the board of
directors of GIMSA, Chairman of
the board of directors of Grupo
Financiero Banorte, S.A. de C.V.                                                                                       | 
|                         |  |                             |  |  |                                                                                                                                                                                                                                             | 
|Hans Bucher Chévez       |  | Age:                        |  |  | 64                                                                                                                                                                                                                                          | 
|                         |  | Years as Executive Officer: |  |  | Since April 2003                                                                                                                                                                                                                            | 
|                         |  | Years at GRUMA:             |  |  | 27                                                                                                                                                                                                                                          | 
|                         |  | Current Position:           |  |  | Acting Chief Operating Officer
of Gruma Centro América.                                                                                                                                                                                     | 
|                         |  | Business Experience:        |  |  | Several positions within Gruma
Centro América, particularly in
the corn flour operations
division. Chief Executive
Officer of Esso Chemical in
Central America and marketing
vice president at United Brands
for Central and South America. | 
|                         |  |                             |  |  |                                                                                                                                                                                                                                             | 
|Raúl Cavazos Morales     |  | Age:                        |  |  | 43                                                                                                                                                                                                                                          | 
|                         |  | Years as Executive Officer: |  |  | 1                                                                                                                                                                                                                                           | 
|                         |  | Years at GRUMA:             |  |  | 15                                                                                                                                                                                                                                          | 
|                         |  | Current Position:           |  |  | Chief Financial Officer.                                                                                                                                                                                                                    | 
|                         |  | Other Positions:            |  |  | Chief Financial Officer of GIMSA.                                                                                                                                                                                                           | 
|                         |  | Business Experience:        |  |  | Several positions within the
finance department of GRUMA,
including: Banking
Relationships, Corporate Finance
and Vice President of Treasury.                                                                                               | 

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|                            |  |                             |  |  |                                                                                                                                                                                                                | 
|--------------------------- |  | --------------------------- |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|Rafael Angel Gárate Muñoz   |  | Age:                        |  |  | 46                                                                                                                                                                                                             | 
|                            |  | Years as Executive Officer: |  |  | 3                                                                                                                                                                                                              | 
|                            |  | Years at GRUMA:             |  |  | 3                                                                                                                                                                                                              | 
|                            |  | Current Position:           |  |  | Chief Operating Officer of Molinera de México                                                                                                                                                                  | 
|                            |  | Business Experience:        |  |  | SECOFI, CONASUPO and Agroinsa.                                                                                                                                                                                 | 
|                            |  |                             |  |  |                                                                                                                                                                                                                | 
|Leonel Garza Ramírez        |  | Age:                        |  |  | 53                                                                                                                                                                                                             | 
|                            |  | Years as Executive Officer: |  |  | 4                                                                                                                                                                                                              | 
|                            |  | Years at GRUMA:             |  |  | 17                                                                                                                                                                                                             | 
|                            |  | Current Position:           |  |  | Chief Procurement Officer.                                                                                                                                                                                     | 
|                            |  | Business Experience:        |  |  | Manager of Quality and Corn Procurement and Vice
President of Corn Procurement at GRUMA.                                                                                                                       | 
|                            |  |                             |  |  |                                                                                                                                                                                                                | 
|Roberto González Alcalá     |  | Age:                        |  |  | 39                                                                                                                                                                                                             | 
|                            |  | Years as Executive Officer: |  |  | 1                                                                                                                                                                                                              | 
|                            |  | Years at GRUMA:             |  |  | 8                                                                                                                                                                                                              | 
|                            |  | Current Position:           |  |  | Chief Operating Officer of GIMSA and PRODISA.                                                                                                                                                                  | 
|                            |  | Business Experience:        |  |  | President of the Tortilla Division in Costa
Rica. President of the Corn Flour Division in
Central America and Chief Operating Officer of
Gruma Centro América.                                                 | 
|                            |  |                             |  |  |                                                                                                                                                                                                                | 
|Homero Huerta Moreno        |  | Age:                        |  |  | 40                                                                                                                                                                                                             | 
|                            |  | Years as Executive Officer: |  |  | 1                                                                                                                                                                                                              | 
|                            |  | Years at GRUMA:             |  |  | 18                                                                                                                                                                                                             | 
|                            |  | Current Position:           |  |  | Chief Administrative Officer.                                                                                                                                                                                  | 
|                            |  | Business Experience:        |  |  | Various positions within GRUMA including finance
and administrative vice president of GRUMA
Venezuela.                                                                                                         | 
|                            |  |                             |  |  |                                                                                                                                                                                                                | 
|Enrique Orjuela Rincón      |  | Age:                        |  |  | 53                                                                                                                                                                                                             | 
|                            |  | Years as Executive Officer: |  |  | 4                                                                                                                                                                                                              | 
|                            |  | Years at GRUMA:             |  |  | 4                                                                                                                                                                                                              | 
|                            |  | Current Position:           |  |  | Chief Operating Officer of MONACA.                                                                                                                                                                             | 
|                            |  | Business Experience:        |  |  | Vice President and Chief Executive Officer of
Coca-Cola Services in Venezuela, Chief Executive
Officer of Kelloggs Venezuela and Andean
Region, marketing positions at Pepsi-Cola,
Warner-Lambert and Quaker. | 
|                            |  |                             |  |  |                                                                                                                                                                                                                | 
|José de la Peña Angellini   |  | Age:                        |  |  | 53                                                                                                                                                                                                             | 
|                            |  | Years as Executive Officer: |  |  | Since September 2002                                                                                                                                                                                           | 
|                            |  | Years at GRUMA:             |  |  | Since September 2002                                                                                                                                                                                           | 
|                            |  | Current Position:           |  |  | Executive Vice President of Sales and Marketing.                                                                                                                                                               | 
|                            |  | Business Experience:        |  |  | Top management positions at Colgate-Palmolive,
senior positions at Chrysler de México,
President of the Mexico office of FCB Worldwide.                                                                        | 
|                            |  |                             |  |  |                                                                                                                                                                                                                | 
|Juan Antonio Quiroga García |  | Age:                        |  |  | 53                                                                                                                                                                                                             | 
|                            |  | Years as Executive Officer: |  |  | 5                                                                                                                                                                                                              | 
|                            |  | Years at GRUMA:             |  |  | 30                                                                                                                                                                                                             | 
|                            |  | Current Position:           |  |  | Chief Corporate Officer.                                                                                                                                                                                       | 
|                            |  | Other Positions:            |  |  | Senior Corporate Controller of GIMSA                                                                                                                                                                           | 
|                            |  | Business Experience:        |  |  | Vice President of Administration of Gruma
Corporation, Chief Administrative and Internal
Auditing Officer of GRUMA.                                                                                            | 

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|                         |  |                             |  |  |                                                                                                                                                                                                                                                       | 
|------------------------ |  | --------------------------- |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|Manuel J. Rubio Portilla |  | Age:                        |  |  | 75                                                                                                                                                                                                                                                    | 
|                         |  | Years as Executive Officer: |  |  | 38                                                                                                                                                                                                                                                    | 
|                         |  | Years at GRUMA:             |  |  | 38                                                                                                                                                                                                                                                    | 
|                         |  | Current Position:           |  |  | Senior Technology Officer.                                                                                                                                                                                                                            | 
|                         |  | Business Experience:        |  |  | Frederick Snare,
President of Nickel
Processing Corporation,
Manager of Special
Processes Research at
Dorr Oliver.                                                                                                                                    | 
|                         |  |                             |  |  |                                                                                                                                                                                                                                                       | 
|Jairo Senise             |  | Age:                        |  |  | 47                                                                                                                                                                                                                                                    | 
|                         |  | Years as Executive Officer: |  |  | Since August 2002                                                                                                                                                                                                                                     | 
|                         |  | Years at GRUMA:             |  |  | Since August 2002                                                                                                                                                                                                                                     | 
|                         |  | Current Position:           |  |  | President and Chief
Executive Officer of
Gruma Corporation.                                                                                                                                                                                           | 
|                         |  | Business Experience:        |  |  | Regional vice president
and managing director of
Europe and Eurasia and
regional vice president
of Latin America/South
Africa for the Pillsbury
Company/General Mills.
Positions at CPC
International/Best Foods,
S.C. Johnson and
Colgate-Palmolive. | 
|                         |  |                             |  |  |                                                                                                                                                                                                                                                       | 
|Salvador Vargas Guajardo |  | Age:                        |  |  | 50                                                                                                                                                                                                                                                    | 
|                         |  | Years as Executive Officer: |  |  | 7                                                                                                                                                                                                                                                     | 
|                         |  | Years at GRUMA:             |  |  | 7                                                                                                                                                                                                                                                     | 
|                         |  | Current Position:           |  |  | General Counsel.                                                                                                                                                                                                                                      | 
|                         |  | Other Positions:            |  |  | General Counsel of GIMSA.                                                                                                                                                                                                                             | 
|                         |  | Business Experience:        |  |  | Positions at Grupo Alfa,
Protexa and Proeza,
senior partner of two law
firms, including
Rojas-González-Vargas-De
la Garza y Asociados.                                                                                                                | 

Mr. Oscar Enrique Urdaneta Finol is the Chief Operating Officer of
DEMASECA since he was appointed based upon an agreement with our partners in
DEMASECA.

Mr. Roberto González Alcalá is a son of Mr. Roberto González Barrera.

Statutory Auditor

Under Mexican law, a statutory auditor must be elected by our shareholders
at the annual ordinary general shareholders meeting for a term of one year. At
the subsequent annual ordinary general shareholders meeting, the statutory
auditor is required to review our affairs and report as to the accuracy of the
financial information as presented to shareholders by the board of directors.
The statutory auditor is also authorized (i) to call ordinary general
shareholders meetings, extraordinary general shareholders meetings and board of
directors meetings; (ii) to place items on the agenda for general shareholders
meetings and meetings of the board of directors; and (iii) to attend general
shareholders meetings, meetings of the board of directors, meetings of the
audit committee, and any other meetings of intermediate committees to which the
board of directors delegates any activities (without the right to vote). At
the General Ordinary Shareholders Meeting held on April 30, 2003, Mr. Hugo
Lara Silva was elected to serve as our Statutory Auditor for one year. His
alternate is Mr. Carlos Arreola Enríquez.

Mr. Hugo Lara Silva is 63 years old. He is a retired co-director of and
partner in PricewaterhouseCoopers and was a member of the board of directors,
the international executive audit committee and the general partner counsel of
that firm. Mr. Hugo Lara Silva has experience with a wide variety of
businesses in the public and private sectors and has been the statutory auditor
for companies such as Grupo Modelo, S.A. de C.V., Ciba-Geigy Mexicana, S.A. de
C.V., El Puerto de Liverpool, S.A. de C.V., Grupo Financiero Bancomer, S.A. de
C.V., Grupo Mexicano Somex, S.N.C. and Aseguradora Cuauhtémoc, S.A., among
others.

Audit Committee

As required by our bylaws, an audit committee was appointed at the General
Ordinary Shareholders Meeting held on April 30, 2003. Members of the audit
committee were selected from members of the board of

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directors. The current
audit committee is comprised of three members, two of whom are independent
directors. Set forth below are the names of our audit committee members, their
positions within the committee, and their directorship type:

|                      |  |                    |  |                                
|--------------------- |  | ------------------ |  | -------------------------------
|Eduardo Livas Cantú   |  | Position:          |  | Chairman of the Audit Committee
|                      |  | Directorship Type: |  | Independent                    
|                      |  |                    |  |                                
|Javier Vélez Bautista |  | Position:          |  | Member of the Audit Committee  
|                      |  | Directorship Type: |  | Independent                    
|                      |  |                    |  |                                
|Román Martínez Méndez |  | Position:          |  | Member of the Audit Committee  
|                      |  | Directorship Type: |  | Related                        

Compensation of Directors and Senior Management

Members of the board of directors are paid a fee of Ps.13,750 for each
board meeting they attend.

For 2002, the aggregate amount of compensation paid to all directors,
alternate directors, the statutory auditor, executive officers and audit
committee members was approximately Ps.$116.0 million (in nominal terms). The
contingent or deferred compensation reserved as of December 31, 2002 was
Ps.$12.2 million (in nominal terms).

We offer an Executive Bonus Plan that is based on individual performance
and on the results of our operations. This program applies to managers, vice
presidents, and executive officers. This variable compensation can range from
15% to 32% of annual base compensation, depending upon the employees level.

We offered eligible employees participation in our Executive Stock
Purchase Plan through a trust that acquired our stock for this purpose. We had
established through an irrevocable grantor trust an Executive Stock Purchase
Plan designating up to 8,039,219 common shares, which represented approximately
1.82% of our capital stock as of December 31, 2001, which were reserved for
issuance pursuant to this plan. As of December 31, 2001, all of these shares
had been subscribed to and paid for and we had granted 1,144,564 of the shares,
which represented 0.26% of our capital stock at that time, under this plan.
The number of shares allotted to each eligible employee was determined by the
employees position with us. These employees were eligible for the Executive
Stock Purchase Plan after the first year of service with us. During 2002, we
decided to terminate this plan by paying to each eligible employee the value of
the number of shares corresponding to them at the then current market price.

Share Ownership

The following Directors and Senior Managers have GRUMA shares which in
each case represent less than 1% of our capital stock: Mr. Adrián Sada
González, Mr. Raúl Cavazos Morales, Mr. Homero Huerta, Mr. Leonel Garza
Ramírez, Mr. Javier Vélez Bautista, Mr. Roberto González Moreno, Mr. Román
Martínez Méndez, Mr. Carlos Hank Rhon and Mr. Juan Antonio Quiroga García. In
addition, Mr. Roberto González Barrera owns directly and indirectly 211,532,757
shares representing approximately 47.9% of our capital stock and Mr. Juan
Antonio González Moreno owns 6,642,259 shares representing approximately 1.5%
of our capital stock.

EMPLOYEES

As of December 31, 2002, we had a total of approximately 14,887 employees,
including unionized (6,156) and non-unionized (8,731), full- and part-time
employees. Of this total, we employed
approximately 6,532 persons in Mexico, 4,770 in the United States, 1,544
in Central America, 1,771 in Venezuela and 229 in England. Total employees for
2001 and 2000 were 15,585 and 17,208, respectively. Of our total employees as
of December 31, 2002, approximately 40% were white-collar and 60% were
blue-collar.

In Mexico, workers at each of our plants are covered by a separate
contract, under which salary revisions take place once each year, usually in
January or February. Non-salary provisions of these contracts are revised
bi-annually. We renewed agreements with the three unions that represent our
workers in 2002 and 2003. In the United

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States, Gruma Corporation has entered
into collective bargaining agreements with five unions that represent 418
workers at specific facilities. We renewed agreements with one union in 2002
and we are currently negotiating the renewal of two other agreements. Salary
revisions are made once each year, usually in March. Non-salary provisions of
these contracts are revised according to the terms of the particular contract.
We believe our current labor relations are satisfactory.




ITEM 7. Major Shareholders And Related Party Transactions.

MAJOR SHAREHOLDERS

The following table sets forth certain information regarding the
beneficial ownership of our capital stock as of April 30, 2003 (which consists
entirely of Series B Shares) with respect to Mr. González Barrera and
Archer-Daniels-Midland and its affiliates, the only shareholders we know to own
beneficially more than 5% of our capital stock, as well as our directors and
executive officers as a group and other shareholders. See Item 9. The Offer
and Listing for further discussion of our capital stock. With the exception
of Archer-Daniels-Midlands right to appoint two members of our board of
directors, and their corresponding alternates, the major shareholders do not
have different or preferential voting rights with respect to those shares they
own.

|                                  |       |                 |             |                    |               |  |      |       |  
|--------------------------------- | ----- | --------------- | ----------- | ------------------ | ------------- |  | ---- | ----- | -
|                                  |       |                 | Number of   |                    | Percentage of
|Name                              |       | Series B Shares |             | Outstanding Shares
|                                  |       |                 |             |                   
|Roberto González
Barrera (1)      |       |                 | 211,532,757 |                    |               |  | 47.9 | %    
|Archer-Daniels-Midland
(2)        |       |                 | 130,901,630 |                    |               |  | 29.7 | %    
|Directors and Officers as a Group |       |                 | 11,958,006  |                    |               |  | 2.7  | %    
|Other shareholders                |       |                 | 86,782,250  |                    |               |  | 19.7 | %    
|                                  | Total |                 |             | 441,174,643        |               |  |      | 100.0 | %



---

|(1) |  | The shares beneficially owned by Mr. González Barrera include:
181,506,961 shares held directly by Mr. González Barrera; and 30,025,796
shares held by him through a Mexican corporation jointly owned with
Archer-Daniels-Midland and controlled by him.                                                                                                                                                                                                     
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Of the shares beneficially owned by Archer-Daniels-Midland, a portion are
held through its Mexican subsidiary, and 24,566,561 shares are held
through a Mexican corporation jointly owned with Mr. González Barrera and
controlled by Mr. González Barrera. Mr. González Barrera has sole
authority to determine how these shares are voted, and the shares cannot
be transferred without the consent of both Archer-Daniels-Midland and Mr.
González Barrera.

Mr. González Barrera controls approximately 53.5% of our capital stock and
therefore has the power to elect a majority of our 14 directors. In addition,
under Mexican law, any holder or group of holders representing 10% or more of
our capital stock may elect one Director. Under our bylaws and the
Archer-Daniels-Midland association, as long as Archer-Daniels-Midland owns at
least 20% of our capital stock, it will have the right to designate two members
of our board of directors and their corresponding alternates.

Under the terms of our agreement, Archer-Daniels-Midland may not, without
the consent of Mr. Roberto González Barrera, the Chairman of our board of
directors and Chief Executive Officer, or our board of directors, acquire
additional shares of us. On September 30, 1999, we completed a rights offering
to shareholders in Mexico and ADS holders in the United States. With the
authorization of Mr. González Barrera, Archer-Daniels-Midland directly and
indirectly purchased a total of 51,408,337 new shares, increasing its direct
and indirect ownership of our outstanding shares from approximately 22% to
approximately 29% immediately after that purchase.

We have been informed that Mr. González Barrera has pledged or has been
required to pledge part of his shares in our Company as collateral for loans
made to him. In the event of a default, should the lenders enforce their
rights with respect to these shares, Mr. Gonzalez Barrera could lose his
controlling interest in us. In addition, Mr. González Barrera must give
Archer-Daniels-Midland a right of first refusal on any sale of his GRUMA shares
if at the time of the sale, he owns, or as a result of the sale will own, less
than 30% of our outstanding shares. Should Archer-Daniels-Midland exercise its
right, then it could control us. Archer-Daniels-Midland must also give Mr.
González Barrera a right of first refusal on any sale of our shares.

With the exception of a number of direct and indirect purchases of shares
by Mr. González Barrera from 2000 through 2002 which, in the aggregate,
increased his ownership by approximately 3.2% of our total outstanding

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shares,
we are not aware of any significant changes in the percentage ownership of any
shareholders which held 5% or more of our outstanding shares during the past
three years.

RELATED PARTY TRANSACTIONS

Transactions with Subsidiaries

The transactions set forth below were made in the ordinary course of
business since we operate as a central treasurer for our subsidiaries.

We periodically enter into short-term credit arrangements with our
subsidiaries, where we provide them with funds for working capital at market
interest rates.

When GIMSA has excess cash, GIMSA periodically makes loans to us. At
their peak on January 15, 2001, these loans reached the amount of Ps.862.8
million in nominal terms. As of June 18, 2003, we owed GIMSA Ps.265.4 million.
The average interest rate for this year has been 9.14%.

MONACA has made loans to us which, at their peak on October 30, 2000,
reached the amount of U.S.$28.6 million. As of June 18, 2003, we did not have
any outstanding balance with MONACA.

In September 2001, Gruma Corporation started to make loans to us which, at
their peak on June 18, 2003, reached the amount of U.S.$52.0 million. The
average interest rate for this year has been 2.0%.

Transactions with Archer-Daniels-Midland

We entered into an association with Archer-Daniels-Midland in September
1996. As a result of this association, we received U.S.$258.0 million in cash,
80% ownership of our combined U.S. corn flour operations and 60% of
Archer-Daniels-Midlands Mexican wheat milling operations. We also gained
exclusivity rights from Archer-Daniels-Midland in specified corn flour and
wheat flour markets. In return, Archer-Daniels-Midland received 74,696,314 of
our newly issued shares, which represented approximately 22% of our total
outstanding shares, and 20% ownership of our combined U.S. corn flour
operations, and retained 40% of the Mexican wheat milling operations.
Archer-Daniels-Midland also obtained the right to designate two of our 14
directors and their corresponding alternates. Archer-Daniels-Midland has
designated Allen Andreas, its Chairman and Chief Executive Officer, and Paul
Mulhollem, its President and Chief Operating Officer, as members of our board
of directors. Archer-Daniels-Midland has elected David J. Smith, its Senior
Vice President, Secretary and General Counsel, and Douglas J. Schmalz, its
Senior Vice President and Chief Financial Officer, to serve as alternates for
Mr. Andreas and Mr. Mulhollem, respectively.

In December 1999, we sold 5% of the shares of MONACA to
Archer-Daniels-Midland.

Other Transactions

We have loans outstanding to the controlling shareholder and related
parties which, at their peak on December 31, 2002, aggregated Ps.176.8 million.
These loans were made for personal purposes. All of these loans bear interest
at market rates. As of June 18, 2003, the aggregate amount outstanding under
these loans was Ps.61.0 million.

We own approximately an 11.1% interest in GFNorte, a Mexican financial
institution. In the normal course of business, we obtain financing from
GFNortes subsidiaries at market rates and terms. The highest outstanding loan
amount in dollars has been U.S.$45.8 million with an average interest rate of
7.57%. The highest outstanding amount in pesos has been Ps.705.5 million with
an average interest rate of 16%. As of June 18, 2003, we do not owe any
amounts to GFNorte or its subsidiaries.

During 2000, 2001 and 2002, we purchased U.S.$75 million, U.S.$90 million
and U.S.$84 million, respectively, of inventory from Archer-Daniels-Midland
Corporation, a shareholder, at market rates and terms.

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ITEM 8. Financial Information.

See Item 18. Financial Statements. For information on our dividend
policy, see Item 3. Key Information  Dividends. For information on legal
proceedings related to us, see   Legal Proceedings.

LEGAL PROCEEDINGS

In the ordinary course of business, we are party to various legal
proceedings, none of which has had or we reasonably expect will have a material
adverse effect on us.

StarLinkTMLitigation

Background

StarLinkTM is a genetically modified variety of yellow corn created by
Aventis CropScience USA Holding, Inc., or Aventis, and sold primarily through
its licensee, Advanta USA Corp. f/k/a Garst Seed Company, or Garst.
StarLinkTM was designed to be resistant to the European Corn Borer.
Aventis first obtained the approval of the Environmental Protection Agency, or
EPA, to sell StarLinkTM on May 12, 1998. This registration limited the use
of StarLinkTM corn to animal feed and other non-industrial uses. This
limitation arose out of the EPAs concern over the possibility that the Cry9C
protein contained in StarLinkTM might be a human allergen. The EPA
required Aventis to undertake a management program designed to prevent the
entry of StarLinkTM corn into the human food supply. On September 18,
2000, a public interest organization called Friends of the Earth announced that
it had detected traces of the DNA of the Cry9C protein in Kraft Foods, Inc.s
Taco Bell Home Originals sold at supermarkets. Following this announcement,
Azteca Milling immediately ceased the milling of yellow corn in its Plainview,
Texas mill because StarLinkTM corn is a yellow corn and Plainview, Texas
was suspected to be the involved location in the flour used in Krafts taco
shells. Azteca Milling thereafter conducted tests on its inventory for
StarLinks presence. Because these tests did not rule out the possibility of
StarLinkTM being present in its yellow corn flour, Azteca Milling initiated
a voluntary recall of its yellow corn flour and Mission Foods likewise
initiated a voluntary recall of all of its yellow corn products. Because of
this, for a time both Azteca Milling and Mission Foods discontinued selling any
yellow corn products.

Consumer Litigation

Shortly after the September 18, 2000 media announcement, Azteca Milling,
Mission Foods and other unaffiliated companies were named in certain consumer
lawsuits. In general, these lawsuits allege the purchase and consumption of
yellow corn products possibly containing StarLinkTM corn. Further, the
lawsuits generally seek unspecified damages arising out of the consumers
purchase and consumption of such products including, but not limited to, a
return of the purchase price for such products to the
consumers. Each of these cases was filed as a putative class action.
Certain of the cases involve allegations of personal injuries arising out of
the alleged consumption of yellow corn products possibly containing
StarLinkTM corn. Plaintiffs and defendants in all of these cases reached a
settlement, and the settlement has been approved by the U.S. District Court for
the Northern District of Illinois. A third party has assumed full liability
for these consumer lawsuits.

Taco Bell Claims

Taco Bell Corporation, its franchisees, and its parent company, have made
claims against us and Aventis CropScience USA, Inc. and its affiliates, and
Advanta, USA, Inc., alleging that they lost sales and profits because of
consumer fears that their products contained StarLinkTM. One lawsuit has
been dismissed without prejudice. Currently, there are three lawsuits pending.
Our insurance carrier has accepted coverage for these claims.

Taco Bell Corporation; Tyson Mexican Original, Inc.; McClain Foods, Inc.;
Russ Taco, Inc.; T.B. Barrett, Inc.; Dar-Taco, Inc.; Heartland Bells, Inc.; on
their own behalf and on behalf of similarly situated Taco Bell franchisees
throughout the United States v. Aventis CropScience U.S.A. Holding, Inc.;
Aventis CropScience USA, Inc.; Aventis CropScience USA, LP; Advanta, USA, Inc.;
Gruma Corporation; Azteca Milling; et al.This lawsuit was filed on September
14, 2001, in the Circuit Court of Washington County, Arkansas, and was
voluntarily dismissed on December 13, 2001, without prejudice. This lawsuit
was a national class action on behalf of all Taco Bell franchisees, Taco Bell
Corporation, and one of their suppliers seeking lost profits alleged to have
been suffered

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because of the publics fear that StarLinkTM corn may have
been used in Taco Bell products. Without explanation, the plaintiffs
voluntarily dismissed this case without prejudice to refiling. On June 12,
2002, this lawsuit was refiled in a substantially similar form, as described in
the following paragraph.

K-MAC Enterprises, Inc.; Russ Taco, Inc.; Dar-Taco, Inc.; T.B. Barrett,
Inc.; McLean Foods, Inc.; and Heartland Bells, Inc.; on their own behalf and on
behalf of similarly situated Taco Bell franchisees throughout the United States
v. Aventis CropScience U.S.A. Holding, Inc.; Aventis CropScience USA, Inc.;
Aventis CropScience USA, LP; Advanta, USA, Inc. (f/k/a Garst Seed Company);
Gruma-ADM, Inc.; and Azteca Milling.This lawsuit was filed on June 12, 2002,
in the Circuit Court of Sebastian County, Arkansas, as a national class action
seeking to recover profits alleged to have been lost by all Taco Bell
franchisees in the United States because of the publics fear that Taco Bell
products may have contained StarLinkTM corn. Plaintiffs also sought
punitive damages. A settlement agreement has been reached by the parties and
is pending approval by the court.

Southern Multifoods, Inc.; Metroplex Multifoods, Inc.; Plaza Dine, Inc.;
Kurani International, Inc.; and Mallen Co. v. Aventis CropScience USA Holding,
Inc.; Aventis CropScience USA, Inc.; Aventis CropScience USA, LP; Advanta USA,
Inc./Garst Seed Company; Gruma Corporation; and Azteca Milling.This lawsuit
was filed on November 30, 2001, in the District Court of Hidalgo County, Texas,
275th Judicial District. This lawsuit is brought by Taco Bell franchisees in
Texas seeking to recover lost profits allegedly suffered because of the
publics fear that StarLinkTM corn may have been used in these franchisees
taco products made with ingredients furnished by Azteca Milling. A settlement
agreement has been reached by the parties and is pending approval by the court.

Paradise Foods, Inc.; Paradise Foods II, Inc.; Bayou Bells, LLC;
Paradise-Byrne Corp.; Jaguar Bells, LLC; Bells and Whistles, LLC; Border
Masters, Inc.; Carolina Coastal Foods, Inc.; John OBrien; West Quality Food
Service, Inc.; East More Tacos, Inc.; and Tricon Global Restaurants, Inc. v.
Aventis CropScience USA Holding, Inc.; Aventis CropScience USA, LP; Aventis
CropScience USA, Inc.; Advanta USA, Inc. (f/k/a Garst Seed Company); Gruma
Corporation; Azteca Milling and Archer-Daniels-Midland Company. This lawsuit
was filed on October 15, 2001, in the Circuit Court for Jones County,
Mississippi, and subsequently was removed to the United States District Court
for the Southern District of Mississippi, Hattiesburg Division. The lawsuit is
now back in the Circuit Court for Jones County, Mississippi. This suit is
brought by Taco Bell franchisees seeking to recover lost profits allegedly
suffered because of the publics fear that StarLinkTM corn may have found
its way into the plaintiffs taco products through ingredients furnished by
Azteca Milling. Plaintiffs have filed a motion to remand the case to state
court, and the motion to remand is pending. A settlement agreement has been
reached by the parties and is pending approval by the court.

Antitrust Lawsuits

Eighteen manufacturers of tortillas and other processed food products have
brought three related antitrust lawsuits against Gruma Corporation and Azteca
Milling in the United States District Court for the Southern District of Texas,
Galveston Division. The three suits are: (1) El Aguila Food Products, Inc., et
al. v. Gruma Corporation, et al.; No. G-01-434, in the United States District
Court for the Southern District of Texas, Galveston Division; (2) Gilbert
Moreno Enterprises, Inc., et al. v. Gruma Corporation, et al.; C.A. No.
G-01-546, in the United States District Court for the Southern District of
Texas, Galveston Division; and (3) Capistran, Inc., et al. v. Gruma
Corporation, et al.; No. G-02-100, in the United States District Court for the
Southern District of Texas, Galveston Division. These three lawsuits have been
consolidated into El Aguila Food Products, Inc., et al. v. Gruma Corporation,
et al. which, on January 10, 2003, was transferred to the United States
District Court for the Southern District of Texas, Houston Division. The
plaintiffs allege that the defendants, including Gruma Corporation and Azteca
Milling, conspired with retailers to restrain trade in the retail sale of
tortillas in Texas, California, Arizona and Michigan, used market power to
exclude plaintiffs from the retail tortilla market, and otherwise competed
unfairly. The plaintiffs seek damages, including treble damages, greatly in
excess of $1 million per Plaintiff, as well as injunctive relief. Gruma
Corporation and Azteca Milling deny these allegations and are vigorously
defending the consolidated lawsuit. The consolidated lawsuit is in the early
stages of discovery. A trial is scheduled for September 2003.

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Mexican Tax Claim

The Mexican tax authorities have disallowed the asset tax reported in our
1995 and 1996 tax returns. The authorities claim we owe Ps.500.8 million,
including related surcharges and penalties. We have brought a proceeding for
annulment of such disallowance notice and are vigorously defending the claim.




ITEM 9. The Offer And Listing.

TRADING HISTORY

Our Series B Shares have been traded on the Bolsa Mexicana de Valores,
S.A. de C.V., or Mexican Stock Exchange, since 1994. The ADSs, each
representing four Series B Shares, commenced trading on the New York Stock
Exchange in November 1998. On December 31, 2002, there were 441,402,386
outstanding Series B Shares, of which 72,613,236 Series B Shares were
represented by 18,153,309 ADSs.

PRICE HISTORY

The following table sets forth, for the periods indicated, the annual high
and low closing sale prices for the Series B Shares and the ADSs as reported by
the Mexican Stock Exchange and the New York Stock Exchange, respectively.

|                        |  |                        |       |                 |  |      |       |     |  |  |       |  |  |  |      | 
|----------------------- |  | ---------------------- | ----- | --------------- |  | ---- | ----- | --- |  |  | ----- |  |  |  | ---- | 
|                        |  | Mexican Stock Exchange |       | NYSE           
|                        |  |                        |       |                
|                        |  | Common Stock           |       | ADS(2)         
|                        |  |                        |       |                
|                        |  | High                   |       | Low             |  | High |       | Low
|                        |  |                        |       |                 |  |      |       |    
|                        |  | {(Ps.per share(1))     |       | (U.S.$ per ADS)
|Annual Price History    |  |                        |       |                 |  |      |       |     |  |  |       |  |  |  |      | 
|1998                    |  |                        | 31.37 |                 |  |      | 15.80 |     |  |  | 10.14 |  |  |  | 9.22 | 
|1999                    |  |                        | 25.60 |                 |  |      | 8.66  |     |  |  | 10.33 |  |  |  | 3.86 | 
|2000                    |  |                        | 14.20 |                 |  |      | 6.80  |     |  |  | 6.25  |  |  |  | 2.88 | 
|2001                    |  |                        | 8.50  |                 |  |      | 6.00  |     |  |  | 3.60  |  |  |  | 2.60 | 
|2002                    |  |                        | 13.00 |                 |  |      | 8.00  |     |  |  | 5.70  |  |  |  | 3.50 | 
|Quarterly Price History |  |                        |       |                 |  |      |       |     |  |  |       |  |  |  |      | 
|2001                    |  |                        |       |                 |  |      |       |     |  |  |       |  |  |  |      | 
|1st Quarter             |  |                        | 8.50  |                 |  |      | 6.62  |     |  |  | 3.40  |  |  |  | 2.70 | 
|2nd Quarter             |  |                        | 7.90  |                 |  |      | 6.11  |     |  |  | 3.40  |  |  |  | 2.82 | 
|3rd Quarter             |  |                        | 6.51  |                 |  |      | 6.00  |     |  |  | 2.90  |  |  |  | 2.60 | 
|4th Quarter             |  |                        | 8.22  |                 |  |      | 6.50  |     |  |  | 3.60  |  |  |  | 2.85 | 
|2002                    |  |                        |       |                 |  |      |       |     |  |  |       |  |  |  |      | 
|1st Quarter             |  |                        | 10.00 |                 |  |      | 8.00  |     |  |  | 4.94  |  |  |  | 3.50 | 
|2nd Quarter             |  |                        | 13.00 |                 |  |      | 10.60 |     |  |  | 5.70  |  |  |  | 4.47 | 
|3rd Quarter             |  |                        | 11.15 |                 |  |      | 10.50 |     |  |  | 4.60  |  |  |  | 4.05 | 
|4th Quarter             |  |                        | 10.70 |                 |  |      | 9.60  |     |  |  | 4.20  |  |  |  | 3.65 | 
|2003                    |  |                        |       |                 |  |      |       |     |  |  |       |  |  |  |      | 
|1st Quarter             |  |                        | 10.10 |                 |  |      | 9.20  |     |  |  | 3.82  |  |  |  | 3.20 | 
|2nd
Quarter(3)          |  |                        | 10.30 |                 |  |      | 9.38  |     |  |  | 3.95  |  |  |  | 3.45 | 
|Monthly Price History   |  |                        |       |                 |  |      |       |     |  |  |       |  |  |  |      | 
|December 2002           |  |                        | 10.20 |                 |  |      | 9.60  |     |  |  | 3.97  |  |  |  | 3.70 | 
|January 2003            |  |                        | 10.10 |                 |  |      | 9.50  |     |  |  | 3.82  |  |  |  | 3.30 | 
|February 2003           |  |                        | 9.88  |                 |  |      | 9.40  |     |  |  | 3.60  |  |  |  | 3.30 | 
|March 2003              |  |                        | 9.60  |                 |  |      | 9.20  |     |  |  | 3.54  |  |  |  | 3.20 | 
|April 2003              |  |                        | 10.00 |                 |  |      | 9.38  |     |  |  | 3.75  |  |  |  | 3.50 | 
|May 2003                |  |                        | 10.30 |                 |  |      | 9.50  |     |  |  | 3.95  |  |  |  | 3.65 | 
|June 2003(3)            |  |                        | 10.07 |                 |  |      | 9.80  |     |  |  | 3.90  |  |  |  | 3.45 | 



---

|(1) |  | Pesos per share reflect nominal price at trade date.            
|--- |  | ----------------------------------------------------------------
|   
|(2) |  | Price per ADS in U.S.$; one ADS represents four Series B Shares.
|   
|(3) |  | Through June 18, 2003.                                          

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On June 18, 2003, the reported last sale price of the B Shares on the
Mexican Stock Exchange was Ps.10.07 per B Share and the reported last sale
price of the ADSs on the New York Stock Exchange was U.S.$3.89 per ADS.

TRADING ON THE MEXICAN STOCK EXCHANGE

The Mexican Stock Exchange, the Bolsa Mexicana de Valores, S.A. de C. V.,
located in Mexico City, is the only stock exchange in Mexico. Founded in 1907,
it is organized as a corporation whose shares are held by brokerage firms,
which are exclusively authorized to trade on the exchange. Trading on the
Mexican Stock Exchange takes place principally through automated systems and is
open between the hours of 8:30 a.m. and 3:00 p.m. Mexico City time, each
business day. Trades in securities listed on the Mexican Stock Exchange can
also be performed off the exchange. The Mexican Stock Exchange operates a
system of automatic suspension of trading in shares of a particular issuer as a
means of controlling excessive price volatility, but under current regulations
this system does not apply to securities such as the Series B Shares that are
directly or indirectly (for example, through ADSs) quoted on a stock exchange
(including for these purposes the New York Stock Exchange) outside Mexico.

Settlement is effected two business days after a share transaction on the
Mexican Stock Exchange. Deferred settlement, even by mutual agreement, is not
permitted without the approval of the Comisión Nacional Bancaria y de Valores
(the Mexican National Banking and Securities Commission, or CNBV). Most
securities traded on the Mexican Stock Exchange, including ours, are on deposit
with S.D. Indeval, S.A. de C.V., or Indeval, a privately owned securities
depositary that acts as a clearinghouse for Mexican Stock Exchange
transactions.




ITEM 10. Additional Information.

BYLAWS

Set forth below is a brief summary of certain significant provisions of
(1) our bylaws, as amended by our Extraordinary Shareholders Meeting held on
April 30, 2002 to comply with recent changes to the Mexican Securities Law, and
(2) Mexican law. This description does not purport to be complete and is
qualified by reference to our bylaws, which have been filed as an exhibit to
this Annual Report.

Organization and Register

We are a sociedad anónima de capital variable(a corporation) organized in
Mexico under the Ley General de Sociedades Mercantiles, or the Mexican
Companies Law. We were incorporated on December 24, 1971 and have a corporate
life of 99 years. Our corporate purpose, as fully described in Article 2 of
our bylaws, is to act as a holding company. As such, our bylaws grant us the
power to engage in various activities, which allow us to function as a holding
company. These powers include, but are not limited to, the ability to (1)
acquire, sell, import, export, and manufacture all types of goods and products,
(2) issue securities and take all actions with respect to securities of any
kind, (3) create, organize and manage all types of companies, (4) act as an
agent or representative, (5) acquire, sell and maintain real property, (6)
perform or receive professional, technical or consulting services, (7)
establish branches, agencies or representative offices, (8) acquire, license or
use intellectual property, (9) grant and receive loans, (10) subscribe, issue
and negotiate all types of credit instruments, and (11) perform any acts
necessary to accomplish the foregoing.

Directors

Our bylaws provide that our management shall be vested in the board of
directors. Each director is elected by a simple majority of the shares and
there are no provisions for cumulative voting. Under Mexican law
and our bylaws, any holder or group of holders owning 10% or more of our
capital stock may elect one director and its corresponding alternate. The
board of directors shall be comprised of a minimum of five and a maximum of
twenty directors, as determined by the shareholders at the annual ordinary
general shareholders meeting. Under Mexican law, at least 25% of the members
of the board of directors must be independent. Currently, our board of
directors consists of 14 members.

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The board of directors shall meet at least once every three months. These
meetings can be called by the Chairman of the Board of Directors, by 25% of the
members of the board of directors, or by our statutory auditors. Under the
terms of our association with Archer-Daniels-Midland, Archer-Daniels-Midland
will have the right to appoint two of our directors, and their corresponding
alternates, as long as it owns at least 20% of our capital stock. The
directors serve for a one year term, or until their successors have taken
office. Directors receive compensation as determined by the shareholders at
the annual ordinary general shareholders meeting. A majority of directors is
needed to constitute a quorum and board resolutions must be passed by a
majority of the votes present at any validly constituted meeting or by
unanimous consent if no meeting is convened.

Under Mexican law, any member of the board of directors who has a conflict
of interest with the corporation in any transaction must disclose such fact to
the other directors and abstain from voting on that transaction. Any member of
the board of directors who violates this provision may be liable for the
resulting damages incurred by the company. Members of the board of directors
may not represent shareholders at any shareholders meeting.

Our bylaws provide that the board of directors is required to approve: (i)
related party transactions other than those occurring in the ordinary course of
business; (ii) purchases of 10% or more of our corporate assets; (iii)
guarantees for more than 30% of our corporate assets; (iv) any other
transaction, different from the aforementioned, the value of which represents
more than 1% of the corporate asset value of GRUMA. This approval is
non-delegable.

Under Mexican law, shareholders can initiate actions for civil liabilities
against directors through resolutions passed by a majority of the shareholders
at a general ordinary shareholders meeting. In the event the majority of the
shareholders decide to bring such action, the director against whom such action
is brought will immediately cease to be a member of the board of directors.
Additionally, shareholders representing not less than 15% of our outstanding
shares may directly bring such action against directors. Any recovery of
damages with respect to such action will be for the benefit of us and not for
the shareholders bringing the action.

Under our bylaws, we are required to have an audit committee comprised of
directors, the majority of whom must be independent directors, including the
Chairman. Members are appointed at the annual ordinary general shareholders
meeting, hold office for one year and will continue their duties until their
successors take their positions. Members shall receive such compensation set
at the ordinary general shareholders meeting. The audit committee is
empowered to: (i) prepare an annual report of its activities and render it to
the board of directors; (ii) issue opinions with respect to related party
transactions; (iii) make proposals relating to the hiring of independent
experts, if necessary, so that such experts can issue their opinions with
respect to related party transactions; (iv) propose to the board of directors
candidates for the external auditor position and the conditions pursuant to
which they will be hired; (v) revise our financial information and arrange the
issuance process for the same; (vi) contribute to the definition of the general
guidelines of the internal control system, assess its effectiveness, as well as
coordinate and evaluate the annual internal audits and the activities performed
by our internal and external auditors and the statutory auditors; and (vii)
verify that we have the necessary mechanisms to ensure that we are in
compliance with applicable laws and inform the board of directors in this
respect. Our statutory auditors will be called to all meetings held by the
audit committee.

According to our bylaws, the board of directors is empowered to execute
and negotiate any of our credit instruments and agreements. The board of
directors may delegate such power to any individual.

See also Item 6. Directors, Senior Management and Employees for further
information about the board of directors.

Voting Rights and Shareholders Meetings

Each share entitles the holder thereof to one vote at any general meeting
of our shareholders. Shareholders may vote by proxy. At the ordinary general
shareholders meeting, any shareholder or group of shareholders
representing 10% or more of the outstanding common stock has the right to
appoint one regular director and its corresponding alternate, with the
remaining directors being elected by majority vote. Holders of series B shares
do not have cumulative voting rights.

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General shareholders meetings may be ordinary meetings or extraordinary
meetings. Extraordinary general shareholders meetings are called to consider
matters specified in Article 182 of the Mexican Companies Law, including,
principally, changes in the authorized fixed share capital and other amendments
to the bylaws, the issuance of preferred stock, liquidation, mergers and
spin-offs, and transformation from one corporate form to another. All other
matters may be considered at ordinary general shareholders meetings. Ordinary
general shareholders meetings must be called to consider and approve matters
specified in Article 181 of the Mexican Companies Law, including, principally,
the appointment of the members of the board of directors and the statutory
auditor, the compensation paid to the directors and statutory auditor, the
distribution of our profits for the previous year, and the annual reports
presented by the board of directors and the statutory auditor.

A general ordinary shareholders meeting must be held during the first
four months after the end of each fiscal year. In order to attend a general
shareholders meeting, the day before the meeting shareholders must deposit the
certificates representing their common stock or other appropriate evidence of
ownership either with the secretary of our board of directors, with a credit
institution, or with Indeval. The secretary, credit institution or Indeval
will hold the certificates until after the general shareholders meeting has
taken place.

Our shareholders establish the number of members that will serve on our
board of directors at the ordinary general shareholders meeting. Under our
bylaws, the board of directors shall be comprised of a minimum of five and a
maximum of twenty directors. Pursuant to Mexican law, at least 25% of the
members of the board of directors must be independent.

Under our bylaws, the quorum for an ordinary general shareholders meeting
is at least 50% of the outstanding common stock, and action may be taken by the
affirmative vote of holders representing a majority of the shares present. If
a quorum is not present, a subsequent meeting may be called at which the
shareholders present, whatever their number, will constitute a quorum and
action may be taken by a majority of the shares present. A quorum for
extraordinary general shareholders meetings is at least 75% of the outstanding
common stock, but if a quorum is not present, a subsequent meeting may be
called. A quorum for the subsequent meeting is at least 50% of the outstanding
shares. Action at an extraordinary general shareholders meeting may only be
taken by a vote of holders representing at least 50% of the outstanding shares.

Shareholders meetings may be called by the board of directors, the
statutory auditor or a court. The board of directors or the statutory auditor
may be required to call a shareholders meeting if holders of at least 10% of
our outstanding share capital request a meeting in writing, at the written
request of any shareholder if no shareholders meeting has been held for two
consecutive years, or if, during a period of two consecutive years, the board
of directors annual report for the previous year and the companys financial
statements were not presented to the shareholders, or if the shareholders did
not elect directors and the statutory auditor.

Notice of shareholders meetings must be published in the Official Gazette
of the Federation or in a newspaper of general circulation in Mexico City at
least 15 days prior to the meeting. Shareholders meetings may be held without
such publication provided that 100% of the outstanding shares are represented.
Shareholders meetings must be held in Mexico City.

Under Mexican law, holders of 10% of our outstanding capital stock may
have any shareholder action set aside by filing a complaint with a Mexican
court of competent jurisdiction within 15 days after the close of the meeting
at which such action was taken, by showing that the challenged action violates
Mexican law or our bylaws. Relief under these provisions is only available to
holders who were entitled to vote on the challenged shareholder action and
whose shares were not represented when the action was taken or, if represented,
were voted against it.

Dividend Rights and Distribution

Within the first four months of each year, the board of directors must
submit our companys financial statements for the preceding fiscal year to the
shareholders for their approval at the ordinary general shareholders meeting.
They are required by law to allocate five percent of any new profits to a legal
reserve which is not thereafter available for distribution until the amount of
the legal reserve equals 20% of our historical capital stock (before adjusting
for inflation). Amounts in excess of those allocated to the legal reserve fund
may be allocated to other reserve funds as the shareholders determine,
including a reserve for the repurchase of our shares. The

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remaining balance of
new profits, if any, is available for distribution as dividends. Cash
dividends on the shares held through Indeval will be distributed by us through
Indeval. Cash dividends on the shares evidenced by physical certificates will
be paid when the relevant dividend coupon registered in the name of its holder
is delivered to us. No dividends may be paid, however, unless losses for prior
fiscal years have been paid up or absorbed. See Item 3. Key
InformationDividends.

Liquidation

Upon our dissolution, one or more liquidators must be appointed by an
extraordinary shareholders general meeting to wind up its affairs. If the
extraordinary general shareholders meeting does not make said appointment, a
Civil or District Judge of the Federation can do so at the request of any
shareholder. All fully paid and outstanding common stock will be entitled to
participate equally in any distribution upon liquidation after the payment of
the companys debts, taxes and the expenses of the liquidation. Common stock
that has not been paid in full will be entitled to these proceeds in proportion
to the paid-in amount.

If the extraordinary general shareholders meeting does not give express
instructions on liquidation, the bylaws stipulate that the liquidators will (i)
conclude all pending matters they deem most convenient, (ii) prepare a general
balance and inventory, (iii) collect all credits and pay all debts by selling
assets necessary to accomplish this task, (iv) sell assets and distribute
income, and (v) distribute the remnant, if any, pro rata among the
shareholders.

Changes in Capital Stock

Our outstanding capital stock consists of Class I and Class II series B
shares. Class I shares are the fixed portion of our capital stock and have no
par value. The fixed portion of our capital stock cannot be redeemed. Class II
shares are the variable portion of our capital stock and have no par value.
The variable portion cannot be greater than seven times the minimum fixed
portion of our companys capital stock specified in the bylaws. The issuance
of variable capital shares, unlike the issuance of fixed capital shares, does
not require an amendment of the bylaws, although it does require approval at an
ordinary general shareholders meeting. The fixed portion of our capital stock
may only be increased or decreased by resolution of an extraordinary general
shareholders meeting and an amendment to our bylaws, whereas the variable
portion of our capital stock may be increased or decreased by resolution of an
ordinary general shareholders meetings. Currently, our outstanding capital
stock consists only of fixed capital.

An increase of capital stock may generally be made through the issuance of
new shares for payment in cash or in kind, by capitalization of indebtedness or
by capitalization of certain items of shareholders equity. An increase of
capital stock generally may not be made until all previously issued and
subscribed shares of capital stock have been fully paid. A reduction of
capital stock may be effected to absorb losses, to redeem shares, to repurchase
shares in the open market or to release shareholders from payments not made.

Preemptive Rights

Except in certain limited circumstances, in the event of a capital
increase through the issuance of shares for payment in cash or in kind, a
holder of existing shares of a given series at the time of the capital increase
has a preferential right to subscribe for a sufficient number of new shares of
the same series to maintain the holders existing proportionate holdings of
shares of that series. Preemptive rights must be exercised within the period
and under the conditions established for such purpose by the shareholders at
the corresponding shareholders meeting. Under Mexican law and the bylaws, the
exercise period may not be less than 15 days following the publication of
notice of the capital increase in the Official Gazette of the Federation
or following the date of the shareholders meeting at which the capital
increase was approved if all shareholders were represented; otherwise such
rights will lapse.

Shareholders will not have preemptive rights to subscribe for common stock
issued in connection with mergers, upon the conversion of convertible
debentures, in a public offering (if the majority of shareholders at a general
extraordinary meeting approve the issuance of shares and waive their preemptive
rights in accordance with

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the Mexican securities market law and our bylaws) or
in a resale of common stock held in our treasury as a result of repurchases on
the Mexican Stock Exchange.

Under Mexican law, preemptive rights may not be waived in advance by a
shareholder, except under limited circumstances, and cannot be represented by
an instrument that is negotiable separately from the corresponding share.
Holders of ADRs may be restricted in their ability to participate in the
exercise of preemptive rights. See Item 3. Key InformationRisk
FactorsRisks Relating to Our Controlling Shareholders and Capital
StructureHolders of ADSs May Not Be Able to Participate in Any Future
Preemptive Rights Offering and as a Result May Be Subject to a Dilution of
Equity Interest.

Restrictions Affecting Non-Mexican Shareholders

Foreign investment in capital stock of Mexican corporations is regulated
by the 1993 Foreign Investment Law and by the 1998 Foreign Investment
Regulations to the extent they are not inconsistent with the Foreign Investment
Law. The Ministry of Economy and the National Commission on Foreign Investment
are responsible for the administration of the Foreign Investment Law and the
Foreign Investment Regulations.

Our bylaws do not restrict the participation of non-Mexican investors in
our capital stock. However, approval of the National Foreign Investment
Commission must be obtained for foreign investors to acquire a direct or
indirect participation in excess of 49% of the capital stock of a Mexican
company that has an aggregate asset value that exceeds, at the time of filing
the corresponding notice of acquisition, an amount determined annually by the
National Foreign Investment Commission.

As required by Mexican law, our bylaws provide that any non-Mexicans who
acquire an interest or participation in our capital at any time will be treated
as having Mexican nationality for purposes of their interest in us, and with
respect to the property, rights, concessions, participations or interests that
we may own or rights and obligations that are based on contracts to which we
are a party with the Mexican authorities. Such shareholders cannot invoke the
protection of their government under penalty of forfeiting to the Mexican State
the ownership interest that they may have acquired. See Item 3. Key
InformationRisk FactorsRisks Relating to Our Controlling Shareholders and
Capital StructureOur Bylaws Restrict the Ability of Non-Mexican Shareholders
to Invoke the Protection of Their Governments with Respect to Their Rights as
Shareholders.

Under this provision, a non-Mexican shareholder is deemed to have agreed
not to invoke the protection of his own government with respect to his rights
as a shareholder, but is not deemed to have waived any other rights it may have
with respect to its investment in us, including any rights under U.S.
securities laws. If a shareholder should invoke governmental protection in
violation of this provision, its shares could be forfeited to the Mexican
government. Mexican law requires that such a provision be included in the
bylaws of all Mexican companies unless such bylaws prohibit ownership of shares
by non-Mexicans.

Registration and Transfer

Our shares are evidenced by certificates in registered form. We maintain
a stock registry and, in accordance with Mexican law, only those persons whose
names appear on the stock registry are recognized as owners of the series B
shares.

Other Provisions

Redemption Rights

Outstanding variable capital shares, if any, may be fully or partially
redeemed by the holders thereof. The minimum fixed portion of our capital
stock cannot be redeemed. Currently, we have no outstanding variable capital
shares. A holder of variable capital stock that wishes to effect a total or
partial redemption of such stock is required to notify us in an authenticated
written notice to that effect. If notice of redemption is received prior to
the last quarter of the fiscal year, the redemption becomes effective at the
end of the fiscal year in which the shareholder gives notice. Otherwise, the
redemption becomes effective at the end of the following fiscal year.

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Redemption of our variable capital stock is made at the lower of (i) 95%
of the average share price quoted on the Mexican Stock Exchange during the 30
business days prior to the date on which the redemption is to become effective
or (ii) the book value per variable capital share as calculated from our
financial statements (as approved at an ordinary general shareholders meeting)
for the fiscal year at the end of which the redemption is to become effective.
Any such amount to be paid by us would become due on the day following the
ordinary general shareholders meeting referred to in clause (ii) above.

Appraisal Rights

Under Mexican law, whenever the shareholders approve a change of corporate
purpose, change of our nationality or transformation from one type of corporate
form to another, any shareholder entitled to vote on such change or
transformation who has voted against it has the right to tender its shares and
receive the amount attributable to its shares, provided such shareholder
exercises its right to withdraw within 15 days following the adjournment of the
meeting at which the change or transformation was approved. Under Mexican law,
the amount which a withdrawing shareholder is entitled to receive is equal to
its proportionate interest in our capital stock according to our most recent
balance sheet approved by an ordinary general meeting of shareholders. The
reimbursement may have certain tax consequences.

Share Repurchases

We may repurchase our common stock on the Mexican Stock Exchange at any
time at the then prevailing market price. The repurchase of shares will be
made at the expense of our equity if the repurchased shares remain outstanding,
or at the expense of our capital stock if the repurchased shares are placed in
our treasury. At the ordinary general shareholders meeting, shareholders
shall determine the maximum amount of funds to be allocated to the repurchase
of shares, which amount shall not exceed our total net profits, including
retained earnings.

Repurchased common stock will either be held by us or kept in our
treasury, pending future sales thereof on the Mexican Stock Exchange. If the
repurchased shares are kept in our treasury, we may not exercise the economic
and voting rights corresponding to them, and such shares are not deemed to be
outstanding for purposes of calculating any quorum or vote at any shareholders
meeting. The repurchased shares held by us as outstanding shares may not be
represented at any shareholder meeting. The decrease or increase of the
capital stock as a consequence of the repurchase and sale by the company of its
shares does not require the approval of a shareholders meeting or of the board
of directors.

Under Mexican securities regulation, our directors, officers, statutory
auditors, external auditors, and the secretary of the board of directors and
holders of 10% or more of our outstanding common stock may not sell common
stock to us, or purchase repurchased common stock from us, unless the sale or
purchase is made through a tender offer. Mexican securities regulations under
the Mexican Securities Market Law require that if we decide to repurchase
common stock representing three percent or more of our outstanding share
capital in any 20 trading-day period, these repurchases must be conducted by
means of a public tender offer.

Repurchase in the Event of Delisting

If the registration of our common shares in the Securities Section of the
Registro Nacional de Valores (National Registry of Securities or RNV) is
canceled, whether at our request or by the CNBV, under our bylaws and CNBV
regulations, our controlling shareholders must make a public offer to purchase
all of the shares owned by
minority shareholders before the cancellation takes effect. Unless a
different price is approved by the CNBV, the common shares must be purchased by
the controlling shareholders at a price equal to or greater than the higher of
the average closing sale price for such shares on the stock exchange during the
30 days before the offer or the book value of the same, as reflected in our
last quarterly report filed with the CNBV and the Mexican Stock Exchange before
the date of the offer. Once a public offer is made, and prior to the
cancellation of our common shares in the Securities Section of the RNV if our
controlling shareholders have not acquired 100% of our outstanding common
shares, our controlling shareholders shall then execute a trust in order to
provide sufficient monetary resources, which should be left in the trust for a
minimum of two years, in order to allow any remaining minority shareholder to
sell its shares to the trust at the public offer price.

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Under our bylaws, holders of the majority of the common shares are not
obligated to make a public offer to purchase the common shares owned by
minority holders if the holders of all our outstanding common shares approve
the cancellation of the registration of the common shares with the RNV. This
provision in the bylaws may not be amended without the consent of holders of at
least 95% of the outstanding common shares and the prior approval of the CNBV.
The majority shareholders shall not be required to carry out the public
offering if the totality of the shareholders consent to the registry
cancellation.

Shareholder Conflicts of Interest

Under Mexican law, any shareholder that has a direct or indirect conflict
of interest with respect to any transaction must abstain from voting thereon at
the relevant shareholders meeting. A shareholder that votes on a business
transaction in which its interest conflicts with ours may be liable for damages
if the transaction would not have been approved without such shareholders
vote.

Rights of Shareholders

The protections afforded to minority shareholders under Mexican law are
different from those in the United States and many other jurisdictions. The
substantive law concerning duties of directors and controlling shareholders has
not been the subject of extensive judicial interpretation in Mexico, unlike
many states in the United States where duties of care and loyalty elaborated by
judicial decisions help to shape the rights of minority shareholders. Mexican
civil procedure does not contemplate class actions or shareholder derivative
actions, which permit shareholders in U.S. courts to bring actions on behalf of
other shareholders or to enforce rights of the corporation itself.
Shareholders cannot challenge corporate action taken at a shareholders meeting
unless they meet certain procedural requirements.

As a result of these factors, in practice it may be more difficult for our
minority shareholders to enforce rights against us or our directors or
controlling shareholders than it would be for shareholders of a U.S. company.
See Item 3. Key InformationRisk FactorsRisks Relating to Our Controlling
Shareholders and Capital StructureThe Protections Afforded to Minority
Shareholders in Mexico Are Different From Those in the United States.

In addition, under the U.S. securities laws, as a foreign private issuer
we are exempt from certain rules that apply to domestic U.S. issuers with
equity securities registered under the Exchange Act, including the proxy
solicitation rules, the rules requiring disclosure of share ownership by
directors, officers and certain shareholders. We are also exempt from certain
of the corporate governance requirements of the New York Stock Exchange,
including the requirements concerning audit committees and independent

directors.

MATERIAL CONTRACTS

Archer-Daniels-Midland

We entered into an association with Archer-Daniels-Midland in September
1996. We believe that this association has improved our position in the U.S.
corn flour market by combining our proprietary corn flour technology, our
leading position in the corn flour industry in Mexico, the United States,
Central America and Venezuela and our operational expertise with
Archer-Daniels-Midlands logistical resources and financial strength.

As a result of this association, we received U.S.$258.0 million in cash,
80% ownership of our combined U.S. corn flour operations and 60% of
Archer-Daniels-Midlands Mexican wheat milling operations. We also gained
exclusivity rights from Archer-Daniels-Midland in specified corn flour and
wheat flour markets. In return, Archer-Daniels-Midland received 74,696,314 of
our newly issued shares, which represented approximately 22% of our total
outstanding shares, and 20% ownership of our combined U.S. corn flour
operations, and retained 40% of the Mexican wheat milling operations.
Archer-Daniels-Midland also obtained the right to designate two of the 14
members of our board of directors and their corresponding alternates.

Under the terms of this association, Archer-Daniels-Midland may not,
without the consent of Mr. Roberto González Barrera, the Chairman of our board
of directors and Chief Executive Officer, or our board of directors,

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acquire
additional shares of us. In 1999, Mr. González Barrera authorized
Archer-Daniels-Midland to acquire additional shares of us issued as a result of
an increase in capital stock and subsequent rights offering to our
shareholders. In connection with the rights offering on August 19, 1999,
Archer-Daniels-Midland directly and indirectly purchased a total of 51,408,337
new shares, increasing its ownership of our outstanding shares to approximately
29.2%, directly and indirectly. A total of 24,566,561 of these new shares are
held by Archer-Daniels Midland through a Mexican corporation jointly owned with
Mr. González Barrera and controlled by him. Furthermore,
Archer-Daniels-Midland must give Mr. González Barrera a right of first refusal
on any sale of our shares. Mr. González Barrera must give
Archer-Daniels-Midland a similar right on any sale of his shares in us if at
the time of the sale, he owns, or as a result of the sale will own, less than
30% of our outstanding shares. See Item 7. Major Stockholders and Related
Party TransactionsRelated Party Transactions.

The documents which detail the terms of the association include the
Shareholders Agreement by and among us, Roberto González Barrera,
Archer-Daniels-Midland and ADM Bioproducts, S.A. de C.V., the Asset
Contribution Agreement among Gruma Corporation, Gruma Holding, Inc., ADM
Milling Co., Valley Holding, Inc., GRUMA-ADM, and Azteca Milling, L.P., and the
Investment Agreement by and between us and Archer-Daniels-Midland, all dated as
of August 21, 1996, as well as Amendment No. 1 and Amendment No. 2 to the
Shareholders Agreement, dated as of September 13, 1996 and August 18, 1999,
respectively. See Item 19. Exhibits.

Bank of America, N.A.

On December 18, 2002, we obtained a U.S.$300,000,000 syndicated loan from
a group of 15 local and foreign banks, led by Bank of America, N.A. The
three-year loan allowed us to pay our outstanding syndicated loan. The loan
pays a spread ranging from 87.5 to 162.5 percentage points over LIBOR. No
single bank in the syndicate finances more than 9.8% of the total loan. The
U.S.$300,000,000 Loan Agreement among us, the lenders, Bank of America, N.A.,
as Administrative Agent, and Banc of America Securities, LLC, as Lead Arranger
and Sole Book Manager, dated December 18, 2002, details the terms of this loan.
See Item 19. Exhibits.

EXCHANGE CONTROLS

Mexican law does not restrict our ability to remit dividends and interest
payments, if any, to non-Mexican holders of our securities. Payments of
dividends to equity-holders generally will be subject to Mexican withholding
tax. See TaxationMexican Tax ConsiderationsPayment of Dividends. Mexico
has had a free market for foreign exchange since 1991, and the government has
allowed the peso to float freely against the U.S. dollar since December 1994.

Our ability to repatriate dividends from our Venezuelan Operations may be
adversely affected by exchange controls and other recent events. See Item 3.
Risk FactorsRisks Related to VenezuelaVenezuela Presents Significant Economic
Uncertainty and Political Risk.

TAXATION

The following summary contains a description of certain Mexican federal
and U.S. federal income tax consequences of the acquisition, ownership and
disposition of B Shares or B Share ADSs (which are evidenced by ADRs), but it
does not purport to be a comprehensive description of all of the tax
considerations that may be relevant to a decision to purchase or hold B Shares
or ADSs, such as the tax treatment of holders that are dealers or
that own (actually or constructively under rules prescribed in the
Internal Revenue Code of 1986, as amended, or the Code), 10% or more of the
voting shares of GRUMA.

The Convention for the Avoidance of Double Taxation and a Protocol
thereto, or the Tax Treaty, between the United States and Mexico entered into
force on January 1, 1994. The United States and Mexico have also entered into
an agreement concerning the exchange of information with respect to tax
matters.

The summary is based upon tax laws of the United States and Mexico as in
effect on the date of this document, which are subject to change, including
changes that may have retroactive effect. Holders of B Shares or ADSs should
consult their own tax advisers as to the Mexican, U.S. or other tax
consequences of the purchase,

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ownership and disposition of shares or ADSs,
including, in particular, the effect of any foreign, state or local tax laws.

Mexican Tax Considerations

The following is a general summary of the principal consequences under the
Ley del Impuesto sobre la Renta(the Mexican Income Tax Law) and rules and
regulations thereunder, as currently in effect, of an investment in Shares or
ADSs by a holder that is not a resident of Mexico and that will not hold shares
or ADSs or a beneficial interest therein in connection with the conduct of a
trade or business through a permanent establishment or fixed base in Mexico.

For purposes of Mexican taxation, a natural person is a resident of Mexico
for tax purposes if he has established his home in Mexico, unless he has
resided in another country for more than 183 days, whether consecutive or not,
in any one calendar year and can demonstrate that he has become a resident of
that country for tax purposes, and a legal entity is a resident of Mexico if it
was incorporated in Mexico or maintains the principal administration of its
business or the effective location of its management in Mexico. A Mexican
citizen is presumed to be a resident of Mexico unless such person can
demonstrate the contrary. If a non-resident of Mexico is deemed to have a
permanent establishment or fixed base in Mexico for tax purposes, all income
attributable to such permanent establishment or fixed base will be subject to
Mexican taxes, in accordance with applicable tax laws.

Tax Treaties

Provisions of the Tax Treaty that may affect the taxation of certain U.S.
holders are summarized below. The United States and Mexico have also entered
into an agreement that covers the exchange of information with respect to tax
matters.

Mexico has also entered into and is negotiating several other tax treaties
that may reduce the amount of Mexican withholding tax to which payment of
dividends on shares or ADSs may be subject. Holders of shares or ADSs should
consult their own tax advisors as to the tax consequences, if any, of such
treaties.

Under the Mexican Income Tax Law, in order for any benefits from the Tax
Treaty or any other tax treaties to be applicable, residence for tax purposes
must be demonstrated.

Payment of Dividends

Under the Mexican Income Tax Law, dividends, either in cash or in kind,
paid with respect to shares represented by ADSs are not subject to Mexican
withholding tax. A Mexican corporation will not be subject to any tax if the
amount of dividends does not exceed the net tax profit account (cuenta de
utilidad fiscal neta,or CUFIN).

If we pay a dividend in 2003 in an amount greater than our CUFIN balance
(which may occur in a year when net profits exceed the balance in such
accounts), then we are required to pay a 34% income tax on an amount equal to
the product of the portion of the grossed-up amount which exceeds such balance
multiplied by the factor 1.5152. For the next couple of years, the applicable
income tax rate and factor are expected to be as follows:

|     |  |      |    |        |  |  |        | 
|---- |  | ---- | -- | ------ |  |  | ------ | 
|Year |  | Rate |    | Factor
|     |  |      |    |       
|2004 |  |      | 33 | %      |  |  | 1.4925 | 
|2005 |  |      | 32 | %      |  |  | 1.4706 | 

After 2005, the applicable income tax rate and factor are expected to be 32% and 1.4706, respectively.

Taxation of Dispositions

The sale or other disposition of ADSs by a non-resident holder will not be
subject to Mexican tax. Deposits of shares in exchange for ADSs and
withdrawals of shares in exchange for ADSs will not give rise to Mexican tax or
transfer duties.

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The sale of shares by a non-resident holder will not be subject to any
Mexican tax if the transaction is carried out through the Mexican Stock
Exchange or other securities markets approved by the Mexican Ministry of
Finance. Sales or other dispositions of shares made in other circumstances
generally would be subject to Mexican tax, regardless of the nationality or
residence of the transferor.

Under the Mexican Income Tax Law, gains realized by a nonresident holder
of shares on the sale or disposition of shares not conducted through a
recognized stock exchange generally are subject to a Mexican tax at a rate of
20% of the gross sale price. However, if the holder is a resident of a country
which is not considered to be a low tax rate country (by reference to a list of
low rate countries published by the Mexican Ministry of Finance and Public
Credit), the holder may elect to designate a resident of Mexico as its
representative, in which case taxes would be payable at a 34% rate on the gain
on such disposition of shares in 2003 (33% in 2004 and 32% in 2005 and
thereafter).

Pursuant to the Tax Treaty, gains realized by qualifying U.S. holders from
the sale or other disposition of shares, even if the sale is not conducted
through a recognized stock exchange, will not be subject to Mexican income tax
except that Mexican taxes may apply if:



| |  |  | 50% or more of our assets consist of fixed assets situated in
Mexico;                                                                                                                       
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | such U.S. holder owned 25% or more of the shares representing
the capital stock of GRUMA (including ADSs), directly or indirectly,
during the 12-month period preceding such disposition; or
|
| |  |  | the gain is attributable to a permanent establishment or
fixed base of the U.S. holder in Mexico.                                                                                           

Other Mexican Taxes

A non-resident holder will not be liable for estate, inheritance or
similar taxes with respect to its holdings of shares or ADSs; provided,
however, that gratuitous transfers of shares may in certain circumstances
result in imposition of a Mexican tax upon the recipient. There are no Mexican
stamp, issue registration or similar taxes payable by a non-resident holder
with respect to shares or ADSs.

Reimbursement of capital pursuant to a redemption of shares will be tax
exempt up to an amount equivalent to the adjusted contributed capital
corresponding to the shares that will be redeemed. Any excess distribution
pursuant to a redemption will be considered a dividend for tax purposes and we
may be taxed as described above.

U.S. Federal Income Tax Considerations

The following is a summary of certain U.S. federal income tax consequences
to U.S. holders (as defined below) of the acquisition, ownership and
disposition of B Shares or ADSs. This summary is based upon the federal income
tax laws of the United States as in effect on the date of this Annual Report,
including the provisions of the Tax Treaty, all of which are subject to change,
possibly with retroactive effect in the case of U.S. federal income tax law.

The summary does not purport to be a comprehensive description of all of
the tax consequences of the acquisition, ownership or disposition of B Shares
or ADSs. The summary applies only to U.S. holders that will hold their B
Shares or ADSs as capital assets and does not apply to special classes of
holders such as dealers in securities
or currencies, holders with a functional currency other than the U.S.
dollar, holders of 10% or more of our voting shares (whether held directly or
through ADSs or both), tax-exempt organizations, financial institutions,
holders liable for the alternative minimum tax, securities traders electing to
account for their investment in their B Shares or ADSs on a mark-to-market
basis, and persons holding their B Shares or ADSs in a hedging transaction or
as part of a straddle or conversion transaction.

For purposes of this discussion, a U.S. holder is a beneficial owner of B Shares or ADSs that is:



|
|
|
|
|

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| |  |  | an estate the income of which is subject to United States
federal taxation regardless of its source;                                                                                                    
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | a trust if a court within the U.S. is able to exercise
primary supervision over the administration and one or more U.S.
persons have the authority to control all substantial decisions of
the trust; or
|
| |  |  | otherwise subject to U.S. federal income taxation on a net
income basis with respect to the shares or ADSs.                                                                                             

A holder of B Shares or ADSs that is a partnership, and partners in such
partnership, should consult their tax advisors about the United States federal
income tax consequences of holding and disposing of the B Shares or the ADSs,
as the case may be.

Prospective investors in the B Shares or ADSs should consult their own tax
advisors as to the U.S. federal, Mexican or other tax consequences of the
purchase, ownership and disposition of the B Shares or ADSs, including, in
particular, the effect of any foreign, state or local tax laws and their
entitlement to the benefits, if any, afforded by the Tax Treaty.

Treatment of ADSs

In general, a U.S. holder of ADSs will be treated as the beneficial owner
of the B Shares represented by those ADSs for U.S. federal income tax purposes.
Deposits or withdrawals of B Shares by U.S. holders in exchange for the ADSs
will not result in the realization of gain or loss for U.S. federal income tax
purposes. U.S. holders that withdraw any shares should consult their own tax
advisors regarding the treatment of any foreign currency gain or loss on any
pesos received in respect of such shares.

Taxation of Distributions

In this discussion, the term dividends is used to mean distributions
(including any amounts withheld in respect of Mexican withholding tax) paid out
of our current or accumulated earnings and profits (calculated for U.S. federal
income tax purposes) with respect to B Shares or ADSs. In general, the gross
amount of any dividends will be includible in the gross income of a U.S. holder
as ordinary income on the day on which the dividends are received by the U.S.
holder in the case of shares, or by the depositary in the case of ADSs.
Dividends paid by us will not be eligible for the dividends-received deduction
allowed to corporations under the Code. To the extent that a distribution
exceeds the amount of our earnings and profits (calculated for U.S. federal
income tax purposes), it will be treated as a non-taxable return of capital to
the extent of the U.S. holders basis in the B Shares or ADSs, and thereafter
as capital gain (provided that the B Shares or ADSs are held as capital
assets). Distributions will be paid in pesos and will be includible in the
income of a U.S. holder in a U.S. dollar amount calculated by reference to the
exchange rate in effect on the day that they are received by the U.S. holder in
the case of shares, or by the depositary in the case of ADSs. U.S. holders
should consult their own tax advisors regarding the treatment of foreign
currency gain or loss, if any, on any pesos received by a U.S. holder or
depositary that are converted into U.S. dollars on a date subsequent to
receipt.

Distributions of additional shares or ADSs to U.S. holders with respect to
their shares or ADSs that are made as part of a pro rata distribution to all of
our shareholders generally will not be subject to U.S. federal income tax.

Dividends paid on shares or ADSs generally will be treated for U.S.
foreign tax credit purposes as foreign source passive income, or, in the case
of certain U.S. holders, as foreign source financial services income. The
Mexican withholding tax that is imposed on such dividends will be treated as a
foreign income tax eligible, subject to generally applicable limitations and
conditions under U.S. federal income tax law, for credit against a U.S.
holders U.S. federal income tax liability or, at the U.S. holders election,
for deduction from gross income in computing the U.S. holders taxable income.

The calculation and availability of foreign tax credits and, in the case
of a U.S. holder that elects to deduct foreign taxes, the availability of
deductions, involves the application of rules that depend on a U.S. holders
particular circumstances. U.S. holders should consult their own tax advisors
regarding the availability of foreign tax credits.

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Under certain U.S. Treasury Department guidance, foreign tax credits will
not be allowed for withholding taxes imposed in respect of certain short-term
or hedged positions in securities or in respect of arrangements in which a U.S.
holders expected economic profit, after non-U.S. taxes, is insubstantial.
U.S. holders should consult their own advisors concerning the implications of
these rules in light of their particular circumstances.

Qualified Dividend Income

Notwithstanding the foregoing, pursuant to recently enacted legislation,
certain dividends received by individual U.S. holders that constitute
qualified dividend income will be subject to a reduced maximum marginal U.S.
federal income tax rate. Qualified dividend income generally includes, among
other dividends, dividends received during the taxable year from qualified
foreign corporations. In general, the term qualified foreign corporation
includes a foreign corporation that is eligible for the benefits of a
comprehensive income tax treaty with the United States which the U.S. Treasury
Department determines to be satisfactory, and which includes an exchange of
information program. In addition, a foreign corporation is treated as a
qualified foreign corporation with respect to any dividend paid by the
corporation with respect to stock of the corporation that is readily tradable
on an established securities market in the United States. For this purpose, a
share is treated as readily tradable on an established securities market in the
United States if an ADR backed by such share is so traded.

Notwithstanding the previous rule, dividends received from a foreign
corporation that is a foreign investment company (as defined in section 1246(b)
of the Code), a passive foreign investment company (as defined in section 1297
of the Code), or a foreign personal holding company (as defined in section 552
of the Code) in either the taxable year of the corporation in which the
dividend was paid or the preceding taxable year will not constitute qualified
dividend income. In addition, the term qualified dividend income will not
include, among other dividends, any (i) dividends on any share of stock or ADS
which is held by a taxpayer for 60 days or less during the 120-day period
beginning on the date which is 60 days before the date on which such share or
the shares backing the ADS become ex-dividend with respect to such dividends
(as measured under section 246(c) of the Code) or (ii) dividends to the extent
that the taxpayer is under an obligation (whether pursuant to a short sale or
otherwise) to make related payments with respects to positions in substantially
similar or related property. Moreover, special rules apply in determining a
taxpayers foreign tax credit limitation under section 904 of the Code in the
case of qualified dividend income.

Individual U.S. holders should consult their own tax advisors to determine
whether or not amounts received as dividends from us will constitute qualified
dividend income subject to a reduced maximum marginal U.S. federal income tax
rate and, in such case, the effect, if any, on the individual U.S. holders
foreign tax credit.

Taxation of Dispositions

Gain or loss realized by a U.S. holder on the sale, redemption or other
disposition of B Shares or ADSs will be subject to U.S. federal income taxation
as capital gain or loss in an amount equal to the difference between such U.S.
holders adjusted basis in the B Shares or the ADSs and the amount realized on
the disposition (including any amounts withheld in respect of Mexican
withholding tax). Gain (including gain that arises because the U.S. holders
basis in the B Shares or ADSs has been reduced because a distribution is
treated as a return of capital rather than as a dividend) and loss realized by
a U.S. holder on a sale, redemption or other disposition of B Shares or ADSs
generally will be treated as U.S. source income or loss for U.S. foreign tax
credit purposes.

The availability of U.S. foreign tax credits for any Mexican taxes imposed
on the sale, redemption or other disposition is subject to certain limitations
and involves the application of rules that depend on a U.S. holders particular
circumstances. U.S. holders should consult their own tax advisors regarding
the application of the foreign tax credit rules to their investment in, and
disposition of, B Shares or ADSs.

Tax Return Disclosure Regulations

Pursuant to recently enacted U.S. Treasury regulations (the Disclosure
Regulations), any taxpayer that has participated in a reportable transaction
and who is required to file a U.S. Federal income tax return must generally
attach a disclosure statement disclosing such taxpayers participation in the
reportable transaction to the taxpayers tax return for each taxable year for
which the taxpayer participates in the reportable transaction. The Disclosure
Regulations provide that, in addition to certain other transactions, loss
transactions and transactions

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involving a brief asset holding period
constitute reportable transactions. Loss transactions include transactions
that produce a foreign currency exchange loss in an amount equal to or in
excess of certain threshold amounts. Transactions
involving a brief asset
holding period are generally transactions resulting in the taxpayer claiming a
tax credit in excess of $250,000 if the underlying asset giving rise to the
credit is held by the taxpayer for 45 days or less. U.S. holders should consult
their own advisors concerning the implications of the tax return disclosure
requirements in light of their particular circumstances.

Information Reporting and Backup Withholding

Dividends on, and proceeds from the sale or other disposition of, the B
Shares or ADSs paid to a U.S. holder generally may be subject to the
information reporting requirements of the Code and may be subject to backup
withholding at the applicable date unless the holder:



| |  |  | establishes that it is a corporation or other exempt holder; or                                                                                                                            
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | provides an accurate taxpayer identification number on a
properly completed Internal Revenue Service Form W-9 and certifies
that no loss of exemption from backup withholding has occurred.

The amount of any backup withholding from a payment to a holder will be
allowed as a credit against the U.S. holders U.S. federal income tax liability
and may entitle such holder to a refund, provided that certain required
information is furnished to the Internal Revenue Service.

U.S. Tax Consequences for Non-U.S. Holders

Distributions:

A holder of shares or ADSs that is, with respect to the United States, a
foreign corporation or a non-resident alien individual (a non-U.S. holder)
generally will not be subject to U.S. federal income or withholding tax on
dividends received on shares or ADSs, unless such income is effectively
connected with the conduct by the holder of a U.S. trade or business.

Dispositions:

A non-U.S. holder of shares or ADSs will not be subject to U.S. federal
income or withholding tax on gain realized on the sale of shares or ADSs,
unless:



| |  |  | such gain is effectively connected with the conduct by the
holder of a U.S. trade or business, or                                                                                          
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | in the case of gain realized by an individual holder, the
holder is present in the United States for 183 days or more in the
taxable year of the sale and certain other conditions are met.

Information Reporting and Backup Withholding:

Although non-U.S. holders generally are exempt from backup withholding, a
non-U.S. holder may be required to comply with certification and identification
procedures in order to establish its exemption from information reporting and
backup withholding.

DOCUMENTS ON DISPLAY

We are subject to the information requirements of the Exchange Act and, in
accordance therewith, we are required to file reports and other information
with the SEC. These materials, including this Form 20-F and the exhibits
thereto, may be inspected and copied at the SECs Public Reference Room at 450
Fifth Street, NW, Washington, D.C. 20549. The public may obtain information on
the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330.

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ITEM 11.    Quantitative And Qualitative Disclosures About Market Risk.

The following information includes forward-looking statements that
involve risk and uncertainties. Actual results could differ from those
presented. All information below is presented on a Mexican GAAP basis in pesos
of constant purchasing power as of December 31, 2002.

We are exposed to market risks arising from changes in interest rates,
foreign exchange rates, equity prices and commodity prices. We use derivative
instruments, on a selective basis, to manage these risks. We do not use
derivative instruments for trading or speculative purposes. We maintain and
control our treasury operations and overall financial risk through policies
approved by senior management.

INTEREST RATE RISKS

We depend upon debt financing transactions, including debt securities,
bank and vendor credit facilities and leases, to finance our operations. These
transactions expose us to interest rate risk, with the primary interest-rate
risk exposure resulting from changes in the relevant base rates (CETES, TIIE,
LIBOR and/or prime rate) which are used to determine the interest rates that
are applicable to borrowings under our credit facilities. We are also exposed
to interest rate risk in connection with refinancings of maturing debt. We had
approximately U.S.$269 million (Ps.2,806 million) of fixed rate debt and
approximately U.S.$387 million (Ps.4,038 million) in floating rate debt at
December 31, 2002. For a description of our debt, see Note 9 to our financial
statements.

The following table sets forth, as of December 31, 2002, the interest rate
and maturity profile of our debt portfolio.

|            |                     |  |                |      |      |  |      |      |      |  |                                                    |       |            |  |       |      |            |  |  |       |   |  |  |      |   |  |  |       |  |  |  |       | 
|----------- | ------------------- |  | -------------- | ---- | ---- |  | ---- | ---- | ---- |  | -------------------------------------------------- | ----- | ---------- |  | ----- | ---- | ---------- |  |  | ----- | - |  |  | ---- | - |  |  | ----- |  |  |  | ----- | 
|            |                     |  | Maturity Dates
|            |                     |  |               
|            |                     |  | 2003           |      | 2004 |  | 2005 |      | 2006 |  | 2007                                               |       | Thereafter |  | Total |      | Fair Value
|            |                     |  |                |      |      |  |      |      |      |  |                                                    |       |            |  |       |      |           
|            |                     |  |                |      |      |  |      |      |      |  | (in millions of pesos of constant purchasing power |       |            |  |       |      |            |  | 
|            |                     |  |                |      |      |  |      |      |      |  | as of December 31, 2002, except percentages)       |       |            |  |       |      |            |  | 
|Liabilities |                     |  |                |      |      |  |      |      |      |  |                                                    |       |            |  |       |      |            |  |  |       |   |  |  |      |   |  |  |       |  |  |  |      
|Debt        |                     |  |                |      |      |  |      |      |      |  |                                                    |       |            |  |       |      |            |  |  |       |   |  |  |      |   |  |  |       |  |  |  |      
|            | Fixed Rate (Ps.)    |  |                | 11   |      |  |      | 12   |      |  |                                                    | 13    |            |  |       | 14   |            |  |  | 2,625 |   |  |  | 127  |   |  |  | 2,802 |  |  |  | 2,750 | 
|            | Average Rate        |  |                | 7.96 | %    |  |      | 7.96 | %    |  |                                                    | 7.96  | %          |  |       | 7.96 | %          |  |  | 7.67  | % |  |  | 7.96 | % |  |  |      |  |  |  |      | 
|            | Floating Rate (Ps.) |  |                | 779  |      |  |      | 537  |      |  |                                                    | 2,611 |            |  |       | 1    |            |  |  | 111   |   |  |  | 2    |   |  |  | 4,041 |  |  |  | 4,041 | 
|            | Average Rate        |  |                | 6.74 | %    |  |      | 3.57 | %    |  |                                                    | 3.56  | %          |  |       | 7.00 | %          |  |  | 2.38  | % |  |  | 7.00 | % |  |  |      |  |  |  |      | 

In the case of our cash and short-term investments, declines in interest rates
decrease the interest return on floating rate cash deposits and short-term
investments. A hypothetical 100 basis point (1.0%) decrease in interest rates
would not have a significant effect on our results of operations. We use
derivative financial instruments such as interest rate swaps for purposes of
hedging a portion of our long-term debt, in order to reduce the risk from
interest rate fluctuations.

FOREIGN EXCHANGE RATE RISKS

Our net sales are denominated in U.S. dollars, Mexican pesos and other
currencies. During 2002, 48% of our revenues were generated in U.S. dollars.
In addition, as of December 31, 2002, 50% of our total assets were denominated
in currencies other than Mexican pesos, particularly U.S. dollars. A
significant portion of our operations is financed through U.S.
dollar-denominated debt.

We believe that we have natural foreign exchange hedges incorporated in
our balance sheet, in significant part because we have subsidiaries outside
Mexico, and the peso-denominated value of our equity in these subsidiaries is
also exposed to fluctuations in exchange rates. Changes in the peso value of
equity in our subsidiaries caused by movements in foreign exchange rate are
recognized as a component of equity. See Note 12 to our financial statements.

81



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Fluctuations in exchange rates relative to the Mexican peso expose us to
foreign-currency exchange rate risk. In the near term, the foreign-currency
exchange rate exposure associated with our debt repayment obligations is
primarily limited to our short-term debt. We have not established any hedge to
our foreign-currency exchange rate exposure.

Our primary foreign exchange rate risk relates to our substantial U.S.
dollar-denominated debt for our non-U.S. subsidiaries. As of December 31,
2002, 98% of our debt obligations was denominated in U.S. dollars. The
following table sets forth information concerning our U.S. dollar-denominated
debt as of December 31, 2002. The table does not address our U.S. dollar sales
and our U.S. dollar-denominated assets.

|                             |  |                                                    |     |      |  |      |     |      |  |      |       |            |  |       |    |            |  |  |       |  |  |  |     |  |  |  |       |  |  |  |       | 
|---------------------------- |  | -------------------------------------------------- | --- | ---- |  | ---- | --- | ---- |  | ---- | ----- | ---------- |  | ----- | -- | ---------- |  |  | ----- |  |  |  | --- |  |  |  | ----- |  |  |  | ----- | 
|                             |  | Expected Maturity or Transaction Date             
|                             |  |                                                   
|                             |  | 2003                                               |     | 2004 |  | 2005 |     | 2006 |  | 2007 |       | Thereafter |  | Total |    | Fair Value
|                             |  |                                                    |     |      |  |      |     |      |  |      |       |            |  |       |    |           
|                             |  | (in millions of pesos of constant purchasing power
|U.S. dollar-denominated debt |  | as of December 31, 2002)                          
|                            
|Yankee bond                  |  |                                                    |    |      |  |      |    |      |  |      |      |            |  |       |   |            |  |  | 2,610 |  |  |  |    |  |  |  | 2,610 |  |  |  | 2,558 | 
|Syndicated loan              |  |                                                    |    |      |  |      | 522 |      |  |      | 2,610 |            |  |       |   |            |  |  |      |  |  |  |    |  |  |  | 3,132 |  |  |  | 3,132 | 
|Private Placement            |  |                                                    | 11  |      |  |      | 12  |      |  |      | 13    |            |  |       | 14 |            |  |  | 15    |  |  |  | 127 |  |  |  | 192   |  |  |  | 192   | 
|Bank loans                   |  |                                                    | 658 |      |  |      | 15  |      |  |      | 1     |            |  |       | 1  |            |  |  | 111   |  |  |  | 2   |  |  |  | 788   |  |  |  | 788   | 

We also have bolívar-denominated debt. The following table sets forth
information concerning our bolívar-denominated debt as of December 31, 2002.
The table does not address our bolívar sales and our bolívar-denominated
assets.

|                               |  |                                                    |     |      |  |      |   |      |  |      |   |            |  |       |   |            |  |  |   |  |  |  |   |  |  |  |     |  |  |  |     | 
|------------------------------ |  | -------------------------------------------------- | --- | ---- |  | ---- | - | ---- |  | ---- | - | ---------- |  | ----- | - | ---------- |  |  | - |  |  |  | - |  |  |  | --- |  |  |  | --- | 
|                               |  | Expected Maturity or Transaction Date             
|                               |  |                                                   
|                               |  | 2003                                               |     | 2004 |  | 2005 |   | 2006 |  | 2007 |   | Thereafter |  | Total |   | Fair Value
|                               |  |                                                    |     |      |  |      |   |      |  |      |   |            |  |       |   |           
|                               |  | (in millions of pesos of constant purchasing power
|Bolívar-denominated debt       |  | as of December 31, 2002)                          
|                              
|Bolívar-denominated bank loans |  |                                                    | 121 |      |  |      |  |      |  |      |  |            |  |       |  |            |  |  |  |  |  |  |  |  |  |  | 121 |  |  |  | 121

COMMODITY PRICE RISKS

The availability and price of corn and other agricultural commodities are
subject to wide fluctuations due to factors outside our control, such as
weather, plantings, government (domestic and foreign) farm programs and
policies, changes in global demand created by population growth and global
production of similar and competitive crops. We hedge a portion of our
production requirements through commodity futures contracts in order to reduce
the risk created by price fluctuations and supply of corn, wheat, gas and soy
oils which exist as part of ongoing business operations. The open positions
for hedges of purchases do not exceed the maximum production requirements for a
one-year period.

Derivative financial instruments held for hedging purposes are recognized
using the same valuation criteria as those used for the assets and liabilities
being hedged. The cost of the financial instrument is recognized in income
using the straight-line method during the contract term. Derivative financial
instruments held for purposes other than hedging are recognized at their fair
value. The difference between the initial and year-end fair value of
derivative assets and liabilities is recognized in income, except for those
financial instruments related to our own shares, which are registered as a
component of equity.

During 2002, we entered into short-term hedge transactions through
commodities futures contracts for a portion of our corn requirements. These
short-term hedge transactions were completed prior to December 31, 2002. At
June 17, 2003, we had no open positions for corn; however, we purchased natural
gas put options for the period from May 2003 to September 2003 through 90
contracts worth in the aggregate approximately U.S.$53,100.
Because options are not open positions, we do not expect any negative
impact from our natural gas put options on our results.

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EQUITY PRICE RISKS

We classify our equity investments, consisting primarily of shares of
Grupo Financiero Banorte, S.A. de C.V., a Mexican financial services holding
company, as long-term assets. Since these investments are accounted for using
the equity method, we do not believe our exposure to a hypothetical 10%
decrease in these equity investments would have any material effect on our
results. For additional information concerning our investment in Grupo
Financiero Banorte, see Item 4. Information on the CompanyDescription of
BusinessMiscellaneousBanorte Investment.

In August 2002, we entered into a one-year term equity swap agreement with
an international financial institution with respect to 2,300,000 of our Series
B shares for a total amount of approximately U.S.$2.6 million, at an average
unit price of U.S.$1.126071.

In December 2002, February 2003 and May 2003, we entered into one year
zero strike price call options with an international financial institution with
respect to 14,055,000 of our Series B shares for a total amount of
approximately U.S.$13.5 million.

In January 2003, we entered into a one-year term equity swap agreement
with an international financial institution with respect to 10,200,000 of our
Series B shares for a total amount of approximately U.S.$9.3 million, at an
average unit price of U.S.$0.91280.

COUNTERPARTY RISKS

We maintain centralized treasury operations in Mexico for our Mexican
operations and in the United States for our U.S. operations. Liquid assets are
invested primarily in government bonds and short-term debt instruments with a
minimum A1/P1 rating for our U.S. operations and A for our Mexican
operations. We face credit risk from the potential non-performance by the
counterparties in respect of the financial instruments that we utilize.
Substantially all of these financial instruments are unsecured. We do not
anticipate non-performance by the counterparties, which are principally
licensed commercial banks and investment banks with long-term credit ratings.
For our Central American operations and Venezuelan Operations, we only invest
cash reserves with well-known local banks and local branches of international
banks.

The above discussion of the effects on us of changes in interest rates,
foreign exchange rates, commodity prices and equity prices is not necessarily
indicative of our actual results in the future. Future gains and losses will
be affected by actual changes in interest rates, foreign exchange rates,
commodity prices, equity prices and other market exposures, as well as changes
in the actual derivative instruments employed during any period.




ITEM 12.     Description Of Securities Other Than Equity Securities.

Not applicable.




PART II




ITEM 13.    Defaults, Dividend Arrearages And Delinquencies.

None.




ITEM 14.    Material Modifications To The Rights Of Security Holders And Use Of Proceeds.

None.

83



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ITEM 15.     Controls and Procedures.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

The conclusions of our Chief Executive Officer and Chief Corporate Officer
about the effectiveness of our disclosure controls and procedures based on
their evaluation of these controls and procedures as of a date within 90 days
of the filing date of this annual report on Form 20-F are as follows:

Our disclosure controls and procedures are designed to ensure that
information required to be disclosed by us is recorded, processed, summarized
and reported within required timeframes. Our disclosure controls and procedures
include controls and procedures designed to ensure that information required to
be disclosed is accumulated and communicated to our management, including our
Chief Executive Officer and Chief Corporate Officer, as appropriate to allow
timely decisions regarding required disclosure. Based on their assessments of
our disclosure controls and procedures, our Chief Executive Officer and Chief
Corporate Officer have concluded that the disclosure controls and procedures
have functioned effectively and that the consolidated financial statements
fairly present our consolidated financial position and the results of our
operations for the periods presented.

CHANGES IN INTERNAL CONTROLS

There were no significant changes in our internal controls or in other
factors that could significantly affect these controls subsequent to the date
of managements most recent evaluation, including any corrective actions with
regard to any significant deficiencies and material weaknesses.




ITEM 16.     [Reserved].




PART III




ITEM 17.    Financial Statements.

Not applicable.




ITEM 18.    Financial Statements.

See pages F-1 through F-49, incorporated herein by reference.




ITEM 19.    Exhibits.



|Exhibit No. |  |                                                                                                                                                                                                                                                                                    
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1           |  | Our bylaws (estatutos sociales) as amended through April 30,
2002, together with an English translation.*                                                                                                                                                                          
|            |  |                                                                                                                                                                                                                                                                                    
|2(a)(1)     |  | Deposit Agreement, dated as of September 18, 1998, by and
among us, Citibank, N.A. as Depositary and the Holders and
Beneficial Owners of American Depositary Shares Evidenced by
American Depositary Receipts Issued Thereunder (including form
of American Depositary Receipt).**
|            |  |                                                                                                                                                                                                                                                                                    
|2(b)(1)     |  | Indenture, dated as of October 9, 1997, between us and The
Chase Manhattan Bank, as Indenture Trustee representing up to
U.S.$250,000,000 of our 7.625% Notes due 2007.***                                                                                                         
|            |  |                                                                                                                                                                                                                                                                                    
|2(b)(2)     |  | Registration Rights Agreement by and among us, Lehman Brothers
Inc., Bear Stearns International Limited, and AFIN Securities
International Ltd., dated October 9, 1997.***                                                                                                         

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|            |  |                                                                                                                                                                                                                                 
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  |                                                                                                                                                                                                                                 
|2(b)(3)     |  | U.S.$300 million Loan Agreement among us, the Lenders party
thereto, Bank of America, N.A., as Administrative Agent, and
Banc of America Securities, LLC, as Lead Arranger and Sole
Book Manager, dated as of December 18, 2002.
|            |  |                                                                                                                                                                                                                                 
|4(a)(1)     |  | Shareholders Agreement by and among us, Roberto González
Barrera, Archer Daniels-Midland Company and ADM Bioproducts,
S.A. de C.V., dated August 21, 1996. ***                                                                  
|            |  |                                                                                                                                                                                                                                 
|4(a)(2)     |  | Amendment No. 1 to Shareholders Agreement by and among us,
Roberto González Barrera, Archer Daniels-Midland Company and
ADM Bioproducts, S.A. de C.V., dated September 13, 1996.*                                               
|            |  |                                                                                                                                                                                                                                 
|4(a)(3)     |  | Amendment No. 2 to Shareholders Agreement by and among us,
Roberto González Barrera, Archer Daniels-Midland Company and
ADM Bioproducts, S.A. de C.V., dated August 18, 1999.*                                                  
|            |  |                                                                                                                                                                                                                                 
|4(a)(4)     |  | Asset Contribution Agreement among Gruma Corporation, Gruma
Holding, Inc., ADM Milling Co., Valley Holding, Inc.,
GRUMA-ADM, and Azteca Milling, L.P., dated as of August 21,
1996.***                                          
|            |  |                                                                                                                                                                                                                                 
|4(a)(5)     |  | Investment Agreement by and between us and
Archer-Daniels-Midland Company, dated as of August 21, 1996. ***                                                                                                                     
|            |  |                                                                                                                                                                                                                                 
|7           |  | Statement of Computation of Ratio of Earnings to Fixed Charges
(Mexican GAAP and U.S. GAAP).                                                                                                                                    
|            |  |                                                                                                                                                                                                                                 
|8           |  | List of Principal Subsidiaries.                                                                                                                                                                                                 
|            |  |                                                                                                                                                                                                                                 
|12(a)(1)    |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C.
Section 1350, as enacted by Section 906 of the Sarbanes-Oxley
Act of 2002, dated June 30, 2003.                                                                  
|            |  |                                                                                                                                                                                                                                 
|12(a)(2)    |  | Certification of Chief Corporate Officer Pursuant to 18 U.S.C.
Section 1350, as enacted by Section 906 of the Sarbanes-Oxley
Act of 2002, dated June 30, 2003.                                                                  



|*   |  | Previously filed in Annual Report on Form 20-F (File No. 1-14852),
originally filed with the SEC on July 1, 2002. Incorporated herein by
reference.             
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|**  |  | Previously filed in Registration Statement on Form F-6 (File No.
333-9282), originally filed with the SEC on August 13, 1998. Incorporated
herein by reference. 
|*** |  | Previously filed in Registration Statement on Form F-4 (File No.
333-8266), originally filed with the SEC on January 28, 1998.
Incorporated herein by reference.

85



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SIGNATURE

The registrant, Gruma, S.A. de C.V., hereby certifies that it meets all of
the requirements for filing on Form 20-F and that it has duly caused and
authorized the undersigned to sign this annual report on its behalf.



| | GRUMA, S.A. de C.V.
| | -------------------



| | /s/ Juan Antonio Quiroga García
Name:    Juan Antonio Quiroga Garcia
Title:      Chief Corporate Officer
| | --------------------------------------------------------------------------------------------------------

Dated: June 30, 2003

86



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CERTIFICATION

I, Roberto González Barrera, certify that:

1.     I have reviewed this annual report on Form 20-F of Gruma, S.A. de
C.V.;

2.     Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by
this annual report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.     The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:



| |  | a. | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
| |  | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | b. | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the Evaluation Date); and                                                                                                  
|
| |  | c. | presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        

5.     The registrants other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):



| |  | a. | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in
internal controls; and
| |  | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | b. | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        

6.     The registrants other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.



| | /s/ Roberto González Barrera

Name:    Roberto González Barrera
Title:      Chief Executive Officer
| | ---------------------------------------------------------------------------------------------------

Date: June 30, 2003

87



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##### Table of Contents



CERTIFICATION

I, Juan Antonio Quiroga Garcia, certify that:

1.     I have reviewed this annual report on Form 20-F of Gruma, S.A. de
C.V.;

2.     Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by
this annual report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.     The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:



| |  | a. | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
| |  | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | b. | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the Evaluation Date); and                                                                                                  
|
| |  | c. | presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        

5.     The registrants other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):



| |  | a. | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in
internal controls; and
| |  | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | b. | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        

6.     The registrants other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.



| | /s/ Juan Antonio Quiroga Garcia
Name:    Juan Antonio Quiroga Garcia
Title:      Chief Corporate Officer
| | --------------------------------------------------------------------------------------------------------

Date: June 30, 2003

88



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GRUMA, S.A. DE C.V. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

|                                                                                                                |  |      |     | 
|--------------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                                                |  | Page
|                                                                                                                |  |     
|Report of independent accountants                                                                               |  |      | F-2 | 
|Consolidated balance sheets as of December 31, 2001 and 2002                                                    |  |      | F-3 | 
|Consolidated statements of income for the years ended December 31,
2000, 2001 and 2002                          |  |      | F-4 | 
|Consolidated statements of changes in stockholders equity for the years
ended December 31, 2000, 2001 and 2002 |  |      | F-5 | 
|Consolidated statements of changes in financial position for the years
ended December 31, 2000, 2001 and 2002   |  |      | F-7 | 
|Notes to consolidated financial statements                                                                      |  |      | F-8 | 

F-1



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##### Table of Contents



REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders of Gruma, S.A. de C.V.:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, changes in stockholders equity and changes
in financial position present fairly, in all material respects, the financial
position of Gruma, S.A. de C.V. and subsidiaries at December 31, 2001 and 2002,
and the results of their operations and changes in their financial position for
each of the three years in the period ended December 31, 2002, in conformity
with generally accepted accounting principles in Mexico. These consolidated
financial statements are the responsibility of management of Gruma, S.A. de
C.V.; our responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits in accordance with generally
accepted auditing standards in the United States of America and in Mexico,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.

Generally accepted accounting principles in Mexico vary in certain respects
from accounting principles generally accepted in the United States of America.
The application of accounting principles generally accepted in the United
States of America would have affected the determination of the consolidated net
income and comprehensive income for each of the three years in the period ended
December 31, 2002, and the determination of the total consolidated
stockholders equity as of December 31, 2001 and 2002, to the extent summarized
in Note 20 to the consolidated financial statements.

PricewaterhouseCoopers

/s/ Carlos Arreola Enríquez

Carlos Arreola Enríquez

Monterrey, N.L., Mexico
March 20, 2003

F-2



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2001 AND 2002(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002)
(Notes 1 and 2)

|                                                             |        |                                                                                                                            |                         |                             |             |           |            |      |             |           |            | 
|------------------------------------------------------------ | ------ | -------------------------------------------------------------------------------------------------------------------------- | ----------------------- | --------------------------- | ----------- | --------- | ---------- | ---- | ----------- | --------- | ---------- | 
|                                                             |        |                                                                                                                            |                         |                             |             | 2001      |            | 2002
|                                                             |        |                                                                                                                            |                         |                             |             |           |            |     
|                                                             | ASSETS |                                                                                                                            |                         |                             |             |           |            |      |            
|Current:                                                     |        |                                                                                                                            |                         |                             |             |           |            |     
|                                                             |        | Cash                                                                                                                       |                         | Ps.                         | 253,896     |           |            | Ps.  | 188,310     |          
|                                                             |        | Temporary investments (Note 2-F)                                                                                           |                         |                             | 155,953     |           |            |      | 263,021     |          
|                                                             |        | Restricted cash (Note 11)                                                                                                  |                         |                             | 2,745       |           |            |      | 1,378       |          
|                                                             |        | Notes and accounts receivable, net (Note 3)                                                                                |                         |                             | 2,528,300   |           |            |      | 2,758,948   |          
|                                                             |        | Refundable taxes (Note 3)                                                                                                  |                         |                             | 228,969     |           |            |      | 279,192     |          
|                                                             |        | Inventories (Note 4)                                                                                                       |                         |                             | 2,496,640   |           |            |      | 2,543,391   |          
|                                                             |        | Prepaid expenses                                                                                                           |                         |                             | 143,000     |           |            |      | 113,414     |          
|                                                             |        |                                                                                                                            |                         |                             |             |           |            |      |             |          
|                                                             |        |                                                                                                                            |                         | Total current assets        |             |           | 5,809,503  |      |             |           | 6,147,654  | 
|                                                             |        | Investment in common stock of associated companies (Note 5)                                                                |                         |                             | 1,228,823   |           |            |      | 1,359,197   |          
|                                                             |        | Property, plant and equipment, net (Note 6)                                                                                |                         |                             | 12,606,574  |           |            |      | 12,582,178  |          
|                                                             |        | Intangibles assets, net (Note 7)                                                                                           |                         |                             | 954,830     |           |            |      | 864,137     |          
|                                                             |        | Excess of cost over book value of subsidiaries acquired, net                                                               |                         |                             | 956,680     |           |            |      | 923,092     |          
|                                                             |        | Other assets (Note 8)                                                                                                      |                         |                             | 326,693     |           |            |      | 267,029     |          
|                                                             |        |                                                                                                                            |                         |                             |             |           |            |      |             |          
|                                                             |        |                                                                                                                            |                         | Total assets                |             | Ps.       | 21,883,103 |      |             | Ps.       | 22,143,287 | 
|                                                             |        |                                                                                                                            |                         |                             |             |           |            |      |             |          
|LIABILITIES                                                  |        |                                                                                                                            |                         |                             |             |           |            |     
|Current:                                                     |        |                                                                                                                            |                         |                             |             |           |            |     
|                                                             |        | Bank loans (Note 9)                                                                                                        |                         | Ps.                         | 343,884     |           |            | Ps.  | 778,365     |          
|                                                             |        | Current portion of long-term debt (Note 9)                                                                                 |                         |                             | 11,769      |           |            |      | 12,183      |          
|                                                             |        | Trade accounts payable                                                                                                     |                         |                             | 863,468     |           |            |      | 1,129,163   |          
|                                                             |        | Accrued liabilities and other accounts payable                                                                             |                         |                             | 1,397,745   |           |            |      | 1,411,856   |          
|                                                             |        | Income taxes payable                                                                                                       |                         |                             | 33,620      |           |            |      | 4,319       |          
|                                                             |        | Employees statutory profit sharing payable                                                                                |                         |                             | 15,606      |           |            |      | 13,090      |          
|                                                             |        |                                                                                                                            |                         |                             |             |           |            |      |             |          
|                                                             |        |                                                                                                                            |                         | Total current liabilities   |             |           | 2,666,092  |      |             |           | 3,348,976  | 
|                                                             |        |                                                                                                                            |                         |                             |             |           |            |      |             |          
|Long-term debt (Note 9)                                      |        |                                                                                                                            | 6,628,044               |                             |             |           | 6,052,935  |     
|Deferred income taxes (Note 14)                              |        |                                                                                                                            | 326,675                 |                             |             |           | 624,841    |     
|Deferred employees statutory profit sharing (Note 14)       |        |                                                                                                                            | 51,619                  |                             |             |           | 47,930     |     
|Other liabilities                                            |        |                                                                                                                            | 49,560                  |                             |             |           | 35,581     |     
|                                                             |        |                                                                                                                            |                         |                             |             |           |            |      |             |          
|                                                             |        |                                                                                                                            |                         | Total long-term liabilities |             |           | 7,055,898  |      |             |           | 6,761,287  | 
|                                                             |        |                                                                                                                            |                         |                             |             |           |            |      |             |          
|                                                             |        |                                                                                                                            |                         | Total liabilities           |             |           | 9,721,990  |      |             |           | 10,110,263 | 
|                                                             |        |                                                                                                                            |                         |                             |             |           |            |      |             |          
|Excess of book value over cost of subsidiaries acquired, net |        |                                                                                                                            | 107,165                 |                             |             |           |           |     
|                                                             |        |                                                                                                                            |                         |                             |             |           |            |      |             |          
|Contingencies and commitments (Note 11)                      |        |                                                                                                                            |                         |                             |             |           |            |     
|STOCKHOLDERS EQUITY                                         |        |                                                                                                                            |                         |                             |             |           |            |     
|Majority interest (Note 12):                                 |        |                                                                                                                            |                         |                             |             |           |            |     
|                                                             |        | Common stock                                                                                                               |                         |                             | 4,237,321   |           |            |      | 4,209,347   |          
|                                                             |        | Restatement of common stock                                                                                                |                         |                             | 6,086,845   |           |            |      | 6,088,566   |          
|                                                             |        |                                                                                                                            |                         |                             |             |           |            |      |             |          
|                                                             |        |                                                                                                                            | 10,324,166              |                             |             |           | 10,297,913 |     
|                                                             |        | Additional paid-in capital                                                                                                 |                         |                             | 3,157,526   |           |            |      | 3,138,695   |          
|                                                             |        |                                                                                                                            |                         |                             |             |           |            |      |             |          
|                                                             |        |                                                                                                                            | 13,481,692              |                             |             |           | 13,436,608 |     
|                                                             |        | Deficit from restatement                                                                                                   |                         |                             | (10,954,926 | )         |            |      | (11,077,100 | )        
|                                                             |        | Cumulative effect of a change in an accounting principle for
deferred income taxes and employees statutory profit sharing |                         |                             | (185,474    | )         |            |      | (185,474    | )        
|                                                             |        | Retained earnings (Note 12-C):                                                                                             |                         |                             |             |           |            |      |             |          
|                                                             |        |                                                                                                                            | Prior years             |                             |             | 7,235,163 |            |      |             | 7,492,019 |           
|                                                             |        |                                                                                                                            | Net income for the year |                             |             | 331,989   |            |      |             | 393,192   |           
|                                                             |        | Foreign currency translation adjustments (Note 12-E)                                                                       |                         |                             | (368,078    | )         |            |      | (610,800    | )        
|                                                             |        |                                                                                                                            |                         |                             |             |           |            |      |             |          
|                                                             |        |                                                                                                                            |                         | Total majority interest     |             |           | 9,540,366  |      |             |           | 9,448,445  | 
|Minority interest                                            |        |                                                                                                                            | 2,513,582               |                             |             |           | 2,584,579  |     
|                                                             |        |                                                                                                                            |                         |                             |             |           |            |      |             |          
|                                                             |        |                                                                                                                            |                         | Total stockholders equity  |             |           | 12,053,948 |      |             |           | 12,033,024 | 
|                                                             |        |                                                                                                                            |                         |                             |             |           |            |      |             |          
|                                                             |        | Ps.                                                                                                                        | 21,883,103              |                             |             | Ps.       | 22,143,287 |     
|                                                             |        |                                                                                                                            |                         |                             |             |           |            |      |             |          

The accompanying notes are an integral part of these consolidated financial statements.

F-3



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2000, 2001 AND 2002(Expressed in thousands of Mexican pesos of constant purchasing power as of
December 31, 2002, except share and per share amounts)
(Notes 1 and 2)

|                                                |                                               |                                                                                                                                   |                                  |          |           |         |             |          |           |         |             |          |           |         | 
|----------------------------------------------- | --------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------- | -------------------------------- | -------- | --------- | ------- | ----------- | -------- | --------- | ------- | ----------- | -------- | --------- | ------- | 
|                                                |                                               |                                                                                                                                   |                                  |          | 2000      |         | 2001        |          | 2002     
|                                                |                                               |                                                                                                                                   |                                  |          |           |         |             |          |          
|Net sales                                       |                                               | Ps.                                                                                                                               | 19,250,949                       |          |           | Ps.     | 18,916,122  |          |           | Ps.     | 19,174,407  |         
|Cost of sales                                   |                                               |                                                                                                                                   | (12,273,048                      | )        |           |         | (11,928,760 | )        |           |         | (11,992,006 | )       
|                                                |                                               |                                                                                                                                   |                                  |          |           |         |             |          |           |         |             |         
|                                                |                                               | Gross profit                                                                                                                      |                                  |          | 6,977,901 |         |             |          | 6,987,362 |         |             |          | 7,182,401 |        
|Selling, general and administrative expenses    |                                               |                                                                                                                                   | (6,117,562                       | )        |           |         | (6,011,588  | )        |           |         | (5,690,119  | )       
|                                                |                                               |                                                                                                                                   |                                  |          |           |         |             |          |           |         |             |         
|                                                |                                               | Operating income                                                                                                                  |                                  |          | 860,339   |         |             |          | 975,774   |         |             |          | 1,492,282 |        
|                                                |                                               |                                                                                                                                   |                                  |          |           |         |             |          |           |         |             |         
|Comprehensive financing cost, net:              |                                               |                                                                                                                                   |                                  |          |           |         |             |          |           |         |             |         
|                                                | Interest expense                              |                                                                                                                                   |                                  | (835,191 | )         |         |             | (670,183 | )         |         |             | (566,649 | )        
|                                                | Interest income                               |                                                                                                                                   |                                  | 155,393  |           |         |             | 93,029   |           |         |             | 57,678   |          
|                                                | Monetary position gain, net                   |                                                                                                                                   |                                  | 234,382  |           |         |             | 179,849  |           |         |             | 160,937  |          
|                                                | Foreign exchange (loss) gain, net (Note 15-A) |                                                                                                                                   |                                  | (60,995  | )         |         |             | 99,964   |           |         |             | (263,095 | )        
|                                                |                                               |                                                                                                                                   |                                  |          |           |         |             |          |           |         |             |         
|                                                |                                               |                                                                                                                                   | (506,411                         | )        |           |         | (297,341    | )        |           |         | (611,129    | )       
|                                                |                                               |                                                                                                                                   |                                  |          |           |         |             |          |           |         |             |         
|Other income, net (Note 13)                     |                                               |                                                                                                                                   | 32,461                           |          |           |         | 69,407      |          |           |         | 120,520     |         
|                                                |                                               |                                                                                                                                   |                                  |          |           |         |             |          |           |         |             |         
|                                                |                                               | Income before income taxes,
employees statutory profit
sharing, equity in earnings of
associated companies and minority
interest |                                  |          | 386,389   |         |             |          | 747,840   |         |             |          | 1,001,673 |        
|                                                |                                               |                                                                                                                                   |                                  |          |           |         |             |          |           |         |             |         
|Income taxes (Note 14):                         |                                               |                                                                                                                                   |                                  |          |           |         |             |          |           |         |             |         
|                                                | Current                                       |                                                                                                                                   |                                  | (156,956 | )         |         |             | (184,049 | )         |         |             | (288,330 | )        
|                                                | Deferred                                      |                                                                                                                                   |                                  | 134,191  |           |         |             | (91,716  | )         |         |             | (272,902 | )        
|                                                |                                               |                                                                                                                                   |                                  |          |           |         |             |          |           |         |             |         
|                                                |                                               |                                                                                                                                   | (22,765                          | )        |           |         | (275,765    | )        |           |         | (561,232    | )       
|                                                |                                               |                                                                                                                                   |                                  |          |           |         |             |          |           |         |             |         
|Employees statutory profit sharing (Note 14):  |                                               |                                                                                                                                   |                                  |          |           |         |             |          |           |         |             |         
|                                                | Current                                       |                                                                                                                                   |                                  | (5,704   | )         |         |             | (14,343  | )         |         |             | (13,101  | )        
|                                                | Deferred                                      |                                                                                                                                   |                                  | 6,175    |           |         |             | 1,353    |           |         |             | 163      |          
|                                                |                                               |                                                                                                                                   |                                  |          |           |         |             |          |           |         |             |         
|                                                |                                               |                                                                                                                                   | 471                              |          |           |         | (12,990     | )        |           |         | (12,938     | )       
|                                                |                                               |                                                                                                                                   |                                  |          |           |         |             |          |           |         |             |         
|                                                |                                               | Income before equity in earnings
of associated companies and
minority
interest                                                    |                                  |          | 364,095   |         |             |          | 459,085   |         |             |          | 427,503   |        
|Equity in earnings of associated companies,
net |                                               |                                                                                                                                   | 72,876                           |          |           |         | 64,021      |          |           |         | 162,017     |         
|                                                |                                               |                                                                                                                                   |                                  |          |           |         |             |          |           |         |             |         
|                                                |                                               |                                                                                                                                   | Income before minority
interest  |          |           | 436,971 |             |          |           | 523,106 |             |          |           | 589,520 | 
|Minority
interest                               |                                               |                                                                                                                                   | (190,641                         | )        |           |         | (191,117    | )        |           |         | (196,328    | )       
|                                                |                                               |                                                                                                                                   |                                  |          |           |         |             |          |           |         |             |         
|                                                |                                               |                                                                                                                                   | Majority net income for the
year |          | Ps.       | 246,330 |             |          | Ps.       | 331,989 |             |          | Ps.       | 393,192 | 
|                                                |                                               |                                                                                                                                   |                                  |          |           |         |             |          |           |         |             |         
|Earnings per share
(pesos)                      |                                               | Ps.                                                                                                                               | 0.57                             |          |           | Ps.     | 0.77        |          |           | Ps.     | 0.88        |         
|                                                |                                               |                                                                                                                                   |                                  |          |           |         |             |          |           |         |             |         
|Weighted average shares outstanding
(thousands) |                                               |                                                                                                                                   | 435,515                          |          |           |         | 433,235     |          |           |         | 446,202     |         
|                                                |                                               |                                                                                                                                   |                                  |          |           |         |             |          |           |         |             |         

The accompanying notes are an integral part of these consolidated financial statements.

F-4



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2000, 2001 AND 2002(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002, except number of shares)
(Notes 1 and 2)



|                                                  |                                                                                                                            |  |                          |  |        |     |            |   |             |     |                    |   |                    |     |             |          |           |     |          |          |  
|------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ |  | ------ | --- | ---------- | - | ----------- | --- | ------------------ | - | ------------------ | --- | ----------- | -------- | --------- | --- | -------- | -------- | -
|                                                  |                                                                                                                            |  | Common stock (Note 12-A) |  |        |     |            |   |             |     |                    |   |                   
|                                                  |                                                                                                                            |  |                          |  |        |     |            |   |             |     |                    |   | Cumulative effect 
|                                                  |                                                                                                                            |  |                          |  |        |     |            |   |             |     |                    |   | of deferred income
|                                                  |                                                                                                                            |  | Number of                |  |        |     |            |   |             |     |                    |   |                    |     |             |          | taxes and
|                                                  |                                                                                                                            |  | shares                   |  |        |     |            |   | Additional  |     |                    |   |                    |     | employees 
|                                                  |                                                                                                                            |  | outstanding              |  |        |     |            |   | paid-in     |     | Deficit from       |   | statutory profit  
|                                                  |                                                                                                                            |  | (thousands)              |  | Amount |     | capital    |   | restatement |     | sharing (Note 3-O)
|                                                  |                                                                                                                            |  |                          |  |        |     |            |   |             |     |                   
|Balances at December 31, 1999                     |                                                                                                                            |  | 436,462                  |  |        | Ps. | 10,314,308 |   |             | Ps. | 3,216,016          |   |                    | Ps. | (10,249,553 | )        |           | Ps. |         |         
|                                                  |                                                                                                                            |  |                          |  |        |     |            |   |             |     |                    |   |                    |     |             |          |           |     |          |         
|Appropriation of prior year net income            |                                                                                                                            |  |                          |  |        |     |            |   |             |     |                    |   |                    |     |             |          |           |     |          |         
|Stock and minority interest dividends
(Note 12-A) |                                                                                                                            |  |                          |  |        |     |            |   |             |     |                    |   |                    |     |             |          |           |     |          |         
|Net purchases of companys common stock           |                                                                                                                            |  | 2,314                    |  |        |     | 46,637     |   |             |     | (99,393            | ) |                    |     |             |          |           |     |          |         
|Issuance of subsidiaries stock                   |                                                                                                                            |  |                          |  |        |     |            |   |             |     |                    |   |                    |     |             |          |           |     |          |         
|Executive stock purchase plan                     |                                                                                                                            |  |                          |  |        |     | (1,292     | ) |             |     | (2,302             | ) |                    |     |             |          |           |     |          |         
|Decrease of minority interest                     |                                                                                                                            |  |                          |  |        |     |            |   |             |     |                    |   |                    |     |             |          |           |     |          |         
|Operations in Companys own stock                 |                                                                                                                            |  |                          |  |        |     |            |   |             |     |                    |   |                    |     |             |          |           |     |          |         
|                                                  |                                                                                                                            |  |                          |  |        |     |            |   |             |     |                    |   |                    |     |             |          |           |     |          |         
|                                                  |                                                                                                                            |  | 2,314                    |  |        |     | 45,345     |   |             |     | (101,695           | ) |                    |     |            |          |           |     |         |         
|                                                  |                                                                                                                            |  |                          |  |        |     |            |   |             |     |                    |   |                    |     |             |          |           |     |          |         
|Comprehensive income (loss):                      |                                                                                                                            |  |                          |  |        |     |            |   |             |     |                    |   |                    |     |             |          |           |     |          |         
|                                                  | Cumulative effect of a change in an
accounting principle for deferred
income taxes and employees
statutory profit sharing |  |                          |  |        |     |            |   |             |     |                    |   |                    |     |             |          |           |     |          | (185,474 | )
|                                                  | Recognition of inflation effects
for the year                                                                              |  |                          |  |        |     |            |   |             |     |                    |   |                    |     |             | (729,673 | )         |     |          |          |  
|                                                  | Foreign currency translation
adjustments                                                                                   |  |                          |  |        |     |            |   |             |     |                    |   |                    |     |             |          |           |     |          |          |  
|                                                  | Net income for the year                                                                                                    |  |                          |  |        |     |            |   |             |     |                    |   |                    |     |             |          |           |     |          |          |  
|                                                  |                                                                                                                            |  |                          |  |        |     |            |   |             |     |                    |   |                    |     |             |          |           |     |          |         
|Comprehensive income for the year                 |                                                                                                                            |  |                         |  |        |     |           |   |             |     |                   |   |                    |     | (729,673    | )        |           |     | (185,474 | )       
|                                                  |                                                                                                                            |  |                          |  |        |     |            |   |             |     |                    |   |                    |     |             |          |           |     |          |         
|Balances at December 31, 2000                     |                                                                                                                            |  | 438,776                  |  |        |     | 10,359,653 |   |             |     | 3,114,321          |   |                    |     | (10,979,226 | )        |           |     | (185,474 | )       
|                                                  |                                                                                                                            |  |                          |  |        |     |            |   |             |     |                    |   |                    |     |             |          |           |     |          |         
|Appropriation of prior year net income            |                                                                                                                            |  |                          |  |        |     |            |   |             |     |                    |   |                    |     |             |          |           |     |          |         
|Minority interest dividends (Note 12-A)           |                                                                                                                            |  |                          |  |        |     |            |   |             |     |                    |   |                    |     |             |          |           |     |          |         
|Net purchases and sales of companys
common stock |                                                                                                                            |  | 2,949                    |  |        |     | 37,690     |   |             |     | 14,589             |   |                    |     |             |          |           |     |          |         
|Executive stock purchase plan                     |                                                                                                                            |  |                          |  |        |     | (73,177    | ) |             |     | 41,348             |   |                    |     |             |          |           |     |          |         
|Operations in Companys own stock                 |                                                                                                                            |  |                          |  |        |     |            |   |             |     | (12,732            | ) |                    |     |             |          |           |     |          |         
|                                                  |                                                                                                                            |  |                          |  |        |     |            |   |             |     |                    |   |                    |     |             |          |           |     |          |         
|                                                  |                                                                                                                            |  | 2,949                    |  |        |     | (35,487    | ) |             |     | 43,205             |   |                    |     |            |          |           |     |         |         
|                                                  |                                                                                                                            |  |                          |  |        |     |            |   |             |     |                    |   |                    |     |             |          |           |     |          |         
|Comprehensive income (loss):                      |                                                                                                                            |  |                          |  |        |     |            |   |             |     |                    |   |                    |     |             |          |           |     |          |         
|                                                  | Recognition of inflation effects
for the year                                                                              |  |                          |  |        |     |            |   |             |     |                    |   |                    |     |             | 24,300   |           |     |          |          |  
|                                                  | Foreign currency translation
adjustments                                                                                   |  |                          |  |        |     |            |   |             |     |                    |   |                    |     |             |          |           |     |          |          |  
|                                                  | Net income for the year                                                                                                    |  |                          |  |        |     |            |   |             |     |                    |   |                    |     |             |          |           |     |          |          |  
|                                                  |                                                                                                                            |  |                          |  |        |     |            |   |             |     |                    |   |                    |     |             |          |           |     |          |         
|Comprehensive income of the year                  |                                                                                                                            |  |                         |  |        |     |           |   |             |     |                   |   |                    |     | 24,300      |          |           |     |         |         
|                                                  |                                                                                                                            |  |                          |  |        |     |            |   |             |     |                    |   |                    |     |             |          |           |     |          |         
|Balances at December 31, 2001                     |                                                                                                                            |  | 441,725                  |  |        |     | 10,324,166 |   |             |     | 3,157,526          |   |                    |     | (10,954,926 | )        |           |     | (185,474 | )       
|                                                  |                                                                                                                            |  |                          |  |        |     |            |   |             |     |                    |   |                    |     |             |          |           |     |          |         

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                  |                                                                                                                            |     |                               |         |                |     |             |         |             |     |          |          |               |     |            |          |       |     |           |          |   |     |            |          |  
|------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------- | --- | ----------------------------- | ------- | -------------- | --- | ----------- | ------- | ----------- | --- | -------- | -------- | ------------- | --- | ---------- | -------- | ----- | --- | --------- | -------- | - | --- | ---------- | -------- | -
|                                                  |                                                                                                                            |     | Retained earnings (Note 12-C) |         |                |     |             |         |             |     |          |          |               |     |            |          |       |     |          
|                                                  |                                                                                                                            |     |                               |         |                |     |             |         |             |     |          |          |               |     |            |          |      
|                                                  |                                                                                                                            |     |                               |         | Foreign        |     |             |         |             |     |          |          |               |     |            |          |      
|                                                  |                                                                                                                            |     |                               |         |                |     |             |         |             |     | currency |          |               |     |            |          |       |     |           |          |   |     |           
|                                                  |                                                                                                                            |     |                               |         |                |     | Net income  |         | translation |     | Total    |          |               |     |            |          | Total
|                                                  |                                                                                                                            |     | Prior                         |         | (loss) for the |     | adjustments |         | majority    |     | Minority |          | stockholders
|                                                  |                                                                                                                            |     | years                         |         | year           |     | (Note 12-E) |         | interest    |     | interest |          | equity       
|                                                  |                                                                                                                            |     |                               |         |                |     |             |         |             |     |          |          |              
|Balances at December 31, 1999                     |                                                                                                                            | Ps. | 6,995,182                     |         |                | Ps. | (324,182    | )       |             | Ps. | 407,953  |          |               | Ps. | 10,359,724 |          |       | Ps. | 2,945,738 |          |   | Ps. | 13,305,462 |         
|                                                  |                                                                                                                            |     |                               |         |                |     |             |         |             |     |          |          |               |     |            |          |       |     |           |          |   |     |            |         
|Appropriation of prior year net income            |                                                                                                                            |     | (324,182                      | )       |                |     | 324,182     |         |             |     |          |          |               |     |            |          |       |     |           |          |   |     |            |         
|Stock and minority interest dividends
(Note 12-A) |                                                                                                                            |     |                               |         |                |     |             |         |             |     |          |          |               |     |            |          |       |     | (23,806   | )        |   |     | (23,806    | )       
|Net purchases of companys common stock           |                                                                                                                            |     | 55,587                        |         |                |     |             |         |             |     |          |          |               |     | 2,831      |          |       |     | 1,580     |          |   |     | 4,411      |         
|Issuance of subsidiaries stock                   |                                                                                                                            |     |                               |         |                |     |             |         |             |     |          |          |               |     |            |          |       |     | 214,053   |          |   |     | 214,053    |         
|Executive stock purchase plan                     |                                                                                                                            |     |                               |         |                |     |             |         |             |     |          |          |               |     | (3,594     | )        |       |     |           |          |   |     | (3,594     | )       
|Decrease of minority interest                     |                                                                                                                            |     |                               |         |                |     |             |         |             |     |          |          |               |     |            |          |       |     | (458,732  | )        |   |     | (458,732   | )       
|Operations in Companys own stock                 |                                                                                                                            |     | (8,015                        | )       |                |     |             |         |             |     |          |          |               |     | (8,015     | )        |       |     |           |          |   |     | (8,015     | )       
|                                                  |                                                                                                                            |     |                               |         |                |     |             |         |             |     |          |          |               |     |            |          |       |     |           |          |   |     |            |         
|                                                  |                                                                                                                            |     | (276,610                      | )       |                |     | 324,182     |         |             |     |         |          |               |     | (8,778     | )        |       |     | (266,905  | )        |   |     | (275,683   | )       
|                                                  |                                                                                                                            |     |                               |         |                |     |             |         |             |     |          |          |               |     |            |          |       |     |           |          |   |     |            |         
|Comprehensive income (loss):                      |                                                                                                                            |     |                               |         |                |     |             |         |             |     |          |          |               |     |            |          |       |     |           |          |   |     |            |         
|                                                  | Cumulative effect of a change in an
accounting principle for deferred
income taxes and employees
statutory profit sharing |     |                               |         |                |     |             |         |             |     |          |          |               |     |            | (185,474 | )     |     |           | (231,558 | ) |     |            | (417,032 | )
|                                                  | Recognition of inflation effects
for the year                                                                              |     |                               | 70,157  |                |     |             |         |             |     |          |          |               |     |            | (659,516 | )     |     |           | (45,477  | ) |     |            | (704,993 | )
|                                                  | Foreign currency translation
adjustments                                                                                   |     |                               |         |                |     |             |         |             |     |          | (201,177 | )             |     |            | (201,177 | )     |     |           |          |   |     |            | (201,177 | )
|                                                  | Net income for the year                                                                                                    |     |                               |         |                |     |             | 248,208 |             |     |          |          |               |     |            | 248,208  |       |     |           | 190,641  |   |     |            | 438,849  |  
|                                                  |                                                                                                                            |     |                               |         |                |     |             |         |             |     |          |          |               |     |            |          |       |     |           |          |   |     |            |         
|Comprehensive income for the year                 |                                                                                                                            |     | 70,157                        |         |                |     | 248,208     |         |             |     | (201,177 | )        |               |     | (797,959   | )        |       |     | (86,394   | )        |   |     | (884,353   | )       
|                                                  |                                                                                                                            |     |                               |         |                |     |             |         |             |     |          |          |               |     |            |          |       |     |           |          |   |     |            |         
|Balances at December 31, 2000                     |                                                                                                                            |     | 6,788,729                     |         |                |     | 248,208     |         |             |     | 206,776  |          |               |     | 9,552,987  |          |       |     | 2,592,439 |          |   |     | 12,145,426 |         
|                                                  |                                                                                                                            |     |                               |         |                |     |             |         |             |     |          |          |               |     |            |          |       |     |           |          |   |     |            |         
|Appropriation of prior year net income            |                                                                                                                            |     | 248,208                       |         |                |     | (248,208    | )       |             |     |          |          |               |     |            |          |       |     |           |          |   |     |            |         
|Minority interest dividends (Note 12-A)           |                                                                                                                            |     |                               |         |                |     |             |         |             |     |          |          |               |     |            |          |       |     | (277,627  | )        |   |     | (277,627   | )       
|Net purchases and sales of companys
common stock |                                                                                                                            |     | (43,819                       | )       |                |     |             |         |             |     |          |          |               |     | 8,460      |          |       |     |           |          |   |     | 8,460      |         
|Executive stock purchase plan                     |                                                                                                                            |     |                               |         |                |     |             |         |             |     |          |          |               |     | (31,829    | )        |       |     |           |          |   |     | (31,829    | )       
|Operations in Companys own stock                 |                                                                                                                            |     | (41,151                       | )       |                |     |             |         |             |     |          |          |               |     | (53,883    | )        |       |     |           |          |   |     | (53,883    | )       
|                                                  |                                                                                                                            |     |                               |         |                |     |             |         |             |     |          |          |               |     |            |          |       |     |           |          |   |     |            |         
|                                                  |                                                                                                                            |     | 163,238                       |         |                |     | (248,208    | )       |             |     |         |          |               |     | (77,252    | )        |       |     | (277,627  | )        |   |     | (354,879   | )       
|                                                  |                                                                                                                            |     |                               |         |                |     |             |         |             |     |          |          |               |     |            |          |       |     |           |          |   |     |            |         
|Comprehensive income (loss):                      |                                                                                                                            |     |                               |         |                |     |             |         |             |     |          |          |               |     |            |          |       |     |           |          |   |     |            |         
|                                                  | Recognition of inflation effects
for the year                                                                              |     |                               | 283,196 |                |     |             |         |             |     |          |          |               |     |            | 307,496  |       |     |           | 7,653    |   |     |            | 315,149  |  
|                                                  | Foreign currency translation
adjustments                                                                                   |     |                               |         |                |     |             |         |             |     |          | (574,854 | )             |     |            | (574,854 | )     |     |           |          |   |     |            | (574,854 | )
|                                                  | Net income for the year                                                                                                    |     |                               |         |                |     |             | 331,989 |             |     |          |          |               |     |            | 331,989  |       |     |           | 191,117  |   |     |            | 523,106  |  
|                                                  |                                                                                                                            |     |                               |         |                |     |             |         |             |     |          |          |               |     |            |          |       |     |           |          |   |     |            |         
|Comprehensive income of the year                  |                                                                                                                            |     | 283,196                       |         |                |     | 331,989     |         |             |     | (574,854 | )        |               |     | 64,631     |          |       |     | 198,770   |          |   |     | 263,401    |         
|                                                  |                                                                                                                            |     |                               |         |                |     |             |         |             |     |          |          |               |     |            |          |       |     |           |          |   |     |            |         
|Balances at December 31, 2001                     |                                                                                                                            |     | 7,235,163                     |         |                |     | 331,989     |         |             |     | (368,078 | )        |               |     | 9,540,366  |          |       |     | 2,513,582 |          |   |     | 12,053,948 |         
|                                                  |                                                                                                                            |     |                               |         |                |     |             |         |             |     |          |          |               |     |            |          |       |     |           |          |   |     |            |         

F-5



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2000, 2001 AND 2002(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002, except number of shares)
(Notes 1 and 2)



|                                                  |                                               |  |                          |   |        |     |            |   |             |     |                    |   |                   |     |             |          |           |     |                    |   | 
|------------------------------------------------- | --------------------------------------------- |  | ------------------------ | - | ------ | --- | ---------- | - | ----------- | --- | ------------------ | - | ----------------- | --- | ----------- | -------- | --------- | --- | ------------------ | - | 
|                                                  |                                               |  | Common stock (Note 12-A) |   |        |     |            |   |             |     |                    |   |                   |     |            
|                                                  |                                               |  |                          |   |        |     |            |   |             |     |                    |   | Cumulative effect
|                                                  |                                               |  |                          |   |        |     |            |   |             |     |                    |   |                   |     |             |          |           |     | of deferred income
|                                                  |                                               |  | Number of                |   |        |     |            |   |             |     |                    |   |                   |     |             |          | taxes and
|                                                  |                                               |  | shares                   |   |        |     |            |   | Additional  |     |                    |   |                   |     | employees 
|                                                  |                                               |  | outstanding              |   |        |     |            |   | paid-in     |     | Deficit from       |   | statutory profit 
|                                                  |                                               |  | (thousands)              |   | Amount |     | capital    |   | restatement |     | sharing (Note 3-O)
|                                                  |                                               |  |                          |   |        |     |            |   |             |     |                   
|Appropriation of prior year net income            |                                               |  |                          |   |        |     |            |   |             |     |                    |   |                   |     |             |          |           |     |                    |  
|Minority interest dividends (Note 12-A)           |                                               |  |                          |   |        |     |            |   |             |     |                    |   |                   |     |             |          |           |     |                    |  
|Net purchases and sales of companys
common stock |                                               |  | (323                     | ) |        |     | (15,844    | ) |             |     | (4,762             | ) |                   |     |             |          |           |     |                    |  
|Executive stock purchase plan                     |                                               |  |                          |   |        |     | (10,409    | ) |             |     | (14,069            | ) |                   |     |             |          |           |     |                    |  
|Operations in Companys own stock                 |                                               |  |                          |   |        |     |            |   |             |     |                    |   |                   |     |             |          |           |     |                    |  
|                                                  |                                               |  |                          |   |        |     |            |   |             |     |                    |   |                   |     |             |          |           |     |                    |  
|                                                  |                                               |  | (323                     | ) |        |     | (26,253    | ) |             |     | (18,831            | ) |                   |     |            |          |           |     |                   |  
|                                                  |                                               |  |                          |   |        |     |            |   |             |     |                    |   |                   |     |             |          |           |     |                    |  
|Comprehensive income (loss):                      |                                               |  |                          |   |        |     |            |   |             |     |                    |   |                   |     |             |          |           |     |                    |  
|                                                  | Recognition of inflation effects
for the year |  |                          |   |        |     |            |   |             |     |                    |   |                   |     |             | (122,174 | )         |     |                    |   | 
|                                                  | Foreign currency translation
adjustments      |  |                          |   |        |     |            |   |             |     |                    |   |                   |     |             |          |           |     |                    |   | 
|                                                  | Net income for the year                       |  |                          |   |        |     |            |   |             |     |                    |   |                   |     |             |          |           |     |                    |   | 
|                                                  |                                               |  |                          |   |        |     |            |   |             |     |                    |   |                   |     |             |          |           |     |                    |  
|Comprehensive income for the year                 |                                               |  |                         |   |        |     |           |   |             |     |                   |   |                   |     | (122,174    | )        |           |     |                   |  
|                                                  |                                               |  |                          |   |        |     |            |   |             |     |                    |   |                   |     |             |          |           |     |                    |  
|Balances at December 31, 2002                     |                                               |  | 441,402                  |   |        | Ps. | 10,297,913 |   |             | Ps. | 3,138,695          |   |                   | Ps. | (11,077,100 | )        |           | Ps. | (185,474           | )
|                                                  |                                               |  |                          |   |        |     |            |   |             |     |                    |   |                   |     |             |          |           |     |                    |  

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                  |                                               |     |                               |         |                |     |             |         |             |     |          |          |               |     |           |          |       |     |           |         |   |     |            |          |  
|------------------------------------------------- | --------------------------------------------- | --- | ----------------------------- | ------- | -------------- | --- | ----------- | ------- | ----------- | --- | -------- | -------- | ------------- | --- | --------- | -------- | ----- | --- | --------- | ------- | - | --- | ---------- | -------- | -
|                                                  |                                               |     | Retained earnings (Note 12-C) |         |                |     |             |         |             |     |          |          |               |     |           |          |       |     |          
|                                                  |                                               |     |                               |         |                |     |             |         |             |     |          |          |               |     |           |          |       |     |          
|                                                  |                                               |     |                               |         |                |     |             |         |             |     | Foreign  |          |               |     |           |          |       |     |           |         |   |     |           
|                                                  |                                               |     |                               |         |                |     |             |         |             |     | currency |          |               |     |           |          |       |     |           |         |   |     |           
|                                                  |                                               |     |                               |         |                |     | Net income  |         | translation |     | Total    |          |               |     |           |          | Total
|                                                  |                                               |     | Prior                         |         | (loss) for the |     | adjustments |         | majority    |     | Minority |          | stockholders
|                                                  |                                               |     | years                         |         | year           |     | (Note 12-E) |         | interest    |     | interest |          | equity       
|                                                  |                                               |     |                               |         |                |     |             |         |             |     |          |          |              
|Appropriation of prior year net income            |                                               |     | 331,989                       |         |                |     | (331,989    | )       |             |     |          |          |               |     |           |          |       |     |           |         |   |     |            |         
|Minority interest dividends (Note 12-A)           |                                               |     |                               |         |                |     |             |         |             |     |          |          |               |     |           |          |       |     | (94,826   | )       |   |     | (94,826    | )       
|Net purchases and sales of companys
common stock |                                               |     | (55,555                       | )       |                |     |             |         |             |     |          |          |               |     | (76,161   | )        |       |     |           |         |   |     | (76,161    | )       
|Executive stock purchase plan                     |                                               |     |                               |         |                |     |             |         |             |     |          |          |               |     | (24,478   | )        |       |     |           |         |   |     | (24,478    | )       
|Operations in Companys own stock                 |                                               |     | 13,354                        |         |                |     |             |         |             |     |          |          |               |     | 13,354    |          |       |     |           |         |   |     | 13,354     |         
|                                                  |                                               |     |                               |         |                |     |             |         |             |     |          |          |               |     |           |          |       |     |           |         |   |     |            |         
|                                                  |                                               |     | 289,788                       |         |                |     | (331,989    | )       |             |     |         |          |               |     | (87,285   | )        |       |     | (94,826   | )       |   |     | (182,111   | )       
|                                                  |                                               |     |                               |         |                |     |             |         |             |     |          |          |               |     |           |          |       |     |           |         |   |     |            |         
|Comprehensive income (loss):                      |                                               |     |                               |         |                |     |             |         |             |     |          |          |               |     |           |          |       |     |           |         |   |     |            |         
|                                                  | Recognition of inflation effects
for the year |     |                               | (32,932 | )              |     |             |         |             |     |          |          |               |     |           | (155,106 | )     |     |           | (30,505 | ) |     |            | (185,611 | )
|                                                  | Foreign currency translation
adjustments      |     |                               |         |                |     |             |         |             |     |          | (242,722 | )             |     |           | (242,722 | )     |     |           |         |   |     |            | (242,722 | )
|                                                  | Net income for the year                       |     |                               |         |                |     |             | 393,192 |             |     |          |          |               |     |           | 393,192  |       |     |           | 196,328 |   |     |            | 589,520  |  
|                                                  |                                               |     |                               |         |                |     |             |         |             |     |          |          |               |     |           |          |       |     |           |         |   |     |            |         
|Comprehensive income for the year                 |                                               |     | (32,932                       | )       |                |     | 393,192     |         |             |     | (242,722 | )        |               |     | (4,636    | )        |       |     | 165,823   |         |   |     | 161,187    |         
|                                                  |                                               |     |                               |         |                |     |             |         |             |     |          |          |               |     |           |          |       |     |           |         |   |     |            |         
|Balances at December 31, 2002                     |                                               | Ps. | 7,492,019                     |         |                | Ps. | 393,192     |         |             | Ps. | (610,800 | )        |               | Ps. | 9,448,445 |          |       | Ps. | 2,584,579 |         |   | Ps. | 12,033,024 |         
|                                                  |                                               |     |                               |         |                |     |             |         |             |     |          |          |               |     |           |          |       |     |           |         |   |     |            |         

The accompanying notes are an integral part of these consolidated financial statements.

F-6



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
FOR THE YEARS ENDED DECEMBER 31, 2000, 2001 AND 2002
(Expressed in thousands of Mexican pesos of constant purchasing power as of
December 31, 2002)
(Notes 1 and 2)

|                                                          |                                                                                        |                                                                     |                                                |            |          |            |           |            |          |           |           |            |          |           |  
|--------------------------------------------------------- | -------------------------------------------------------------------------------------- | ------------------------------------------------------------------- | ---------------------------------------------- | ---------- | -------- | ---------- | --------- | ---------- | -------- | --------- | --------- | ---------- | -------- | --------- | -
|                                                          |                                                                                        |                                                                     |                                                |            | 2000     |            | 2001      |            | 2002    
|                                                          |                                                                                        |                                                                     |                                                |            |          |            |           |            |         
|Operating activities:                                     |                                                                                        |                                                                     |                                                |            |          |            |           |            |          |           |           |           
|                                                          | Majority net income for the year                                                       |                                                                     | Ps.                                            | 246,330    |          |            | Ps.       | 331,989    |          |           | Ps.       | 393,192    |         
|                                                          | Minority interest                                                                      |                                                                     |                                                | 190,641    |          |            |           | 191,117    |          |           |           | 196,328    |         
|                                                          |                                                                                        |                                                                     |                                                |            |          |            |           |            |          |           |           |            |         
|                                                          | Consolidated net income                                                                |                                                                     |                                                | 436,971    |          |            |           | 523,106    |          |           |           | 589,520    |         
|                                                          | Adjustments to reconcile net income to net resources provided by
operating activities: |                                                                     |                                                |            |          |            |           |            |          |           |           |            |         
|                                                          |                                                                                        | Depreciation and amortization                                       |                                                |            | 683,391  |            |           |            | 828,287  |           |           |            | 986,851  |          
|                                                          |                                                                                        | Write-off of idle assets and other intangible assets                |                                                |            | 108,865  |            |           |            |         |           |           |            |         |          
|                                                          |                                                                                        | Equity in earnings of associated companies, less dividends received |                                                |            | (72,876  | )          |           |            | (64,021  | )         |           |            | (162,017 | )        
|                                                          |                                                                                        | Deferred income taxes and employees statutory profit sharing       |                                                |            | (140,366 | )          |           |            | 90,364   |           |           |            | 272,739  |          
|                                                          |                                                                                        | Net loss for shut-down of bread operations                          |                                                |            |         |            |           |            | 199,314  |           |           |            |         |          
|                                                          |                                                                                        | Seniority premiums                                                  |                                                |            | 378      |            |           |            | 7,120    |           |           |            | 8,948    |          
|                                                          |                                                                                        |                                                                     |                                                |            |          |            |           |            |          |           |           |            |         
|                                                          |                                                                                        |                                                                     | 1,016,363                                      |            |          |            | 1,584,170 |            |          |           | 1,696,041 |           
|                                                          |                                                                                        |                                                                     |                                                |            |          |            |           |            |          |           |           |            |         
|                                                          | Changes in working capital:                                                            |                                                                     |                                                |            |          |            |           |            |          |           |           |            |         
|                                                          |                                                                                        | Restricted cash                                                     |                                                |            | 472      |            |           |            | 4,009    |           |           |            | 1,367    |          
|                                                          |                                                                                        | Notes and accounts receivable, net                                  |                                                |            | (36,492  | )          |           |            | 228,077  |           |           |            | (389,800 | )        
|                                                          |                                                                                        | Inventories                                                         |                                                |            | 201,403  |            |           |            | (37,348  | )         |           |            | (298,046 | )        
|                                                          |                                                                                        | Prepaid expenses                                                    |                                                |            | 22,820   |            |           |            | 14,357   |           |           |            | 26,751   |          
|                                                          |                                                                                        | Trade accounts payable                                              |                                                |            | 367,590  |            |           |            | (340,572 | )         |           |            | 344,145  |          
|                                                          |                                                                                        | Accrued liabilities and other payable                               |                                                |            | 80,437   |            |           |            | 43,740   |           |           |            | 37,549   |          
|                                                          |                                                                                        | Income taxes and employees statutory profit sharing payable        |                                                |            | 22,330   |            |           |            | 43,969   |           |           |            | (27,972  | )        
|                                                          |                                                                                        |                                                                     |                                                |            |          |            |           |            |          |           |           |            |         
|                                                          |                                                                                        |                                                                     | 658,560                                        |            |          |            | (43,768   | )          |          |           | (306,006  | )         
|                                                          |                                                                                        |                                                                     |                                                |            |          |            |           |            |          |           |           |            |         
|                                                          |                                                                                        |                                                                     | Net resources provided by operating activities |            |          | 1,674,923  |           |            |          | 1,540,402 |           |            |          | 1,390,035 |  
|                                                          |                                                                                        |                                                                     |                                                |            |          |            |           |            |          |           |           |            |         
|Financing activities:                                     |                                                                                        |                                                                     |                                                |            |          |            |           |            |          |           |           |           
|                                                          | Proceeds from bank loans and long-term debt                                            |                                                                     |                                                | 2,507,054  |          |            |           | 2,648,103  |          |           |           | 1,559,025  |         
|                                                          | Repayment of bank loans and long-term debt                                             |                                                                     |                                                | (2,784,625 | )        |            |           | (3,190,460 | )        |           |           | (2,124,848 | )       
|                                                          | Proceeds from issuance of subsidiaries stock                                          |                                                                     |                                                | 214,053    |          |            |           |           |          |           |           |           |         
|                                                          | Decrease of minority interest                                                          |                                                                     |                                                | (458,732   | )        |            |           |           |          |           |           |           |         
|                                                          | Net purchases and sales of Companys common stock                                      |                                                                     |                                                | (8,778     | )        |            |           | (77,252    | )        |           |           | (87,285    | )       
|                                                          | Dividends paid by subsidiary to minority stockholders                                  |                                                                     |                                                | (23,806    | )        |            |           | (277,627   | )        |           |           | (94,826    | )       
|                                                          | Other                                                                                  |                                                                     |                                                | (57,685    | )        |            |           | (86,917    | )        |           |           | (61,762    | )       
|                                                          |                                                                                        |                                                                     |                                                |            |          |            |           |            |          |           |           |            |         
|                                                          |                                                                                        |                                                                     | Net resources used in financing activities     |            |          | (612,519   | )         |            |          | (984,153  | )         |            |          | (809,696  | )
|                                                          |                                                                                        |                                                                     |                                                |            |          |            |           |            |          |           |           |            |         
|Investing activities:                                     |                                                                                        |                                                                     |                                                |            |          |            |           |            |          |           |           |           
|                                                          | Purchases of property, plant and equipment                                             |                                                                     |                                                | (1,451,153 | )        |            |           | (690,214   | )        |           |           | (556,477   | )       
|                                                          | Acquisition of new plants                                                              |                                                                     |                                                | (129,674   | )        |            |           |           |          |           |           |           |         
|                                                          | Proceeds from the shut-down of bread operations                                        |                                                                     |                                                |           |          |            |           | 536,808    |          |           |           |           |         
|                                                          | Excess of book value over cost of subsidiaries acquired                                |                                                                     |                                                | 387,473    |          |            |           | 5,108      |          |           |           | (12,487    | )       
|                                                          | Deferred assets                                                                        |                                                                     |                                                | (104,463   | )        |            |           | (78,955    | )        |           |           | (48,573    | )       
|                                                          | Investment in common stock                                                             |                                                                     |                                                | (59,252    | )        |            |           | (2,205     | )        |           |           | 53,272     |         
|                                                          | Other                                                                                  |                                                                     |                                                | (20,249    | )        |            |           | (40,933    | )        |           |           | 25,408     |         
|                                                          |                                                                                        |                                                                     |                                                |            |          |            |           |            |          |           |           |            |         
|                                                          |                                                                                        |                                                                     | Net resources used in investing activities     |            |          | (1,377,318 | )         |            |          | (270,391  | )         |            |          | (538,857  | )
|                                                          |                                                                                        |                                                                     |                                                |            |          |            |           |            |          |           |           |            |         
|Net (decrease) increase in cash and temporary investments |                                                                                        |                                                                     | (314,914                                       | )          |          |            | 285,858   |            |          |           | 41,482    |           
|Cash and temporary investments at beginning of year       |                                                                                        |                                                                     | 438,905                                        |            |          |            | 123,991   |            |          |           | 409,849   |           
|                                                          |                                                                                        |                                                                     |                                                |            |          |            |           |            |          |           |           |            |         
|Cash and temporary investments at end of year             |                                                                                        | Ps.                                                                 | 123,991                                        |            |          | Ps.        | 409,849   |            |          | Ps.       | 451,331   |           
|                                                          |                                                                                        |                                                                     |                                                |            |          |            |           |            |          |           |           |            |         

The accompanying notes are an integral part of these consolidated financial statements.

F-7



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2000, 2001 AND 2002(Expressed in thousands of Mexican pesos of constant purchasing
power of December 31, 2002,
except where otherwise indicated)



|1. |  | ENTITY AND NATURE OF BUSINESS                                                                                                                                                                                                                                                                                                                                                                                         
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Gruma, S.A. de C.V., a Mexican corporation, is a holding company whose
subsidiaries are located in Mexico, the United States of America, Central
and South America and Europe. These subsidiaries are primarily engaged in
manufacturing and distributing corn flour, tortillas, wheat flour and
other related products. Gruma, S.A de C.V. and its subsidiaries are
herein collectively referred to as the Company.
|  
|2. |  | SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   |  | The consolidated financial statements have been prepared in accordance
with generally accepted accounting principles in Mexico (Mexican GAAP)
as promulgated by the Mexican Institute of Public Accountants. A
reconciliation from Mexican GAAP to United States generally accepted
accounting principles (U.S. GAAP) is included in Note 20.                                                                     



| |  | A) | BASIS OF CONSOLIDATION                                                                                                                                                                                                                
| |  | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |    | The consolidated financial statements include the accounts of Gruma,
S.A. de C.V. and all of its subsidiaries. All significant intercompany
balances and transactions have been eliminated from the consolidated
financial statements.
|
| |  |    | As of December 31, the principal subsidiaries included in the
consolidation are the following:                                                                                                                                        

|                                                                    |  |                |        | 
|------------------------------------------------------------------- |  | -------------- | ------ | 
|                                                                    |  | % of ownership
|                                                                    |  | 2001 and 2002 
|                                                                    |  |               
|Grupo Industrial Maseca, S.A. de C.V.
and
subsidiaries              |  |                | 83.18  | 
|Gruma Corporation and
subsidiaries                                  |  |                | 100.00 | 
|Gruma Centro América, S.A. and
subsidiaries                         |  |                | 100.00 | 
|Molinos Nacionales,
C.A(1)                                          |  |                | 95.00  | 
|Derivados de Maíz Seleccionado,
C.A(1)                              |  |                | 50.00  | 
|Productos y Distribuidora Azteca, S.A.
de C.V. and
subsidiaries     |  |                | 100.00 | 
|Investigación de Tecnología Avanzada,
S.A. de C.V. and
subsidiaries |  |                | 100.00 | 
|Molinera de México, S.A. de C.V. and
subsidiaries                   |  |                | 60.00  | 
|Asesoría de Empresas, S.A. de
C.V.                                  |  |                | 100.00 | 
|Transporte Aéreo Técnico Ejecutivo,
S.A. de
C.V.                    |  |                | 100.00 | 
|Inmobiliaria Residencial San Pedro,
S.A. de C.V. and
subsidiaries   |  |                | 100.00 | 



| |  |  | (1)  Our Venezuelan operations represented 12% of our sales in 2002.
The severe political and economic situation in Venezuela presents a
risk to our business that we cannot control and that cannot be
accurately measured or estimated. The April 2002 coup, which ousted
President Hugo Chávez from office for two days, marked the climax of
the political instability that continued throughout the remainder of
2002. In addition, a nation-wide general strike that began in early
December 2002 and lasted for approximately two months has caused a
significant reduction in oil production in Venezuela, and has had a
material adverse effect on Venezuelas oil-dependent economy. In 2002,
inflation in Venezuela reached 31.2%, the Venezuelan bolívar
depreciated 85.1%
against the U.S. dollar and Venezuelas gross domestic product
decreased 8.9%. More recently, in February 2003, in response to the
general strike and in an effort to shore up the economy and control
inflation, Venezuelan authorities imposed foreign exchange and price
controls on certain products. Foreign exchange controls could limit
our ability to convert bolívars into other currencies and transfer
funds out of Venezuela. On February 6, 2003, the Venezuelan
government set a single fixed exchange rate for the bolivar against
the U.S. dollar of 1,600.00 bolívars to U.S. $1.00. On February 11,
2003, the Venezuelan government established price controls on products
such as corn flour and wheat flour. Because a portion of our sales are
denominated in bolívars, our Venezuelan operations produce products
that are subject to price controls and we may have difficulties
repatriating dividends from our Venezuelan operations due to exchange
controls, our financial condition and results of operations have been
and may continue to be adversely affected.
| |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-8



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##### Table of Contents



GRUMA, S.A. DE C.V. AND
SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002,
except where otherwise indicated)



|2. |  | SIGNIFICANT ACCOUNTING POLICIES (continued)
|-- |  | -------------------------------------------



| | B) |  | USE OF ESTIMATES                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
certain estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and
liabilities at the dates of the financial statements, and reported
amounts of revenues, costs and expenses for the reporting years.
Actual results could differ from those estimates.
|
| | C) |  | FOREIGN CURRENCY TRANSLATION                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |    |  | Financial statements of foreign subsidiaries have been restated to
recognize the effects of inflation and translated to Mexican pesos of
constant purchasing power as of December 31, 2002, as follows:                                                                                                                                                                                                                                                        



| |  |  | Financial statements are restated to year-end constant
local currencies following the provisions of Bulletin B-10,
applying the General Consumer Price Index (GCPI) of the foreign
country, which reflects the change in purchasing power of the
local currency in which the subsidiary operates.                                                                                                                                        
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Assets, liabilities, income and expenses are
translated to Mexican pesos applying the exchange rate in effect
at each period end. Stockholders equity balances are translated
by applying the exchange rates in effect at the dates in which
the contributions were made and the income was generated. The
effects of translation are recognized as a component of equity
entitled Foreign Currency Translation Adjustments (Note 12-E).



| | D) |  | RECOGNITION OF THE EFFECTS OF INFLATION                                                                                                                                                                                    
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | The consolidated financial statements have been restated to recognize
the effects of inflation and are expressed in thousands of Mexican
pesos of constant purchasing power as of December 31, 2002, determined
as follows:



| |  |  | For comparability purposes, the financial statements as of and for
the year ended December 31, 2000 and 2001 have been restated by
utilizing a weighted average restatement factor, which considers
the relative total sales contribution by country for the year ended
December 31, 2000 and 2001 and the corresponding inflation and
exchange rate fluctuations during those years.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The consolidated statements of income and of stockholders equity
for the year ended December 31, 2002 were restated applying GCPI
factors from the country in which the subsidiary operates and
applied to periods in which the transactions occurred and year-end.                                                                                                                 
|
| |  |  | The consolidated statements of changes in financial position
present, in Mexican pesos of constant purchasing power, the
resources provided by or used in operating, financing and investing
activities.                                                                                                                                                                             
|
| |  |  | The factors used to recognize the effects of inflation
were the following:                                                                                                                                                                                                                                                                                                           

|     |  |             |      |             |  |  |      |  
|---- |  | ----------- | ---- | ----------- |  |  | ---- | -
|     |  | Mexican     |      | Weighted   
|     |  | national    |      | average    
|     |  | consumer    |      | restatement
|Year |  | price index |      | factor     
|     |  |             |      |            
|2000 |  |             | 8.90 | %           |  |  | 6.30 | %
|2001 |  |             | 4.46 | %           |  |  | 0.41 | %
|2002 |  |             | 5.70 | %           |  |  | 6.15 | %

F-9



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##### Table of Contents



GRUMA, S.A. DE C.V. AND
SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002,
except where otherwise indicated)



|2. |  | SIGNIFICANT ACCOUNTING POLICIES (continued)
|-- |  | -------------------------------------------



| | The methodology used to restate financial statement items is as follows:
| | ------------------------------------------------------------------------
|
| |                                                                        
|
| |                                                                         
|
| |                                                                        
|
| |                                                                         
|
| |                                                                        
|
| |                                                                         
|
| |                                                                        
|
| |                                                                         



| | E) |  | FOREIGN CURRENCY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | Foreign currency transactions are recorded at the exchange rate in
effect on the dates the transactions are entered into and settled.
Monetary assets and liabilities denominated in foreign currencies are
translated into Mexican pesos at the exchange rate in effect at the
balance sheet dates. Currency exchange fluctuations from valuation and
liquidation of these balances are credited or charged to income,
except for the effects of translation arising from foreign currency
denominated liabilities, which are accounted for as a hedge of the
Companys net investment in foreign subsidiaries, and are recognized
as a component of equity under Foreign currency translation
adjustments.
|
| | F) |  | TEMPORARY INVESTMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |    |  | Temporary investments are highly liquid investments with maturities of less than a year from the date of the financial
statements and are stated at cost, which approximates market value. At December 31, 2002, shares quoted on the Mexican
Stock Exchange amounting to Ps.192,151 are included within temporary investments. At the date of issuance of these financial
statements, these shares were carried out in cash.                                                                                                                                                                                                                                                                                 

F-10



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002,
except where otherwise indicated)



|2. |  | SIGNIFICANT ACCOUNTING POLICIES (continued)
|-- |  | -------------------------------------------



| | G) |  | INVENTORIES AND COST OF SALES                                                                                                                                                                                                                                                                                            
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | Inventories are stated at the lower of estimated replacement cost or
market. Estimated replacement cost is determined by the last purchase
price, the first-in, first-out method and the last production cost.
Cost of sales is determined from replacement costs calculated for the
month in which inventories are sold.
|
| | H) |  | INVESTMENT IN COMMON STOCK                                                                                                                                                                                                                                                                                               
|
| |    |  | Investments in common stock with ownership between 10% and 50% of the
investees voting stock, or where the Company exercises significant
influence, are accounted for by the equity method.                                                                                                                             
|
| | I) |  | PROPERTY, PLANT AND EQUIPMENT, NET                                                                                                                                                                                                                                                                                       
|
| |    |  | Property, plant and equipment are restated utilizing the NCPI factors,
except for machinery and equipment of foreign origin which are
restated on the basis of a specific index composed of the GCPI from
the foreign country and the change in value of the Mexican peso
against the foreign currency.                  
|
| |    |  | Depreciation expense is computed based on the net book value less
salvage value, using the straight-line method over the estimated
useful lives of the assets. Useful lives of the assets are as
follows:                                                                                                                

|                        |  |       |       | 
|----------------------- |  | ----- | ----- | 
|                        |  | Years
|                        |  |      
|Buildings               |  |       | 3050 | 
|Machinery and equipment |  |       | 327  | 



| |    |  | Maintenance and repairs are expensed as incurred. Costs of major
replacements and improvements are capitalized. Comprehensive financing
cost, including interest expense, foreign currency exchange
fluctuations, and monetary position gain of the related debt for major
construction projects, are capitalized as part of the assets during
the construction period. When assets are retired, sold or otherwise
disposed of, the restated value and accumulated depreciation are
removed from the appropriate accounts and any resulting gain or loss
is included in Other income, net.
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | Direct internal and external costs associated with the development of
internal use software are capitalized and amortized over the estimated
useful life beginning when such software is ready for its intended
use.                                                                                                                                                                                                                                                                                                                                                                        
|
| | J) |  | INTANGIBLE ASSETS, NET                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |    |  | Intangible assets are restated using NCPI factors. Amortization
expense is computed on the restated values using the straight-line
method, over a period of 5 to 20 years.                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |    |  | Expenses incurred during stages dedicated to the beginning of
industrial and commercial operations are capitalized as pre-operating
expenses. This capitalization stage concludes when the project begins
its commercial activities. Pre-operating expenses are restated using
the NCPI factor and amortized using the straight-line method over a
period not to exceed 12 years.                                                                                                                                                                                                           
|
| |    |  | The excess of cost over book value and the excess of book value over
cost of subsidiaries and associated companies acquired are restated
using the NCPI factors. Amortization expense is computed based on the
restated values using the straight-line method, over a period not to
exceed 5 and 20 years for the excess of book value over cost and for
the excess of cost over book value, respectively.                                                                                                                                                                                  
|
| |    |  | Debt issuance costs are capitalized and amortized over the term of the
related debt.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

F-11



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002,
except where otherwise indicated)



|2. |  | SIGNIFICANT ACCOUNTING POLICIES (continued)
|-- |  | -------------------------------------------



| | K) |  | SENIORITY PREMIUM PLANS AND INDEMNITIES                                                                                                                                                                                                                                                                                                                                       
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | Seniority premium to which Mexican employees are entitled after 15
years of service are charged to income as determined by annual
actuarial valuations. Indemnities to which Mexican employees may be
entitled in the case of dismissal or death, under certain
circumstances established by Mexican Labor Law, are expensed when they
become payable.                        
|
| | L) |  | FINANCIAL INSTRUMENTS                                                                                                                                                                                                                                                                                                                                                         
|
| |    |  | Derivative financial instruments held for hedging purposes are
recognized utilizing the same valuation criteria used for the assets
and liabilities being hedged. The cost of the financial instrument is
recognized in income using the straight-line method during the
contract term.                                                                                       
|
| |    |  | Derivative financial instruments held for purposes other than hedging
are recognized at their fair value. The difference between the initial
and year-end fair value of derivative assets and liabilities is
recognized in income, except for those financial instruments related
to the Companys own shares, which are registered as a component of
equity.                 
|
| | M) |  | REVENUE RECOGNITION                                                                                                                                                                                                                                                                                                                                                           
|
| |    |  | Revenue on product sales is recognized upon shipment to and acceptance
by the Companys customers or when the risk of ownership has passed to
the customers. Provisions for discounts and rebates to customers,
returns and other adjustments are recognized in the same period the
related sales are recorded and are based upon either historical
estimates or actual terms.
|
| | N) |  | INCOME TAXES AND EMPLOYEES STATUTORY PROFIT SHARING                                                                                                                                                                                                                                                                                                                          
|
| |    |  | Income taxes and employees statutory profit sharing are recorded
based on the comprehensive asset and liability method for all
temporary differences arising between the carrying values for
financial reporting and tax values of assets and liabilities at the
date of the financial statements.                                                                           
|
| | O) |  | EARNINGS PER SHARE                                                                                                                                                                                                                                                                                                                                                            
|
| |    |  | Earnings per share are computed by dividing majority net income for
the year by the weighted average number of common shares outstanding
during the year.                                                                                                                                                                                                                     
|
| | P) |  | COMPREHENSIVE INCOME (LOSS)                                                                                                                                                                                                                                                                                                                                                   
|
| |    |  | The different components that constitute earned (lost) capital for the
year are presented in the statement of changes in stockholders equity
as comprehensive income (loss).                                                                                                                                                                                                 

F-12



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002,
except where otherwise indicated)



|3. |  | NOTES AND ACCOUNTS RECEIVABLE, NET AND REFUNDABLE TAXES                             
|-- |  | ------------------------------------------------------------------------------------
|  
|   |  | Notes and accounts receivable, net are comprised of the following as of
December 31:

|                                             |  |      |  |      |           |  |           |     |  |  |           |  |  |  |           |  
|-------------------------------------------- |  | ---- |  | ---- | --------- |  | --------- | --- |  |  | --------- |  |  |  | --------- | -
|                                             |  | 2001 |  | 2002
|                                             |  |      |  |     
|Trade accounts receivable                    |  | Ps.  |  |      | 2,331,921 |  |           | Ps. |  |  | 2,392,542 | 
|Allowance for doubtful accounts              |  |      |  |      |           |  | (109,425  | )   |  |  |           |  |  |  | (92,984   | )
|                                             |  |      |  |      |           |  |           |     |  |  |           |  |  |  |           |  
|                                             |  |      |  |      |           |  | 2,222,496 |     |  |  |           |  |  |  | 2,299,558 |  
|Related parties (Note 18)                    |  |      |  |      |           |  | 147,940   |     |  |  |           |  |  |  | 108,267   |  
|Account receivable for disposed subsidiaries |  |      |  |      |           |  |          |     |  |  |           |  |  |  | 146,000   |  
|Employees                                    |  |      |  |      |           |  | 26,580    |     |  |  |           |  |  |  | 26,358    |  
|Notes receivable, net                        |  |      |  |      |           |  | 7,245     |     |  |  |           |  |  |  | 7,454     |  
|Other debtors                                |  |      |  |      |           |  | 124,039   |     |  |  |           |  |  |  | 171,311   |  
|                                             |  |      |  |      |           |  |           |     |  |  |           |  |  |  |           |  
|                                             |  | Ps.  |  |      | 2,528,300 |  |           | Ps. |  |  | 2,758,948 | 
|                                             |  |      |  |      |           |  |           |     |  |  |           |  |  |  |           |  



| |  | Refundable taxes are comprised of the following as of December 31:
| |  | ------------------------------------------------------------------

|                            |  |      |  |      |         |  |         |     |  |  |         |  |  |  |        | 
|--------------------------- |  | ---- |  | ---- | ------- |  | ------- | --- |  |  | ------- |  |  |  | ------ | 
|                            |  | 2001 |  | 2002
|                            |  |      |  |     
|Value-added tax             |  | Ps.  |  |      | 80,157  |  |         | Ps. |  |  | 101,119 | 
|Income tax                  |  |      |  |      |         |  | 18,398  |     |  |  |         |  |  |  | 93,891 | 
|Production and services tax |  |      |  |      |         |  | 129,294 |     |  |  |         |  |  |  | 84,182 | 
|Other                       |  |      |  |      |         |  | 1,120   |     |  |  |         |  |  |  |       | 
|                            |  |      |  |      |         |  |         |     |  |  |         |  |  |  |        | 
|                            |  | Ps.  |  |      | 228,969 |  |         | Ps. |  |  | 279,192 | 
|                            |  |      |  |      |         |  |         |     |  |  |         |  |  |  |        | 



|4. |  | INVENTORIES                                            
|-- |  | -------------------------------------------------------
|  
|   |  | Inventories consist of the following as of December 31:

|                                     |  |      |  |      |           |  |           |     |  |  |           |  |  |  |           | 
|------------------------------------ |  | ---- |  | ---- | --------- |  | --------- | --- |  |  | --------- |  |  |  | --------- | 
|                                     |  | 2001 |  | 2002
|                                     |  |      |  |     
|Finished products                    |  | Ps.  |  |      | 222,933   |  |           | Ps. |  |  | 206,757   | 
|Production in process                |  |      |  |      |           |  | 36,527    |     |  |  |           |  |  |  | 54,120    | 
|Raw materials, mainly corn and wheat |  |      |  |      |           |  | 1,982,350 |     |  |  |           |  |  |  | 1,949,368 | 
|Materials and spare parts            |  |      |  |      |           |  | 217,156   |     |  |  |           |  |  |  | 261,143   | 
|Inventory in transit                 |  |      |  |      |           |  | 6,406     |     |  |  |           |  |  |  | 63,145    | 
|Advances to suppliers                |  |      |  |      |           |  | 31,268    |     |  |  |           |  |  |  | 8,858     | 
|                                     |  |      |  |      |           |  |           |     |  |  |           |  |  |  |           | 
|                                     |  | Ps.  |  |      | 2,496,640 |  |           | Ps. |  |  | 2,543,391 | 
|                                     |  |      |  |      |           |  |           |     |  |  |           |  |  |  |           | 



|5. |  | INVESTMENT IN COMMON STOCK OF ASSOCIATED COMPANIES                                                                                                                                                                                                                     
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Investment in common stock of associated companies consists of the
investment in common stock of Grupo Financiero Banorte, S.A. de C.V. and
subsidiaries (GFNorte) and Harinera de Monterrey, S.A. de C.V. which
produces wheat flour and related products in Mexico.
|  
|   |  | These investments, accounted for by the equity method, are comprised of
the following as of December 31:                                                                                                                                                               

F-13



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002,
except where otherwise indicated)



|5. |  | INVESTMENTS IN COMMON STOCK OF ASSOCIATED COMPANIES (continued)
|-- |  | ---------------------------------------------------------------

|                                   |                                     |     |      |  |           |           |           |        |     |  |           |           |  |  |           |    |   |  |    |   | 
|---------------------------------- | ----------------------------------- | --- | ---- |  | --------- | --------- | --------- | ------ | --- |  | --------- | --------- |  |  | --------- | -- | - |  | -- | - | 
|                                   |                                     |     | 2001 |  | 2002      |           | Ownership
|                                   |                                     |     |      |  |           |           |          
|GFNorte:                           |                                     |     |      |  |           |           |           |        |     |  |           |           |  |  |           |    |   |  |    |  
|                                   | Book value                          |     | Ps.  |  |           | 1,067,554 |           |        | Ps. |  |           | 1,242,254 |  |  |           | 11 | %
|                                   | Excess of cost over book value, net |     |      |  |           |           |           | 51,704 |     |  |           |           |  |  |           |   |   |  |    |   | 
|                                   |                                     |     |      |  |           |           |           |        |     |  |           |           |  |  |           |    |   |  |    |  
|                                   |                                     |     |      |  |           |           | 1,119,258 |        |     |  |           |           |  |  | 1,242,254 |    |   |  |    |  
|Harinera de Monterrey, S.A de C.V. |                                     |     |      |  |           |           | 109,565   |        |     |  |           |           |  |  | 116,943   |    |   |  | 40 | %
|                                   |                                     |     |      |  |           |           |           |        |     |  |           |           |  |  |           |    |   |  |    |  
|                                   |                                     | Ps. |      |  | 1,228,823 |           |           | Ps.    |     |  | 1,359,197 |           |  |  |           |   
|                                   |                                     |     |      |  |           |           |           |        |     |  |           |           |  |  |           |    |   |  |    |  



|6. |  | PROPERTY, PLANT AND EQUIPMENT, NET                                              
|-- |  | --------------------------------------------------------------------------------
|  
|   |  | Property, plant and equipment, net consisted of the following as of
December 31:

|                                          |  |      |  |      |            |  |            |     |  |  |            |  |  |  |            |  
|----------------------------------------- |  | ---- |  | ---- | ---------- |  | ---------- | --- |  |  | ---------- |  |  |  | ---------- | -
|                                          |  | 2001 |  | 2002
|                                          |  |      |  |     
|Land                                      |  | Ps.  |  |      | 959,212    |  |            | Ps. |  |  | 1,012,362  | 
|Buildings                                 |  |      |  |      |            |  | 4,323,250  |     |  |  |            |  |  |  | 3,951,894  |  
|Machinery and equipment                   |  |      |  |      |            |  | 12,991,753 |     |  |  |            |  |  |  | 13,226,467 |  
|Construction in progress                  |  |      |  |      |            |  | 172,376    |     |  |  |            |  |  |  | 324,614    |  
|Software for internal use                 |  |      |  |      |            |  | 583,433    |     |  |  |            |  |  |  | 607,122    |  
|Leasehold improvements                    |  |      |  |      |            |  | 230,285    |     |  |  |            |  |  |  | 205,458    |  
|Other                                     |  |      |  |      |            |  | 19,776     |     |  |  |            |  |  |  | 32,758     |  
|                                          |  |      |  |      |            |  |            |     |  |  |            |  |  |  |            |  
|                                          |  |      |  |      |            |  | 19,280,085 |     |  |  |            |  |  |  | 19,360,675 |  
|Accumulated depreciation and amortization |  |      |  |      |            |  | (6,673,511 | )   |  |  |            |  |  |  | (6,778,497 | )
|                                          |  | Ps.  |  |      | 12,606,574 |  |            | Ps. |  |  | 12,582,178 | 
|                                          |  |      |  |      |            |  |            |     |  |  |            |  |  |  |            |  



| |  | For the years ended December 31, 2000, 2001 and 2002, depreciation
expense amounted to Ps.877,960, Ps.958,726 and Ps.924,467, respectively.                                                                                                                                                                                                                                                                                                                                                               
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | For the year ended December 31, 2000, comprehensive financing costs of
Ps.6,113 were capitalized to property, plant and equipment.                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | As of December 31, 2002, property, plant and equipment include
temporarily idled assets with a carrying value of approximately
Ps.570,155, resulting from the temporary shut-down of the productive
operation of various plants in Mexico, Central America and Venezuela. The
Companys management has the intention to use these assets in the
short-term. For the years ended December 31, 2001 and 2002 the Company
recognized an idle assets impairment loss of Ps.14,861 and Ps.56,675,
respectively.

F-14



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002,
except where otherwise indicated)



|7. |  | INTANGIBLES ASSETS, NET                                           
|-- |  | ------------------------------------------------------------------
|  
|   |  | Intangibles, net are comprised of the following as of December 31:

|                         |  |      |  |      |         |  |           |     |  |  |         |  |  |  |           |  
|------------------------ |  | ---- |  | ---- | ------- |  | --------- | --- |  |  | ------- |  |  |  | --------- | -
|                         |  | 2001 |  | 2002
|                         |  |      |  |     
|Covenants not to compete |  | Ps.  |  |      | 769,275 |  |           | Ps. |  |  | 745,877 | 
|Pre-operating expenses   |  |      |  |      |         |  | 70,225    |     |  |  |         |  |  |  | 86,071    |  
|Debt issuance costs      |  |      |  |      |         |  | 201,910   |     |  |  |         |  |  |  | 216,165   |  
|Patents and trade names  |  |      |  |      |         |  | 174,707   |     |  |  |         |  |  |  | 163,153   |  
|Research of new projects |  |      |  |      |         |  | 75,171    |     |  |  |         |  |  |  | 62,677    |  
|Other                    |  |      |  |      |         |  | 55,317    |     |  |  |         |  |  |  | 51,318    |  
|                         |  |      |  |      |         |  |           |     |  |  |         |  |  |  |           |  
|                         |  |      |  |      |         |  | 1,346,605 |     |  |  |         |  |  |  | 1,325,261 |  
|Accumulated amortization |  |      |  |      |         |  | (391,775  | )   |  |  |         |  |  |  | (461,124  | )
|                         |  |      |  |      |         |  |           |     |  |  |         |  |  |  |           |  
|                         |  | Ps.  |  |      | 954,830 |  |           | Ps. |  |  | 864,137 | 
|                         |  |      |  |      |         |  |           |     |  |  |         |  |  |  |           |  



|   |  | Expenditures for research are expensed as incurred and expenditures for
development are expensed when they do not qualify as intangible assets.
Research and development costs charged to income amounted to Ps.39,191,
Ps.21,388 and Ps.9,243 for the years ended December 31, 2000, 2001 and
2002, respectively. The amortization of pre-operating expenses charged to
income for the years ended December 31, 2000, 2001 and 2002 amounted to
Ps.38,937, Ps.34,703 and Ps.8,158, respectively. Additionally, during
2001 the Company wrote-off certain capitalized pre-operating expenses of
Ps.326,265 due to the shut-down of the bread manufacturing operation,
which were recognized in other income, net (Note 13).
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | At December 31, 2001 and 2002, the excess of cost over book value is
presented net of accumulated amortization of Ps. 716,158 and Ps. 766,428.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|8. |  | OTHER ASSETS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   |  | Other assets consist of the following, as of December 31:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

| |                                                        |     |      |  |         |         |  |        |     |  |         |         |  |  |  |        | 
| | ------------------------------------------------------ | --- | ---- |  | ------- | ------- |  | ------ | --- |  | ------- | ------- |  |  |  | ------ | 
| |                                                        |     | 2001 |  | 2002   
| |                                                        |     |      |  |        
| | Trust funds for research and development of technology |     | Ps.  |  |         | 222,380 |  |        | Ps. |  |         | 213,728 | 
| | Long-term notes receivable                             |     |      |  |         |         |  | 49,916 |     |  |         |         |  |  |  | 9,218  | 
| | Guarantee deposits                                     |     |      |  |         |         |  | 18,929 |     |  |         |         |  |  |  | 14,104 | 
| | Club memberships                                       |     |      |  |         |         |  | 25,214 |     |  |         |         |  |  |  | 20,269 | 
| | Refundable taxes                                       |     |      |  |         |         |  | 10,254 |     |  |         |         |  |  |  | 9,710  | 
| |                                                        |     |      |  |         |         |  |        |     |  |         |         |  |  |  |       
| |                                                        | Ps. |      |  | 326,693 |         |  | Ps.    |     |  | 267,029 |        
| |                                                        |     |      |  |         |         |  |        |     |  |         |         |  |  |  |       



|9. |  | SHORT-TERM BANK LOANS AND LONG-TERM DEBT                                             
|-- |  | -------------------------------------------------------------------------------------
|  
|   |  | Short-term bank loans and long-term debt as of December 31 are summarized
as follows:

|                                                                                                                                                                                                         |  |      |  |      |           |  |           |     |  |  |           |  |  |  |           | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- |  | ---- | --------- |  | --------- | --- |  |  | --------- |  |  |  | --------- | 
|                                                                                                                                                                                                         |  | 2001 |  | 2002
|                                                                                                                                                                                                         |  |      |  |     
|Syndicated loan in U.S. dollars, maturing in December 2004
and 2005, bearing interest at annual rate of LIBOR plus
1.00% to 1.625% payable monthly or quarterly (LIBOR plus 1.375% at December 31, 2002) |  | Ps.  |  |      | 3,893,582 |  |           | Ps. |  |  | 3,132,000 | 
|Senior unsecured notes in U.S. dollars, maturing in October
2007 and bearing interest at an annual rate of 7.625%
payable semiannually                                                                   |  |      |  |      |           |  | 2,433,489 |     |  |  |           |  |  |  | 2,610,000 | 
|Loans in U.S. dollars, bearing interest at annual rates from
3.80% to 7.96% payable quarterly, and due in annual payments
from 2003 through 2009                                                         |  |      |  |      |           |  | 312,742   |     |  |  |           |  |  |  | 323,126   | 

F-15



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002,
except where otherwise indicated)



|9. |  | SHORT-TERM BANK LOANS AND LONG-TERM DEBT (continued)
|-- |  | ----------------------------------------------------

|                                                                                                                                                             |  |      |  |      |           |  |           |     |  |  |           |  |  |  |           |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---- |  | ---- | --------- |  | --------- | --- |  |  | --------- |  |  |  | --------- | -
|                                                                                                                                                             |  | 2001 |  | 2002
|                                                                                                                                                             |  |      |  |     
|Loans in Venezuelan bolivars payable in 2003 and bearing interest at
variable annual rates, ranging from 23% to 27%
as of December 31, 2002, payable monthly |  |      |  |      |           |  | 295,204   |     |  |  |           |  |  |  | 120,167   |  
|Loans in U.S. dollars, due in 2003, bearing interest at an
annual rate of LIBOR plus 1.25% to 2.5% (payable
monthly)                                         |  |      |  |      |           |  | 48,680    |     |  |  |           |  |  |  | 658,190   |  
|                                                                                                                                                             |  |      |  |      |           |  |           |     |  |  |           |  |  |  |           |  
|                                                                                                                                                             |  |      |  |      |           |  | 6,983,697 |     |  |  |           |  |  |  | 6,843,483 |  
|Short-term bank loans                                                                                                                                        |  |      |  |      |           |  | (343,884  | )   |  |  |           |  |  |  | (778,365  | )
|Current portion of long-term debt                                                                                                                            |  |      |  |      |           |  | (11,769   | )   |  |  |           |  |  |  | (12,183   | )
|                                                                                                                                                             |  |      |  |      |           |  |           |     |  |  |           |  |  |  |           |  
|Long-term debt                                                                                                                                               |  | Ps.  |  |      | 6,628,044 |  |           | Ps. |  |  | 6,052,935 | 
|                                                                                                                                                             |  |      |  |      |           |  |           |     |  |  |           |  |  |  |           |  



| |  | Short-term bank loans in U.S. dollars bear interest at an average rate of
2.77% as of December 31, 2002. Short-term bank loans in Venezuelan
bolivars bear interest at an average rate of 16.75% and 25.67% as of
December 31, 2001 and 2002, respectively.                               
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Company has credit line agreements for U.S.$70 million (Ps.730,800),
all of which were available as of December 31, 2002. These credit line
agreements require the payment of an annual commitment fee of 0.035% to
0.15% on the unused amounts.                                      
|
| |  | Various credit agreements contain covenants requiring the Company to
maintain certain financial ratios. The Companys ability to pay dividends
is restricted upon the failure to maintain such financial ratios. At
December 31, 2002, the Company was in compliance with these covenants.
|
| |  | At December 31, 2002, the annual maturities of long-term debt outstanding
are as follows:                                                                                                                                                                                                 

|     |                     |        |     |  |           |         |  |           | 
|---- | ------------------- | ------ | --- |  | --------- | ------- |  | --------- | 
|Year |                     | Amount
|     |                     |       
|     | 2004                |        | Ps. |  |           | 548,989 | 
|     | 2005                |        |     |  |           |         |  | 2,623,908 | 
|     | 2006                |        |     |  |           |         |  | 15,039    | 
|     | 2007                |        |     |  |           |         |  | 2,736,264 | 
|     | 2008 and thereafter |        |     |  |           |         |  | 128,735   | 
|     |                     | Ps.    |     |  | 6,052,935 |        
|     |                     |        |     |  |           |         |  |          



|    |  | The Company has entered into an interest rate swap agreement covering a
portion of its long term debt maturing in October 2007. See Note 17.                                                                                                            
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|10. |  | SENIORITY PREMIUM AND SAVINGS PLAN                                                                                                                                                                                                                      
|   
|    |  | Seniority premium cost and other employee retirement benefits are
determined by independent actuaries and are principally based on the
employees years of service, age and salaries. The Company has
established trust funds to meet these obligations.
|   
|    |  | The seniority premium balance as of December 31, 2001 and 2002 amounted
to Ps.30,516 and Ps.31,773, respectively, and is included in other
liabilities.                                                                                                 

F-16



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002,
except where otherwise indicated)



|10. |  | SENIORITY PREMIUM AND SAVINGS PLAN (continued)                                                         
|--- |  | -------------------------------------------------------------------------------------------------------
|   
|    |  | The components of net seniority premium cost for the years ended
December 31, consist of the following:

|                         |  |      |  |      |       |      |        |     |  |  |       |  |  |     |        |   |       |  |  |  |  |  |        |  
|------------------------ |  | ---- |  | ---- | ----- | ---- | ------ | --- |  |  | ----- |  |  | --- | ------ | - | ----- |  |  |  |  |  | ------ | -
|                         |  | 2000 |  | 2001 |       | 2002
|                         |  |      |  |      |       |     
|Service cost             |  | Ps.  |  |      | 2,524 |      |        | Ps. |  |  | 2,802 |  |  | Ps. |        |   | 2,854 | 
|Interest cost            |  |      |  |      |       |      | 626    |     |  |  |       |  |  |     | 739    |   |       |  |  |  |  |  | 807    |  
|Return on plan assets    |  |      |  |      |       |      | (1,675 | )   |  |  |       |  |  |     | (1,759 | ) |       |  |  |  |  |  | (1,509 | )
|Curtailment loss (gain)  |  |      |  |      |       |      |       |     |  |  |       |  |  |     | 199    |   |       |  |  |  |  |  | (311   | )
|Settlement loss          |  |      |  |      |       |      |       |     |  |  |       |  |  |     | 252    |   |       |  |  |  |  |  |       |  
|Net amortization of gain |  |      |  |      |       |      | 1,242  |     |  |  |       |  |  |     | 1,209  |   |       |  |  |  |  |  | 1,181  |  
|                         |  |      |  |      |       |      |        |     |  |  |       |  |  |     |        |   |       |  |  |  |  |  |        |  
|Net cost for the year    |  | Ps.  |  |      | 2,717 |      |        | Ps. |  |  | 3,442 |  |  | Ps. |        |   | 3,022 | 
|                         |  |      |  |      |       |      |        |     |  |  |       |  |  |     |        |   |       |  |  |  |  |  |        |  

As of December 31, the status of the plan is as follows:

|                                                                           |                               |                                                    |     |      |        |        |         |        |        |   |        |        |   |  |         |        |        |  
|-------------------------------------------------------------------------- | ----------------------------- | -------------------------------------------------- | --- | ---- | ------ | ------ | ------- | ------ | ------ | - | ------ | ------ | - |  | ------- | ------ | ------ | -
|                                                                           |                               |                                                    |     | 2001 |        | 2002  
|                                                                           |                               |                                                    |     |      |        |       
|Actuarial present value of benefit obligations:                            |                               |                                                    |     |      |        |        |         |        |        |   |        |        |   |  |         |       
|                                                                           | Vested benefit obligation     |                                                    | Ps. |      |        | (8,117 | )       |        | Ps.    |   |        | (8,821 | )
|                                                                           | Non-vested benefit obligation |                                                    |     |      |        |        |         | (7,916 | )      |   |        |        |   |  |         | (8,195 | )     
|                                                                           |                               |                                                    |     |      |        |        |         |        |        |   |        |        |   |  |         |       
|                                                                           |                               |                                                    |     |      |        |        | (16,033 | )      |        |   |        |        |   |  | (17,016 | )     
|Excess of projected benefit obligation over accumulated
benefit obligation |                               |                                                    |     |      |        |        | (6,270  | )      |        |   |        |        |   |  | (6,441  | )     
|                                                                           |                               |                                                    |     |      |        |        |         |        |        |   |        |        |   |  |         |       
|Projected benefit obligation                                               |                               |                                                    |     |      |        |        | (22,303 | )      |        |   |        |        |   |  | (23,457 | )     
|Plan assets at fair value (trust funds)                                    |                               |                                                    |     |      |        |        | 17,373  |        |        |   |        |        |   |  | 16,839  |       
|                                                                           |                               |                                                    |     |      |        |        |         |        |        |   |        |        |   |  |         |       
|Shortfall of plan assets over projected benefit obligation                 |                               |                                                    |     |      |        |        | (4,930  | )      |        |   |        |        |   |  | (6,618  | )     
|Unrecognized amounts to be amortized over 17 years:                        |                               |                                                    |     |      |        |        |         |        |        |   |        |        |   |  |         |       
|                                                                           |                               | Cumulative net gain                                |     |      |        |        |         |        | 1,513  |   |        |        |   |  |         |        | 2,293  |  
|                                                                           |                               | Net transition liability                           |     |      |        |        |         |        | (204   | ) |        |        |   |  |         |        | (398   | )
|                                                                           |                               | Prior service cost                                 |     |      |        |        |         |        | (304   | ) |        |        |   |  |         |        | (204   | )
|                                                                           |                               | Adjustment required to recognize minimum liability |     |      |        |        |         |        | (1,198 | ) |        |        |   |  |         |        | (1,308 | )
|                                                                           |                               |                                                    |     |      |        |        |         |        |        |   |        |        |   |  |         |       
|Seniority premium liability                                                |                               | Ps.                                                |     |      | (5,123 | )      |         | Ps.    |        |   | (6,235 | )     
|                                                                           |                               |                                                    |     |      |        |        |         |        |        |   |        |        |   |  |         |       



| |  | For the years ended December 31, 2001 and 2002, the changes in projected
benefit obligation and plan assets are summarized as follows:
| |  | --------------------------------------------------------------------------------------------------------------------------------------

|                                                  |                                          |     |      |  |        |  |  |       |  |  |        |  |  |  |  |        |  
|------------------------------------------------- | ---------------------------------------- | --- | ---- |  | ------ |  |  | ----- |  |  | ------ |  |  |  |  | ------ | -
|                                                  |                                          |     | 2001 |  | 2002  
|                                                  |                                          |     |      |  |       
|Projected benefit obligation at beginning of year |                                          | Ps. |      |  | 18,096 |  |  | Ps.   |  |  | 22,303 | 
|                                                  | Effect of inflation on beginning balance |     |      |  |        |  |  | 318   |  |  |        |  |  |  |  | (659   | )
|                                                  | Service cost                             |     |      |  |        |  |  | 2,802 |  |  |        |  |  |  |  | 2,854  |  
|                                                  | Interest cost                            |     |      |  |        |  |  | 739   |  |  |        |  |  |  |  | 807    |  
|                                                  | Benefits paid                            |     |      |  |        |  |  | 263   |  |  |        |  |  |  |  | (2,702 | )
|                                                  | Actuarial loss                           |     |      |  |        |  |  | 85    |  |  |        |  |  |  |  | 854    |  
|                                                  |                                          |     |      |  |        |  |  |       |  |  |        |  |  |  |  |       
|Projected benefit obligation at end of year       |                                          | Ps. |      |  | 22,303 |  |  | Ps.   |  |  | 23,457 | 
|                                                  |                                          |     |      |  |        |  |  |       |  |  |        |  |  |  |  |       

|                                               |                                          |     |      |  |        |  |  |       |  |  |        |  |  |  |  |        |  
|---------------------------------------------- | ---------------------------------------- | --- | ---- |  | ------ |  |  | ----- |  |  | ------ |  |  |  |  | ------ | -
|                                               |                                          |     | 2001 |  | 2002  
|                                               |                                          |     |      |  |       
|Fair value of plan assets at beginning of year |                                          | Ps. |      |  | 15,038 |  |  | Ps.   |  |  | 17,372 | 
|                                               | Effect of inflation on beginning balance |     |      |  |        |  |  | 312   |  |  |        |  |  |  |  | (73    | )
|                                               | Return on plan assets                    |     |      |  |        |  |  | 1,759 |  |  |        |  |  |  |  | 1,509  |  
|                                               | Benefits paid                            |     |      |  |        |  |  | 263   |  |  |        |  |  |  |  | (1,969 | )
|                                               |                                          |     |      |  |        |  |  |       |  |  |        |  |  |  |  |       
|Fair value of plan assets at end of year       |                                          | Ps. |      |  | 17,372 |  |  | Ps.   |  |  | 16,839 | 
|                                               |                                          |     |      |  |        |  |  |       |  |  |        |  |  |  |  |       

F-17



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002,
except where otherwise indicated)



|10. |  | SENIORITY PREMIUM AND SAVINGS PLAN (continued)                                                                                         
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Significant assumptions (weighted average rates, net of expected
inflation) used in determining seniority premium cost were as follows:

|                                                 |  |                         |     |      |  |      |     |   |  |  |     |  
|------------------------------------------------ |  | ----------------------- | --- | ---- |  | ---- | --- | - |  |  | --- | -
|                                                 |  | Year ended December 31,
|                                                 |  |                        
|                                                 |  | 2000                    |     | 2001 |  | 2002
|                                                 |  |                         |     |      |  |     
|Discount rate                                    |  |                         | 4.0 | %    |  |      | 4.0 | % |  |  | 3.5 | %
|Rate of increase in future compensation levels   |  |                         | 2.0 | %    |  |      | 2.0 | % |  |  | 1.5 | %
|Expected long-term rate of return on plan assets |  |                         | 5.0 | %    |  |      | 5.0 | % |  |  | 4.0 | %



|    |  | In the United States, the Company has a saving and investment plan that
incorporates voluntary employee 401(K) contributions with Company
contributions. For the years ended December 31, 2000, 2001 and 2002,
total expenses related to this plan were U.S.$2,098 (Ps.21,903),
U.S.$2,212 (Ps.23,093) and U.S.$2,324 (Ps.24,263), respectively.                                                                                   
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | In Venezuela, the Company recognizes a liability for seniority premiums
and indemnities for dismissal established by the local Labor Law, which
amounted Ps.16,939 and Ps.14,070 as of December 31, 2001 and 2002,
respectively.                                                                                                                                                                                                   
|   
|    |  | In Central America, the labor legislation of Costa Rica, Nicaragua, El
Salvador, Honduras and Guatemala establishes that the accumulated
payments to which workers may be entitled, based on the years of
services, must be paid in the case of death, retirement or dismissal. The
Company records a liability at 10% over salaries paid, which amounted to
Ps.8,454 and Ps.11,468 as of December 31, 2001 and 2002, respectively.
|   
|11. |  | CONTINGENCIES AND COMMITMENTS                                                                                                                                                                                                                                                                                                                                                                                                      



| | A) |  | CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | The Mexican tax authorities have made certain observations to asset
tax declarations for the years 1995 and 1996, which amounted to
Ps.500,082 including the related surcharges and penalties. The
resolution of these matters is not expected to have a material adverse
effect on the Companys consolidated financial position or results of
operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |    |  | In September 2000, the Company learned that some products made with
yellow corn flour manufactured by the Company were found to contain
traces of Starlink DNA, indicating that the products may have
contained Starlink. Starlink is a genetically modified organism
approved by U.S. government agencies for animal feed, but not for
human consumption. Shortly thereafter, the Company voluntarily
recalled all of their yellow corn products and ceased manufacturing
products made with yellow corn. During the voluntary product recall,
the Company incurred significant costs primarily related to raw
material and finished goods inventories on hand that will not be sold
for human consumption, return of yellow corn products sold to
customers for credit or replacement with white corn products, unusable
packaging material, laboratory testing fees and other legal and
consulting fees. During 2001 the Company reached and collected
settlements from third parties for costs incurred during the voluntary
product recall with approximately Ps.64,419 (U.S.$6,618,000) allocated
to lost sales and margins. This amount is recorded in other income,
net (Note 13).
|
| |    |  | As a result of the possible Starlink contamination, a number of
lawsuits by consumers and customers were filed against the Company and
other defendants, in which the plaintiffs claimed damages from buying
yellow corn products that were suspected to contain Starlink. These
lawsuits were solved without any cost for the Company. In addition,
the Company is involved in lawsuits filed by one of the principal
restaurant chains in the United States and certain franchisees which
alleged sales loss as a result of Starlink contamination. At the
present time, these cases have not had a significant effect on the
Companys financial position and results of operations. A settlement
agreement has been reached by the parties and is pending approval by
the court.                                                                                                                                                                                                                                                                                                                                                                                                      

F-18



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002,
except where otherwise indicated)



|11. |  | CONTINGENCIES AND COMMITMENTS (continued)
|--- |  | -----------------------------------------



| |    |  | The Company is involved in lawsuits alleging monopolistic practices in
the United States of America. The resolution of these matters is not
expected to have a material adverse effect on the Companys
consolidated financial position or results of operations.                                                                                                                                                     
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | The Company is also involved in a number of claims arising in the
ordinary course of business which have not been finally adjudicated.
The resolution of these matters is not expected to have a material
adverse effect on the Companys consolidated financial position or
results of operations.                                                                                                                   
|
| | B) |  | COMMITMENTS                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |    |  | The Company entered into sale-leaseback agreements for various
production equipment located in its U.S. plants. The Company has a
purchase option at fair market value at the expiration of the leases
and an early purchase option, which permits the Company to acquire the
equipment at fair market value at approximately three-fourths of the
lease term. These agreements are accounted for as operating leases.
|
| |    |  | As of December 31, 2002, the Company is leasing certain equipment
under long-term operating lease agreements expiring through 2011.
Future minimum lease payments under such leases amount to
approximately U.S. $114,328,000 (Ps.1,193,584), as follows:                                                                                                                                                             

|     |                     |            |                          |           |         |       |        |       |     |  |         |  |      |      |        |        |           |  |  |  |      |      |         |        | 
|---- | ------------------- | ---------- | ------------------------ | --------- | ------- | ----- | ------ | ----- | --- |  | ------- |  | ---- | ---- | ------ | ------ | --------- |  |  |  | ---- | ---- | ------- | ------ | 
|     |                     |            | U.S. dollars (thousands)
|     |                     |            |                         
|Year |                     | Facilities |                          | Equipment |         | Total
|     |                     |            |                          |           |         |      
|     | 2003                |            |                          |           |         | U.S.  | $      | 8,290 |     |  |         |  |      | U.S. | $      | 24,550 |           |  |  |  |      | U.S. | $       | 32,840 | 
|     | 2004                |            |                          |           |         |       |        | 6,750 |     |  |         |  |      |      |        | 18,867 |           |  |  |  |      |      |         | 25,617 | 
|     | 2005                |            |                          |           |         |       |        | 5,826 |     |  |         |  |      |      |        | 12,974 |           |  |  |  |      |      |         | 18,800 | 
|     | 2006                |            |                          |           |         |       |        | 5,068 |     |  |         |  |      |      |        | 6,147  |           |  |  |  |      |      |         | 11,215 | 
|     | 2007                |            |                          |           |         |       |        | 4,582 |     |  |         |  |      |      |        | 5,635  |           |  |  |  |      |      |         | 10,217 | 
|     | 2008 and thereafter |            |                          |           |         |       |        | 7,710 |     |  |         |  |      |      |        | 7,929  |           |  |  |  |      |      |         | 15,639 | 
|     |                     |            |                          |           |         |       |        |       |     |  |         |  |      |      |        |        |           |  |  |  |      |      |         |       
|     |                     |            |                          |           | U.S.    | $     | 38,226 |       |     |  |         |  | U.S. | $    | 76,102 |        |           |  |  |  | U.S. | $    | 114,328 |       
|     |                     |            |                          |           |         |       |        |       |     |  |         |  |      |      |        |        |           |  |  |  |      |      |         |       
|     |                     |            | Ps.                      |           | 399,079 |       |        |       | Ps. |  | 794,505 |  |      |      | Ps.    |        | 1,193,584 | 
|     |                     |            |                          |           |         |       |        |       |     |  |         |  |      |      |        |        |           |  |  |  |      |      |         |       



| |  |  | Rental expense was approximately Ps.436,212, Ps.377,379 and Ps.366,705
for the years ended December 31, 2000, 2001 and 2002, respectively.                                                                                                                                                                                                                                                                       
| |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | At December 31, 2002, the Company has various outstanding commitments
in the United States to purchase commodities and raw materials of
approximately U.S.$70,371,000 (Ps.734,673), which will be delivered
during 2003.                                                                                                                                                                                         
|
| |  |  | As of December 31, 2002, the Company has outstanding commitments to
purchase machinery and equipment amounting to U.S.$1,136,000
(Ps.11,860).                                                                                                                                                                                                                                                                    
|
| |  |  | As of December 31, 2001 and 2002, restricted cash of Ps.2,745 and
Ps.1,378, respectively, included undisbursed proceeds from the
issuance of tax-exempt industrial development revenue bonds in the
United States amounting to Ps.1,284 (U.S.$123,000) and Ps.1,211
(U.S.$116,000) for the years 2001 and 2002, respectively, which are
available to pay interest expense on outstanding balances on these
bonds.

F-19



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002,
except where otherwise indicated)



|12. |  | STOCKHOLDERS EQUITY
|--- |  | --------------------



| | A) |  | COMMON STOCK                                                                                                                                                                                                                                                                                                                                                                                        
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | At December 31, 2002, Grumas outstanding common stock consisted of
441,402,386 shares of Series B, with no par value, fully subscribed
and paid, which can only be withdrawn with stockholders approval, and
11,147,566 authorized shares held in Treasury. At December 31, 2001,
the Companys outstanding common stock consisted of 441,725,086 shares
and 10,824,866 shares held in Treasury.
|
| | B) |  | EXECUTIVE STOCK PURCHASE PLAN                                                                                                                                                                                                                                                                                                                                                                       
|
| |    |  | Gruma S.A. de C.V. established, through an irrevocable grantor trust,
an Executive Stock Purchase Plan. The shares were granted to
executives, and such executives had the right to receive dividends
during the six-year term after joining the plan.                                                                                                                                            
|
| |    |  | During 2002 the Company decided to cancel the plan and paid each of
the eligible employees the value of the shares corresponding to them
at the then current market price.                                                                                                                                                                                                                          
|
| | C) |  | RETAINED EARNINGS                                                                                                                                                                                                                                                                                                                                                                                   
|
| |    |  | In accordance with Mexican Corporate Law, the legal reserve must be
increased annually by 5 % of annual net profits until it reaches 20 %
of the fully paid capital stock amount.                                                                                                                                                                                                                   
|
| |    |  | A 53.85% tax is payable by the Company if dividends are paid from
earnings that have not been subject to Mexican income tax. The
applicable tax may be credited against income tax the Company is
subject to in the following three fiscal years. Effective January 1,
2002, dividends paid by the Company from the net tax income account
are not subject to any tax.                              
|
| | D) |  | PURCHASE OF COMMON STOCK                                                                                                                                                                                                                                                                                                                                                                            
|
| |    |  | The Stockholders Meeting approved a Ps.650,000 reserve to repurchase
the Companys own shares. The total amount of repurchased shares
cannot exceed either the reserve amount or 5% of total equity. As of
December 31, 2002, the Company has repurchased 11,147,566 of its own
shares with market value of Ps.112,590.                                                                            
|
| |    |  | The Company has entered into the following agreements involving its
own shares:                                                                                                                                                                                                                                                                                                                     



| |  |  | During 2002, the Company entered into an equity swap
agreement with a financial institution to sell 2,300,000 of its
own shares for a total amount of U.S.$2,590,000. At maturity the
Company is subject to pay a financial cost at the LIBOR rate
plus 3.2% on the contractual amount. The agreement matures in
August 2003, at which time the Company has the option to
repurchase the shares at U.S.$1.126071 per share or pay or
receive the difference between the agreed price and the market
price.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | During 2002, the Company entered into two call option
agreements with a European financial institution, selling
13,900,000 of its own shares for a total amount of
U.S.$13,244,000. The agreements mature in January 2003 and
December 2003, respectively. At maturity, the Company has the
right to repurchase the shares at nominal value.                                                                                                                                                              

F-20



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002,
except where otherwise indicated)



|12. |  | STOCKHOLDERS EQUITY (continued)
|--- |  | --------------------------------



| | E) |  | FOREIGN CURRENCY TRANSLATION ADJUSTMENTS                                                              
| | -- |  | ------------------------------------------------------------------------------------------------------
|
| |    |  | As of December 31, 2001 and 2002, Foreign currency translation
adjustments consist of the following:

| |                                                                                                                                                              |     |      |  |          |         |  |          |     |  |          |          |   |  |  |          |  
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------ | --- | ---- |  | -------- | ------- |  | -------- | --- |  | -------- | -------- | - |  |  | -------- | -
| |                                                                                                                                                              |     | 2001 |  | 2002    
| |                                                                                                                                                              |     |      |  |         
| | Foreign currency translation at beginning of year                                                                                                            |     | Ps.  |  |          | 215,113 |  |          | Ps. |  |          | (368,078 | )
| | Annual effect of translating net investment in foreign
subsidiaries                                                                                          |     |      |  |          |         |  | (723,920 | )   |  |          |          |   |  |  | 311,650  |  
| | Exchange differences arising from foreign currency
liabilities accounted for as a hedge of the Companys net
investments in foreign subsidiaries, net of tax |     |      |  |          |         |  | 140,729  |     |  |          |          |   |  |  | (554,372 | )
| |                                                                                                                                                              |     |      |  |          |         |  |          |     |  |          |          |   |  |  |         
| |                                                                                                                                                              | Ps. |      |  | (368,078 | )       |  | Ps.      |     |  | (610,800 | )       
| |                                                                                                                                                              |     |      |  |          |         |  |          |     |  |          |          |   |  |  |         



| | F) |  | INFLATION EFFECTS                                                                        
| | -- |  | -----------------------------------------------------------------------------------------
|
| |    |  | As of December 31, 2002, the majority stockholders equity is
comprised of the following:

|                                                                                                                           |  |         |  |             |           |       |           |     |  |  |           |  |  |     |             |   |            |  |  |  |  |  |             |  
|-------------------------------------------------------------------------------------------------------------------------- |  | ------- |  | ----------- | --------- | ----- | --------- | --- |  |  | --------- |  |  | --- | ----------- | - | ---------- |  |  |  |  |  | ----------- | -
|                                                                                                                           |  | Nominal |  | Restatement |           | Total
|                                                                                                                           |  |         |  |             |           |      
|Common stock                                                                                                               |  | Ps.     |  |             | 4,209,347 |       |           | Ps. |  |  | 6,088,566 |  |  | Ps. |             |   | 10,297,913 | 
|Additional paid-in
capital                                                                                                 |  |         |  |             |           |       | 1,216,020 |     |  |  |           |  |  |     | 1,922,675   |   |            |  |  |  |  |  | 3,138,695   |  
|Deficit from restatement                                                                                                   |  |         |  |             |           |       |          |     |  |  |           |  |  |     | (11,077,100 | ) |            |  |  |  |  |  | (11,077,100 | )
|Cumulative effect
of a change in an
accounting
principle for
deferred income
taxes and
employees
statutory profit
sharing |  |         |  |             |           |       | (175,471  | )   |  |  |           |  |  |     | (10,003     | ) |            |  |  |  |  |  | (185,474    | )
|Retained earnings
from prior
years                                                                                         |  |         |  |             |           |       | 2,455,720 |     |  |  |           |  |  |     | 5,036,299   |   |            |  |  |  |  |  | 7,492,019   |  
|Net income for the
year                                                                                                    |  |         |  |             |           |       | 394,482   |     |  |  |           |  |  |     | (1,290      | ) |            |  |  |  |  |  | 393,192     |  
|Foreign currency
translation
adjustments                                                                                   |  |         |  |             |           |       | (610,800  | )   |  |  |           |  |  |     |            |   |            |  |  |  |  |  | (610,800    | )
|                                                                                                                           |  |         |  |             |           |       |           |     |  |  |           |  |  |     |             |   |            |  |  |  |  |  |             |  
|                                                                                                                           |  | Ps.     |  |             | 7,489,298 |       |           | Ps. |  |  | 1,959,147 |  |  | Ps. |             |   | 9,448,445  | 
|                                                                                                                           |  |         |  |             |           |       |           |     |  |  |           |  |  |     |             |   |            |  |  |  |  |  |             |  



| | G) |  | TAX VALUES OF COMMON STOCK AND RETAINED EARNINGS                                                                            
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------
|
| |    |  | As of December 31, 2002, tax amounts of common stock and retained
earnings were Ps.8,578,412 and Ps.1,429,235, respectively.

F-21



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002,
except where otherwise indicated)



|13. |  | OTHER INCOME, NET                               
|--- |  | ------------------------------------------------
|   
|    |  | Other income, net is comprised of the following:

|                                                                                                              |  |                         |  |      |        |      |         |     |  |  |        |  |  |     |          |   |         |  |  |  |  |  |         |  
|------------------------------------------------------------------------------------------------------------- |  | ----------------------- |  | ---- | ------ | ---- | ------- | --- |  |  | ------ |  |  | --- | -------- | - | ------- |  |  |  |  |  | ------- | -
|                                                                                                              |  | Year ended December 31,
|                                                                                                              |  |                        
|                                                                                                              |  | 2000                    |  | 2001 |        | 2002
|                                                                                                              |  |                         |  |      |        |     
|Disposal of subsidiaries                                                                                      |  | Ps.                     |  |      |       |      |         | Ps. |  |  |       |  |  | Ps. |          |   | 130,627 | 
|Software implementation expenses                                                                              |  |                         |  |      |        |      | (35,349 | )   |  |  |        |  |  |     | (5,413   | ) |         |  |  |  |  |  |        |  
|Reorganization expenses                                                                                       |  |                         |  |      |        |      | (47,815 | )   |  |  |        |  |  |     | (3,487   | ) |         |  |  |  |  |  |        |  
|Amortization of excess of cost over book
value and excess of book value over cost, net                        |  |                         |  |      |        |      | 299,009 |     |  |  |        |  |  |     | 323,002  |   |         |  |  |  |  |  | 132,698 |  
|Amortization of other deferred costs                                                                          |  |                         |  |      |        |      | (77,409 | )   |  |  |        |  |  |     | (75,622  | ) |         |  |  |  |  |  | (90,909 | )
|Write-off of machinery                                                                                        |  |                         |  |      |        |      | (46,094 | )   |  |  |        |  |  |     |         |   |         |  |  |  |  |  |        |  
|Write-off of pre-operating expenses not
related with shut-down of the bread
manufacturing operation and other |  |                         |  |      |        |      | (23,567 | )   |  |  |        |  |  |     | (21,979  | ) |         |  |  |  |  |  |        |  
|Impairment loss in the carrying value of idle
assets (Note 6)                                                 |  |                         |  |      |        |      |        |     |  |  |        |  |  |     | (14,861  | ) |         |  |  |  |  |  | (56,675 | )
|Net loss from the shut-down of the bread
operations                                                           |  |                         |  |      |        |      |        |     |  |  |        |  |  |     | (199,315 | ) |         |  |  |  |  |  |        |  
|Voluntary product recall settlements (Note 11)                                                                |  |                         |  |      |        |      |        |     |  |  |        |  |  |     | 64,419   |   |         |  |  |  |  |  |        |  
|Other                                                                                                         |  |                         |  |      |        |      | (36,314 | )   |  |  |        |  |  |     | 2,663    |   |         |  |  |  |  |  | 4,779   |  
|                                                                                                              |  |                         |  |      |        |      |         |     |  |  |        |  |  |     |          |   |         |  |  |  |  |  |         |  
|                                                                                                              |  | Ps.                     |  |      | 32,461 |      |         | Ps. |  |  | 69,407 |  |  | Ps. |          |   | 120,520 | 
|                                                                                                              |  |                         |  |      |        |      |         |     |  |  |        |  |  |     |          |   |         |  |  |  |  |  |         |  



|    |  | During 2002, the Company sold the shares of one of its subsidiaries and
recognized a gain of Ps 130,627.                                                             
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | During 2001, the Company determined that the carrying value of certain
goodwill was impaired; consequently, goodwill was reduced by Ps.21,979.                       
|   
|    |  | The net loss from the shut-down of the bread operations includes in 2001
a provision of approximately Ps.34,274, mainly for fixed asset impairment
losses and others.
|   
|14. |  | INCOME TAXES, ASSET TAX AND EMPLOYEES STATUTORY PROFIT SHARING                                                                                                      



| | A) |  | INCOME TAX AND ASSET TAX                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | Gruma files a consolidated income tax return for Mexican income tax
purposes, consolidating taxable income and losses of Gruma and its
controlled Mexican subsidiaries. Filing a consolidated tax return had
the effect of reducing income tax expense for the years ended December
31, 2000, 2001 and 2002 by Ps.115,622, Ps.86,324 and Ps.52,897,
respectively, as compared to filing a tax return on an unconsolidated
basis. Tax regulations limit the income tax consolidation to 60% of
the ownership interest of controlled Mexican subsidiaries.
|
| |    |  | In accordance with the applicable tax law, Mexican corporations must
pay the higher of either income tax or asset tax. Asset tax is
determined applying 1.8% on the average value of substantially all of
the Companys Mexican assets less certain liabilities. Payments of
asset tax are recoverable against the excess of income tax over asset
tax of the three prior years and the ten subsequent years.                                                                                                                                           
|
| |    |  | For the years ended December 31, 2000, 2001 and 2002, asset tax
amounted to Ps.88,634, Ps.125,132 and Ps.159,501, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                         

F-22



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002,
except where otherwise indicated)



|14. |  | INCOME TAXES, ASSET TAX AND EMPLOYEES STATUTORY PROFIT SHARING
(continued)
|--- |  | ---------------------------------------------------------------------------



| | B) |  | RECONCILIATION OF FINANCIAL AND TAXABLE INCOME                                                                                                           
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | For the years 2000, 2001 and 2002, the reconciliation between
statutory income tax amounts and the effective income tax amounts is
summarized as follows:

|                                                                                       |  |                         |  |      |         |      |         |     |  |  |         |  |  |     |          |   |         |  |  |  |  |  |         |  
|-------------------------------------------------------------------------------------- |  | ----------------------- |  | ---- | ------- | ---- | ------- | --- |  |  | ------- |  |  | --- | -------- | - | ------- |  |  |  |  |  | ------- | -
|                                                                                       |  | Year ended December 31,
|                                                                                       |  |                        
|                                                                                       |  | 2000                    |  | 2001 |         | 2002
|                                                                                       |  |                         |  |      |         |     
|Statutory federal income tax (35%)                                                     |  | Ps.                     |  |      | 135,235 |      |         | Ps. |  |  | 261,745 |  |  | Ps. |          |   | 350,586 | 
|Foreign income tax differences                                                         |  |                         |  |      |         |      | (29,863 | )   |  |  |         |  |  |     | (80,520  | ) |         |  |  |  |  |  | (89,037 | )
|Effect of disposed subsidiaries                                                        |  |                         |  |      |         |      |        |     |  |  |         |  |  |     |         |   |         |  |  |  |  |  | 248,128 |  
|Restatement of corn cost                                                               |  |                         |  |      |         |      | (7,022  | )   |  |  |         |  |  |     | (3,491   | ) |         |  |  |  |  |  | (2,774  | )
|Financing cost, net and other income
statement effects related to inflation            |  |                         |  |      |         |      | 56,716  |     |  |  |         |  |  |     | 15,093   |   |         |  |  |  |  |  | (48,434 | )
|Amortization of excess of cost over book
value and excess of book value over cost, net |  |                         |  |      |         |      | (70,410 | )   |  |  |         |  |  |     | (76,766  | ) |         |  |  |  |  |  | (26,460 | )
|Foreign dividends                                                                      |  |                         |  |      |         |      |        |     |  |  |         |  |  |     | 168,319  |   |         |  |  |  |  |  | 144,843 |  
|Effect due to change in income tax rate                                                |  |                         |  |      |         |      |        |     |  |  |         |  |  |     |         |   |         |  |  |  |  |  | (26,684 | )
|Non-deductible expenses and non-taxable income                                         |  |                         |  |      |         |      |         |     |  |  |         |  |  |     | (28,153  | ) |         |  |  |  |  |  | 5,702   |  
|Restatement of tax loss carryforwards                                                  |  |                         |  |      |         |      | (70,208 | )   |  |  |         |  |  |     | (236,580 | ) |         |  |  |  |  |  | (33,657 | )
|Losses of Mexican subsidiaries which cannot
be utilized for income tax consolidation   |  |                         |  |      |         |      | 77,630  |     |  |  |         |  |  |     | 261,363  |   |         |  |  |  |  |  | 38,319  |  
|Other                                                                                  |  |                         |  |      |         |      | (69,313 | )   |  |  |         |  |  |     | (5,245   | ) |         |  |  |  |  |  | 700     |  
|                                                                                       |  |                         |  |      |         |      |         |     |  |  |         |  |  |     |          |   |         |  |  |  |  |  |         |  
|Effective income tax                                                                   |  | Ps.                     |  |      | 22,765  |      |         | Ps. |  |  | 275,765 |  |  | Ps. |          |   | 561,232 | 
|                                                                                       |  |                         |  |      |         |      |         |     |  |  |         |  |  |     |          |   |         |  |  |  |  |  |         |  



| |  |  | As a result of the amendments to the Income Tax Law approved on
January 1, 2002, beginning in 2003 the income tax rate of 35% will be
reduced annually to a nominal rate of 32% in 2005.                                                                                        
| |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | According to Bulletin D-4, Accounting Treatment of Income Tax, Asset
Tax and Employees Statutory Profit Sharing, deferred income taxes
should be determined using the statutory tax rate effective when the
deferred tax assets and liabilities will be recovered or settled.
|
| |  |  | The modification of the tax rate mentioned above, reduced the net
deferred tax liability by Ps.26,684 and resulted in a benefit to
income for the same amount.                                                                                                                  
|
| |  |  | At December 31, 2001 and 2002, the tax effects of main differences
that give rise to significant portions of the deferred tax assets and
liabilities, are as follows:                                                                                                           

F-23



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002,
except where otherwise indicated)



|14. |  | INCOME TAXES, ASSET TAX AND EMPLOYEES STATUTORY PROFIT SHARING
(continued)
|--- |  | ---------------------------------------------------------------------------

|                                                       |  |      |  |      |         |  |           |     |  |  |         |  |  |  |           | 
|------------------------------------------------------ |  | ---- |  | ---- | ------- |  | --------- | --- |  |  | ------- |  |  |  | --------- | 
|                                                       |  | 2001 |  | 2002
|                                                       |  |      |  |     
|Deferred tax assets:                                   |  |      |  |      |         |  |           |     |  |  |         |  |  |  |           | 
|Net operating loss carryforwards and other tax credits |  | Ps.  |  |      | 789,205 |  |           | Ps. |  |  | 970,223 | 
|Accrued
liabilities                                    |  |      |  |      |         |  | 108,073   |     |  |  |         |  |  |  | 109,430   | 
|Recoverable asset
tax                                  |  |      |  |      |         |  | 656,669   |     |  |  |         |  |  |  | 345,155   | 
|Intangible asset resulting from intercompany operation |  |      |  |      |         |  | 299,029   |     |  |  |         |  |  |  | 186,480   | 
|Other                                                  |  |      |  |      |         |  | 87,697    |     |  |  |         |  |  |  | 185,917   | 
|                                                       |  |      |  |      |         |  |           |     |  |  |         |  |  |  |           | 
|                                                       |  |      |  |      |         |  | 1,940,673 |     |  |  |         |  |  |  | 1,797,205 | 
|                                                       |  |      |  |      |         |  |           |     |  |  |         |  |  |  |           | 
|Deferred tax liabilities:                              |  |      |  |      |         |  |           |     |  |  |         |  |  |  |           | 
|Property, plant and equipment, net                     |  |      |  |      |         |  | 1,660,297 |     |  |  |         |  |  |  | 1,818,743 | 
|Inventories                                            |  |      |  |      |         |  | 378,078   |     |  |  |         |  |  |  | 395,470   | 
|Intangible assets and other                            |  |      |  |      |         |  | 37,467    |     |  |  |         |  |  |  | 5,652     | 
|Investment in partnership and equity method investee   |  |      |  |      |         |  | 191,506   |     |  |  |         |  |  |  | 202,181   | 
|                                                       |  |      |  |      |         |  |           |     |  |  |         |  |  |  |           | 
|                                                       |  |      |  |      |         |  | 2,267,348 |     |  |  |         |  |  |  | 2,422,046 | 
|                                                       |  |      |  |      |         |  |           |     |  |  |         |  |  |  |           | 
|Net deferred tax liability                             |  | Ps.  |  |      | 326,675 |  |           | Ps. |  |  | 624,841 | 
|                                                       |  |      |  |      |         |  |           |     |  |  |         |  |  |  |           | 



| |    |  | The Company has valuation allowances for its loss carryforwards
amounting to Ps.104,866 from Mexican subsidiaries and Ps.56,385 from
foreign subsidiaries as of December 31, 2001 and Ps.45,111 from
foreign subsidiaries as of December 31, 2002. In managements opinion,
the realization of these assets is less likely than not because of the
dependency on the generation of sufficient taxable income at the
subsidiary level.
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | Additionally, the Company has a deferred liability relating to
employees statutory profit sharing of Ps.51,619 and Ps.47,930 as of
December 31, 2001 and 2002, respectively.                                                                                                                                                                                                                                                        
|
| | C) |  | TAX LOSS CARRYFORWARDS AND RECOVERABLE ASSET TAX                                                                                                                                                                                                                                                                                                                                                                                     
|
| |    |  | At December 31, 2002, in Mexico, the Company has tax loss
carryforwards of approximately Ps.2,056,630 available to offset its
taxable income in subsequent years, and asset tax of Ps.296,763
available to offset the excess of income tax over asset tax in future
years, as shown below:                                                                                                                                           

|                |      |               |          |           |             |   |  |           |     |  |         |         |  |  |  |         | 
|--------------- | ---- | ------------- | -------- | --------- | ----------- | - |  | --------- | --- |  | ------- | ------- |  |  |  | ------- | 
|                |      |               | Tax loss |           | Recoverable
|Expiration year |      | carryforwards |          | asset tax
|                |      |               |          |          
|                | 2010 |               | Ps.      |           |             |  |  |           | Ps. |  |         | 137,262 | 
|                | 2012 |               |          |           |             |   |  | 2,056,630 |     |  |         |         |  |  |  | 159,501 | 
|                |      |               |          |           |             |   |  |           |     |  |         |         |  |  |  |        
|                |      | Ps.           |          |           | 2,056,630   |   |  | Ps.       |     |  | 296,763 |        
|                |      |               |          |           |             |   |  |           |     |  |         |         |  |  |  |        



| |    |  | Additionally, at December 31, 2002, certain foreign subsidiaries have
tax loss carryforwards of approximately Ps.28,789 (1,044,342
million Costa Rican colons) which will expire in 2003 to 2004 and
Ps.154,901 (20,820 million Venezuelan bolivars) which will expire
in 2003.                                                                                                                                                                                            
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | D) |  | EMPLOYEES STATUTORY PROFIT SHARING                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |    |  | In Mexico, employees statutory profit sharing is determined for each
subsidiary on an unconsolidated basis, applying 10% of taxable income
determined on a basis similar to income tax, except that the
employees statutory profit sharing does not consider inflation
effects (inflationary component), depreciation expense is based on the
historical cost, and a foreign exchange gain or loss is recognized
when a monetary asset or liability is contractually due.

F-24



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002,
except where otherwise indicated)



|15. |  | FOREIGN CURRENCY
|--- |  | ----------------



| | A) |  | EXCHANGE DIFFERENCES                                                                                                                                                        
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | For the years ended December 31, 2000, 2001 and 2002, the effects of
exchange rate fluctuations on the Companys monetary assets and
liabilities were recognized as follows:

| |                                                                                                                                                                                                                                                    |    |      |  |          |         |      |         |     |  |         |         |  |     |     |        |          |          |   |  |  |  |  |          |  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -- | ---- |  | -------- | ------- | ---- | ------- | --- |  | ------- | ------- |  | --- | --- | ------ | -------- | -------- | - |  |  |  |  | -------- | -
| |                                                                                                                                                                                                                                                    |    | 2000 |  | 2001     |         | 2002
| |                                                                                                                                                                                                                                                    |    |      |  |          |         |     
| | Exchange differences arising from foreign currency liabilities
accounted for as a hedge of the Companys net investment in
foreign subsidiaries recorded directly to stockholders equity
as an effect of foreign currency translation adjustments |    | Ps   |  |          | (48,835 | )    |         | Ps. |  |         | 140,729 |  |     | Ps. |        |          | (554,372 | )
| | Exchange differences arising from foreign currency
transactions credited (charged) to income                                                                                                                                                       |    |      |  |          |         |      | (60,995 | )   |  |         |         |  |     |     | 99,964 |          |          |   |  |  |  |  | (263,095 | )
| |                                                                                                                                                                                                                                                    |    |      |  |          |         |      |         |     |  |         |         |  |     |     |        |          |          |   |  |  |  |  |         
| |                                                                                                                                                                                                                                                    | Ps |      |  | (109,830 | )       |      | Ps.     |     |  | 240,693 |         |  | Ps. |     |        | (817,467 | )       
| |                                                                                                                                                                                                                                                    |    |      |  |          |         |      |         |     |  |         |         |  |     |     |        |          |          |   |  |  |  |  |         



| | B) |  | FOREIGN CURRENCY POSITION                                                                                              
| | -- |  | -----------------------------------------------------------------------------------------------------------------------
|
| |    |  | As of December 31, 2001 and 2002, monetary assets and liabilities held
or payable in U.S. dollars are summarized below:

|                                |              |             |           |  |                           |  |          |   |        |          |       |  |       |  |          |   |         |          |  
|------------------------------- | ------------ | ----------- | --------- |  | ------------------------- |  | -------- | - | ------ | -------- | ----- |  | ----- |  | -------- | - | ------- | -------- | -
|                                |              |             |           |  | Thousands of U.S. dollars
|                                |              |             |           |  |                          
|                                |              |             |           |  | 2001                      |  | 2002    
|                                |              |             |           |  |                           |  |         
|By companies located in Mexico: |              |             |           |  |                           |  |          |   |        |          |       |  |       |  |          |  
|                                | Assets:      |             |           |  |                           |  |          |   |        |          |       |  |       |  |          |   |        
|                                |              | Current     |           |  | U.S.$                     |  |          |   | 13,989 |          |       |  | U.S.$ |  |          |   | 33,204  |         
|                                |              | Non current |           |  |                           |  |          |   |       |          |       |  |       |  |          |   | 11      |         
|                                | Liabilities: |             |           |  |                           |  |          |   |        |          |       |  |       |  |          |   |        
|                                |              | Current     |           |  |                           |  |          |   | (2,873 | )        |       |  |       |  |          |   | (71,342 | )       
|                                |              |             | Long-term |  |                           |  |          |   |        | (650,000 | )     |  |       |  |          |   |         | (550,000 | )
|                                |              |             |           |  |                           |  |          |   |        |          |       |  |       |  |          |  
|                                |              |             | U.S.$     |  |                           |  | (638,884 | ) |        |          | U.S.$ |  |       |  | (588,127 | )
|                                |              |             |           |  |                           |  |          |   |        |          |       |  |       |  |          |  

|                      |              |             |       |                           |       |      |          |   |          |   |       |  |       |  |          |   |          |  
|--------------------- | ------------ | ----------- | ----- | ------------------------- | ----- | ---- | -------- | - | -------- | - | ----- |  | ----- |  | -------- | - | -------- | -
|                      |              |             |       | Thousands of U.S. dollars
|                      |              |             |       |                          
|                      |              |             |       | 2001                      |       | 2002
|                      |              |             |       |                           |       |     
|By foreign companies: |              |             |       |                           |       |      |          |   |          |   |       |  |       |  |          |  
|                      | Assets:      |             |       |                           |       |      |          |   |          |   |       |  |       |  |          |   |         
|                      |              | Current     |       |                           | U.S.$ |      |          |   | 152,046  |   |       |  | U.S.$ |  |          |   | 146,594  |  
|                      |              | Non current |       |                           |       |      |          |   | 10,340   |   |       |  |       |  |          |   | 1,059    |  
|                      | Liabilities: |             |       |                           |       |      |          |   |          |   |       |  |       |  |          |   |         
|                      |              | Current     |       |                           |       |      |          |   | (206,423 | ) |       |  |       |  |          |   | (199,654 | )
|                      |              | Long-term   |       |                           |       |      |          |   | (61,269  | ) |       |  |       |  |          |   | (88,785  | )
|                      |              |             |       |                           |       |      |          |   |          |   |       |  |       |  |          |  
|                      |              |             | U.S.$ |                           |       |      | (105,306 | ) |          |   | U.S.$ |  |       |  | (140,786 | )
|                      |              |             |       |                           |       |      |          |   |          |   |       |  |       |  |          |  



| |  |  | At December 31, 2001 and 2002, the exchange rates used to translate
U.S. dollar assets and liabilities were Ps.9.17 and Ps.10.44,
respectively. On March 20, 2003 (date of issuance of these financial
statements), the exchange rate for the U.S. dollar was Ps.10.86.
| |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-25



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002,
except where otherwise indicated)



|15. |  | FOREIGN CURRENCY (continued)
|--- |  | ----------------------------



| |  |  | For the years ended December 31, the Companys Mexican subsidiaries
had transactions in U.S. dollars as follows :
| |  |  | -----------------------------------------------------------------------------------------------------------------

|                                     |  |                           |       |      |  |      |         |  |  |  |       |  |  |  |         |  |  |  |       |  |  |  |         | 
|------------------------------------ |  | ------------------------- | ----- | ---- |  | ---- | ------- |  |  |  | ----- |  |  |  | ------- |  |  |  | ----- |  |  |  | ------- | 
|                                     |  | Thousands of U.S. dollars
|                                     |  |                          
|                                     |  | 2000                      |       | 2001 |  | 2002
|                                     |  |                           |       |      |  |     
|Corn purchases and other inventories |  |                           | U.S.$ |      |  |      | 103,714 |  |  |  | U.S.$ |  |  |  | 104,117 |  |  |  | U.S.$ |  |  |  | 147,927 | 
|Interest expense                     |  |                           |       |      |  |      | 58,621  |  |  |  |       |  |  |  | 52,162  |  |  |  |       |  |  |  | 43,278  | 
|Equipment purchases                  |  |                           |       |      |  |      | 76      |  |  |  |       |  |  |  | 88      |  |  |  |       |  |  |  | 404     | 
|Services                             |  |                           |       |      |  |      | 292     |  |  |  |       |  |  |  | 194     |  |  |  |       |  |  |  | 321     | 
|                                     |  |                           |       |      |  |      |         |  |  |  |       |  |  |  |         |  |  |  |       |  |  |  |         | 
|                                     |  |                           | U.S.$ |      |  |      | 162,703 |  |  |  | U.S.$ |  |  |  | 156,561 |  |  |  | U.S.$ |  |  |  | 191,930 | 
|                                     |  |                           |       |      |  |      |         |  |  |  |       |  |  |  |         |  |  |  |       |  |  |  |         | 



| |                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As of December 31, non-monetary assets of foreign origin, which are
restated on the basis of the GCPI from the foreign country of origin
are summarized as follows:

|                    |  |             |             |          |  |             |        |          |  |  |             |  |  |  |        | 
|------------------- |  | ----------- | ----------- | -------- |  | ----------- | ------ | -------- |  |  | ----------- |  |  |  | ------ | 
|                    |  | 2001        |             | 2002    
|                    |  |             |             |         
|                    |  | Foreign     |             | Year-end |  | Foreign     |        | Year-end
|                    |  | currency    |             | exchange |  | currency    |        | exchange
|                    |  | (thousands) |             | rate     |  | (thousands) |        | rate    
|                    |  |             |             |          |  |             |        |         
|U.S. dollars        |  |             | 582,524     |          |  |             | 9.17   |          |  |  | 574,686     |  |  |  | 10.44  | 
|Swiss francs        |  |             | 26,266      |          |  |             | 5.52   |          |  |  | 23,008      |  |  |  | 7.55   | 
|Deutsche marks      |  |             | 32,668      |          |  |             | 4.18   |          |  |  | 24,786      |  |  |  | 5.60   | 
|Italian liras       |  |             | 3,227,844   |          |  |             | 0.0042 |          |  |  | 2,432,856   |  |  |  | 0.0057 | 
|Spanish pesetas     |  |             | 704,904     |          |  |             | 0.0491 |          |  |  | 554,205     |  |  |  | 0.0659 | 
|Venezuelan bolivars |  |             | 173,599,434 |          |  |             | 0.0121 |          |  |  | 256,511,893 |  |  |  | 0.0074 | 
|Costa Rican colons  |  |             | 32,082,560  |          |  |             | 0.0268 |          |  |  | 35,464,477  |  |  |  | 0.0276 | 



|16. |  | SEGMENT INFORMATION                                                                                                                                                                                                                                              
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The Companys reportable segments are strategic business units that offer
different products in different geographical regions. These business
units are managed separately because each business segment requires
different technology and marketing strategies.
|   
|    |  | The Companys reportable segments are as follows:                                                                                                                                                                                                                



| |  |  | Corn flour and packaged tortilla division (United States of
America)  manufactures and distributes over 20 varieties of corn
flour that are used mainly to produce and distribute different types
of tortillas and tortilla chip products in the United States and
Europe. The main brands are MASECA for corn flour and MISSION and
GUERRERO for packaged tortillas.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Corn flour division (Mexico)  engaged principally in the
production, distribution and sale of corn flour in Mexico under
MASECA brand. Corn flour produced by this division is used mainly in
the preparation of tortillas and other related products.                                                                                                               
|
| |  |  | Corn flour, wheat flour and other products division
(Venezuela)  engaged mainly in producing and distributing corn and
wheat flour, used principally for industrial and human consumption.                                                                                                                                                                           
|
| |  |  | Packaged tortilla division (Mexico)  produces and
distributes packaged tortillas. In 2000 and 2001, this division also
produced and distributed bread in Mexico.                                                                                                                                                                                                     
|
| |  |  | Wheat flour division (Mexico)  engaged in the production and
marketing of wheat flour in Mexico.                                                                                                                                                                                                                                                                     

F-26



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002,
except where otherwise indicated)



|16. |  | SEGMENT INFORMATION (continued)
|--- |  | -------------------------------



| |  |  | Corn flour and other products division (Central America) 
manufactures corn flour, tortillas and snacks and cultivates and
sells hearts of palm.                                                                                                                                                                                                   
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Other division  this segment represents the technology and
equipment division located in Mexico, which conducts research and
development regarding flour and tortilla manufacturing equipment,
produces machinery for corn flour and tortilla production and is
engaged in the construction of the Companys corn flour
manufacturing facilities.
|
| |  |  | The Other reconciling items row includes the corporate
expenses and the elimination of inter-business unit transactions.                                                                                                                                                                                                                          



| |  | During 2001 the Company decided to terminate the bread operations in
Mexico and Central America.                                             
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | All intersegment sales prices are market based. The Company evaluates
performance based on operating income of the respective business units.
|
| |  | Summarized financial information concerning the Companys reportable
segments is shown in the following tables.                              
|
| |  | Segment information as of and for the year ended December 31, 2000:                                                                          

|                                                          |       |           |              |           |           |            |           |              |              |  |    |   |  |     |          |   |         |         |  |     |     |  |          |         |  |  |  |  |  |  |          |   | 
|--------------------------------------------------------- | ----- | --------- | ------------ | --------- | --------- | ---------- | --------- | ------------ | ------------ |  | -- | - |  | --- | -------- | - | ------- | ------- |  | --- | --- |  | -------- | ------- |  |  |  |  |  |  | -------- | - | 
|                                                          |       |           | Net sales to |           | Inter-    |            | Operating |              | Depreciation
|                                                          |       |           | external     |           | segment   |            | income    |              | and         
|Segment                                                   |       | customers |              | net sales |           | (loss)     |           | amortization
|                                                          |       |           |              |           |           |            |           |             
|Corn flour and packaged tortilla
division (United States) |       | Ps        |              |           | 8,659,832 |            |           | Ps.          |              |  | 96 |   |  | Ps. |          |   | 450,903 |         |  | Ps. |     |  | 361,233  |        
|Corn flour division (Mexico)                              |       |           |              |           |           |            | 5,232,879 |              |              |  |    |   |  |     | 38,263   |   |         |         |  |     |     |  | 579,376  |         |  |  |  |  |  |  | 277,415  |  
|Corn flour, wheat flour and
other products (Venezuela)    |       |           |              |           |           |            | 2,237,779 |              |              |  |    |   |  |     |         |   |         |         |  |     |     |  | 218,120  |         |  |  |  |  |  |  | 51,362   |  
|Packaged tortilla (Mexico)                                |       |           |              |           |           |            | 381,081   |              |              |  |    |   |  |     | 26,364   |   |         |         |  |     |     |  | (302,244 | )       |  |  |  |  |  |  | 138,162  |  
|Wheat flour (Mexico)                                      |       |           |              |           |           |            | 1,489,505 |              |              |  |    |   |  |     | 20,650   |   |         |         |  |     |     |  | (43,369  | )       |  |  |  |  |  |  | 72,809   |  
|Corn flour and other products
(Central America)           |       |           |              |           |           |            | 1,180,352 |              |              |  |    |   |  |     |         |   |         |         |  |     |     |  | 31,590   |         |  |  |  |  |  |  | 46,121   |  
|Other                                                     |       |           |              |           |           |            | 33,994    |              |              |  |    |   |  |     | 556,277  |   |         |         |  |     |     |  | (22,834  | )       |  |  |  |  |  |  | 10,855   |  
|Other reconciling items                                   |       |           |              |           |           |            | 35,527    |              |              |  |    |   |  |     | (641,650 | ) |         |         |  |     |     |  | (51,203  | )       |  |  |  |  |  |  | (165,701 | )
|                                                          |       |           |              |           |           |            |           |              |              |  |    |   |  |     |          |   |         |         |  |     |     |  |          |         |  |  |  |  |  |  |          |  
|                                                          | Total |           | Ps           |           |           | 19,250,949 |           |              | Ps.          |  |    |  |  |     | Ps.      |   |         | 860,339 |  |     | Ps. |  |          | 792,256 | 
|                                                          |       |           |              |           |           |            |           |              |              |  |    |   |  |     |          |   |         |         |  |     |     |  |          |         |  |  |  |  |  |  |          |  

F-27



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002,
except where otherwise indicated)



|16. |  | SEGMENT INFORMATION (continued)
|--- |  | -------------------------------

|                                                          |       |              |     |                   |           |                   |           |     |     |  |           |            |  |     |           |  |         |           |  |  |  |  |                  |  | 
|--------------------------------------------------------- | ----- | ------------ | --- | ----------------- | --------- | ----------------- | --------- | --- | --- |  | --------- | ---------- |  | --- | --------- |  | ------- | --------- |  |  |  |  | ---------------- |  | 
|                                                          |       |              |     |                   |           |                   |           |     |     |  |           |            |  |     |           |  |         |           |  |  |  |  | Expenditures for
|Segment                                                   |       | Total assets |     | Total liabilities |           | long-lived assets
|                                                          |       |              |     |                   |           |                  
|Corn flour and
packaged tortilla
division (United States) |       | Ps.          |     |                   | 7,714,731 |                   |           | Ps. |     |  | 2,373,300 |            |  | Ps. |           |  | 667,727 |          
|Corn flour division
(Mexico)                              |       |              |     |                   |           |                   | 7,460,525 |     |     |  |           |            |  |     | 1,617,401 |  |         |           |  |  |  |  | 47,718           | 
|Corn flour, wheat
flour and other
grains (Venezuela)      |       |              |     |                   |           |                   | 2,261,876 |     |     |  |           |            |  |     | 538,954   |  |         |           |  |  |  |  | 10,085           | 
|Packaged tortilla
(Mexico)                                |       |              |     |                   |           |                   | 1,290,452 |     |     |  |           |            |  |     | 427,332   |  |         |           |  |  |  |  |                 | 
|Wheat flour
(Mexico)                                      |       |              |     |                   |           |                   | 2,107,269 |     |     |  |           |            |  |     | 350,575   |  |         |           |  |  |  |  | 360,118          | 
|Corn flour and
other products
(Central America)           |       |              |     |                   |           |                   | 1,503,113 |     |     |  |           |            |  |     | 264,688   |  |         |           |  |  |  |  | 225,129          | 
|Other                                                     |       |              |     |                   |           |                   | 559,848   |     |     |  |           |            |  |     | 113,369   |  |         |           |  |  |  |  |                 | 
|Other reconciling
items                                   |       |              |     |                   |           |                   | 187,730   |     |     |  |           |            |  |     | 4,950,907 |  |         |           |  |  |  |  | 300,170          | 
|                                                          |       |              |     |                   |           |                   |           |     |     |  |           |            |  |     |           |  |         |           |  |  |  |  |                  | 
|                                                          | Total |              | Ps. |                   |           | 23,085,544        |           |     | Ps. |  |           | 10,636,526 |  |     | Ps.       |  |         | 1,610,947 | 
|                                                          |       |              |     |                   |           |                   |           |     |     |  |           |            |  |     |           |  |         |           |  |  |  |  |                  | 

Segment information as of and for the year ended December 31, 2001:

|                                                          |  |           |              |           |         |        |           |              |              |     |          |   |  |     |          |   | 
|--------------------------------------------------------- |  | --------- | ------------ | --------- | ------- | ------ | --------- | ------------ | ------------ | --- | -------- | - |  | --- | -------- | - | 
|                                                          |  |           | Net sales to |           | Inter-  |        | Operating |              | Depreciation
|                                                          |  |           | external     |           | segment |        | income    |              | and         
|Segment                                                   |  | customers |              | net sales |         | (loss) |           | amortization
|                                                          |  |           |              |           |         |        |           |             
|Corn flour and
packaged tortilla
division (United
States) |  | Ps.       | 8,822,479    |           |         | Ps.    |          |              |              | Ps. | 599,439  |   |  | Ps. | 555,028  |  
|Corn flour
division
(Mexico)                              |  |           | 4,911,339    |           |         |        | 35,428    |              |              |     | 558,288  |   |  |     | 261,459  |  
|Corn flour, wheat
flour and other
products
(Venezuela)    |  |           | 1,995,782    |           |         |        |          |              |              |     | 152,818  |   |  |     | 56,646   |  
|Packaged tortilla
(Mexico)                                |  |           | 366,944      |           |         |        | 34,137    |              |              |     | (227,993 | ) |  |     | 84,559   |  
|Wheat flour
(Mexico)                                      |  |           | 1,519,717    |           |         |        | 27,597    |              |              |     | 13,473   |   |  |     | 59,801   |  
|Corn flour and
related products
(Central
America)         |  |           | 1,185,319    |           |         |        |          |              |              |     | (8,052   | ) |  |     | 91,496   |  
|Other                                                     |  |           | 97,074       |           |         |        | 358,506   |              |              |     | (13,566  | ) |  |     | 8,593    |  
|Other reconciling
items                                   |  |           | 17,468       |           |         |        | (455,668  | )            |              |     | (98,633  | ) |  |     | (289,295 | )
|                                                          |  |           |              |           |         |        |           |              |              |     |          |   |  |     |          |  
|Total                                                     |  | Ps.       | 18,916,122   |           |         | Ps.    |          |              |              | Ps. | 975,774  |   |  | Ps. | 828,287  |  
|                                                          |  |           |              |           |         |        |           |              |              |     |          |   |  |     |          |  

|                                                          |       |              |           |             |  |                   |           |           |                  |     |         |         | 
|--------------------------------------------------------- | ----- | ------------ | --------- | ----------- |  | ----------------- | --------- | --------- | ---------------- | --- | ------- | ------- | 
|                                                          |       |              |           |             |  |                   | Total     |           | Expenditures for
|Segment                                                   |       | Total assets |           | liabilities |  | long-lived assets
|                                                          |       |              |           |             |  |                  
|Corn flour and packaged tortilla
division (United
States) |       | Ps.          | 7,531,177 |             |  | Ps.               | 2,077,903 |           |                  | Ps. | 439,808 |        
|Corn flour division
(Mexico)                              |       |              | 6,747,015 |             |  |                   | 1,398,030 |           |                  |     | 3,740   |        
|Corn flour, wheat flour and other
products
(Venezuela)    |       |              | 2,058,503 |             |  |                   | 655,806   |           |                  |     | 59,393  |        
|Packaged tortilla
(Mexico)                                |       |              | 743,778   |             |  |                   | 98,359    |           |                  |     | 24,526  |        
|Wheat flour
(Mexico)                                      |       |              | 1,926,449 |             |  |                   | 207,101   |           |                  |     | 18,508  |        
|Corn flour and related products
(Central
America)         |       |              | 1,161,343 |             |  |                   | 172,127   |           |                  |     | 85,270  |        
|Other                                                     |       |              | 518,062   |             |  |                   | 83,252    |           |                  |     |        |        
|Other reconciling
items                                   |       |              | 1,196,776 |             |  |                   | 5,029,412 |           |                  |     | 73,169  |        
|                                                          |       |              |           |             |  |                   |           |           |                  |     |         |        
|                                                          | Total |              | Ps.       | 21,883,103  |  |                   | Ps.       | 9,721,990 |                  |     | Ps.     | 704,414 | 
|                                                          |       |              |           |             |  |                   |           |           |                  |     |         |        

F-28



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002,
except where otherwise indicated)



|16. |  | SEGMENT INFORMATION (continued)                                    
|--- |  | -------------------------------------------------------------------
|   
|    |  | Segment information as of and for the year ended December 31, 2002:

|                                                          |  |           |              |           |         |        |           |              |              |     |           |   |  |     |         |   | 
|--------------------------------------------------------- |  | --------- | ------------ | --------- | ------- | ------ | --------- | ------------ | ------------ | --- | --------- | - |  | --- | ------- | - | 
|                                                          |  |           | Net sales to |           | Inter-  |        | Operating |              | Depreciation
|                                                          |  |           | external     |           | segment |        | income    |              | and         
|Segment                                                   |  | customers |              | net sales |         | (loss) |           | amortization
|                                                          |  |           |              |           |         |        |           |             
|Corn flour and
packaged tortilla
division (United States) |  | Ps.       | 9,275,753    |           |         | Ps.    |          |              |              | Ps. | 797,161   |   |  | Ps. | 482,153 |  
|Corn flour division
(Mexico)                              |  |           | 4,733,609    |           |         |        | 29,112    |              |              |     | 507,416   |   |  |     | 258,317 |  
|Corn flour, wheat
flour and other
products
(Venezuela)    |  |           | 2,230,666    |           |         |        |          |              |              |     | 241,360   |   |  |     | 64,395  |  
|Packaged tortilla
(Mexico)                                |  |           | 148,572      |           |         |        | 38,343    |              |              |     | (75,603   | ) |  |     | 58,079  |  
|Wheat flour
(Mexico)                                      |  |           | 1,716,293    |           |         |        | 4,435     |              |              |     | 18,308    |   |  |     | 63,133  |  
|Corn flour and
related products
(Central
America)         |  |           | 1,051,011    |           |         |        |          |              |              |     | 31,371    |   |  |     | 62,047  |  
|Other                                                     |  |           | 1,582        |           |         |        | 292,004   |              |              |     | (45,804   | ) |  |     | 7,952   |  
|Other reconciling
items                                   |  |           | 16,921       |           |         |        | (363,894  | )            |              |     | 18,073    |   |  |     | (9,225  | )
|                                                          |  |           |              |           |         |        |           |              |              |     |           |   |  |     |         |  
|Total                                                     |  | Ps.       | 19,174,407   |           |         | Ps.    |          |              |              | Ps. | 1,492,282 |   |  | Ps. | 986,851 |  
|                                                          |  |           |              |           |         |        |           |              |              |     |           |   |  |     |         |  

|                                                          |       |              |           |                   |  |                   |           |            |  |     |                  |         | 
|--------------------------------------------------------- | ----- | ------------ | --------- | ----------------- |  | ----------------- | --------- | ---------- |  | --- | ---------------- | ------- | 
|                                                          |       |              |           |                   |  |                   |           |            |  |     | Expenditures for
|Segment                                                   |       | Total assets |           | Total liabilities |  | long-lived assets
|                                                          |       |              |           |                   |  |                  
|Corn flour and packaged tortilla
division (United
States) |       | Ps.          | 7,705,921 |                   |  | Ps.               | 2,285,650 |            |  | Ps. | 490,962          |        
|Corn flour division
(Mexico)                              |       |              | 7,023,987 |                   |  |                   | 1,480,801 |            |  |     | 30,012           |        
|Corn flour, wheat flour and other
products
(Venezuela)    |       |              | 2,341,766 |                   |  |                   | 680,011   |            |  |     |                 |        
|Packaged tortilla
(Mexico)                                |       |              | 532,720   |                   |  |                   | 74,878    |            |  |     |                 |        
|Wheat flour
(Mexico)                                      |       |              | 2,008,733 |                   |  |                   | 262,535   |            |  |     | 35,781           |        
|Corn flour and related products
(Central
America)         |       |              | 1,128,969 |                   |  |                   | 353,871   |            |  |     | 7,163            |        
|Other                                                     |       |              | 381,241   |                   |  |                   | 82,824    |            |  |     | 7,081            |        
|Other reconciling
items                                   |       |              | 1,019,950 |                   |  |                   | 4,889,693 |            |  |     | 128,518          |        
|                                                          |       |              |           |                   |  |                   |           |            |  |     |                  |        
|                                                          | Total |              | Ps.       | 22,143,287        |  |                   | Ps.       | 10,110,263 |  |     | Ps.              | 699,517 | 
|                                                          |       |              |           |                   |  |                   |           |            |  |     |                  |        



| |  | The following table presents the details of Other reconciling
items for operating income:
| |  | -------------------------------------------------------------------------------------------

|                                                |  |      |          |      |  |      |          |   |  |     |         |  
|----------------------------------------------- |  | ---- | -------- | ---- |  | ---- | -------- | - |  | --- | ------- | -
|Other reconciling items                         |  | 2000 |          | 2001 |  | 2002
|                                                |  |      |          |      |  |     
|Corporate expenses                              |  | Ps.  | (128,257 | )    |  | Ps.  | (113,090 | ) |  | Ps. | (34,226 | )
|Elimination of inter-business unit transactions |  |      | 77,054   |      |  |      | 14,457   |   |  |     | 52,299  |  
|                                                |  | Ps.  | (51,203  | )    |  | Ps.  | (98,633  | ) |  | Ps. | 18,073  |  
|                                                |  |      |          |      |  |      |          |   |  |     |         |  

F-29



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002,
except where otherwise indicated)



|16. |  | SEGMENT INFORMATION (continued)
|--- |  | -------------------------------



| |                                                                            
| | ---------------------------------------------------------------------------
| | Additionally, a summary of information by geographic segment is as
follows:

|                                 |                 |     |            |            |   |  |      |    |   |     |            |            |   |  |     |    |  |     |            |            |   |  |     |     |  
|-------------------------------- | --------------- | --- | ---------- | ---------- | - |  | ---- | -- | - | --- | ---------- | ---------- | - |  | --- | -- |  | --- | ---------- | ---------- | - |  | --- | --- | -
|                                 |                 |     | 2000       |            | % |  | 2001 |    | % |     | 2002       |            | %
|                                 |                 |     |            |            |   |  |      |    |   |     |            |            |  
|NET SALES TO EXTERNAL
CUSTOMERS: |                 |     |            |            |   |  |      |    |   |     |            |            |   |  |     |    |  |     |            |            |   |  |     |    
|                                 | United States   |     | Ps.        | 8,985,809  |   |  |      | 47 |   |     | Ps.        | 8,822,479  |   |  |     | 47 |  |     | Ps.        | 9,275,753  |   |  |     | 48  |  
|                                 | Mexico          |     |            | 6,847,009  |   |  |      | 35 |   |     |            | 6,912,542  |   |  |     | 36 |  |     |            | 6,616,977  |   |  |     | 35  |  
|                                 | Venezuela       |     |            | 2,237,779  |   |  |      | 12 |   |     |            | 1,995,782  |   |  |     | 11 |  |     |            | 2,230,666  |   |  |     | 12  |  
|                                 | Central America |     |            | 1,180,352  |   |  |      | 6  |   |     |            | 1,185,319  |   |  |     | 6  |  |     |            | 1,051,011  |   |  |     | 5   |  
|                                 |                 |     |            |            |   |  |      |    |   |     |            |            |   |  |     |    |  |     |            |            |   |  |     |     |  
|                                 |                 | Ps. | 19,250,949 |            |   |  | 100  |    |   | Ps. | 18,916,122 |            |   |  | 100 |    |  | Ps. | 19,174,407 |            |   |  | 100 |    
|                                 |                 |     |            |            |   |  |      |    |   |     |            |            |   |  |     |    |  |     |            |            |   |  |     |     |  
|IDENTIFIABLE ASSETS:             |                 |     |            |            |   |  |      |    |   |     |            |            |   |  |     |    |  |     |            |            |   |  |     |    
|                                 | United States   |     | Ps.        | 7,738,548  |   |  |      | 33 |   |     | Ps.        | 7,531,177  |   |  |     | 35 |  |     | Ps.        | 7,705,921  |   |  |     | 35  |  
|                                 | Mexico          |     |            | 11,582,007 |   |  |      | 50 |   |     |            | 11,132,080 |   |  |     | 51 |  |     |            | 10,966,631 |   |  |     | 49  |  
|                                 | Venezuela       |     |            | 2,261,876  |   |  |      | 10 |   |     |            | 2,058,503  |   |  |     | 9  |  |     |            | 2,341,766  |   |  |     | 11  |  
|                                 | Central America |     |            | 1,503,113  |   |  |      | 7  |   |     |            | 1,161,343  |   |  |     | 5  |  |     |            | 1,128,969  |   |  |     | 5   |  
|                                 |                 |     |            |            |   |  |      |    |   |     |            |            |   |  |     |    |  |     |            |            |   |  |     |     |  
|                                 |                 | Ps. | 23,085,544 |            |   |  | 100  |    |   | Ps. | 21,883,103 |            |   |  | 100 |    |  | Ps. | 22,143,287 |            |   |  | 100 |    
|                                 |                 |     |            |            |   |  |      |    |   |     |            |            |   |  |     |    |  |     |            |            |   |  |     |     |  
|CAPITAL EXPENDITURES:            |                 |     |            |            |   |  |      |    |   |     |            |            |   |  |     |    |  |     |            |            |   |  |     |    
|                                 | United States   |     | Ps.        | 667,727    |   |  |      | 42 |   |     | Ps.        | 439,808    |   |  |     | 64 |  |     | Ps.        | 490,962    |   |  |     | 88  |  
|                                 | Mexico          |     |            | 677,886    |   |  |      | 43 |   |     |            | 105,743    |   |  |     | 15 |  |     |            | 131,318    |   |  |     | 24  |  
|                                 | Venezuela       |     |            | 10,085     |   |  |      | 1  |   |     |            | 59,393     |   |  |     | 9  |  |     |            | (72,966    | ) |  |     | (13 | )
|                                 | Central America |     |            | 225,129    |   |  |      | 14 |   |     |            | 85,270     |   |  |     | 12 |  |     |            | 7,163      |   |  |     | 1   |  
|                                 |                 |     |            |            |   |  |      |    |   |     |            |            |   |  |     |    |  |     |            |            |   |  |     |     |  
|                                 |                 | Ps. | 1,580,827  |            |   |  | 100  |    |   | Ps. | 690,214    |            |   |  | 100 |    |  | Ps. | 556,477    |            |   |  | 100 |    
|                                 |                 |     |            |            |   |  |      |    |   |     |            |            |   |  |     |    |  |     |            |            |   |  |     |     |  



|17. |  | FINANCIAL INSTRUMENTS
|--- |  | ---------------------



| | A) |  | FAIR VALUE OF FINANCIAL INSTRUMENTS                                                                                                                                                                                                                                                                                                                                                                                                   
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | The carrying amounts of cash and temporary investments, notes and
accounts receivable, refundable taxes, trade accounts payable,
short-term bank loans, current portion of long-term debt and accrued
liabilities and other payables approximate their fair value, due to
their short maturity. In addition, the net book value of notes and
accounts receivable and refundable taxes represent the expected cash
flow to be received.
|
| |    |  | The estimated fair value of the Companys long-term debt and
derivative financial instruments is as follows:                                                                                                                                                                                                                                                                                                                          

|                                                                                              |  |                 |           |            |  |     |           | 
|--------------------------------------------------------------------------------------------- |  | --------------- | --------- | ---------- |  | --- | --------- | 
|                                                                                              |  | Carrying amount |           | Fair value
|                                                                                              |  |                 |           |           
|At December 31, 2001:                                                                         |  |                 |           |            |  |     |           | 
|Liabilities: Senior
unsecured notes in
U.S. dollars bearing
interest at annual
rate of 7.625% |  | Ps.             | 2,433,489 |            |  | Ps. | 2,372,895 | 
|Equity
swap                                                                                   |  |                 | 56,041    |            |  |     | 76,375    | 
|Call option                                                                                   |  |                 | 67,067    |            |  |     | 66,630    | 
|At December 31, 2002:                                                                         |  |                 |           |            |  |     |           | 
|Liabilities: Senior
unsecured notes in
U.S. dollars bearing
interest at annual
rate of 7.625% |  | Ps.             | 2,610,000 |            |  | Ps. | 2,518,650 | 
|Equity swap                                                                                   |  |                 | 27,039    |            |  |     | 23,230    | 
|Call option                                                                                   |  |                 | 138,263   |            |  |     | 140,390   | 

F-30



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##### Table of Contents



GRUMA, S.A. DE C.V. and SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002

(Expressed in thousands of Mexican pesos of constant purchasing
power as of December 31, 2002,
except where otherwise indicated)



|17. |  | FINANCIAL INSTRUMENTS (continued)
|--- |  | ---------------------------------

Fair values were determined as follows:



| |  |  | The fair value of debt is estimated based on
quoted market prices for similar issues or on current rates
available to the Company for debt of the same maturity and
similar terms.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The fair value of the equity swap and the call
option is estimated based on quoted market prices of the
shares and on the agreement terms.                                        
|
| |  |  | The fair value of the interest rate swap was estimated based on market prices.                                                                                                    
|
| |  |  | The carrying value of the remainder of the long-term debt was similar to its fair value.                                                                                          



| | B) |  | HEDGES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | In Mexico, the Company has entered into futures contracts to minimize
the risk in price fluctuations of corn and gas. These contracts are
short-term and do not exceed the maximum production requirements for
a one-year period. The effect of these contracts was recognized in
income when they were settled and was not significant.                                                                                                                                                                                                                             
|
| |    |  | The Company uses derivative financial instruments such as interest
rate swaps to hedge its long term debt which matures in 2007 and
bears interest at an annual rate of 7.625%. This hedge considers the
risk created by changes in the market value conferred to interest
rate fluctuations, converting the debt from a fixed rate (7.625%) to
a variable rate (LIBOR plus 2.035%). Additionally, the Company
entered into an agreement to receive a fixed interest rate of 5.1525%
through 2004 and 5.485% from 2004 through 2007 and to pay LIBOR rate.           
|
| | C) |  | CONCENTRATION OF CREDIT RISK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |    |  | The financial instruments which are potentially subject to a
concentration of risk are principally cash, temporary investments and
trade accounts receivable. The Company deposits its cash and
temporary investments in recognized financial institutions. The
concentration of the credit risk with respect to trade receivables is
limited since the Company sells its products to a large number of
customers located in different parts of Mexico, United States,
Central America and South America. The Company maintains reserves for
potential credit losses.



|18. |  | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The Company owns an 11.1070% interest in GFNorte, a Mexican financial
institution. In the normal course of business, the Company obtains
long-term financing from GFNorte and other subsidiaries of this
institution at market rates and terms. The highest outstanding loan
amount in 2002 has been U.S.Ps.13
million at an average interest rate of 3.36%. The interest paid to
GFNortes subsidiaries for the years ended December 31, 2000, 2001 and
2002 was Ps.3,541, Ps.5,519 and Ps.73, respectively.
|   
|    |  | As of December 31, 2001 and 2002, the Company made loans to its
controlling shareholders, bearing interest at market rates. As of
December 31, 2001 and 2002, accounts receivable from these transactions
totaled Ps.147,940 and Ps.108,267, respectively.                                                                                                                                                                                                                                                   
|   
|    |  | During 2001 and 2002, the Company had accounts payable to a shareholder,
included in trade accounts payable, for Ps.108,913 and Ps.79,620,
respectively. Additionally, during 2000, 2001 and 2002, the Company
purchased inventory ingredients from a shareholder, amounting to U.S.$75
million (Ps. 761,798), U.S.$90 million (Ps.829,639) and U.S.$84 million
(Ps.873,577), respectively.                                                                                                                  

F-31



---



##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31,
2000, 2001 and 2002


(Expressed in thousands of Mexican pesos of constant purchasing power
as of December 31, 2002,
except where otherwise indicated)



|19. |  | RECENT ACCOUNTING PRONOUNCEMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | In November 2001, the Mexican Institute of Public Accountants issued
Bulletin C-9, Liabilities, Provisions, Contingent Assets and Liabilities
and Commitments, which supersedes existing Bulletin C-9, Liabilities
and Bulletin C-12, Contingencies and Commitments. This Bulletin is
effective as of January 1, 2003. This Statement contains the guidelines
relating to valuation, recording and disclosure of liabilities,
provisions, contingent assets and liabilities and disclosure of
commitments. This Statement establishes among other issues, detailed
presentation of provisions, use of present value, the consideration of
future events to estimate provisions, accounting treatment for probable
reimbursement and changes in the value estimated for provisions. It also
contains the accounting treatment for redemption of debt. The Companys
management believes that the adoption of this Bulletin will not have a
significant effect in its financial statements.                                                                                                                                                                                                                                                                                                                                                
|   
|    |  | In December 2001, the Mexican Institute of Public Accountants issued
Bulletin C-8, Intangible Assets which defines intangible assets as
rights or privileges acquired that will generate a future economic
benefit. Additionally, Bulletin C-8 establishes guidelines on the
accounting for deferred research and development costs and pre-operating
costs. It also establishes provisions for the amortization of intangible
assets. The provisions of Bulletin C-8 are effective as of January 1,
2003. The Companys management believes that the adoption of this
Bulletin will not have a significant effect in its financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|20. |  | DIFFERENCES BETWEEN MEXICAN GAAP AND U.S. GAAP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|    |  | The Companys consolidated financial statements are prepared in
accordance with Mexican GAAP, which differ in certain significant
respects from U.S. GAAP. The Mexican GAAP consolidated financial
statements include the effects of inflation as provided for under
Bulletin B-10 (see Note 2-D), including the Fifth Amendment to Bulletin
B-10 and Bulletin B-15, whereas financial statements prepared under U.S.
GAAP are presented on a historical cost basis. The reconciliation to U.S.
GAAP includes a reconciling item for the effect of applying the Fifth
Amendment to Bulletin B-10 and Bulletin B-15 restatement to Mexican pesos
of constant purchasing power as of December 31, 2002 because, as
described below, these provisions of inflation accounting under Mexican
GAAP do not meet the consistent reporting currency requirements of
Regulation S-X. The U.S. GAAP adjustments have been determined based on
Mexican NCPI factors. The reconciliation does not include the reversal of
other Mexican GAAP inflation accounting adjustments as they represent a
comprehensive measure of the effects of price-level changes in the
inflationary Mexican economy and, as such, are considered a more
meaningful presentation than historical cost-based financial reporting
for both Mexican and U.S. accounting purposes.
|   
|    |  | The principal differences between Mexican GAAP and U.S. GAAP and the
effect on consolidated net income and consolidated stockholders equity
are presented below, with an explanation of the adjustments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

F-32



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31,
2000, 2001 and 2002


(Expressed in thousands of Mexican pesos of constant purchasing power
as of December 31, 2002,
except where otherwise indicated)



|20. |  | DIFFERENCES BETWEEN MEXICAN GAAP AND U.S. GAAP (continued)
|--- |  | ----------------------------------------------------------
|   
|    |  | Reconciliation of net income:                             

|                                               |                                              |                                                                         |                                                |                             |         |                         |          |      |          |          |          |   |         |          |         |  
|---------------------------------------------- | -------------------------------------------- | ----------------------------------------------------------------------- | ---------------------------------------------- | --------------------------- | ------- | ----------------------- | -------- | ---- | -------- | -------- | -------- | - | ------- | -------- | ------- | -
|                                               |                                              |                                                                         |                                                |                             |         | Year ended December 31,
|                                               |                                              |                                                                         |                                                |                             |         |                        
|                                               |                                              |                                                                         |                                                |                             |         | 2000                    |          | 2001 |          | 2002    
|                                               |                                              |                                                                         |                                                |                             |         |                         |          |      |          |         
|Net majority income under Mexican GAAP         |                                              | Ps.                                                                     | 246,330                                        |                             |         | Ps.                     | 331,989  |      |          | Ps.      | 393,192  |  
|                                               |                                              |                                                                         |                                                |                             |         |                         |          |      |          |          |          |  
|U.S. GAAP adjustments:                         |                                              |                                                                         |                                                |                             |         |                         |          |      |          |          |          |  
|                                               |                                              | Depreciation expense (See C)                                            |                                                |                             | (50,786 | )                       |          |      | (54,981  | )        |          |   | (57,834 | )       
|                                               |                                              | Pre-operating expenses and other deferred costs
(See D)                 |                                                |                             | 105,385 |                         |          |      | 33,979   |          |          |   | 2,650   |         
|                                               |                                              | Capitalized comprehensive financing costs (See E)                       |                                                |                             | 2,626   |                         |          |      | 2,754    |          |          |   | 2,743   |         
|                                               |                                              | Sale-leaseback transaction (See F):                                     |                                                |                             |         |                         |          |      |          |          |          |   |         |         
|                                               |                                              |                                                                         | Interest expense                               |                             |         | (13,473                 | )        |      |          | (15,626  | )        |   |         | (16,049  | )      
|                                               |                                              |                                                                         | Rental and depreciation expense, net           |                             |         | 7,638                   |          |      |          | 8,105    |          |   |         | 8,030    |        
|                                               |                                              | Amortization of excess of cost over book value (See
G)                  |                                                |                             | 16,974  |                         |          |      | 17,793   |          |          |   | 17,717  |         
|                                               |                                              | Deferred income taxes (See H)                                           |                                                |                             | 10,689  |                         |          |      | (139,734 | )        |          |   | 26,362  |         
|                                               |                                              | Deferred employees statutory profit sharing (See H)                    |                                                |                             | (1,032  | )                       |          |      | (16      | )        |          |   | 471     |         
|                                               |                                              | Effect of U.S. GAAP adjustments on equity method
investee (See L)       |                                                |                             | (11,703 | )                       |          |      | (17,938  | )        |          |   | (62,339 | )       
|                                               |                                              | Negative goodwill (See I):                                              |                                                |                             |         |                         |          |      |          |          |          |   |         |         
|                                               |                                              |                                                                         | Amortization of excess of book value over cost |                             |         | (312,451                | )        |      |          | (352,442 | )        |   |         | (165,411 | )      
|                                               |                                              |                                                                         | Depreciation expense                           |                             |         | 36,945                  |          |      |          | 37,074   |          |   |         | 49,070   |        
|                                               |                                              | Adjustment to net loss from shutdown of bread
operations (See D)        |                                                |                             |        |                         |          |      | 326,265  |          |          |   |        |         
|                                               |                                              | Amortization of goodwill and indefinite-lived
intangible assets (See K) |                                                |                             |        |                         |          |      |         |          |          |   | 104,809 |         
|                                               |                                              | Monetary position gain resulting from U.S. GAAP
adjustments             |                                                |                             | 5,833   |                         |          |      | 5,043    |          |          |   | 362     |         
|                                               | Effects of Bulletin B-15 restatement (See A) |                                                                         |                                                | 1,971                       |         |                         |          | (777 | )        |          |          |  |        
|                                               |                                              |                                                                         |                                                |                             |         |                         |          |      |          |          |          |  
|                                               |                                              |                                                                         |                                                | Total U.S. GAAP adjustments |         |                         | (201,384 | )    |          |          | (150,501 | ) |         |          | (89,419 | )
|                                               |                                              |                                                                         |                                                |                             |         |                         |          |      |          |          |          |  
|                                               |                                              |                                                                         |                                                | Minority interest (See B)   |         |                         | 26,432   |      |          |          | 18,374   |   |         |          | 6,118   |  
|                                               |                                              |                                                                         |                                                |                             |         |                         |          |      |          |          |          |  
|Net income under U.S. GAAP                     |                                              | Ps.                                                                     | 71,378                                         |                             |         | Ps.                     | 199,862  |      |          | Ps.      | 309,891  |  
|                                               |                                              |                                                                         |                                                |                             |         |                         |          |      |          |          |          |  
|Basic and diluted earnings per share(in
pesos) |                                              | Ps.                                                                     | 0.16                                           |                             |         | Ps.                     | 0.46     |      |          | Ps.      | 0.69     |  
|                                               |                                              |                                                                         |                                                |                             |         |                         |          |      |          |          |          |  
|Weighted average shares outstanding(thousands) |                                              |                                                                         | 435,515                                        |                             |         |                         | 433,235  |      |          |          | 446,202  |  
|                                               |                                              |                                                                         |                                                |                             |         |                         |          |      |          |          |          |  

F-33



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31,
2000, 2001 and 2002


(Expressed in thousands of Mexican pesos of constant purchasing power
as of December 31, 2002,
except where otherwise indicated)



|20. |  | DIFFERENCES BETWEEN MEXICAN GAAP AND U.S. GAAP (continued)
|--- |  | ----------------------------------------------------------
|   
|    |  | Reconciliation of stockholders equity:                   

|                                        |                                                                   |                             |            |                    |            |      |            |            |            |  
|--------------------------------------- | ----------------------------------------------------------------- | --------------------------- | ---------- | ------------------ | ---------- | ---- | ---------- | ---------- | ---------- | -
|                                        |                                                                   |                             |            | As of December 31,
|                                        |                                                                   |                             |            |                   
|                                        |                                                                   |                             |            | 2001               |            | 2002
|                                        |                                                                   |                             |            |                    |            |     
|Stockholders equity under Mexican GAAP |                                                                   | Ps.                         | 12,053,948 |                    |            | Ps.  | 12,033,024 |           
|                                        |                                                                   |                             |            |                    |            |      |            |           
|U.S. GAAP adjustments:                  |                                                                   |                             |            |                    |            |      |            |           
|                                        | Property, plant and equipment (See C)                             |                             |            | 501,929            |            |      |            | 425,286    |           
|                                        | Pre-operating expenses and other deferred costs (See D)           |                             |            | (40,157            | )          |      |            | (40,256    | )         
|                                        | Capitalized comprehensive financing cost (See E)                  |                             |            | (19,275            | )          |      |            | (16,455    | )         
|                                        | Sale-leaseback transaction (See F)                                |                             |            | (41,953            | )          |      |            | (53,014    | )         
|                                        | Excess of cost over book value (See G)                            |                             |            | (177,928           | )          |      |            | (159,457   | )         
|                                        | Deferred income taxes (See H)                                     |                             |            | (56,207            | )          |      |            | (36,603    | )         
|                                        | Deferred employees statutory profit sharing (See H)              |                             |            | 2,038              |            |      |            | 2,378      |           
|                                        | Effect of U.S. GAAP adjustments on equity method
investee (See L) |                             |            | (148,813           | )          |      |            | (202,530   | )         
|                                        | Negative goodwill (See I)                                         |                             |            | (565,780           | )          |      |            | (845,589   | )         
|                                        | Deferred (loss) gain on hedge activity (See J)                    |                             |            | (4,162             | )          |      |            | 18,009     |           
|                                        | Goodwill and indefinite-lived intangible assets (See K)           |                             |            |                   |            |      |            | 103,999    |           
|                                        | U.S. GAAP adjustments attributable to minority interest           |                             |            | (75,748            | )          |      |            | (64,639    | )         
|                                        | Minority interest under Mexican GAAP (See B)                      |                             |            | (2,513,582         | )          |      |            | (2,584,579 | )         
|                                        | Effects of Bulletin B-15 restatement (See A)                      |                             |            | (37,728            | )          |      |            |           |           
|                                        |                                                                   |                             |            |                    |            |      |            |           
|                                        |                                                                   | Total U.S. GAAP adjustments |            |                    | (3,177,366 | )    |            |            | (3,453,450 | )
|                                        |                                                                   |                             |            |                    |            |      |            |           
|Stockholders equity under U.S. GAAP    |                                                                   | Ps.                         | 8,876,582  |                    |            | Ps.  | 8,579,574  |           
|                                        |                                                                   |                             |            |                    |            |      |            |           

A summary of the Companys statement of changes in stockholders equity
with balances determined under U.S. GAAP is as follows:

|                             |                                               |     |           |          |  
|---------------------------- | --------------------------------------------- | --- | --------- | -------- | -
|Balance at December 31, 2001 |                                               | Ps. | 8,876,582 |         
|                             | Net purchases of Companys common stock       |     |           | (76,161  | )
|                             | Executive stock purchase plan                 |     |           | (24,478  | )
|                             | Operation with Companys own shares           |     |           | 13,354   |  
|                             | Deferred gain on hedge activity               |     |           | 21,456   |  
|                             | Recognition of inflation effects for the year |     |           | (291,803 | )
|                             | Foreign currency translation adjustments      |     |           | (249,267 | )
|                             | Net income for the year                       |     |           | 309,891  |  
|                             |                                               |     |           |         
|Balance at December 31, 2002 |                                               | Ps. | 8,579,574 |         
|                             |                                               |     |           |         

A summary of the Companys stockholders equity after the U.S. GAAP
adjustments described above as of December 31, 2001 and 2002 is as
follows:

|                                           |  |      |             |      |  |     |             |  
|------------------------------------------ |  | ---- | ----------- | ---- |  | --- | ----------- | -
|                                           |  | 2001 |             | 2002
|                                           |  |      |             |     
|Capital stock                              |  | Ps.  | 10,324,166  |      |  | Ps. | 10,297,913  |  
|Additional paid-in capital                 |  |      | 3,157,526   |      |  |     | 3,138,695   |  
|Retained earnings                          |  |      | 6,137,888   |      |  |     | 6,405,578   |  
|Accumulated other comprehensive loss       |  |      | (10,742,998 | )    |  |     | (11,262,612 | )
|                                           |  |      |             |      |  |     |             |  
|Total stockholders equity under U.S. GAAP |  | Ps.  | 8,876,582   |      |  | Ps. | 8,579,574   |  
|                                           |  |      |             |      |  |     |             |  

F-34



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31,
2000, 2001 and 2002


(Expressed in thousands of Mexican pesos of constant purchasing power
as of December 31, 2002,
except where otherwise indicated)



|20. |  | DIFFERENCES BETWEEN MEXICAN GAAP AND U.S. GAAP (continued)
|--- |  | ----------------------------------------------------------



| | A) |  | EFFECTS OF BULLETIN B-15 RESTATEMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | As disclosed in Note 2-C, the Company adopted the provisions of
Bulletin B-15 effective as of January 1, 1997. Bulletin B-15 allows
the restatement of information for prior periods for comparison
purposes to information of the most current period presented based on
a weighted average restatement factor that reflects the relative
inflation and currency exchange movements of the countries in which
the Company operates. The restatement provisions of Bulletin B-15 do
not meet the Regulation S-X requirement that the financial statements
be stated in the same currency for all periods, because changes in
foreign currency exchange rates are included in the restatement
factor. The U.S. GAAP adjustments to net income and stockholders
equity reflect the difference between restating these prior periods,
including the U.S. GAAP adjustments, to December 31, 2002 constant
pesos utilizing the Mexican NCPI and the weighted average restatement
factor. See Note 20-Q for summarized financial information prepared
on a U.S. GAAP basis restated to December 31, 2002 constant pesos
utilizing the Mexican NCPI.             
|
| | B) |  | MINORITY INTEREST                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |    |  | Under Mexican GAAP, the minority interest in consolidated subsidiaries
is presented as a separate component within stockholders equity in
the consolidated balance sheet. For U.S. GAAP purposes, the minority
interest is not included in stockholders equity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | C) |  | PROPERTY, PLANT AND EQUIPMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |    |  | The Company adopted the Fifth Amendment to Bulletin B-10 effective as
of January 1, 1997. The Fifth Amendment eliminates the use of
replacement costs for purposes of restating property, plant and
equipment and instead, allows companies the option of using a
specific index, which contemplates inflation and currency exchange
movements in the restatement of machinery and equipment and the
related depreciation expense if such machinery and equipment is of
foreign origin. The Company has elected to apply a specific index to
fixed assets of foreign origin for the purposes of determining the
restated balances under Mexican GAAP. For U.S. GAAP purposes, the
use of a specific index, which contemplates currency exchange
changes, is not in accordance with the historical cost concept nor
does it present financial information in a constant reporting
currency. The impact on the net carrying value of fixed assets of
restating fixed assets of foreign origin utilizing the Mexican NCPI
for U.S. GAAP purposes increases stockholders equity as of December
31, 2001 and 2002 by Ps. 567,588 and Ps. 515,753, respectively.
|
| |    |  | Under Mexican GAAP, depreciation on idle equipment is not required if
the carrying value is expected to be recovered. Under U.S. GAAP, those
assets should continue be depreciated, and therefore the adjustment to
property, plant and equipment decreases stockholders equity as of
December 31, 2001 and 2002 by Ps.65,659 and Ps.90,467, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | D) |  | PRE-OPERATING EXPENSES AND OTHER DEFERRED COSTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |    |  | Under Mexican GAAP, pre-operating expenses are permitted to be
capitalized and amortized over a period of time estimated to generate
the income necessary to recover such expenses. The Company defined 12
years as the maximum period of amortization, based on its prior
experience. Under U.S. GAAP, such expenses are treated as period
expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

F-35



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power
as of December 31, 2002,
except where otherwise indicated)



|20. |  | DIFFERENCES BETWEEN MEXICAN GAAP AND U.S. GAAP (continued)
|--- |  | ----------------------------------------------------------



| |                                                                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Under Mexican GAAP, costs associated with research of new projects and
brand development and promotion are also permitted to be capitalized
and amortized over a period estimated to generate the income necessary to recover such expenses, which the Company has
estimated to be 5 to 20 years depending on the nature of the project.
Under U.S. GAAP, such costs are expensed as incurred.





| |                                                                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In 2001, as disclosed in Note 13, the Company shutdown its bread
operations and recognized a loss of Ps.199,315, which includes the
write-off of pre-operating expenses. Under U.S. GAAP, these expenses
have been previously written off.



| |                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The U.S. GAAP equity adjustments of Ps.40,157 and Ps.40,256 decrease
intangible assets presented in the balance sheets as of December 31,
2001 and 2002, respectively.

E)       COMPREHENSIVE FINANCING COSTS



| |                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Under Mexican GAAP, comprehensive financing costs, including interest
expense, foreign exchange gains or losses and monetary position of
the related debt for major construction projects, are capitalized as
part of the assets during the construction period. Under U.S. GAAP,
monetary position and foreign exchange gains and losses on U.S.
dollar or other stable currency borrowings are excluded from
capitalized interest.

F)       SALE-LEASEBACK TRANSACTION



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Under Mexican GAAP, a sale-leaseback transaction that involves real
estate is recognized with the use of the general criteria established
for capital and operating lease transactions. Based upon these
criteria, a sale-leaseback of real estate was recorded by the Company
as an operating lease. Under U.S. GAAP, Statement of Financial
Accounting Standards (SFAS) No. 98, such a transaction would be
recognized as a capital lease because a continuing involvement from
the seller-lessee is present, and consequently, the risks and
benefits of the property are not transferred to the buyer-lessor.
The U.S. GAAP balance sheet as of December 31, 2001 and 2002 would
reflect increases in fixed assets, net, of Ps.157,895 and Ps.149,908
(net of accumulated depreciation of Ps. 41,954 and Ps.53,014,
respectively), respectively, and long-term debt increases of
Ps.199,848 and Ps.202,922, respectively.



| |                                                                                                                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The capital lease under U.S. GAAP has a 15-year term with an effective
date of May 1, 1996. It requires minimum annual payments of
approximately U.S.Ps.2.7 million (Ps.28,146) for the year 2003,
approximately U.S.Ps.3.2 million (Ps.33.867) for the year 2004, 2005 and
2006, and approximately U.S.Ps.14.4 million (Ps.150,430) thereafter.

G)       AMORTIZATION OF EXCESS OF COST OVER BOOK VALUE



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Under Mexican GAAP, the excess of the purchase price over the
proportionate book value of net assets acquired is recorded as Excess
of cost over book value for all of the Companys acquisitions. Under
U.S. GAAP, transfers and exchanges between enterprises under common
control are accounted for on a carry-over basis, and therefore, no
such assets would be recorded. The U.S. GAAP equity adjustments of
Ps.177,928 and Ps.159,457 decrease the excess of cost over book value
presented in the balance sheet as of December 31, 2001 and 2002,
respectively.

F-36



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power
as of December 31, 2002,
except where otherwise indicated)

20.     DIFFERENCES BETWEEN MEXICAN GAAP AND U.S. GAAP (continued)

H)      DEFERRED INCOME TAXES AND EMPLOYEES STATUTORY PROFIT SHARING



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Under Mexican GAAP through December 31, 1999, deferred income taxes
were determined by the partial liability method of accounting, under
which deferred income taxes were provided for identifiable,
non-recurring temporary differences (i.e. those that are expected to
reverse over a defined period of time) at the tax rate expected to be
in effect at the time those temporary differences reverse. The
recognition of deferred tax assets under Mexican GAAP was subject to
practical absolute assurance that they were realizable through
future operations.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Effective January 1, 2000, the Company adopted the provisions of
revised Bulletin D-4, which is an asset and liability method for the
recognition of deferred income taxes for existing temporary
differences. The accounting treatment of the Bulletin D-4 is in
accordance with the comprehensive asset and liability method of SFAS
No. 109 Accounting for Income Taxes for the recognition of U.S. GAAP
deferred tax assets and liabilities. The U.S. GAAP adjustments to net
income and stockholders equity reflect only the deferred income taxes
and employees statutory profit sharing generated by the other U.S.
GAAP adjustments discussed in this document.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Under the comprehensive asset and liability method of SFAS No. 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be
reversed.



| |                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | For both Mexican and U.S. GAAP purposes, the financial statement
carrying amounts utilized in the determination of the deferred tax
assets and liabilities included the inflation adjustments described in
Note 2-D, and their respective tax bases also included the effects of
inflation based on tax regulations.



| |                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The amounts of deferred income taxes charged or credited to net income
for each year under SFAS No. 109 and as set forth in Issued 93-9 of
the U.S. Financial Accounting Standards Boards Emerging Issues Task
Force was determined based on the differences between the beginning
and ending balances of the deferred tax assets or liabilities for each
period, expressed in Mexican pesos of constant purchasing power.



| |                    
| | -------------------
| | Income tax expense:



| |                                                                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The domestic and foreign components of income before taxes, employees
statutory profit sharing, equity in earnings of associated companies,
extraordinary item and minority interest reported under Mexican GAAP
are as follows:

|         |  |                         |          |      |  |      |         |   |  |     |           | 
|-------- |  | ----------------------- | -------- | ---- |  | ---- | ------- | - |  | --- | --------- | 
|         |  | Year ended December 31,
|         |  |                        
|         |  | 2000                    |          | 2001 |  | 2002
|         |  |                         |          |      |  |     
|Domestic |  | Ps.                     | (218,622 | )    |  | Ps.  | (71,275 | ) |  | Ps. | 104,594   | 
|Foreign  |  |                         | 605,011  |      |  |      | 819,115 |   |  |     | 897,079   | 
|         |  |                         |          |      |  |      |         |   |  |     |           | 
|         |  | Ps.                     | 386,389  |      |  | Ps.  | 747,840 |   |  | Ps. | 1,001,673 | 
|         |  |                         |          |      |  |      |         |   |  |     |           | 



| |                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Provisions for domestic federal, foreign federal and state income
taxes in the Mexican GAAP consolidated statements of income consist of
the following components:

F-37



---



##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002


(Expressed in thousands of Mexican pesos of constant purchasing power
as  of December 31, 2002,
except where otherwise indicated)

20. DIFFERENCES BETWEEN MEXICAN GAAP AND U.S. GAAP (continued)

|                   |                  |     |          |          |      |     |                         |         |   |     |         |         | 
|------------------ | ---------------- | --- | -------- | -------- | ---- | --- | ----------------------- | ------- | - | --- | ------- | ------- | 
|                   |                  |     |          |          |      |     | Year ended December 31, |         |   |     |        
|                   |                 
|                   |                  |     | 2000     |          | 2001 |     | 2002                   
|                   |                  |     |          |          |      |     |                        
|Current:           |                  |     |          |          |      |     |                         |         |   |     |         |        
|                   | Domestic federal |     | Ps.      | 145,051  |      |     | Ps.                     | 101,089 |   |     | Ps.     | 215,857 | 
|                   | Foreign federal  |     |          | 8,810    |      |     |                         | 75,377  |   |     |         | 66,142  | 
|                   | Foreign state    |     |          | 3,095    |      |     |                         | 7,583   |   |     |         | 6,331   | 
|                   |                  |     |          |          |      |     |                         |         |   |     |         |         | 
|                   |                  | Ps. | 156,956  |          |      | Ps. | 184,049                 |         |   | Ps. | 288,330 |        
|                   |                  |     |          |          |      |     |                         |         |   |     |         |         | 
|Deferred:          |                  |     |          |          |      |     |                         |         |   |     |         |        
|                   | Domestic federal |     | Ps.      | (219,890 | )    |     | Ps.                     | (65,210 | ) |     | Ps.     | 34,552  | 
|                   | Foreign federal  |     |          | 78,073   |      |     |                         | 150,143 |   |     |         | 197,649 | 
|                   | Foreign state    |     |          | 7,626    |      |     |                         | 6,783   |   |     |         | 40,701  | 
|                   |                  |     |          |          |      |     |                         |         |   |     |         |         | 
|                   |                  | Ps. | (134,191 | )        |      | Ps. | 91,716                  |         |   | Ps. | 272,902 |        
|                   |                  |     |          |          |      |     |                         |         |   |     |         |         | 
|Total income taxes |                  | Ps. | 22,765   |          |      | Ps. | 275,765                 |         |   | Ps. | 561,232 |        
|                   |                  |     |          |          |      |     |                         |         |   |     |         |         | 



| |                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities at December 31, 2001
and 2002, are as follows:

|                                                       |  |      |           |      |  |     |           | 
|------------------------------------------------------ |  | ---- | --------- | ---- |  | --- | --------- | 
|                                                       |  | 2001 |           | 2002
|                                                       |  |      |           |     
|Deferred tax assets:                                   |  |      |           |      |  |     |           | 
|Net operating loss carryforwards and other tax credits |  | Ps.  | 1,463,827 |      |  | Ps. | 1,315,378 | 
|Customer advances and accrued liabilities              |  |      | 108,073   |      |  |     | 109,430   | 
|Intangible assets
(c)                                  |  |      | 299,029   |      |  |     | 186,480   | 
|Other                                                  |  |      | 87,697    |      |  |     | 197,602   | 
|                                                       |  |      |           |      |  |     |           | 
|Total gross deferred tax assets                        |  |      | 1,958,626 |      |  |     | 1,808,890 | 
|                                                       |  |      |           |      |  |     |           | 
|Deferred tax liabilities:                              |  |      |           |      |  |     |           | 
|Property, plant and equipment, net (a)                 |  |      | 1,829,226 |      |  |     | 1,929,981 | 
|Inventories
(b)                                        |  |      | 378,078   |      |  |     | 402,465   | 
|Investment in partnership and equity method investee   |  |      | 110,299   |      |  |     | 132,236   | 
|Other assets                                           |  |      | 23,905    |      |  |     | 5,652     | 
|                                                       |  |      |           |      |  |     |           | 
|Total gross deferred tax liabilities                   |  |      | 2,341,508 |      |  |     | 2,470,334 | 
|                                                       |  |      |           |      |  |     |           | 
|Net deferred tax liability under U.S. GAAP             |  |      | 382,882   |      |  |     | 661,444   | 
|Net deferred tax liability under Mexican GAAP          |  |      | 326,675   |      |  |     | 624,841   | 
|                                                       |  |      |           |      |  |     |           | 
|Adjustment for U.S. GAAP                               |  | Ps.  | 56,207    |      |  | Ps. | 36,603    | 
|                                                       |  |      |           |      |  |     |           | 



---

|(a) |  | Principally due to the differences between restated
book and tax basis, including depreciation and capitalized
interest.
|--- |  | ------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Principally due to the expensing of purchases for
Mexican tax purposes.                                                 
|   
|(c) |  | Reflects a prepaid asset resulting from an
intercompany transaction.                                                    

F-38



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power
as of December 31, 2002,
except where otherwise indicated)



|20. |  | DIFFERENCES BETWEEN MEXICAN GAAP AND U.S. GAAP (continued)
|--- |  | ----------------------------------------------------------



| |  |  | A summary of the deferred tax liability (asset) balances on a U.S.
GAAP basis are as follows:
| |  |  | ---------------------------------------------------------------------------------------------

|             |                        |  |         |            |      |  |         |            |  
|------------ | ---------------------- |  | ------- | ---------- | ---- |  | ------- | ---------- | -
|             |                        |  | 2001    |            | 2002
|             |                        |  |         |            |     
|Current:     |                        |  |         |            |      |  |         |           
|             | Deferred tax asset     |  | Ps.     | (195,770   | )    |  | Ps.     | (307,032   | )
|             | Deferred tax liability |  |         | 378,078    |      |  |         | 402,465    |  
|             |                        |  |         |            |      |  |         |            |  
|             |                        |  | 182,308 |            |      |  | 95,433  |           
|             |                        |  |         |            |      |  |         |            |  
|Non-current: |                        |  |         |            |      |  |         |           
|             | Deferred tax asset     |  |         | (1,762,856 | )    |  |         | (1,501,858 | )
|             | Deferred tax liability |  |         | 1,963,430  |      |  |         | 2,067,869  |  
|             |                        |  |         |            |      |  |         |            |  
|             |                        |  | 200,574 |            |      |  | 566,011 |           
|             |                        |  |         |            |      |  |         |            |  
|             | Total                  |  | Ps.     | 382,882    |      |  | Ps.     | 661,444    |  
|             |                        |  |         |            |      |  |         |            |  



| |  |  | The provision for income tax on a U.S. GAAP basis is as follows:
| |  |  | ----------------------------------------------------------------

|         |  |      |          |      |  |      |          |   |  |     |          |  
|-------- |  | ---- | -------- | ---- |  | ---- | -------- | - |  | --- | -------- | -
|         |  | 2000 |          | 2001 |  | 2002
|         |  |      |          |      |  |     
|Current  |  | Ps.  | (156,956 | )    |  | Ps.  | (184,049 | ) |  | Ps. | (288,330 | )
|Deferred |  |      | 144,880  |      |  |      | (231,450 | ) |  |     | (246,540 | )
|         |  |      |          |      |  |      |          |   |  |     |          |  
|         |  | Ps.  | (12,076  | )    |  | Ps.  | (415,499 | ) |  | Ps. | (534,870 | )
|         |  |      |          |      |  |      |          |   |  |     |          |  



| |    |  | In addition, the Company has established a deferred liability for U.S.
GAAP purposes of Ps.49,581 and Ps.45,552, at December 31, 2001 and
2002, respectively, relating to employees statutory profit sharing.                                                                    
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | Income taxes have not been provided on the undistributed earnings of
the Companys foreign subsidiaries as such earnings are deemed to be
permanently invested.                                                                                                                   
|
| | I) |  | NEGATIVE GOODWILL                                                                                                                                                                                                                                                                 
|
| |    |  | Under Mexican GAAP, the excess of the net book value of identifiable
assets acquired over their purchase price, is recorded as Excess of
book value over cost of subsidiaries acquired, net and is permitted
to be amortized over a period of time not to exceed 5 years.       
|
| |    |  | Under U.S. GAAP, the excess of the fair value over the net book value
of acquired identifiable assets is allocated to the book value of the
non-monetary assets acquired. Once the book value has been reduced to
zero, any unallocated amounts are recorded as negative goodwill.
|
| |    |  | As of December 31, 2001 and 2002, the U.S. GAAP equity adjustment of
Ps.565,780 and Ps.845,589, respectively, decrease the net fixed assets
in Ps.672,945 and Ps.845,589, respectively, and eliminated the excess
of book value over cost for Ps.107,165 as of December 31, 2001. 

F-39



---



##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power
as of December 31, 2002,
except where otherwise indicated)



|20. |  | DIFFERENCES BETWEEN MEXICAN GAAP AND U.S. GAAP (continued)
|--- |  | ----------------------------------------------------------



| | J) |  | DERIVATIVE FINANCIAL INSTRUMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | Under Mexican GAAP, with the adoption of Bulletin C-2, Financial
Instruments, effective January 1, 2001, when a company is engaged in
hedge activities, the corresponding derivative financial instruments
must be valued utilizing the same criteria used for the assets or
liabilities that are being hedged. Changes in the fair value of
derivatives are recognized in the income statement, net of costs,
expenses or earnings from the assets or liabilities being hedged and
the gain or loss is recognized when the hedge item is realized.                                                                                  
|
| |    |  | Under U.S. GAAP, all derivative instruments must be recorded on the
balance sheet at fair value. On the date the derivatives contracts are
entered into, the Company designates the derivative as either (a) a
fair value hedge or (b) a cash flow hedge. For cash-flow hedge
transactions, changes in the fair value of the derivative instrument
are reported in other comprehensive income. The gains and losses on
cash flow hedge transactions that are reported in other comprehensive
income are reclassified to earnings in the periods in which earnings
are affected by the variability of the cash flows of the hedged item.
|
| |    |  | At December 31, 2001 the Company had open futures contracts for corn
and natural gas at fair values of Ps. 52,080 and Ps. 9,059,
respectively, and unrealized losses on such contracts of Ps.845 and
Ps.3,317, respectively. The adjustment for these contracts decreases
stockholders equity as of December 31, 2001 by Ps.4,162. As of
December 31, 2002 the effects of theses contracts were not significant
and were recognized in income when settled.                                                                                                                                                                           
|
| |    |  | At December 31, 2002, the Company realized gains of Ps. 18,009 from
cash flow hedges related to corn futures contracts; these gains are
deferred and reported in other comprehensive income. The Company
expects these deferred gains related to cash flow hedges will be
recognized within the next 12 months.                                                                                                                                                                                                                                                                                                                        
|
| |    |  | As stated in Note 17-B, the Company entered into two interest rate
swap contracts to hedge its long-term debt, which matures in 2007.
SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities does not permit synthetic instrument accounting,
consequently, for U.S. GAAP purposes, both contracts have been treated
as speculative contracts and have been recorded at fair value, with
the offsetting changes in their fair value reported in earnings and
therefore the impact under U.S. GAAP and Mexican GAAP was similar.                                                                                  
|
| | K) |  | GOODWILL AND INDEFINITE-LIVED INTANGIBLE ASSETS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |    |  | Under U.S. GAAP, effective January 1, 2002, the Company adopted the
provisions of SFAS No. 142, Goodwill and Other Intangible Assets
(SFAS No. 142). Under SFAS No. 142, goodwill and indefinite-lived
intangible assets are no longer amortized but are reviewed for
impairment on an annual basis at the reporting unit level.                                                                                                                                                                                                                                                                                                   

F-40



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power
as of December 31, 2002,
except where otherwise indicated)



|20. |  | DIFFERENCES BETWEEN MEXICAN GAAP AND U.S. GAAP (continued)
|--- |  | ----------------------------------------------------------



| |  |  | Goodwill impairment test is performed in two phases. The first step of
the goodwill impairment test compares the fair value of the reporting
unit with its carrying value, including goodwill. If the fair value of
the reporting unit exceeds its carrying value, goodwill of the
reporting unit is considered not impaired; however if the carrying
value of the reporting unit exceeds its fair value, an additional
procedure must be performed. The additional procedure compares the
implied fair value of the reporting unit (as defined by SFAS No. 142)
with the carrying amount of that goodwill. An impairment loss is
recorded to the extent that the carrying amount of goodwill exceeds
its implied fair value. The Company estimates fair values based on the
discounted cash flows approach. Considerable management judgment is
necessary to estimate discounted future cash flows. Assumptions used
for these cash flows are consistent with internal forecasts.
| |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Intangible assets that are not subject to amortization shall be tested
for impairment annually or more frequently if events or changes in
circumstances indicate that the asset might be impaired. The
impairment test consists of a comparison of the fair value of an
intangible asset with its carrying amount. If the carrying amount of
an intangible asset exceeds its fair value, an impairment loss is
recognized in an amount equal to that excess. After an impairment loss
is recognized, the adjusted carrying amount of the intangible asset
shall be its new accounting basis.                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  |  | Under Mexican GAAP goodwill continues to be amortized. For U.S. GAAP
purposes, the reversal of goodwill amortization under Mexican GAAP
increased the balance sheet item Excess of cost over book value of
subsidiaries acquired, net for an amount of Ps. 98,310 as of December
31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  |  | Under Mexican GAAP, the amortization of goodwill for the years 2000
and 2001 was recognized as a non-operating expense. Under U.S. GAAP,
such item would be included in the determination of operating income.
For the years ended December 31, 2000 and 2001, this item amounted to
Ps. 16,830 and Ps. 11,598.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  |  | Additionally, the Company defined proprietary trademarks as intangible
assets with indefinite life. Consequently, under U.S. GAAP, the
amortization of this intangible asset ceased, whereas for Mexican GAAP
purposes, such amortization continues. The reversal of
indefinite-lived intangible assets amortization under Mexican GAAP,
increased the balance sheet item Intangible assets for an amount of
Ps. 3,739 as of December 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  |  | The impact of adopting SFAS No. 142 on net income and earnings per
share adjusted to exclude amortization expense (net of taxes) related
to goodwill and indefinite-lived intangible assets is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

|                                                                  |                                                                 |    |         |      |  |      |         |      |  |    |         |      |  | 
|----------------------------------------------------------------- | --------------------------------------------------------------- | -- | ------- | ---- |  | ---- | ------- | ---- |  | -- | ------- | ---- |  | 
|                                                                  |                                                                 |    |         | 2000 |  | 2001 |         | 2002
|                                                                  |                                                                 |    |         |      |  |      |         |     
|Net income attributable to common
stockholders equity            |                                                                 | Ps | 71,378  |      |  | Ps   | 199,862 |      |  | Ps | 309,891 |     
|Amortization of goodwill and
indefinite-lived intangible
assets   |                                                                 |    | 132,314 |      |  |      | 123,209 |      |  |    |        |     
|Pro forma net income attributable to
 common stockholders equity |                                                                 | Ps | 203,692 |      |  | Ps   | 323,071 |      |  | Ps | 309,891 |     
|                                                                  |                                                                 |    |         |      |  |      |         |      |  |    |         |     
|Basic and diluted earnings per share:                             |                                                                 |    |         |      |  |      |         |      |  |    |         |     
|                                                                  | Reported earnings per
share                                     |    | Ps      | 0.16 |  |      | Ps      | 0.46 |  |    | Ps      | 0.69 | 
|                                                                  | Amortization of goodwill and
indefinite-lived intangible
assets |    |         | 0.31 |  |      |         | 0.28 |  |    |         |     | 
|                                                                  |                                                                 |    |         |      |  |      |         |      |  |    |         |     
|Pro forma basic and diluted earnings
per
share                    |                                                                 | Ps | 0.47    |      |  | Ps   | 0.74    |      |  | Ps | 0.69    |     
|                                                                  |                                                                 |    |         |      |  |      |         |      |  |    |         |     

F-41



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power of December 31, 2002,
except where otherwise indicated)



|20. |  | DIFFERENCES BETWEEN MEXICAN GAAP AND U.S. GAAP (continued)
|--- |  | ----------------------------------------------------------



| |  | L) | SUPPLEMENTAL BALANCE SHEET INFORMATION
| |  | -- | --------------------------------------



| |  |  | Long-lived assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |   | The Company evaluates the carrying value of long-lived assets to be
held and used, primarily property, plant and equipment and any assets
to be disposed of, when events or circumstances suggest that the
carrying value may not be recoverable. Any impairment of these assets
is included in income of the year, for the difference between the
carrying value and the fair market value of long-lived assets to be
held and used, and the difference between the carrying value and the
fair market value less costs to sell for long-lived assets to be
disposed of. As of December 31, 2002 the Companys management believes
there is no impairment in the carrying value of long-lived assets.
|
| |  |  | Securities of related parties:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  |   | The investment in common stock of GF Banorte is accounted for under
the equity method, because the Company has significant influence over
the investee due to its representation on the Board of Directors of GF
Banorte and the equity interest of GRUMAs principal shareholder in GF
Banorte. The effect of applying U.S. GAAP adjustments to the equity
investment has been included in the Companys U.S. GAAP
reconciliation, and principally result from differences in accounting
for loan loss reserves, deferred start-up costs, and deferred income
taxes.                                                                                                                                 
|
| |  |   | Condensed financial information for GF Banorte as of and for the years
ended December 31:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

|                                         |  |      |             |      |  |     |             | 
|---------------------------------------- |  | ---- | ----------- | ---- |  | --- | ----------- | 
|                                         |  | 2001 |             | 2002
|                                         |  |      |             |     
|Cash and cash equivalents                |  | Ps.  | 8,105,293   |      |  | Ps. | 23,525,329  | 
|Investment securities                    |  |      | 6,851,961   |      |  |     | 11,986,305  | 
|Net loan portfolio                       |  |      | 83,629,697  |      |  |     | 149,121,899 | 
|Property, furniture and equipment, net   |  |      | 3,826,221   |      |  |     | 5,721,597   | 
|Total assets                             |  |      | 111,290,844 |      |  |     | 199,520,744 | 
|Deposits                                 |  |      | 79,771,579  |      |  |     | 143,281,465 | 
|Bank and other entity loans  current    |  |      | 7,863,436   |      |  |     | 26,919,791  | 
|Bank and other entity loans  noncurrent |  |      | 9,197,053   |      |  |     | 10,641,516  | 
|Total liabilities                        |  |      | 100,881,781 |      |  |     | 187,529,879 | 
|Majority interest                        |  |      | 9,569,644   |      |  |     | 11,175,462  | 
|Minority interest                        |  |      | 839,419     |      |  |     | 815,403     | 

|                                  |  |      |             |      |  |      |             |   |  |     |             |  
|--------------------------------- |  | ---- | ----------- | ---- |  | ---- | ----------- | - |  | --- | ----------- | -
|                                  |  | 2000 |             | 2001 |  | 2002
|                                  |  |      |             |      |  |     
|Interest income                   |  | Ps.  | 28,721,238  |      |  | Ps.  | 23,837,690  |   |  | Ps. | 24,317,147  |  
|Interest expense                  |  |      | (22,076,445 | )    |  |      | (17,070,298 | ) |  |     | (15,869,066 | )
|Income from continuing operations |  |      | 2,065,587   |      |  |      | 1,984,108   |   |  |     | 1,965,112   |  
|Net income                        |  |      | 1,859,891   |      |  |      | 1,587,888   |   |  |     | 2,015,863   |  



| |  |  | Other current liabilities:                                                                                                                                                                                                                                                  
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |   |  | Included within accrued liabilities and other payables as of December
31, 2001 and 2002 are accrued compensation costs (Ps.278,660 and Ps.
288,116 in 2001 and 2002, respectively) and accrued advertising costs
(Ps.140,091 and Ps.161,687 in 2001 and 2002, respectively).

F-42



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power of December 31, 2002,
except where otherwise indicated)



|20. | DIFFERENCES BETWEEN MEXICAN GAAP AND U.S. GAAP (continued)
|--- | ----------------------------------------------------------



| |  |  | Other stockholders equity:                                                                                                                                                        
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |   |  | Included within retained earnings as of December 31, 2001 and 2002 are
undistributed earnings of GF Banorte amounting to approximately
Ps.1,223,025 and Ps.1,459,648, respectively.
|
| |  |  | Computer software:                                                                                                                                                                 
|
| |   |  | Depreciation expense for the years ended December 31, 2000, 2001 and
2002 amounted to Ps.48,709, Ps.67,679 and Ps.74,188 respectively, on
capitalized computer software cost.      



| | M) |  | SUPPLEMENTAL INCOME STATEMENT INFORMATION
| | -- |  | -----------------------------------------



| |  |  | Advertising costs:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |   |  | Advertising costs, included in selling, general and administrative
expenses, are expensed when the advertising first takes place.
Advertising expense was Ps.517,180, Ps.552,525 and Ps.499,057 for the
years ended December 31, 2000, 2001 and 2002, respectively. The
Company had Ps.7,393 and Ps.2,708 of prepaid advertising costs
reported as prepaid expenses as of December 31, 2001 and 2002,
respectively.                                                                                                                                                                         
|
| |  |  | Shipping and handling costs:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |   |  | During 2000, the Financial Accounting Standards Boards Emerging
Issues Task Force issued EITF 00-10, Accounting for Shipping and
Handling Fees and Costs. The shipping and handling costs included in
selling, general and administrative expenses amounted to Ps.
1,073,197, Ps. 1,032,392 and Ps.1,011,561 for the years ended December
31, 2000, 2001 and 2002.                                                                                                                                                                                                                       
|
| |  |  | Operating income:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |   |  | Under U.S. GAAP, certain other income items included in the Mexican
GAAP financial statements of the Company, such as software
implementation expenses, ESPS, reorganization expenses and
amortization of other deferred costs would be included in the
determination of operating income. For the years ended December 31,
2000, 2001 and 2002, these items amounted to Ps. 160,102, Ps. 97,512
and Ps. 103,847, respectively.                                                                                                                                                             
|
| |  |  | Earnings per share data                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |   |  | For U.S. GAAP purposes, the equity swap transaction that took place in
September 2000 is accounted under the Emerging Issue Task Force
(EITF) Issue No. 98-12 Application of Issue No. 00-19 to Forward
Equity Sales Transactions which observes that any common shares
actually issued and outstanding should be considered in the
weighted-average shares calculation, and additionally, the payment of
10.25% over the contractual amount should be treated as a reduction of
income available to shareholders. This operation had no effect on the
fully diluted earnings per share.

F-43



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power of December 31, 2002,
except where otherwise indicated)



|20. | DIFFERENCES BETWEEN MEXICAN GAAP AND U.S. GAAP (continued)
|--- | ----------------------------------------------------------



| |  |  | Consumer and trade sales promotion expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |   |  | In May 2000 and April 2001 the EITF issued EITF No. 00-14, Accounting
for Certain Sales Incentives and EITF No. 00-25 Vendor Income
Statement Characterization of Consideration Paid to a Reseller of the
Vendors Products, respectively. The Company adopted these standards
during 2002 and has classified certain consumer and trade sales
promotion expenses, such as coupon redemption costs, cooperative
advertising programs, new product introduction fees, feature price
discounts and in-store display incentives as a reduction of revenue.
Previously, these consumer and trade sales promotional expenses were
classified as a component of selling, general and administrative
expenses. For the years ended December 31, 2000, 2001 and 2002 these
items amounted to Ps. 171,101, Ps. 195,332 and Ps. 146,233,
respectively.



| | N) |  | SUPPLEMENTAL CASH FLOW INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | Mexican GAAP Bulletin B-12 issued by the Mexican Institute of Public
Accountants specifies the appropriate presentation of the statements
of changes in financial position. Under Bulletin B-12, the sources and
uses of resources are determined based upon the differences between
beginning and ending financial statement balances in Mexican pesos of
constant purchasing power. Under U.S. GAAP, a statement of cash flow
is required, which presents only cash movements and excludes non-cash
items.
|
| |    |  | The following presents a price-level adjusted statement of cash flows,
after considering the impact of U.S. GAAP adjustments in conformity
with the AICPA SEC Regulations Committees International Practice Task
Force recommendation.                                                                                                                                                                                                                                                                     

|                      |                                                                                    |                                                                      |         |                         |           |      |           |         |           |   |           |         |           |  
|--------------------- | ---------------------------------------------------------------------------------- | -------------------------------------------------------------------- | ------- | ----------------------- | --------- | ---- | --------- | ------- | --------- | - | --------- | ------- | --------- | -
|                      |                                                                                    |                                                                      |         | Year ended December 31,
|                      |                                                                                    |                                                                      |         |                        
|                      |                                                                                    |                                                                      |         | 2000                    |           | 2001 |           | 2002   
|                      |                                                                                    |                                                                      |         |                         |           |      |           |        
|Operating activities: |                                                                                    |                                                                      |         |                         |           |      |           |         |           |   |           |        
|                      | Net income (loss)                                                                  |                                                                      | Ps.     | 71,378                  |           |      | Ps.       | 199,862 |           |   | Ps.       | 309,891 |          
|                      | Minority interest                                                                  |                                                                      |         | 172,472                 |           |      |           | 171,933 |           |   |           | 190,210 |          
|                      |                                                                                    |                                                                      |         |                         |           |      |           |         |           |   |           |         |          
|                      | Consolidated income (loss)                                                         |                                                                      |         | 243,850                 |           |      |           | 371,795 |           |   |           | 500,101 |          
|                      | Adjustments to reconcile net income to resources
provided by operating activities: |                                                                      |         |                         |           |      |           |         |           |   |           |         |          
|                      |                                                                                    | Monetary position gain                                               |         |                         | (250,736  | )    |           |         | (184,109  | ) |           |         | (161,299  | )
|                      |                                                                                    | Depreciation and amortization                                        |         |                         | 1,044,089 |      |           |         | 1,142,004 |   |           |         | 1,035,850 |  
|                      |                                                                                    | Allowance for doubtful accounts                                      |         |                         | 39,646    |      |           |         | 53,721    |   |           |         | 34,754    |  
|                      |                                                                                    | Write-off of idle assets and other intangible assets                 |         |                         | 111,125   |      |           |         |          |   |           |         |          |  
|                      |                                                                                    | Account receivable for disposed subsidiaries                         |         |                         |          |      |           |         |          |   |           |         | (146,000  | )
|                      |                                                                                    | Equity in earnings of associated companies, less
dividends received |         |                         | (63,852   | )    |           |         | (45,885   | ) |           |         | (99,678   | )
|                      |                                                                                    | Seniority premium                                                    |         |                         | 394       |      |           |         | 7,089     |   |           |         | 8,948     |  
|                      |                                                                                    | Gain from shutdown in bread operations                               |         |                         |          |      |           |         | (126,412  | ) |           |         |          |  
|                      |                                                                                    | Deferred income taxes and employees statutory
profit sharing        |         |                         | (156,596  | )    |           |         | 229,141   |   |           |         | 245,906   |  
|                      |                                                                                    |                                                                      |         |                         |           |      |           |         |           |   |           |         |          
|                      |                                                                                    |                                                                      | 967,920 |                         |           |      | 1,447,344 |         |           |   | 1,418,582 |        
|                      |                                                                                    |                                                                      |         |                         |           |      |           |         |           |   |           |         |          

F-44



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002,
except where otherwise indicated)

20.      DIFFERENCES BETWEEN MEXICAN GAAP AND U.S. GAAP (continued)

|                      |                                                      |                                                              |                                           |            |                         |            |          |          |          |           |          |          |          |          |  
|--------------------- | ---------------------------------------------------- | ------------------------------------------------------------ | ----------------------------------------- | ---------- | ----------------------- | ---------- | -------- | -------- | -------- | --------- | -------- | -------- | -------- | -------- | -
|                      |                                                      |                                                              |                                           |            | Year ended December 31,
|                      |                                                      |                                                              |                                           |            |                        
|                      |                                                      |                                                              |                                           |            | 2000                    |            | 2001     |          | 2002    
|                      |                                                      |                                                              |                                           |            |                         |            |          |          |         
|                      | Changes in working capital:                          |                                                              |                                           |            |                         |            |          |          |          |           |          |          |         
|                      |                                                      | Restricted cash                                              |                                           |            | 493                     |            |          |          | 3,992    |           |          |          | 1,367    |         
|                      |                                                      | Notes and accounts receivable, net                           |                                           |            | (353,664                | )          |          |          | 51,743   |           |          |          | (564,873 | )       
|                      |                                                      | Inventories                                                  |                                           |            | 210,228                 |            |          |          | (37,196  | )         |          |          | (298,046 | )       
|                      |                                                      | Prepaid expenses                                             |                                           |            | 23,817                  |            |          |          | 14,296   |           |          |          | 26,751   |         
|                      |                                                      | Trade accounts payable                                       |                                           |            | 432,423                 |            |          |          | (322,137 | )         |          |          | 354,129  |         
|                      |                                                      | Accrued liabilities and other payable                        |                                           |            | 205,456                 |            |          |          | 77,544   |           |          |          | 58,667   |         
|                      |                                                      | Income taxes and employees statutory profit
sharing payable |                                           |            | (30,317                 | )          |          |          | 48,078   |           |          |          | (30,643  | )       
|                      |                                                      |                                                              |                                           |            |                         |            |          |          |          |           |          |          |          |         
|                      |                                                      |                                                              | 488,436                                   |            |                         |            | (163,680 | )        |          |           | (452,648 | )       
|                      |                                                      |                                                              |                                           |            |                         |            |          |          |          |           |          |          |          |         
|                      |                                                      |                                                              | Net cash provided by operating activities |            |                         | 1,456,356  |          |          |          | 1,283,664 |          |          |          | 965,934  |  
|                      |                                                      |                                                              |                                           |            |                         |            |          |          |          |           |          |          |          |         
|Investing activities: |                                                      |                                                              |                                           |            |                         |            |          |          |          |           |          |         
|                      | Purchases of property, plant and equipment           |                                                              |                                           | (1,143,136 | )                       |            |          | (699,147 | )        |           |          | (699,517 | )       
|                      | Sales of property, plant and equipment               |                                                              |                                           | 30,120     |                         |            |          | 14,200   |          |           |          | 140,297  |         
|                      | Acquisitions of new plants                           |                                                              |                                           | (135,354   | )                       |            |          |         |          |           |          |         |         
|                      | Resources received from shutdown of bread
operations |                                                              |                                           |           |                         |            |          | 534,532  |          |           |          |         |         
|                      | Deferred assets                                      |                                                              |                                           | (219,044   | )                       |            |          | (78,620  | )        |           |          | (61,060  | )       
|                      | Investments in common stock                          |                                                              |                                           | (61,845    | )                       |            |          | (2,194   | )        |           |          | 53,272   |         
|                      | Other                                                |                                                              |                                           | (21,137    | )                       |            |          | (40,759  | )        |           |          | 25,408   |         
|                      |                                                      |                                                              |                                           |            |                         |            |          |          |          |           |          |          |          |         
|                      |                                                      |                                                              | Net cash used in investing activities     |            |                         | (1,550,396 | )        |          |          | (271,988  | )        |          |          | (541,600 | )
|                      |                                                      |                                                              |                                           |            |                         |            |          |          |          |           |          |          |          |         

F-45



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002,
except where otherwise indicated)

20.      DIFFERENCES BETWEEN MEXICAN GAAP AND U.S. GAAP (continued)

|                                                          |                                               |                                                     |          |            |          |     |         |            |          |     |          |            |          |  
|--------------------------------------------------------- | --------------------------------------------- | --------------------------------------------------- | -------- | ---------- | -------- | --- | ------- | ---------- | -------- | --- | -------- | ---------- | -------- | -
|Financing activities:                                     |                                               |                                                     |          |            |          |     |         |            |          |     |          |           
|                                                          | Proceeds from bank loans and long-term debt   |                                                     |          | 3,077,736  |          |     |         | 2,901,724  |          |     |          | 1,807,525  |         
|                                                          | Repayment of bank loans and long-term debt    |                                                     |          | (2,906,619 | )        |     |         | (3,176,935 | )        |     |          | (2,124,848 | )       
|                                                          | Proceeds from issuance of subsidiaries stock |                                                     |          | 223,431    |          |     |         |           |          |     |          |           |         
|                                                          | Decrease of minority interest                 |                                                     |          | (478,828   | )        |     |         |           |          |     |          |           |         
|                                                          | Net purchases-sales of Companys common stock |                                                     |          | (7,129     | )        |     |         | (77,253    | )        |     |          | (87,285    | )       
|                                                          | Dividends paid                                |                                                     |          | (24,849    | )        |     |         | (276,450   | )        |     |          | (94,826    | )       
|                                                          | Other                                         |                                                     |          | (58,095    | )        |     |         | (86,230    | )        |     |          | (61,762    | )       
|                                                          |                                               |                                                     |          |            |          |     |         |            |          |     |          |            |         
|                                                          |                                               | Net cash provided by (used in) financing
activities |          |            | (174,353 | )   |         |            | (715,144 | )   |          |            | (561,196 | )
|                                                          |                                               |                                                     |          |            |          |     |         |            |          |     |          |            |         
|Effect of inflation on cash and temporary investments     |                                               |                                                     | (61,746  | )          |          |     | (16,865 | )          |          |     | (12,072  | )         
|Net increase (decrease) in cash and temporary
investments |                                               |                                                     | (330,139 | )          |          |     | 279,667 |            |          |     | (148,934 | )         
|Cash and temporary investments at beginning of year       |                                               |                                                     | 458,586  |            |          |     | 128,447 |            |          |     | 408,114  |           
|                                                          |                                               |                                                     |          |            |          |     |         |            |          |     |          |            |         
|Cash and temporary investments at end of year             |                                               | Ps.                                                 | 128,447  |            |          | Ps. | 408,114 |            |          | Ps. | 259,180  |           
|                                                          |                                               |                                                     |          |            |          |     |         |            |          |     |          |            |         



| |  | During 2002, the Company had a noncash activity in which it received
temporary investments to settle a note receivable for an amount of Ps.
192,151.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Net cash flow from operating activities reflects cash payments and
receipts for interest and income taxes as follows:                               

|                            |  |                         |         |      |  |      |         |  |  |     |         | 
|--------------------------- |  | ----------------------- | ------- | ---- |  | ---- | ------- |  |  | --- | ------- | 
|                            |  | Year ended December 31,
|                            |  |                        
|                            |  | 2000                    |         | 2001 |  | 2002
|                            |  |                         |         |      |  |     
|Interest paid               |  | Ps.                     | 849,973 |      |  | Ps.  | 703,793 |  |  | Ps. | 524,627 | 
|Interest received           |  |                         | 148,920 |      |  |      | 81,787  |  |  |     | 57,221  | 
|Income and asset taxes paid |  |                         | 162,159 |      |  |      | 148,798 |  |  |     | 94,958  | 
|Interest capitalized        |  |                         | 6,381   |      |  |      |        |  |  |     |        | 
|Interest incurred           |  |                         | 878,162 |      |  |      | 667,342 |  |  |     | 566,649 | 



|O) |  | COMPREHENSIVE INCOME                      
|-- |  | ------------------------------------------
|  
|   |  | Comprehensive income (loss) is as follows:

|                                        |                                          |     |                         |          |      |     |          |          |   |     |          |          |  
|--------------------------------------- | ---------------------------------------- | --- | ----------------------- | -------- | ---- | --- | -------- | -------- | - | --- | -------- | -------- | -
|                                        |                                          |     | Year ended December 31,
|                                        |                                          |     |                        
|                                        |                                          |     | 2000                    |          | 2001 |     | 2002    
|                                        |                                          |     |                         |          |      |     |         
|Net income under U.S. GAAP              |                                          | Ps. | 71,378                  |          |      | Ps. | 199,862  |          |   | Ps. | 309,891  |         
|Other comprehensive loss, net of taxes: |                                          |     |                         |          |      |     |          |          |   |     |          |         
|                                        | Deficit from restatement                 |     |                         | (773,906 | )    |     |          | 109,132  |   |     |          | (291,803 | )
|                                        | Deferred loss on hedge activity          |     |                         |         |      |     |          | (3,447   | ) |     |          | 21,456   |  
|                                        | Foreign currency translation adjustments |     |                         | (203,629 | )    |     |          | (590,284 | ) |     |          | (249,267 | )
|                                        |                                          |     |                         |          |      |     |          |          |   |     |          |         
|Comprehensive loss under U.S. GAAP      |                                          | Ps. | (906,157                | )        |      | Ps. | (284,737 | )        |   | Ps. | (209,723 | )       
|                                        |                                          |     |                         |          |      |     |          |          |   |     |          |         

F-46



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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002,
except where otherwise indicated)



| |  | 20.    DIFFERENCES BETWEEN MEXICAN GAAP AND U.S. GAAP (continued)                                                                                                                   
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Foreign currency translation adjustments are presented net of tax
benefits of Ps.9,048, Ps.73,480 and Ps.111,904 for the years ended
December 31, 2000, 2001 and 2002, respectively.
|
| |  | The components of accumulated other comprehensive loss are as follows
as of December 31, 2001 and 2002:                                                                             

|                             |  |                  |           |          |  |              |        |                    |  |     |             |   |  |     |             |  
|---------------------------- |  | ---------------- | --------- | -------- |  | ------------ | ------ | ------------------ |  | --- | ----------- | - |  | --- | ----------- | -
|                             |  |                  |           |          |  | Deferred     |        |                    |  |     |             |   |  |    
|                             |  |                  |           |          |  | (loss)       |        |                    |  |     |             |   |  |    
|                             |  | Foreign currency |           | gain on  |  |              |        |                    |  |     |             |  
|                             |  | translation      |           | hedge    |  | Deficit from |        | Accumulated other 
|                             |  | adjustments      |           | activity |  | restatement  |        | comprehensive loss
|                             |  |                  |           |          |  |              |        |                   
|Balance at December 31, 2000 |  | Ps.              | 1,430,329 |          |  | Ps.          |       |                    |  | Ps. | (11,688,728 | ) |  | Ps. | (10,258,399 | )
|Current period changes       |  |                  | (590,284  | )        |  |              | (3,447 | )                  |  |     | 109,132     |   |  |     | (484,599    | )
|                             |  |                  |           |          |  |              |        |                    |  |     |             |   |  |     |             |  
|Balance at December 31, 2001 |  |                  | 840,045   |          |  |              | (3,447 | )                  |  |     | (11,579,596 | ) |  |     | (10,742,998 | )
|Current period changes       |  |                  | (249,267  | )        |  |              | 21,456 |                    |  |     | (291,803    | ) |  |     | (519,614    | )
|                             |  |                  |           |          |  |              |        |                    |  |     |             |   |  |     |             |  
|Balance at December 31, 2002 |  | Ps.              | 590,778   |          |  | Ps.          | 18,009 |                    |  | Ps. | (11,871,399 | ) |  | Ps. | (11,262,612 | )
|                             |  |                  |           |          |  |              |        |                    |  |     |             |   |  |     |             |  



|P) |  | VALUATION AND QUALIFYING ACCOUNTS                    
|-- |  | -----------------------------------------------------
|  
|   |  | The valuation and qualifying accounts are as follows:
|  
|   |  | Allowance for doubtful accounts:                     

|             |  |              |         |                  |  |            |        |             |  |         |         |   |  |     |         | 
|------------ |  | ------------ | ------- | ---------------- |  | ---------- | ------ | ----------- |  | ------- | ------- | - |  | --- | ------- | 
|For the year |  | Balance at   |         | Additions        |  |            |        |             |  |         |         |  
|ended        |  | beginning of |         | charged to costs |  |            |        |             |  | Balance
|December 31, |  | year         |         | and expenses     |  | Deductions |        | at year-end
|             |  |              |         |                  |  |            |        |            
|2000         |  | Ps.          | 109,009 |                  |  | Ps.        | 29,359 |             |  | Ps.     | (4,437  | ) |  | Ps. | 133,931 | 
|2001         |  |              | 133,931 |                  |  |            | 53,950 |             |  |         | (78,456 | ) |  |     | 109,425 | 
|2002         |  |              | 109,425 |                  |  |            | 34,754 |             |  |         | (51,195 | ) |  |     | 92,984  | 



|Q) |  | RESTATEMENT TO CONSTANT PESOS                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The following presents condensed financial information prepared on a
U.S. GAAP basis restated to December 31, 2002 constant pesos utilizing
the Mexican NCPI. As disclosed in Note 2-D, under Bulletin B-15, the
Company restated prior year balances utilizing weighted average
restatement factors. The difference in the factors applied to restate
prior year information to December 31, 2002 constant pesos utilizing
the Mexican NCPI were:

|     |  |        |        | 
|---- |  | ------ | ------ | 
|Year |  | Factor
|     |  |       
|2000 |  |        | 1.0438 | 
|2001 |  |        | 0.9958 | 

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##### Table of Contents



GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002,
except where otherwise indicated)



|20. |  | DIFFERENCES BETWEEN MEXICAN GAAP AND U.S. GAAP (continued)
|--- |  | ----------------------------------------------------------

Condensed consolidated balance sheets as of December 31:

|                              |  |                           |            |      |  |     |            | 
|----------------------------- |  | ------------------------- | ---------- | ---- |  | --- | ---------- | 
|                              |  | Expressed in Thousands of
|                              |  | Constant Mexican Pesos   
|                              |  | as of December 31, 2002  
|                              |  |                          
|                              |  | 2001                      |            | 2002
|                              |  |                           |            |     
|Total current assets          |  | Ps.                       | 5,784,871  |      |  | Ps. | 6,173,409  | 
|Property, plant and equipment |  |                           | 12,520,874 |      |  |     | 12,595,328 | 
|Total assets                  |  |                           | 21,392,732 |      |  |     | 21,583,948 | 
|Short-term debt               |  |                           | 364,749    |      |  |     | 803,368    | 
|Long-term debt                |  |                           | 6,788,343  |      |  |     | 6,243,037  | 
|Total liabilities             |  |                           | 9,937,859  |      |  |     | 10,355,156 | 
|Minority interest             |  |                           | 2,578,351  |      |  |     | 2,649,218  | 
|Total stockholders equity    |  |                           | 8,876,522  |      |  |     | 8,579,574  | 

Condensed consolidated statements of income for the years ended
December 31:

|                           |  |                           |            |      |  |      |            |  |  |     |            | 
|-------------------------- |  | ------------------------- | ---------- | ---- |  | ---- | ---------- |  |  | --- | ---------- | 
|                           |  | Expressed in Thousands of
|                           |  | Constant Mexican Pesos   
|                           |  | as of December 31, 2002  
|                           |  |                          
|                           |  | 2000                      |            | 2001 |  | 2002
|                           |  |                           |            |      |  |     
|Net sales                  |  | Ps.                       | 19,923,232 |      |  | Ps.  | 18,640,602 |  |  | Ps. | 19,028,174 | 
|Gross profit               |  |                           | 7,108,768  |      |  |      | 6,755,392  |  |  |     | 7,038,177  | 
|Operating income           |  |                           | 815,194    |      |  |      | 1,214,623  |  |  |     | 1,429,500  | 
|Majority net income (loss) |  |                           | 71,378     |      |  |      | 199,862    |  |  |     | 309,891    | 



|R) |  | RECENTLY ISSUED ACCOUNTING STANDARDS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | In January 2003, the Financial Accounting Standards Board (FASB)
issued FASB Interpretation No. 46 Consolidation of Variable
Interest Entities (FIN No. 46), an interpretation of ARB No. 51,
Consolidated Financial Statements. FIN 46 provides a new framework
for identifying variable interest entities (VIE) and determining
when a company should include the assets, liabilities,
non-controlling interests and results of activities of a VIE in its
consolidated financial statements. FIN No. 46 is effective in 2003.
Adoption of this standard is not expected to materially affect the
results of operations or financial position of the Company.                                                                                                                                                                                                                 
|  
|   |  | Statement of Financial Accounting Standards No. 148, Accounting for
Stock-Based Compensation  Transition and Disclosure  an amendment
of FASB Statement No. 123, (SFAS No. 148), issued in December
2002, provides alternative methods of transition for a voluntary
change to the fair value-based method of accounting for stock-based
employee compensation. SFAS No. 148 also amends the disclosure
requirements of Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation, (SFAS No. 123) to
require prominent disclosures in both annual and interim financial
statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results
Adoption of this standard is not expected to materially affect the
results of operations or financial position of the Company.

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GRUMA, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2000, 2001 and 2002
(Expressed in thousands of Mexican pesos of constant purchasing power as of December 31, 2002,
except where otherwise indicated)



| |  | 20.    DIFFERENCES BETWEEN MEXICAN GAAP AND U.S. GAAP (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | FASB Interpretation No. 45, Guarantors Accounting and Disclosure
Requirements for Guarantees, (FIN No. 45) was issued in November
2002. FIN No. 45 requires that a liability be recognized at the
inception of certain guarantees for the fair value of the obligation,
including the ongoing obligation to stand ready to perform over the
term of the guarantee. Guarantees, as defined in FIN No. 45, include
contracts that contingently require the Company to make payments to a
guaranteed party based on changes in an underlying that is related to
an asset, liability or equity security of the guaranteed party,
performance guarantees, indemnification agreements or indirect
guarantees of indebtedness of others. This new accounting is
effective for certain guarantees issued or modified after December
31, 2002. Adoption of this standard is not expected to materially
affect the results of operations or financial position of the
Company.                                                                                                      
|
| |  | In July 2002, the FASB issued Statement No. 146, Accounting for Costs
Associated with Exit or Disposal Activities (SFAS No. 146). The
standard requires companies to recognize costs associated with exit
or disposal activities when they are incurred rather than at the date
of a commitment to an exit or disposal plan. Examples of costs
covered by the standard include lease termination costs and certain
employee severance costs that are associated with a restructuring,
discontinued operation, plant closing, or other exit or disposal
activity. Previous accounting guidance was provided by Emerging Issue
Task Force (EITF) Issue No. 94-3, Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring). SFAS
No. 146 replaces Issue No. 94-3. SFAS 146 is to be applied
prospectively to exit or disposal activities initiated after December
31, 2002. SFAS No. 146 is not expected to have any material effect on
the Companys financial statements.

F-49



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##### Table of Contents






EXHIBIT INDEX

|            |  |                                                                                                                                                                                                                                                                                    
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Document                                                                                                                                                                                                                                                                           
|            |  |                                                                                                                                                                                                                                                                                    
|1           |  | Our bylaws (estatutos sociales) as amended through April 30,
2002, together with an English translation.*                                                                                                                                                                          
|            |  |                                                                                                                                                                                                                                                                                    
|2(a)(1)     |  | Deposit Agreement, dated as of September 18, 1998, by and
among us, Citibank, N.A. as Depositary and the Holders and
Beneficial Owners of American Depositary Shares Evidenced by
American Depositary Receipts Issued Thereunder (including form
of American Depositary Receipt).**
|            |  |                                                                                                                                                                                                                                                                                    
|2(b)(1)     |  | Indenture, dated as of October 9, 1997, between us and The
Chase Manhattan Bank, as Indenture Trustee representing up to
U.S.$250,000,000 of our 7.625% Notes due 2007.***                                                                                                         
|            |  |                                                                                                                                                                                                                                                                                    
|2(b)(2)     |  | Registration Rights Agreement by and among us, Lehman Brothers
Inc., Bear Stearns International Limited, and AFIN Securities
International Ltd., dated October 9, 1997.***                                                                                                         
|            |  |                                                                                                                                                                                                                                                                                    
|2(b)(3)     |  | U.S.$300 million Loan Agreement among us, the Lenders party
thereto, Bank of America, N.A., as Administrative Agent, and
Banc of America Securities, LLC, as Lead Arranger and Sole
Book Manager, dated as of December 18, 2002.                                                   
|            |  |                                                                                                                                                                                                                                                                                    
|4(a)(1)     |  | Shareholders Agreement by and among us, Roberto González
Barrera, Archer Daniels-Midland Company and ADM Bioproducts,
S.A. de C.V., dated August 21, 1996. ***                                                                                                                     
|            |  |                                                                                                                                                                                                                                                                                    
|4(a)(2)     |  | Amendment No. 1 to Shareholders Agreement by and among us,
Roberto González Barrera, Archer Daniels-Midland Company and
ADM Bioproducts, S.A. de C.V., dated September 13, 1996.*                                                                                                  
|            |  |                                                                                                                                                                                                                                                                                    
|4(a)(3)     |  | Amendment No. 2 to Shareholders Agreement by and among us,
Roberto González Barrera, Archer Daniels-Midland Company and
ADM Bioproducts, S.A. de C.V., dated August 18, 1999.*                                                                                                     
|            |  |                                                                                                                                                                                                                                                                                    
|4(a)(4)     |  | Asset Contribution Agreement among Gruma Corporation, Gruma
Holding, Inc., ADM Milling Co., Valley Holding, Inc.,
GRUMA-ADM, and Azteca Milling, L.P., dated as of August 21,
1996.***                                                                                             
|            |  |                                                                                                                                                                                                                                                                                    
|4(a)(5)     |  | Investment Agreement by and between us and
Archer-Daniels-Midland Company, dated as of August 21, 1996.
***                                                                                                                                                                        
|            |  |                                                                                                                                                                                                                                                                                    
|7           |  | Statement of Computation of Ratio of Earnings to Fixed Charges
(Mexican GAAP and U.S. GAAP).                                                                                                                                                                                       
|            |  |                                                                                                                                                                                                                                                                                    
|8           |  | List of Principal Subsidiaries.                                                                                                                                                                                                                                                    
|            |  |                                                                                                                                                                                                                                                                                    
|12(a)(1)    |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C.
Section 1350, as enacted by Section 906 of the Sarbanes-Oxley
Act of 2002, dated June 30, 2003.                                                                                                                     
|            |  |                                                                                                                                                                                                                                                                                    
|12(a)(2)    |  | Certification of Chief Corporate Officer Pursuant to 18 U.S.C.
Section 1350, as enacted by Section 906 of the Sarbanes-Oxley
Act of 2002, dated June 30, 2003.                                                                                                                     



|*   |  | Previously filed in Annual Report on Form 20-F (File No. 1-14852),
originally filed with the SEC on July 1, 2002. Incorporated herein by
reference.             
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|**  |  | Previously filed in Registration Statement on Form F-6 (File No.
333-9282), originally filed with the SEC on August 13, 1998. Incorporated
herein by reference. 
|   
|*** |  | Previously filed in Registration Statement on Form F-4 (File No.
333-8266), originally filed with the SEC on January 28, 1998.
Incorporated herein by reference.