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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 20-F
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF
1934
 OR
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE FISCAL YEAR ENDED ON DECEMBER 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM  TO
 OR
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Date of event requiring this shell company report
 COMMISSION FILE NUMBER: 1-10905
 Vitro, S.A.B. de C.V.
  N/A
  United Mexican States
 
 Title of Each Class
    
    Name of Each Exchange on Which RegisteredShares of Series A common stock, no par value
    
    New York Stock Exchange*Ordinary Participation Certificate, each representing 
one share of Series A common stock
    
    New York Stock Exchange*American Depositary Shares, evidenced by American 
Depositary Receipts, each representing three Ordinary 
Participation Certificates
    
    New York Stock Exchange
 
 *
    
    Not for trading, but only in connection with the registration of American Depositary Shares,
pursuant to the requirements of the Securities and Exchange Commission. 
  o þ
  o þ
  þ o
  o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
  U.S. GAAP o
    
    International Financial Reporting Standards as issued by the
International Accounting Standards Board o
    
    Other þ
  o þ
  o þ




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TABLE OF CONTENTS
 PagePresentation of Certain Information
    
    iiiForward-Looking Statements
    
    
    viItem 1. Identity of Directors, Senior Management and Advisers
    
    
    1Item 2. Offer Statistics and Expected Timetable
    
    
    1Item 3. Key Information
    
    
    1Recent Developments
    
    
    1Risk Factors
    
    
    3Exchange Rates
    
    
    17Selected Consolidated Financial Information
    
    
    18Item 4. Information on the Company
    
    
    23Organizational Structure
    
    
    23Business
    
    
    23Item 4A. Unresolved Staff Comments
    
    
    43Item 5. Operating and Financial Review and Prospects
    
    
    44Operating Results
    
    
    44Liquidity and Capital Resources
    
    
    57Off-Balance Sheet Arrangements
    
    
    65Tabular Disclosure of Contractual Obligations
    
    
    67Accounting Considerations
    
    
    68Research and Development
    
    
    72Item 6. Directors, Senior Management and Employees
    
    
    73Directors and Senior Management
    
    
    73Board Practices
    
    
    80Share Ownership
    
    
    85Employees
    
    
    84Item 7. Major Shareholders and Related Party Transactions
    
    
    87Major Shareholders
    
    
    87Related Party Transactions
    
    
    89Item 8. Financial Information
    
    
    90Item 9. The Offer and Listing
    
    
    93Listing Details
    
    
    93Markets
    
    
    95Item 10. Additional Information
    
    
    96Mexican Corporate Law and By-Laws
    
    
    96Material Contracts
    
    
    108
  i




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PageExchange Controls
    
    
    108Material Tax Consequences
    
    
    109Where You Can Find More Information
    
    
    114Differences in Corporate Governance PracticesItem 11. Quantitative and Qualitative Disclosures About Market Risk
    
    
    115Item 12. Description of Securities Other than Equity Securities
    
    
    119Item 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    119Item 14. Material Modifications to the Rights of Security Holders
and Use of Proceeds
    
    
    119Item 15. Controls and Procedures
    
    
    119Item 16. Reserved
    
    
    122Item 16A. Audit Committee Financial Expert
    
    
    122Item 16B. Code of Ethics
    
    
    122Item 16C. Principal Accountant Fees and Services
    
    
    123Item 16D. Exemption from the Listing Standards for Audit Committees
    
    
    123Item 16E. Purchases of Equity Securities by the Issuer and
Affiliated Purchasers
    
    
    123Item 17. Financial Statements
    
    
    127Item 18. Financial Statements
    
    
    127Item 19. Exhibits
    
    
    128Exhibit 4.03Exhibit 4.06Exhibit 4.07Exhibit 4.08Exhibit 8.1Exhibit 12.1Exhibit 12.2Exhibit 13.1
   ii




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PRESENTATION OF CERTAIN INFORMATION
 sociedad anónima
bursátil de capital variable
    Statement of Cash Flows Effects of
Inflation Foreign Currency Translation Employee Benefits Income
Taxes
    iii




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Statement of Changes in Financial Position
       Diario Oficial de la Federación
  iv




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v




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FORWARD-LOOKING STATEMENTS
    
    
    The general political, economic and competitive conditions in markets and countries
where we have operations, including the current global recession conditions, competitive
pricing pressures, inflation or deflation, increased security risks and changes in tax
rates;
 
    
    Our ability to restructure and refinance our current debt
 
    
    Liquidity, debt repayment and access to credit;
 
    
    Cost and availability of energy;
 
    
    Transportation costs and availability;
 
    
    Consolidation among competitors and customers;
 
    
    Foreign currency exchange fluctuations relative to the U.S. dollar against the
Mexican peso;
 
    
    Changes in capital availability or cost, including interest rate or foreign currency
exchange
rate fluctuations;
 
    
    Fluctuations in the price of raw materials and labor costs;
 
    
    Capacity utilization of our facilities;
 
    
    Availability of raw materials;
 
    
    The ability to integrate operations of acquired businesses;
 
    
    Consumer preferences for forms of packaging that are alternatives to glass
containers;
 
    
    The ability to hire and retain experienced management;
 
    
    The performance by customers of their obligations under purchase agreements;
 
    
    Lifting of trade barriers and enforcement of measures against unfair trade practices;
 
    
    The enactment of stricter environmental laws; and
 
    
    The timing and occurrence of events which are beyond our control.
   vi




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Item 1. Identity of Directors, Senior Management and Advisers
  
 Item 2. Offer Statistics and Expected Timetable
  
 Item 3. Key Information
 
 RECENT DEVELOPMENTS
 The Global Recession and Its Effects on Our Business
   Derivative Financial Instruments
     1




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Interest and Principal Payment Default
 Certificados Bursátiles Certificados Bursátiles Certificados Bursátiles Vitro 03
  Bancomext Transaction.
   2




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Cost Reduction Initiatives
  Venas Securitization Refinancing
   Termination of ADRs
 Certificados de Participación Ordinaria
  a)
    
    The low volume of ADRs traded through NYSE (daily average for the last six months was
of approximately 18,000 ADRs).b)
    
    Our desire to improve the trading of our shares in Mexico.c)
    
    The high costs associated with the trading of the ADRs on the NYSE.
  Recent Organizational Changes
  
 RISK FACTORS
 You should carefully consider the following risk factors, as well as all of the other
information presented in this annual report, including our consolidated financial statements and
the notes thereto. In general, investing in the securities of issuers in emerging market countries
such as Mexico involves certain risks not typically associated with investing in securities of U.S.
companies.
 The risks and uncertainties described below are not the only risks and uncertainties affecting
us. Additional risks and uncertainties that we do not know about or that we currently think are
immaterial also may impair our business operations or our ability to make payments under our
existing indebtedness.
  3




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For purposes of this section, when we state that a risk, uncertainty or problem may, could or
would have an adverse effect on us, we mean that the risk, uncertainty or problem may, could or
would have an adverse effect on our business, financial condition, liquidity, results of operations
or prospects, except as otherwise indicated or as the context may otherwise require.
 RISK FACTORS RELATING TO OUR BUSINESS
 Our current liabilities significantly exceed our current assets, and we may not be able to continue
to conduct our businesses.
  We are in default under our indentures and other financial instruments, and our future is dependent
upon our ability to restructure our debt and other financial instruments.
  Certificados Bursátiles
Vitro 03 Certificados
Bursátiles Vitro 03 Certificados
Bursátiles Vitro 03
   4




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Concurso Mercantil
 We may not be able to successfully complete our restructuring plan.
  
    
    The overall strength and stability of general economic conditions in the glass
container, automotive and construction industries;
 
    
    Customer confidence in our viability going forward, and our ability to continue to
maintain and expand our customer base;
 
    
    The availability of adequate financing on acceptable terms from our suppliers and their
continuing business relationships with us;
 
    
    Our ability to maintain off-balance sheet securitization programs which provide working
capital for operations;
 
    
    Our ability to sell non-productive assets at favorable prices;
 
    
    Development of new products and new uses for our products; and
 
    
    Expansion of our existing customer base.
 Our business and our ability to continue operations are highly dependent on sales volume, which has
been significantly affected by the continued financial crisis.
    5




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We have insufficient liquidity to repay our existing obligations and meet our capital requirements.
        Even if our debt restructuring is successful, our indebtedness and other obligations could continue
to be significant and could contain significant restrictions.
   6




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
    
    We may have less cash available to expand and improve our business, since we are
required to dedicate a significant portion of our cash flow from operations to the payment
of interest on our debt;
 
    
    Our ability to obtain additional debt financing may be limited and the terms on which
such financing is obtained may be negatively affected; and
 
    
    Our ability to compete effectively against better-capitalized competitors and to
withstand downturns in our business may be affected since a significant portion of our
cash flow from operations is required to be dedicated to making interest payments. As a
result, we may lose market share and experience lower sales, which, in turn, could result
in a material adverse effect on our financial condition, results of operations and
liquidity.
  Price pressures that result from over-capacity, lower-margin business opportunities, flat glass
customers initiatives, and consolidation of our customer base may adversely affect our
businesses.
    We have customers that are significant to us and the loss of all or a portion of their business
will have an adverse effect on us.
   7




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We have experienced rising operating costs in our businesses.
         8




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Foreign currency exchange rate fluctuations may have an adverse effect on our operating income and
our total comprehensive financial result.
      We may be adversely affected by increases in natural gas prices, interest rates or foreign exchange
rate changes that we are unable to mitigate through derivative transactions due to our financial
condition.
    9




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We have to pay interest and principal on our dollar-denominated debt with revenues generated in
pesos or other currencies, as we do not generate sufficient revenue in dollars from our operations.
  We operate in a highly competitive industry in which we compete with global competitors and
vertically integrated customers, have relatively high fixed costs and are faced with sharply
decreasing demands.
   We face intense competition from other glass container producers, as well as from makers of
alternative forms of packaging.
   10




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Difficult market conditions in the automotive industry may affect our operating margins and results
of operations.
   Inflation fluctuations may have an adverse effect on our total comprehensive financing result.
     The costs of complying with environmental protection and health and safety laws, and any
liabilities arising there under, may increase and adversely affect our business, results of
operations, cash flows or financial condition.
   11




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Procuraduría
Federal de Protección al Ambiente
  Substitution trends in the glass container industry may continue to adversely affect our business.
  If we fail to maintain an effective system of internal control over financial reporting, and if we
are unable to remediate our internal control deficiencies, we may not be able to accurately report
our financial results or prevent fraud.
    We have a disagreement with our partner in our Flat Glass business unit about the merger of Vitro
Plan into Viméxico, which may affect the value of the guaranty of the 2012 Senior Notes, 2017
Senior Notes, and 2013 Senior Notes by our Flat Glass business unit.
   12




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Protracted constraints on our capital expenditures may impact our business operations.
   13




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RISK FACTORS RELATING TO ECONOMIES IN WHICH WE PARTICIPATE
 Economic developments in Mexico and the United States affect our business.
     We face risks related to health epidemics and other outbreaks.
  Developments in other countries may adversely affect our business or the market price of our
securities.
   14




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If foreign currency exchange controls and restrictions are imposed, we may not be able to service
our debt in U.S. dollars, which exposes investors to foreign currency exchange risk.
  Political events in Mexico could affect Mexican economic policy and adversely affect us.
     Security issues and social instability in Mexico could adversely affect us
   15




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Our financial statements may not give you the same information as financial statements prepared
under United States accounting principles.
   16




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EXCHANGE RATES
  Noon Buying Rate(1)Year ended December 31,
    
    High
    
    
    Low
    
    
    Average
    
    
    Period-End2004
    
    Ps.
    11.64
    
    
    Ps.
    10.81
    
    
    Ps.
    11.29
    
    
    Ps.
    11.152005
    
    
    11.41
    
    
    
    10.41
    
    
    
    10.89
    
    
    
    10.632006
    
    
    11.46
    
    
    
    10.43
    
    
    
    10.91
    
    
    
    10.802007
    
    
    11.27
    
    
    
    10.67
    
    
    
    10.93
    
    
    
    10.922008
    
    
    13.94
    
    
    
    9.92
    
    
    
    11.19
    
    
    
    13.83
 
 (1)
    
    Source: Federal Reserve Bank of New York  Noon Buying Rate(1)High
    
    
    Low(1) December 2008
    
    Ps.
    13.83
    
    
    Ps.
    13.09(2) January 2009
    
    
    14.31
    
    
    
    13.35(2) February
    
    
    15.07
    
    
    
    14.14(2) March
    
    
    15.37
    
    
    
    14.08(2) April
    
    
    13.91
    
    
    
    13.05(2) May
    
    
    13.35
    
    
    
    12.87(2) June (through June 26, 2009)
    
    
    13.65
    
    
    
    13.16
 
 (1)
    
    Source: Federal Reserve Bank of New York(2)
    
    The International Monetary Fund  17




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SELECTED CONSOLIDATED FINANCIAL INFORMATION
   As of or for the year ended December 31,2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2008(Ps. millions)(1)
    
    
    ($ millions)(1)(2)Income Statement Data:MFRS:Net sales
    
    Ps.
    26,385
    
    
    Ps.
    26,567
    
    
    Ps.
    27,876
    
    
    Ps.
    28,591
    
    
    Ps.
    29,013
    
    
    $
    2,097Cost of sales
    
    
    19,109
    
    
    
    19,198
    
    
    
    20,230
    
    
    
    20,187
    
    
    
    21,279
    
    
    
    1,538Gross profit
    
    
    7,276
    
    
    
    7,369
    
    
    
    7,646
    
    
    
    8,404
    
    
    
    7,734
    
    
    
    559Selling, general and administrative expenses
    
    
    5,643
    
    
    
    5,530
    
    
    
    5,529
    
    
    
    5,700
    
    
    
    6,024
    
    
    
    435Operating income
    
    
    1,632
    
    
    
    1,839
    
    
    
    2,117
    
    
    
    2,704
    
    
    
    1,710
    
    
    
    124Financing result:Interest expense, net
    
    
    2,204
    
    
    
    2,355
    
    
    
    2,155
    
    
    
    1,836
    
    
    
    2,089
    
    
    
    151Derivative financial instruments(10)
    
    
    0
    
    
    
    17
    
    
    
    337
    
    
    
    201
    
    
    
    3,766
    
    
    
    272Exchange loss (gain), net
    
    
    90
    
    
    
    (417
    )
    
    
    224
    
    
    
    94
    
    
    
    3,222
    
    
    
    233Gain from monetary position(3)
    
    
    (776
    )
    
    
    (455
    )
    
    
    (440
    )
    
    
    (471
    )
    
    
    
    
    
    
    Total comprehensive financing result
    
    
    1,518
    
    
    
    1,500
    
    
    
    2,276
    
    
    
    1,660
    
    
    
    9,077
    
    
    
    656Other expenses (income), net(4)
    
    
    279
    
    
    
    494
    
    
    
    (229
    )
    
    
    869
    
    
    
    495
    
    
    
    36(Loss) income before income and asset tax
    
    
    (165
    )
    
    
    (155
    )
    
    
    70
    
    
    
    175
    
    
    
    (7,858
    )
    
    
    (568
    )Income and asset tax expense (benefit)
    
    
    (9
    )
    
    
    (519
    )
    
    
    228
    
    
    
    44
    
    
    
    (2,175
    )
    
    
    (157
    )Net income (loss) from continuing operations before changes
in accounting principles
    
    
    (156
    )
    
    
    364
    
    
    
    (158
    )
    
    
    131
    
    
    
    (5,682
    )
    
    
    (411
    )Net income (loss) from discontinued operations(5)
    
    
    97
    
    
    
    3
    
    
    
    (31
    )
    
    
    0
    
    
    
    
    
    
    
    Gain on sale of discontinued operations
    
    
    0
    
    
    
    0
    
    
    
    480
    
    
    
    0
    
    
    
    
    
    
    
    Cumulative effect of changes in accounting
principle(10)
    
    
    0
    
    
    
    (124
    )
    
    
    0
    
    
    
    0
    
    
    
    
    
    
    
    Net income (loss)
    
    
    (59
    )
    
    
    243
    
    
    
    291
    
    
    
    131
    
    
    
    (5,682
    )
    
    
    (411
    )Net income (loss) of majority interest
    
    
    (308
    )
    
    
    63
    
    
    
    401
    
    
    
    (13
    )
    
    
    (5,706
    )
    
    
    (413
    )Net income (loss) from continuing operations per share
    
    
    (0.57
    )
    
    
    1.33
    
    
    
    (0.54
    )
    
    
    0.38
    
    
    
    (16.57
    )
    
    
    (1.20
    )Net income (loss) from discontinued operations per
share(5)
    
    
    0.36
    
    
    
    0.01
    
    
    
    1.55
    
    
    
    0
    
    
    
    
    
    
    
    Diluted and basic net income (loss) of majority interest
per share
    
    
    (1.13
    )
    
    
    0.23
    
    
    
    1.39
    
    
    
    (0.04
    )
    
    
    (16.64
    )
    
    
    (1.20
    )U.S. GAAP(6)(11):Net sales
    
    Ps.
    23,891
    
    
    Ps.
    24,292
    
    
    Ps.
    25,655
    
    
    Ps.
    26,159
    
    
    Ps.
    26,854
    
    
    $
    1,941Operating income
    
    
    723
    
    
    
    831
    
    
    
    1,436
    
    
    
    2,524
    
    
    
    1,454
    
    
    
    105Net income (loss) from continuing
operations(5)(11)
    
    
    (873
    )
    
    
    (183
    )
    
    
    (554
    )
    
    
    469
    
    
    
    (6,337
    )
    
    
    (458
    )Net income (loss)
    
    
    (248
    )
    
    
    (287
    )
    
    
    (74
    )
    
    
    469
    
    
    
    (6,337
    )
    
    
    (458
    )
  18




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As of or for the year ended December 31,2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2008(Ps. millions)(1)
    
    
    ($ millions)(1)(2)Net income (loss) from continuing operations per
share(5)(11)
    
    
    (3.21
    )
    
    
    (0.66
    )
    
    
    (1.92
    )
    
    
    1.37
    
    
    
    (1.85
    )
    
    
    (0.13
    )Net income (loss) from discontinued operations
per share(5)(11)
    
    
    2.30
    
    
    
    (0.38
    )
    
    
    1.66
    
    
    
    0
    
    
    
    0
    
    
    
    0Diluted and basic net income (loss) per share
    
    
    (0.91
    )
    
    
    (1.04
    )
    
    
    (0.26
    )
    
    
    (1.37
    )
    
    
    (1.85
    )
    
    
    (0.13
    )Balance Sheet Data:MFRS:Cash and cash equivalents
    
    
    2,838
    
    
    
    1,441
    
    
    
    1,222
    
    
    
    1,638
    
    
    
    1,428
    
    
    
    103Current assets
    
    
    10,704
    
    
    
    9,863
    
    
    
    9,175
    
    
    
    11,136
    
    
    
    10,155
    
    
    
    734Total assets from discontinued operations(5)
    
    
    2,180
    
    
    
    2,021
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Total assets
    
    
    34,692
    
    
    
    32,937
    
    
    
    28,695
    
    
    
    32,187
    
    
    
    33,948
    
    
    
    2,454Current liabilities(13)
    
    
    8,200
    
    
    
    8,675
    
    
    
    4,835
    
    
    
    7,140
    
    
    
    28,348
    
    
    
    2,049Total debt
    
    
    17,926
    
    
    
    15,959
    
    
    
    12,826
    
    
    
    14,918
    
    
    
    20,243
    
    
    
    1,463Total liabilities from discontinued
operations(5)
    
    
    1,647
    
    
    
    1,398
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Total liabilities
    
    
    25,715
    
    
    
    23,704
    
    
    
    19,329
    
    
    
    22,801
    
    
    
    30,840
    
    
    
    2,229Stockholders equity
    
    
    8,977
    
    
    
    9,234
    
    
    
    9,366
    
    
    
    9,386
    
    
    
    3,108
    
    
    
    225Minority interest in consolidated subsidiaries
    
    
    3,114
    
    
    
    3,198
    
    
    
    1,892
    
    
    
    1,960
    
    
    
    1,404
    
    
    
    102Majority stockholders equity
    
    
    5,863
    
    
    
    6,036
    
    
    
    7,474
    
    
    
    7,426
    
    
    
    1,704
    
    
    
    123U.S. GAAP(5)(11):Total assets
    
    Ps.
    33,736
    
    
    Ps.
    30,579
    
    
    Ps.
    26,097
    
    
    Ps.
    29,985
    
    
    Ps.
    32,789
    
    
    $
    2,370Total liabilities
    
    
    25,895
    
    
    
    23,178
    
    
    
    19,272
    
    
    
    22,923
    
    
    
    32,573
    
    
    
    2,355Net assets
    
    
    7,841
    
    
    
    7,402
    
    
    
    6,826
    
    
    
    7,062
    
    
    
    216
    
    
    
    16Capital stock
    
    
    7,566
    
    
    
    7,566
    
    
    
    7,632
    
    
    
    7,632
    
    
    
    7,632
    
    
    
    552Stockholders equity
    
    
    5,375
    
    
    
    4,913
    
    
    
    5,710
    
    
    
    5,850
    
    
    
    (1,164
    )
    
    
    (84
    )Other Data:MFRS:Capital expenditures
    
    
    1,505
    
    
    
    1,107
    
    
    
    1,252
    
    
    
    2,695
    
    
    
    1,798
    
    
    
    130Depreciation and amortization
    
    
    2,283
    
    
    
    1,854
    
    
    
    1,795
    
    
    
    1,414
    
    
    
    1,469
    
    
    
    106Total shares issued at end of period(6)
    
    
    324
    
    
    
    324
    
    
    
    386.9
    
    
    
    386.9
    
    
    
    386.9Total shares held in Stock Option Trust at end of
period(6)(12)
    
    
    22.8
    
    
    
    22.3
    
    
    
    17.6
    
    
    
    17.5
    
    
    
    11.7Total shares held as treasury stock at end of
period(6)
    
    
    28.2
    
    
    
    28.2
    
    
    
    28.3
    
    
    
    28.3
    
    
    
    28.5Total shares issued and outstanding at end of
period(6)
    
    
    273.1
    
    
    
    273.5
    
    
    
    341.0
    
    
    
    341.0
    
    
    
    346.7Average total shares outstanding during
period(6)
    
    
    271.8
    
    
    
    273.1
    
    
    
    289.6
    
    
    
    341.0
    
    
    
    342.8Inflation and Foreign Currency Exchange Rate Data:Percentage of change in INPC(7)
    
    
    5.2
    %
    
    
    3.3
    %
    
    
    4.1
    %
    
    
    3.8
    %
    
    
    6.5
    %Peso/dollar exchange rate at the end of
period(8)
    
    
    11.1495
    
    
    
    10.6344
    
    
    
    10.8116
    
    
    
    10.8662
    
    
    
    13.8325Average exchange rate(9)
    
    
    11.3091
    
    
    
    10.8786
    
    
    
    10.9034
    
    
    
    10.9371
    
    
    
    11.1939
  19




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##### Table of Contents



(1)
    
    Except per share amounts, number of shares and inflation and foreign currency
exchange rate data.(2)
    
    Peso amounts have been translated into U.S. dollars, solely for the convenience of
the reader, at the rate of 13.8325 pesos per one U.S. dollar, the Free Exchange Rate on
December 31, 2008.(3)
    
    Through December 31, 2007, the gain from monetary position reflected the result of
holding monetary assets and liabilities during periods of inflation. Values stated in current
monetary units decreased in purchasing power over time. This means that losses were incurred
by holding monetary assets over time, whereas gains were realized by maintaining monetary
liabilities. Beginning January 1, 2008, we stopped recognizing gains in monetary position as
well as inflation effects. See Presentation of Certain Information for more information on
changes in NIF B-10 regarding effects of inflation.(4)
    
    Other expenses (income), net, includes: Year ended December 31,(millions)2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008Restructuring charges (i)
    
    Ps.
    267
    
    
    Ps.
    332
    
    
    Ps.
    61
    
    
    Ps.
    7
    
    
    Ps.
    185Impairment of long-lived assets
    
    
    352
    
    
    
    385
    
    
    
    393
    
    
    
    122
    
    
    
    196Loss (gain) from sale of long-lived assets
    
    
    10
    
    
    
    6
    
    
    
    (795
    )
    
    
    47
    
    
    
    (3
    )Loss (gain) from sale of subsidiaries
    
    
    (545
    )
    
    
    137
    
    
    
    (68
    )
    
    
    11Assignment of Vitro Club Trust (ii)
    
    
    
    
    
    
    (458
    )Early extinguishment of employee
retirement obligations
    
    
    
    
    
    
    18
    
    
    
    8
    
    
    
    97
    
    
    
    69Fees and costs for extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    488Statutory employee profit sharing
    
    
    129
    
    
    
    51
    
    
    
    55
    
    
    
    54
    
    
    
    10Other
    
    
    66
    
    
    
    23
    
    
    
    117
    
    
    
    43
    
    
    
    38Ps.
    279
    
    
    Ps.
    494
    
    
    Ps.
    (229
    )
    
    Ps.
    869
    
    
    Ps.
    495
 (i)
    
    The restructuring charges relate to the downsizing and streamlining of our
corporate functions and organization at some of our business units and are part of an
ongoing benefit arrangement.
 (ii)
    
    The Vitro Club holds land and facilities for our employees recreational
activities, which are held in a trust (the Trust). The Trust can only be assigned if
all of the participants name one entity as the sole beneficiary. In 2005, all the
participants named the Company as the sole beneficiary, and therefore the Company has
the right to take control of the Trust. The Company recorded the fair value of the
assets and recognized other income of Ps. 458 million. At the end of 2008, we decided
to temporarily suspend the services provided at the Vitro Club facilities.
 (5)
    
    On June 16, 2006, we completed the sale of our 51% equity ownership interest in
Vitrocrisa to Libbey, the owner of the remaining 49% equity interest. See Item 4. Information
on the Company BusinessStrategic Sales of Non-Core Businesses and Assets. All financial and
operating information relating to Vitrocrisa in this annual report, which was previously
presented as one of our reportable segments is now presented as a discontinued operation. In
addition, the discussion of our indebtedness in this annual report does not include the
indebtedness of Vitrocrisa, which is presented under MFRS in our consolidated balance sheets
as a part of Total liabilities of discontinued operations.(6)
    
    Millions of shares.(7)
    
    Calculated using year-end INPC of the most recent year divided by the year-end INPC
of the previous year.  20




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##### Table of Contents



(8)
    
    Based on the Free Exchange Rate at the end of the period.(9)
    
    Calculated using the average of Free Exchange Rates on the last day of each month
during the period.(10)
    
    Effective January 1, 2005, the Company adopted the provisions of Bulletin C-10,
Derivative Financial Instruments and Hedging Activities, which requires that all derivative
instruments be recognized at fair value, sets the rules to recognize hedging activities and
requires separation, if practical, of embedded derivative instruments. Through December 31,
2004, according to prior accounting standards (Bulletin C-2, Financial Instruments), the
Company did not recognize the effect of hedging derivatives under financial expenses until
the flow exchanges were executed. The effect of adopting Bulletin C-10 was a charge to
cumulative effect of changes in accounting principles of Ps. 124 million, net of tax.(11)
    
    From 2004 to 2006, certain of our subsidiaries were classified as discontinued
operations in our U.S. GAAP consolidated financial information as they meet the definition of
held for sale for U.S. GAAP purposes. These subsidiaries did not meet the definition of
discontinued operations for MFRS purposes as they do not constitute the sale of a significant
portion of our business.(12)
    
    The total shares held in the Stock Option Trust as of April 29, 2009, were 39.8
million. See Item 16E. Purchase of Equity Securities by the Issuers and Affiliated
Purchasers.(13)
    
    As of December 31, 2008, we were in default under the indentures governing the
Senior Notes due 2012, 2013 and 2017 for $300 million, $216 million and $700 million,
respectively; therefore, Ps. 16,689 million were reclassified as short-term debt.  21




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##### Table of Contents



Dividends per Share
  Fiscal Year WithRespect to WhichDividend Was
    
    Month Dividend
    
    
    Total Dividend
    
    
    Dividend per
    
    
    Dividend per
    
    
    Month DividendDeclared
    
    Was Declared
    
    
    Amount(1)
    
    
    Share
    
    
    Share(2)
    
    
    Was Paid(Ps. millions)
    
    
    (Pesos)
    
    
    (Dollars)2004
    
    March 2005
    
    
    90
    
    
    
    0.30
    
    
    
    0.0268
    
    
    April 20052005
    
    April 2006
    
    
    89
    
    
    
    0.30
    
    
    
    0.0270
    
    
    May 20062006
    
    March 2007
    
    
    133
    
    
    
    0.37
    
    
    
    0.0334
    
    
    April 20072007
    
    April 2008
    
    
    143
    
    
    
    0.40
    
    
    
    0.0372
    
    
    May 20082008(3)
 
 (1)
    
    Under Mexican corporate law, our shares held by the Stock Option Trust are
considered issued and outstanding and therefore are entitled to receive dividends.(2)
    
    For purposes of calculating the dividends paid in U.S. dollars per share, we divided
the dividends paid in Mexican peso per share by the Free Exchange Rate as of the date on which
such dividend was declared.(3)
    
    For 2008 no dividends were declared.  22




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##### Table of Contents



Item 4. Information on the Company
 
 ORGANIZATIONAL STRUCTURE
 
 (1)
    
    Vitro, S.A.B. de C.V. is our legal and commercial name.(2)
    
    Venture between Vitro, S.A.B. de C.V. and Pilkington Group Limited.(3)
    
    Percentage owned directly or indirectly by Viméxico, S.A. de C.V., the holding
company for our Flat Glass business unit.(4)
    
    Percentage owned directly or indirectly by Vitro Envases Norteamérica, S.A.
de C.V., the holding company of our Glass Containers business unit.(5)
    
    0.01% owned directly or indirectly by Vitro, S.A.B. de C.V. 
 BUSINESS
 Business Overview
 sociedad anónima bursátil de
capital variable
     23




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Acquisitions
      24




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##### Table of Contents



Our Operating Business Units
   25




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##### Table of Contents



Business Segment Data
  Glass
    
    
    Flat
    
    
    Corporate &Containers
    
    
    Glass
    
    
    Eliminations
    
    
    Consolidated
    
    
    $ million(Ps. million)
    
    
    ($ million)2008Consolidated net sales
    
    
    
    
    
    Ps.
    15,484
    
    
    Ps.
    13,187
    
    
    Ps.
    342
    
    
    Ps.
    29,013
    
    
    $
    2,097Operating income
    
    
    
    
    
    
    1,661
    
    
    
    186
    
    
    
    (137
    )
    
    
    1,710
    
    
    
    124Total assets
    
    
    
    
    
    
    18,903
    
    
    
    14,352
    
    
    
    693
    
    
    
    33,948
    
    
    
    2,454Capital expenditures
    
    
    
    
    
    
    1,538
    
    
    
    255
    
    
    
    5
    
    
    
    1,798
    
    
    
    1302007Consolidated net sales
    
    
    
    
    
    Ps.
    14,639
    
    
    Ps.
    13,591
    
    
    Ps.
    361
    
    
    Ps.
    28,591
    
    
    $
    2,631Operating income
    
    
    
    
    
    
    2,054
    
    
    
    782
    
    
    
    (132
    )
    
    
    2,704
    
    
    
    249Total assets
    
    
    
    
    
    
    17,040
    
    
    
    12,835
    
    
    
    2,312
    
    
    
    32,187
    
    
    
    2,962Capital expenditures
    
    
    
    
    
    
    2,328
    
    
    
    324
    
    
    
    43
    
    
    
    2,695
    
    
    
    2482006Consolidated net sales
    
    
    
    
    
    Ps.
    13,982
    
    
    Ps.
    13,461
    
    
    Ps.
    433
    
    
    Ps.
    27,876
    
    
    $
    2,565Operating income
    
    
    
    
    
    
    1,853
    
    
    
    418
    
    
    
    (154
    )
    
    
    2,117
    
    
    
    195Total assets
    
    
    
    
    
    
    13,937
    
    
    
    11,401
    
    
    
    3,357
    
    
    
    28,695
    
    
    
    2,641Capital expenditures
    
    
    
    
    
    
    894
    
    
    
    338
    
    
    
    20
    
    
    
    1,252
    
    
    
    115
  Glass
    
    
    Flat
    
    
    Corporate &Containers
    
    
    Glass
    
    
    Eliminations
    
    
    Consolidated2008Consolidated net sales
    
    
    53
    %
    
    
    45
    %
    
    
    2
    %
    
    
    100
    %Operating income
    
    
    97
    %
    
    
    11
    %
    
    
    (8
    %)
    
    
    100
    %Total assets
    
    
    56
    %
    
    
    42
    %
    
    
    2
    %
    
    
    100
    %Capital expenditures
    
    
    86
    %
    
    
    14
    %
    
    
    0
    %
    
    
    100
    %2007Consolidated net sales
    
    
    51
    %
    
    
    48
    %
    
    
    1
    %
    
    
    100
    %Operating income
    
    
    76
    %
    
    
    29
    %
    
    
    (5
    %)
    
    
    100
    %Total assets
    
    
    53
    %
    
    
    40
    %
    
    
    7
    %
    
    
    100
    %Capital expenditures
    
    
    86
    %
    
    
    12
    %
    
    
    2
    %
    
    
    100
    %2006Consolidated net sales
    
    
    50
    %
    
    
    48
    %
    
    
    2
    %
    
    
    100
    %Operating income
    
    
    88
    %
    
    
    20
    %
    
    
    (8
    %)
    
    
    100
    %Total assets
    
    
    49
    %
    
    
    40
    %
    
    
    11
    %
    
    
    100
    %Capital expenditures
    
    
    71
    %
    
    
    27
    %
    
    
    2
    %
    
    
    100
    %
  26




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##### Table of Contents



(i)
    
    We hold a significant portion of the non-captive market in Mexico.In 2008, we served
approximately 75% of the non-captive market in Mexico. We define a non-captive market to
exclude buyers (such as beverage and beer bottlers) that are supplied glass containers by
their affiliates. Our production flexibility to service niche markets, as well as our high
quality products and manufacturing capacity offer a strong competitive advantage that makes us
the leading supplier of the non-captive market in Mexico.
 (ii)
    
    We believe that significant entry barriers exist for foreign competitors to enter into our
domestic market, which is very capital intensive. Based on a 40% market share, we believe we
are the leading glass containers producer in Mexico. The glass containers industry is very
capital intensive, which added to high freight costs for foreign competitors, results in
significant cost barrier to entry.
 (iii)
    
    Our facilities are located in proximity to our clients facilities. We operate eight
manufacturing facilities strategically located throughout Mexico. The proximity to our
clients facilities allows us to reduce freight costs and conduct a more efficient supply
chain with our customers.
 (iv)
    
    We enjoy long-established relationships with many of our customers, some of which have lasted
more than 50 years. We have a long-established relationship with The Coca-Cola
Company, Herdez, Nestlé and Domeq, whom have been clients for more than 50 years.
 (v)
    
    We have the ability to manufacture short-run orders. We have the ability to supply short-runs
of customized, decorated containers. Our high-tech engineering allows us to develop molds in a
shorter period of time than industry standards. These factors give us a fast time to market
and the ability to develop new customized products in a timely manner for our customers whom
as a result are willing to pay above market average prices.
 (vi)
    
    Our sales in the U.S. target niche markets. We believe that we are the largest importer of
glass containers into the U.S. as we serve target niche markets, such as the wine and liquor
market, the nostalgia soft drink market and the cosmetics market where we have high profit
margins.
  Year ended December 31,2006
    
    
    2007
    
    
    2008(Ps. million)Net sales (1) to customers in:Mexico
    
    Ps.
    11,875
    
    
    Ps.
    12,707
    
    
    Ps.
    12,831All foreign countries, mainly the
United States and Europe
    
    
    16,001
    
    
    
    15,884
    
    
    
    16,182Consolidated
    
    Ps.
    27,876
    
    
    Ps.
    28,591
    
    
    Ps.
    29,013
 (1)
    
    Net sales are attributed to countries based on the location of the
customer.   27




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##### Table of Contents



Glass Containers
   
    
    Soda ash, sodium bicarbonate, calcium chloride and salt, which are the main raw
materials used in the manufacture of glass products, pharmaceutical, food and detergent
industries; and
 
    
    Capital goods such as glass forming machines and molds.
   Flat Glass
      28




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29




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Our Products
  Glass Containers:
 Customers andBusiness Line
    
    Products
    
    End-Users
    
    Sales RegionsGlass Containers
    
    Glass containers
    
    Soft drink, beer,
food, juices, wine
& liquor,
pharmaceutical and
cosmetics
industries
    
    Mexico, the United
States, Canada, the
Caribbean, Central
and South America
and Europe.Raw Materials
    
    Soda ash, sodium
bicarbonate,
calcium chloride
and salt
    
    Glass manufacturers
and detergent
producers,
pharmaceutical and
food producers
    
    Mexico, the United
States, Canada,
Europe, Central and
South AmericaMachinery and Molds
    
    Glass forming
machines, castings
for glass molds,
machinery parts and
electronic controls
    
    Flat Glass business
unit, Glass
Containers business
unit, glass
manufacturers and
other third-party
manufacturers
    
    Mexico, the United
States and Central
and South America
 Flat Glass:
 Customers andBusiness Line
    
    Products
    
    End-Users
    
    Sales RegionsFloat Glass
    
    Float glass,
architectural
tempered safety
glass, insulated
glass units,
laminated, table
tops
    
    Construction
industry,
distributors,
retailers and
installers, and
furniture and home
appliances
manufacturers.
Automotive Safety
Glass
manufacturers.
    
    Mexico, the United
States, Canada,
Europe and Central
and South AmericaAutomotive Glass
    
    Windshields, side
laminated glass,
rear and side
tempered glass
    
    Automotive OEMs,
AGR market,
distributors and
installers
    
    Mexico, the United
States, Canada and
Central and South
America
   30




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##### Table of Contents



Our Operations
 Glass Containers Business Unit
    Short-Term:
  
    
    Preserve cash to guarantee operations through strict expenses controls and
non-payment of scheduled interest payments to the extent necessary;
 
    
    Reduce capital expenditures to a minimum level, mostly oriented towards required
maintenance activities;
 
    
    Implement significant initiatives aimed at reducing costs and expenses; and
 
    
    Constantly communicate with clients and suppliers to maintain continuous
operations.
 Long-Term:
  
    
    Focus on current operations to maximize organic growth and to take advantage of
future opportunities;
 
    
    Consolidate its competitive position by defending share and margins in the
domestic market;
 
    
    Use its growing position in niche markets and focus on value added products to
enhance profitability;
 
    
    Continue the promotion of innovative new product development;
 
    
    Enhance operating efficiencies; and
 
    
    Maximize cash flow through growth in sales and margins while optimizing the use of
capital expenditures and assets.
   31




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##### Table of Contents



32




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##### Table of Contents



Mexican Operations
   Exports and U.S. Operations
  Central and South American Operations
   33




---



##### Table of Contents



Raw Materials, Machinery and Molds
   Competition
     34




---



##### Table of Contents



Flat Glass Business Unit
      35




---



##### Table of Contents



Short-Term:
  
    
    Preserve cash to guarantee operations through strict expenses controls and
non-payment of scheduled interest payments to the extent necessary;
 
    
    Reduce capital expenditures to a minimum level, mostly oriented towards required
maintenance activities;
 
    
    Implement significant initiatives aimed at reducing costs and expenses;
 
    
    Constant communication with clients and suppliers to maintain continuous
operations.
 Long-Term:
  
    
    Enhance operating efficiencies;
 
    
    Improve cash flow and optimize asset use;
 
    
    Protect and increase our market share in the Mexican market for construction
glass, reducing our reliance on the export market;
 
    
    Maintain our leading position and growth trend in the OEM glass business through
increasing participation with the Asian car manufacturers;
 
    
    Consolidate and grow North American leadership of laminated window products for
the OEMs and other value-added products;
 
    
    Diversify our client portfolio;
 
    
    Increase fabrication of value-added products in the United States and Mexico;
 
    
    Increase its European presence through Vitro Cristalglass; and
 
    
    Leverage the Vitro brand name.
  Mexican Operations
 
  36




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United States Operations
   37




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##### Table of Contents



European Operations
   Central and South American Operations
  Competition
    38




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##### Table of Contents



Our Raw Materials
 Soda Ash, Sand and Feldspar
   Energy
  Fuel
     39




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##### Table of Contents



Our Capital Expenditures
  Year ended December 31,2006
    
    
    2007
    
    
    2008Business Unit
    
    (Ps. millions)Glass Containers
    
    Ps.
    894
    
    
    Ps.
    2,328
    
    
    Ps.
    1,538Flat Glass
    
    
    338
    
    
    
    324
    
    
    
    255Corporate and other
    
    
    20
    
    
    
    43
    
    
    
    5Total
    
    Ps.
    1,252
    
    
    Ps.
    2,695
    
    
    Ps.
    1,798
  
    
    Our Glass Containers Business Unit expects to make capital expenditures of Ps. 571
million ($41 million), that will be used to provide maintenance to certain of our
furnaces and IS machines; also, for a palletizing center and infrastructure in one of
our facilities. The remaining will be applied to new products molds.
 
    
    Our Flat Glass Business Unit expects to make capital expenditures of Ps. 300 million
($22 million), which will be used mainly for maintenance of our facilities.
   Genesis Project
   40




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##### Table of Contents



Our Property, Plant and Equipment
    Average Capacity
    
    Average CapacityUtilization(1) as of
    
    Utilization(2) as of
    
    Number of FacilitiesBusiness Unit
    
    
    
    December 31, 2007
    
    December 31, 2008
    
    by City or CountryGlass Containers
    
    
    
    93%(4)
    
    86%(4)
    
    Monterrey(3)
Guadalajara
Mexico City
Querétaro
Toluca (2)
Costa Rica
Guatemala
Panama
BoliviaFlat Glass
    
    Float
Furnaces(3)
    
    
    99
    %
    
    
    106
    %
    
    Monterrey(4)
Mexico City(2)
Mexicali
United States(7)Automotive
Facilities
    
    
    77
    %

    
    
    74
    %
    
    Colombia
Spain(5)
Portugal (2)
France
 
 (1)
    
    Average for the twelve-month period ended December 31, 2007.(2)
    
    Average for the twelve-month period ended December 31, 2008.(3)
    
    Capacity utilization may sometimes be greater than 100% because pulling capacity is
calculated based on a certain number of changes in glass color and thickness, determined by
historical averages. Additionally, we also have a furnace in Mexico City that has been shut
down since 2006; therefore its potential capacity is not included in our capacity utilization
calculation.(4)
    
    Average capacity is calculated over installed capacity for 2008 and restated as such for 2007
for purposes of comparison, whereas previously it was calculated over working capacity.     41




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Environmental Matters
 Ley General de Equilibrio Ecológico y la Protección al Ambiente Ley de Aguas
Nacionales
 Ley General para la Prevención y Gestión Integral de los Residuos
 Normas Oficiales Mexicanas Ley General de Metrología
y Normalización
 Secretaria del Medio Ambiente y Recursos Naturales Procuraduria Federal de Protección al Ambiente
  Industria Limpia
  42




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Item 4A. Unresolved Staff Comments
   43




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##### Table of Contents



Item 5. Operating and Financial Review and Prospects
 You should read this discussion in conjunction with, and this discussion is qualified in its
entirety by reference to, our consolidated financial statements and notes thereto and other
financial information included elsewhere in this annual report. Our consolidated financial
statements are prepared in accordance with MFRS, which differs in certain significant respects from
U.S. GAAP. Note 25 to our consolidated financial statements for the year ended December 31, 2008
provides a description of the principal differences between MFRS and U.S. GAAP as they relate to
us. This section contains forward-looking statements that involve risks and uncertainties. Our
actual results may differ materially from those discussed in the forward-looking statements as a
result of various factors, including without limitation those set forth in Item 3. Key
InformationRisk Factors and the other matters set forth in this annual report. See
Forward-Looking Statements.
 
 OPERATING RESULTS
 Factors Affecting Our Results of Operations
  Trend Information
  Developments in the Glass Containers Business
     44




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Developments in the Flat Glass Business
         45




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##### Table of Contents



Natural Gas Prices and Related Derivative Financial Instruments
       46




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##### Table of Contents



Economic Developments in Mexico and the United States Affecting Our Business
       Inflation and Foreign Currency Exchange Rate Fluctuations
  For the Year Ended December 31,2006
    
    
    2007
    
    
    2008Nominal peso devaluation relative to the U.S. dollar(1)
    
    
    1.7
    %
    
    
    0.5
    %
    
    
    27.3
    %Mexican inflation (based on changes in INPC)(1)
    
    
    4.1
    %
    
    
    3.8
    %
    
    
    6.5
    %U.S. inflation (based on changes in Consumer Price Index)(2)
    
    
    2.5
    %
    
    
    4.1
    %
    
    
    0.1
    %Inflation differential (Mexican vs. U.S.)(1)(2)(3)
    
    
    1.6
    %
    
    
    (0.3
    %)
    
    
    6.4
    %Real peso devaluation relative to the U.S. dollar(4)
    
    
    0.1
    %
    
    
    0.8
    %
    
    
    20.9
    %Free Exchange Rate as of year end(1)
    
    Ps.
    10.8116
    
    
    Ps.
    10.8662
    
    
    Ps.
    13.8325Mexican GDP growth rate(5)
    
    
    4.7
    %
    
    
    3.3
    %
    
    
    1.3
    %Exchange rate of euro per peso as of year end(6)
    
    Ps.
    14.2680
    
    
    Ps.
    15.9526
    
    
    Ps.
    19.2534
 
 (1)
    
    Source: Banco de México.(2)
    
    Source: U.S. Bureau of Labor Statistics.(3)
    
    Compounded.(4)
    
    Peso devaluation (appreciation) in real terms = -((Nominal peso devaluation +1) / (Inflation
differential + 1))-1.(5)
    
    Source: Instituto Nacional de Estadística, Geografía e Informática (National Institute of
Statistics, Geography and Information.(6)
    
    Source: Federal Reserve Bank of New YorkNoon Buying Rates as to euro-to-dollar exchange rate
and Banco de México as to dollar-to-peso exchange rate.  47




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Effects of Inflation and Foreign Currency Exchange Rate Fluctuations on Operating Margins
     Effects of Inflation and Foreign Currency Exchange Rate Fluctuations on Total Comprehensive
Financing Result
   48




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Effect of Increases in Interest Rates
    Government, Economic, Fiscal, Monetary or Political Policies or Factors
   49




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##### Table of Contents



Results of Operations
  For the year ended December 31,2006
    
    
    2007
    
    
    2008Net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of goods sold
    
    
    72.6
    
    
    
    70.6
    
    
    
    73.3Gross profit
    
    
    27.4
    
    
    
    29.4
    
    
    
    26.7General, administrative and selling expenses
    
    
    19.8
    
    
    
    19.9
    
    
    
    20.8Operating income
    
    
    7.6
    
    
    
    9.5
    
    
    
    5.9Total comprehensive financing result
    
    
    8.2
    
    
    
    5.8
    
    
    
    31.3Net income
    
    
    1.0
    
    
    
    0.5
    
    
    
    -19.6
  For the year ended December 31,2006(3)
    
    
    2007
    
    
    2008
    
    
    2008% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofAmount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    Amount(Ps. millions, except for percentages)
    
    
    ($ millions)(1)Net salesGlass Containers
    
    Ps.
    14,068
    
    
    
    51
    %
    
    Ps.
    14,676
    
    
    
    51
    %
    
    Ps.
    15,524
    
    
    
    53
    %
    
    $
    1,122Flat Glass
    
    
    13,462
    
    
    
    48
    %
    
    
    13,605
    
    
    
    48
    %
    
    
    13,230
    
    
    
    46
    %
    
    
    956Corporate and other eliminations
    
    
    346
    
    
    
    1
    %
    
    
    310
    
    
    
    1
    %
    
    
    259
    
    
    
    1
    %
    
    
    19Consolidated net sales
    
    Ps.
    27,876
    
    
    
    100
    %
    
    Ps.
    28,591
    
    
    
    100
    %
    
    Ps.
    29,013
    
    
    
    100
    %
    
    $
    2,097
 (Ps. millions, except for percentages)
    
    

($
millions)(1)Net salesDomestic
    
    Ps.
    11,875
    
    
    
    43
    %
    
    Ps.
    12,707
    
    
    
    44
    %
    
    Ps.
    12,831
    
    
    
    44
    %
    
    $
    928Exports
    
    
    6,384
    
    
    
    23
    %
    
    
    6,674
    
    
    
    23
    %
    
    
    6,547
    
    
    
    23
    %
    
    
    473Foreign Subsidiaries
    
    
    9,617
    
    
    
    34
    %
    
    
    9,210
    
    
    
    32
    %
    
    
    9,635
    
    
    
    33
    %
    
    
    696Ps.
    27,876
    
    
    
    100
    %
    
    Ps.
    28,591
    
    
    
    100
    %
    
    Ps.
    29,013
    
    
    
    100
    %
    
    $
    2,097
 ($ millions(2), except for percentages)Net salesDomestic
    
    $
    1,028
    
    
    
    43
    %
    
    $
    1,145
    
    
    
    45
    %
    
    $
    1,157
    
    
    
    44
    %Exports
    
    
    556
    
    
    
    23
    %
    
    
    601
    
    
    
    23
    %
    
    
    600
    
    
    
    23
    %Foreign Subsidiaries
    
    
    817
    
    
    
    34
    %
    
    
    814
    
    
    
    32
    %
    
    
    870
    
    
    
    33
    %$
    2,401
    
    
    
    100
    %
    
    $
    2,560
    
    
    
    100
    %
    
    $
    2,627
    
    
    
    100
    %
 ($ millions(2), except for percentages)Export salesGlass Containers
    
    $
    344
    
    
    
    62
    %
    
    $
    364
    
    
    
    61
    %
    
    $
    383
    
    
    
    64
    %Flat Glass
    
    
    212
    
    
    
    38
    %
    
    
    237
    
    
    
    39
    %
    
    
    217
    
    
    
    36
    %Consolidated export sales
    
    $
    556
    
    
    
    100
    %
    
    $
    601
    
    
    
    100
    %
    
    $
    600
    
    
    
    100
    %
 (Ps. millions, except for percentages)
    
    
    ($ millions)(1)Operating income (loss)Glass Containers
    
    Ps.
    1,853
    
    
    
    87
    %
    
    Ps.
    2,054
    
    
    
    76
    %
    
    Ps.
    1,661
    
    
    
    97
    %
    
    $
    120Flat Glass
    
    
    418
    
    
    
    20
    %
    
    
    782
    
    
    
    29
    %
    
    
    186
    
    
    
    11
    %
    
    
    13Corporate and other eliminations
    
    
    (154
    )
    
    
    (7
    )%
    
    
    (132
    )
    
    
    (5
    )%
    
    
    (137
    )
    
    
    (8
    )%
    
    
    (10
    )Consolidated operating income
    
    Ps.
    2,117
    
    
    
    100
    %
    
    Ps.
    2,704
    
    
    
    100
    %
    
    Ps.
    1,710
    
    
    
    100
    %
    
    $
    123
  50




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(1)
    
    These amounts have been translated into U.S. dollars, solely for the convenience of
the reader, at the rate of 13.8325 pesos per one U.S. dollar, the Free Exchange Rate on
December 31, 2008.(2)
    
    Dollar figures reported herein are in nominal dollars resulting from dividing each
months nominal pesos by that months ending exchange rate published by Banco de México.(3)
    
    On June 16, 2006, we completed the sale of our 51% equity ownership interest in
Vitrocrisa to Libbey, the owner of the remaining 49% equity interest. Vitrocrisa, which was
previously presented as one of our reportable segments is presented as discontinued operation
as its disposition represents the end of a significant activity of the Company. Accordingly,
all financial and operating information relating to Vitrocrisa in this annual report are
presented as a discontinued operation. Year Ended December 31, 2008 Compared to Year Ended December 31, 2007
 Net Sales
   Glass Containers Business Unit
    51




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Flat Glass Business Unit
        Operating Income
   52




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##### Table of Contents



Glass Containers Business Unit
  Flat Glass Business Unit
   53




---



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Total Comprehensive Financing Result
  Other Expenses (Income), Net
  Income Taxes
  Net Income
   54




---



##### Table of Contents



Year Ended December 31, 2007 Compared to Year Ended December 31, 2006
 Net Sales
   Glass Containers Business Unit
   Flat Glass Business Unit
    Operating Income
   55




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##### Table of Contents



Glass Containers Business Unit
  Flat Glass Business Unit
  Total Comprehensive Financing Result
  Other Expenses (Income), Net
  Income and Asset Taxes
  Net Income
   56




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
 We do not currently have sufficient liquidity to repay our existing obligations and conduct our
operations.
 .
  Certificados Bursátiles
Vitro 03
   Our future depends on our ability to restructure our debt and reduce our costs and acquire new
financing.
 Concurso Mercantil
  57




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Various continuing or potential restrictions threaten our ability to restructure our business and
restore liquidity.
        58




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##### Table of Contents



Financing Transactions
 Bancomext TransactionIn November 2008,
 Principal Sources and Uses of Cash
    For the Year Ended December 31,2006
    
    
    2007
    
    
    2008(in millions of pesos)Sources:Net resources generated by operating activities (2006
and 2007) and cash flows generated from operating
activities (2008)
    
    Ps.
    1,081
    
    
    Ps.
    1,803
    
    
    Ps.
    2,565Issuance of capital stock
    
    
    578Debt issuance
    
    
    6,374
    
    
    
    16,939
    
    
    
    3,131Sale of assets
    
    
    2,907
    
    
    
    109
    
    
    
    20Uses:Capital expenditures
    
    
    1,252
    
    
    
    2,695
    
    
    
    1,798Debt repayments
    
    
    9,508
    
    
    
    14,868
    
    
    
    1,020Dividends declared and paid
    
    
    161
    
    
    
    215
    
    
    
    274
 Changes in Working Capital
   59




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Capital Expenditures
     
    
    Our Glass Containers Business Unit expects to make capital expenditures of
Ps. 571 million ($41 million), that will be used to provide maintenance to certain
furnaces in Vidriera Guadalajara and Vidriera los Reyes and IS machines in Vidriera
Queretaro; also, for a palletizing center and infrastructure for Vidriera Monterrey.
The remaining will be applied to new products molds.
 
    
    Our Flat Glass Business Unit expects to make capital expenditures of Ps.300
million ($22 million), which will be used mainly for maintenance of our facilities.
      60




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##### Table of Contents



Genesis Project
  Liquidity in 2009
  
    
    Vena securitizationOn March 31, 2009, we completed a one-year refinancing of the the
Vena receivables securitization through an amendment, which allowed our subsidiaries
Covisa and Álcali to obtain the necessary liquidity to maintain operations. The senior
tranche is a Ps.550
million variable rate investment grade bond that was privately funded. As part of this
transaction, we made a partial payment of the subordinated notes for an amount of $9
million out of the original $19 million outstanding. For further discussion see Item 5.
Operating ResultsOff-Balance Sheet Arrangements.
 
    
    Sale of Vitro Club Querétaros real estateIn April 2009, we sold Vitro Club
Querétaros real estate for approximately Ps. 74 million ($5 million).
 
    
    Sale of inventory in the U.S.In May 2009, we decided to sell the inventory for
approximately Ps. 83 million ($6 million), which was dedicated to serve the U.S. AGR
market, including windshields and side and back windows for American and foreign cars
and trucks; therefore, since that date, we are no longer participating in such business.
 
    
    Sale of float glass inventory in MexicoIn February 2009, we entered into a financing
transaction involving the sale of some of our flat glass inventory for approximately Ps.
249 million ($18 million).
 
    
    Sale of real stateIn December 2006, Vitro sold real estate located in Mexico City
for $100 million, 80% payable on the date of sale and the remainder payable on the
delivery date of the property. Vitro also guaranteed up to $80 million in favor of the
purchaser payable in the event that the property is not delivered to the purchaser prior
to December 2009. The Company has fulfilled all the requirements demanded under the
contract to receive payment for the remaining 20% and in April 2009 we received a
partial payment of Ps. 70 million ($5 million) from the purchaser refusing to pay the
outstanding balance. Further, in May 2009 we cancelled the guaranty. We are initiating
legal proceedings to recover the remaining balance.
 
    
    Vitro Americas Line of
Credit AmendmentOn February 19, 2009, Vitro America and other
U.S. subsidiaries executed an amendment to increase their line of credit by $10 million.
 Indebtedness
  Certificados Bursátiles
  61




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As of December 31, 2008(Ps. millions)
    
    
    ($ millions)(1)Short-term debt(2)(3)
    
    Ps.
    18,488
    
    
    $
    1,337Long-term debt(4)(5)
    
    
    1,755
    
    
    
    127
 
 (1)
    
    Peso amounts have been translated into U.S. dollars, solely for the convenience of the
reader, at a rate of 13.8325 pesos per U.S. dollar, the Free Exchange Rate on December 31,
2008.(2)
    
    Includes the current portion of our long-term debt, which was Ps. 16,887 million
($1,221 million) as of December 31, 2008.(3)
    
    95% and 2% of the aggregate amount of our short-term debt as of December 31, 2008 was
denominated in U.S. dollars and euros, respectively.(4)
    
    Excludes the current portion of our long-term debt. If the current portion of our long-term
debt were included, the aggregate amount of outstanding long-term debt as of December 31, 2008
would be Ps. 18,643 million ($1,348 million).(5)
    
    73% and 23% of the aggregate amount of our long-term debt as of December 31, 2008 was
denominated in U.S. dollars and pesos, respectively. Short-Term Debt
 Long-term debt reclassified to short-term due to defaults:
 OutstandingPrincipal
    
    
    
    FinalAmount as of
    
    
    
    Amortization/Facility
    
    December 31, 2008
    
    Interest Rate and Payment Dates
    
    MaturityInterest Rate:8.625% per annum.2012 Senior NotesIssuer:Vitro
    
    $300 million
    
    
    
    February 1, 2012Interest Payment Dates: Semiannually on August 1 and
February 1 of each year.Guarantors: Wholly owned
subsidiaries of Vitro, VENA
and ViméxicoInterest Rate:9.125% per annum.2017 Senior NotesIssuer:Vitro
    
    $700 million
    
    
    
    February 1, 2017Interest Payment Dates: Semiannually on August 1 and
February 1 of each year.Guarantors: Wholly owned
subsidiaries of Vitro, VENA
and Viméxico2013 Senior NotesIssuer:Vitro
    
    
    
    Interest Rate:11.75% per annum.Guarantors: Wholly owned
    
    
    
    Interest Payment Dates: Semiannuallysubsidiaries of Vitro, VENA
and Viméxico
    
    $216 million
    
    on May 1 and
November 1 of each year.
    
    November 1, 2013Interest Rate: Cetes + 3.25%Certificados Bursatiles Vitro 03Ps. 150 million
    
    Interest Payment Dates: Every 28th day fromIssuer:Vitro
    
    ($10.9 million)
    
    October 21, 2004.
    
    February 5, 2009
  62




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##### Table of Contents



Long-Term Debt
 Long-term debt:
 OutstandingPrincipal
    
    
    
    
    
    FinalAmount as of
    
    
    
    
    
    Amortization/Facility
    
    December 31, 2008
    
    Interest Rate and Payment Dates
    
    MaturityInterest Rate:TIIE (28 days) + 2.50%Certificados Bursatiles Vitro 08Issuer: Vitro
    
    Ps. 400 million
($28.9 million)
    
    Interest Payment Dates: Every
28th day from July 2, 2008.
    
    April 7, 2011Interest Rate:Libor (3 months) + 5.00%
    
    April 3, 2011Bancomext
    
    $85 millionIssuer: Administración de Inmuebles Vitro
    
    
    
    Interest Payment Dates:Every
90th day from November 3, 2008.Capital
leases
    
    $13 million
    
    Interest rate
on case by case basis
  2012 Notes and 2017 Notes.
  2013 Notes
  Certificados Bursátiles Vitro 03 Certificados Bursátiles note which Certificados Bursátiles
  Certificados Bursátiles Vitro 08 Certificados Bursátiles Certificados Bursátiles
  63




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Other Restrictions on Dividend Payments
 Mexican Ley General de Sociedades Mercantiles
  Share Repurchases and Sales
   PBGC Matter
     64




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##### Table of Contents



Energy
  
 OFF-BALANCE SHEET ARRANGEMENTS
 Sales of receivables
  Securitization of Trade Receivables
  
    65




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66




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TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
  Less than
    
    
    
    
    
    
    
    
    
    
    More thanContractual Obligations
    
    Total
    
    
    1 year(7)
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 years(Ps. millions)Short- and long-term debt(1)(2) (3)
    
    Ps.
    30,662
    
    
    Ps.
    20,279
    
    
    Ps.
    5,046
    
    
    Ps.
    2,541
    
    
    Ps.
    2,796Operating leases(4)
    
    
    1,401
    
    
    
    318
    
    
    
    550
    
    
    
    342
    
    
    
    191Unconditional purchase obligations(5)
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Other long-term obligations(6)
    
    
    3,001
    
    
    
    335
    
    
    
    697
    
    
    
    583
    
    
    
    1,386Total contractual obligations
    
    Ps.
    35,064
    
    
    Ps.
    20,932
    
    
    Ps.
    6,293
    
    
    Ps.
    3,466
    
    
    Ps.
    4,373
 
 (1)
    
    Does not include DFIs. For a description of our outstanding DFIs, see Item 11.
Quantitative and Qualitative Disclosures about Market RiskNatural Gas Price Risk.(2)
    
    Includes scheduled interest payments with fixed and variable rates. For our variable
interest rate debt, we utilized the rates in effect as of December 31, 2008, as disclosed in
Note 10 of our consolidated financial statements when estimating the scheduled interest
payments. For the Senior Notes due 2012 and Senior Notes due 2017, we are adding 200 basis
points for the subsequent 3 years, as we are in default on these notes, assuming we can
resolve this matter within that period.(3)
    
    Includes Ps. 105 million of capital lease obligations.(4)
    
    The amounts set forth above under Operating leases include mainly payments that
will be made under leases relating to two aircraft, warehouses, forklifts and computer
equipment. In May 2009 we entered into restructuring process regarding our two aircraft
leases, which allows us to reduce 12 months of future payments by approximately 50% and to
transfer such leases to any interested third party.(5)
    
    Certain of our subsidiaries agreed to purchase, in the aggregate, 90 megawatts of
electrical power and 1.3 million tons of steam per year pursuant to a 15-year take-or-pay
power purchase agreement with Tractebel Energía. This contract began in April 2003 and the
price at which we are required to purchase electrical power and steam is based on variables
such as inflation, the peso/U.S. dollar exchange rate and the price of natural gas, whose
future value is uncertain.(6)
    
    Expected benefit payments regarding the company pension plans, seniority premium and
severance indemnities.(7)
    
    Includes long-term debt reclassification as short-term debt.  67




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ACCOUNTING CONSIDERATIONS
 Critical Accounting Estimates
  Trade Receivables
  Acquisitions
   Contingencies
  Financial Instruments
   68




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Seniority Premiums and Pension Plans
   For theYear EndedDecember 31, 2008(Ps. millions)One-percentage-point increase in assumed discount rate+ Effect on total net periodic cost
    
    Ps.
    4+ Effect on net pension liability
    
    
    82One-percentage-point decrease in assumed discount rate+ Effect on total net periodic cost
    
    
    80+ Effect on net pension liability
    
    
    (81
    )One-percentage-point increase in expected rate of return on plan assets+ Effect on total net periodic cost
    
    
    (14
    )+ Effect on net pension liability
    
    
    One-percentage-point decrease in expected rate of return on plan assets+ Effect on total net periodic cost
    
    
    14+ Effect on net pension liability
    
    
    
  69




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Environmental Obligations
  Impairment of Long-Lived Assets
   Recoverability of Deferred Tax Assets
     70




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New Accounting Pronouncements
 MFRS
  U.S. GAAP
   71




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RESEARCH AND DEVELOPMENT
        72




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##### Table of Contents



Item 6. Directors, Senior Management and Employees
 
 DIRECTORS AND SENIOR MANAGEMENT
  Directors
 consejeros
   FirstBecame
    
    
    Year ofName
    
    Principal Occupation
    
    a Director
    
    
    BirthAdrián Sada González
    
    Chairman of the Board of Directors of Vitro, S.A.B. de C.V.
    
    
    1984
    
    
    
    1944Hugo A. Lara García
    
    Chief Executive Officer of Vitro S.A.B. de C.V.
    
    
    2009
    
    
    
    1965Tomás González Sada
    
    Chairman of the Board, President and Chief Executive Officer of Cydsa, S.A.B. de C.V.
    
    
    1980
    
    
    
    1943Andrés Yarte Cantú
    
    Chief Executive Officer of Distribuidora de Productos Cerámicos, S.A.
    
    
    1991
    
    
    
    1941Federico Sada Melo
    
    Exports Sales Manager of the Flat Glass Business Unit
    
    
    2009
    
    
    
    1979Jaime Serra Puche*
    
    Founder, SAI-Consultores, S.C.
    
    
    1998
    
    
    
    1951Carlos Muñoz Olea*
    
    Private Investor
    
    
    2000
    
    
    
    1955Joaquín Vargas Guajardo*
    
    Chairman of the Board of Directors of Grupo MVS Comunicaciones, S.A. de C.V.
    
    
    2000
    
    
    
    1954Alejandro Garza Lagüera*
    
    President of Desarrollo Inmobiliario Omega, S.A. de C.V.
    
    
    2001
    
    
    
    1926Jaime Rico Garza
    
    President and Chief Executive Officer of Vitro Europa, Ltd.
    
    
    2008
    
    
    
    1957Manuel Güemez de la Vega*
    
    Chairman of the Board of Regio Empresas S.A. de C.V. and Grupo PREZ
    
    
    2006
    
    
    
    1942Julio Escamez Ferreiro
    
    Member of the Board of Directors of Consorcio Industrial de Manufacturas, S.A.
    
    
    2006
    
    
    
    1934Ricardo Martin Bringas*
    
    President and CEO of Organización Soriana
    
    
    2007
    
    
    
    1960
 
 *
    
    Independent non-management directors.  73




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Centenarios Centenarios Centenarios
  Adrián Sada González, Chairman of the Board of Directors of Vitro:
  Hugo A. Lara García, Chief Executive Officer of Vitro S.A.B. de C.V.
  Federico Sada Melo, Export Sales Manager of Flat Glass Business Unit
  Tomás González Sada, Chairman of the Board, President and Chief Executive Officer of Cydsa, S.A.B.
de C.V.:
  Andrés Yarte Cantú, Chief Executive Officer of Distribuidora de Productos Cerámicos, S.A.:
  Jaime Serra Puche, Founder, SAI-Consultores, S.C.:
  Carlos Muñoz Olea, Private Investor:
   74




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##### Table of Contents



Joaquín Vargas Guajardo, Chairman of the Board of Directors of Grupo MVS Comunicaciones, S.A. de
C.V.:
  Alejandro Garza Lagüera, Member of the Executive Committee of Desarrollo Inmobiliario Omega:
  Jaime Rico, President and CEO of Vitro Europa, Ltd.:
  Manuel Güemez de la Vega, Chairman of the Board of Regio Empresas and Grupo PREZ:
  Julio Escamez Ferreiro, Member of the Board of Directors of Consorcio Industrial de Manufacturas,
S.A.:
  Ricardo Martin Bringas, CEO of Organización Soriana:
  Secretary and Surveillance
 Ley del Mercado de Valores
   75




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##### Table of Contents



Senior Management
 directores generales
 CurrentPosition
    
    
    Year ofName
    
    Title
    
    Held Since
    
    
    BirthHugo A. Lara García
    
    Chief Executive Officer
    
    
    2008
    
    
    
    1965Alejandro Sánchez Mújica
    
    Executive Vice President and General Counsel
    
    
    2005
    
    
    
    1954Claudio Del Valle Cabello
    
    Chief Financial and Administrative Officer and Chief Restructuring Officer
    
    
    2003
    
    
    
    1960David González Morales
    
    President of the Glass Containers business unit
    
    
    2007
    
    
    
    1955Roberto Rubio Barnes
    
    President of the Flat Glass business unit
    
    
    2008
    
    
    
    1955
  Hugo Lara García, President and Chief Executive Officer
  Alejandro Sánchez Mújica, Executive Vice President and General Counsel:
  Claudio Del Valle Cabello, Chief Financial and Administrative Officer and Chief Restructuring
Officer:
    76




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##### Table of Contents



David González Morales, President of the Glass Containers business unit:
  Roberto Rubio Barnes, President of the Flat Glass business unit
   Recent Organizational Changes
  Family Relationship of Directors and Senior Management
  Use of Certain Assets and Services
 Política de
Uso Especial de Servicios Corporativos y de Seguridad
  77




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##### Table of Contents



Compensation
   Directors Compensation
  Variable Compensation
   Employee Stock Option Plan
    78




---



##### Table of Contents



For the year ended December 31,Total1998
    
    
    1999
    
    
    2000
    
    
    2001
    
    
    1998*
    
    
    2002
    
    
    outstandingOptions granted
    
    
    2,813,300
    
    
    
    2,893,000
    
    
    
    4,851,900
    
    
    
    3,204,800
    
    
    
    940,950
    
    
    
    3,941,950Options cancelled,
expired or exercised
at December 31, 2008
    
    
    2,813,300
    
    
    
    1,059,500
    
    
    
    3,986,950
    
    
    
    2,827,950
    
    
    
    478,050
    
    
    
    3,208,150Options outstanding
December 31, 2008
    
    
    
    
    
    
    1,833,500
    
    
    
    864,950
    
    
    
    376,850
    
    
    
    462,900
    
    
    
    733,800
    
    
    
    4,272,000Initial Exercise Price
    
    
    
    
    
    Ps.
    14.88
    
    
    Ps.
    11.00
    
    
    Ps.
    8.27
    
    
    Ps.
    13.00
    
    
    Ps.
    7.53Adjusted Exercise
Price at December 31,
2008
    
    
    
    
    
    Ps.
    33.86
    
    
    Ps.
    11.00
    
    
    Ps.
    8.27
    
    
    Ps.
    13.00
    
    
    Ps.
    7.53
 *
    
    During the year ended in 2001, we modified the price of 940,950 options granted in 1998 and their
maturity date to 2011.   Pension Benefits
   Severance Benefits
   79




---



##### Table of Contents



BOARD PRACTICES
     Comisión Nacional Bancaria y de
Valores (CNBV)
  80




---



##### Table of Contents



81




---



##### Table of Contents



(Registro Nacional de
Valores)
  82




---



##### Table of Contents



83




---



##### Table of Contents



EMPLOYEES
   2006
    
    
    2007
    
    
    2008Business Unit
    
    Period End
    
    
    Average
    
    
    Period End
    
    
    Average
    
    
    Period End
    
    
    AverageGlass Containers
    
    
    12,426
    
    
    
    11,918
    
    
    
    13,967
    
    
    
    13,717
    
    
    
    10,044
    
    
    
    13,575Flat Glass
    
    
    8,998
    
    
    
    9,288
    
    
    
    9,488
    
    
    
    8,965
    
    
    
    8,785
    
    
    
    9,284Other(1)
    
    
    0
    
    
    
    69
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Corporate Offices
    
    
    870
    
    
    
    819
    
    
    
    987
    
    
    
    815
    
    
    
    556
    
    
    
    624Total
    
    
    22,294
    
    
    
    22,094
    
    
    
    24,442
    
    
    
    23,497
    
    
    
    19,385
    
    
    
    23,483
 (1)
    
    Other is comprised by our metal flatware business, which we sold in October 2006, and
which was previously included in our Glassware reportable segment.  2006
    
    
    2007
    
    
    2008Business Unit
    
    Period End
    
    
    Average
    
    
    Period End
    
    
    Average
    
    
    Period End
    
    
    AverageMexico
    
    
    15,979
    
    
    
    16,101
    
    
    
    18,070
    
    
    
    17,063
    
    
    
    15,406
    
    
    
    17,486United States
    
    
    2,729
    
    
    
    2,716
    
    
    
    2,632
    
    
    
    2,676
    
    
    
    2,436
    
    
    
    2,530Rest of the world
    
    
    3,586
    
    
    
    3,277
    
    
    
    3,740
    
    
    
    3,758
    
    
    
    1,543
    
    
    
    3,468Total
    
    
    22,294
    
    
    
    22,094
    
    
    
    24,442
    
    
    
    23,497
    
    
    
    19,385
    
    
    
    23,484
 Relation with Labor Unions
 empleados de confianza
   84




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##### Table of Contents



SHARE OWNERSHIP
  Percentage ofShares
    
    
    Granted
    
    
    Outstanding
    
    
    Exercise
    
    
    AdjustedNumber of
    
    
    Outstanding
    
    
    Options
    
    
    Options
    
    
    Price on
    
    
    Exercise
    
    
    ExpirationName
    
    Shares Owned
    
    
    (3)
    
    
    (4)
    
    
    (4)(5)
    
    
    Grant Date
    
    
    Price
    
    
    DateAdrián Sada González
    
    
    29,545,712
    (1)(6)
    
    
    7.89
    %
    
    
    90,400
    
    
    
    90,400
    
    
    
    13.00
    
    
    
    N/A
    
    
    March 2011430,000
    
    
    
    430,000
    
    
    
    11.00
    
    
    
    N/A
    
    
    June 2010550,000
    
    
    
    137,500
    
    
    
    8.27
    
    
    
    N/A
    
    
    March 2011550,000
    
    
    
    275,000
    
    
    
    7.53
    
    
    
    N/A
    
    
    March 2012Hugo A. Lara García
    
    
    *
    
    
    
    *
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Tomás González Sada
    
    
    *
    
    
    
    *
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Andrés Yarte Cantú
    
    
    *
    
    
    
    *
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Federico Sada Melo
    
    
    29,212,591
    (2)
    
    
    7.72
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Jaime Serra Puche
    
    
    *
    
    
    
    *
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Carlos Muñoz Olea
    
    
    *
    
    
    
    *
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Joaquín Vargas Guajardo
    
    
    *
    
    
    
    *
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Alejandro Garza Lagüera
    
    
    *
    
    
    
    *
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Jaime Rico Garza
    
    
    *
    
    
    
    *
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Manuel Güemez de la Vega
    
    
    *
    
    
    
    *
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Julio Escámez Ferreiro
    
    
    *
    
    
    
    *
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Ricardo Martin Bringas
    
    
    *
    
    
    
    *
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Alejandro Sánchez Mújica
    
    
    *
    
    
    
    *
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Claudio Del Valle Cabello
    
    
    *
    (6)
    
    
    *
    
    
    
    15,100
    
    
    
    15,100
    
    
    
    13.00
    
    
    
    N/A
    
    
    March 201160,000
    
    
    
    15,000
    
    
    
    11.00
    
    
    
    N/A
    
    
    June 201059,000
    
    
    
    14,750
    
    
    
    8.27
    
    
    
    N/A
    
    
    March 201160,500
    
    
    
    30,250
    
    
    
    7.53
    
    
    
    N/A
    
    
    March 2012David González Morales
    
    
    *
    
    
    
    *
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Roberto Rubio Barnes
    
    
    *
    
    
    
    *
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 *
    
    Beneficially owns less than one percent of our shares.(1)
    
    Reported as a group with his wife, Mrs. Esther Cueva de Sada, and his son, Mr.
Adrián Sada Cueva.(2)
    
    Reported as a group with his parents, Mr. Federico Sada González and Mrs. Liliana
Melo de Sada, his brother, Mr. Mauricio Sada Melo, and his sister, Ms. Liliana Sada Melo.(3)
    
    For purposes of calculating percentage of shares outstanding, we use the number of
our shares outstanding that was 386,411,643 shares, which is the number equal to our
386,357,143 issued shares minus the shares held as treasury stock. The total amount of
outstanding shares includes 53.6 million of shares that are subject to dispute. See item 7
Major Shareholders and Related Party TransactionsMajor ShareholdersShares subject to
dispute.  85




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##### Table of Contents



(4)
    
    The options listed below are options to purchase our shares.(5)
    
    All the options are exercisable.(6)
    
    In addition to the shares set forth below, Messrs. Adrián Sada González and Claudio
Del Valle Cabello may be deemed to be beneficial owners of the 39,777,907 shares held by our
Stock Option Trust, as they are members of the Technical Committee of the Stock Option Trust
and share the right to vote and the right to sell the shares held by the Stock Option Trust
with the other member of the Technical Committee.   86




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##### Table of Contents



Item 7. Major Shareholders and Related Party Transactions
  
 MAJOR SHAREHOLDERS
    Name
    
    Shares Outstanding(1)
    
    
    % of Shares Outstanding(1)(2)Pension Plan Trust
    
    
    53,341,849
    
    
    
    13.80Stock Option Trust
    
    
    39,777,907
    
    
    
    10.29Mr. Adrián Sada González(3) (4)
    
    
    29,545,712
    
    
    
    7.89Mr. Federico Sada González(3) (5)
    
    
    29,212,591
    
    
    
    7.72Ms. Alejandra Sada González(3)
    
    
    26,058,188
    
    
    
    6.74
 
 (1)
    
    All of the shares that may be issued upon exercise of our outstanding options are held by our
Stock Option Trust, and all of our outstanding options are currently exercisable. Therefore,
shares outstanding and the calculation of percentage of shares outstanding include all our
outstanding options.(2)
    
    Calculation of percentage of shares outstanding based upon 386,357,143 issued shares minus
445,500 held as treasury stock. The total amount of outstanding shares includes 53.6 million
of shares that are subject to dispute. See item 7 Major Shareholders and Related Party
Transactions-Major Shareholders-Shares subject to dispute.(3)
    
    Mrs. María Nelly Sada de Yarte, her children and her childrens spouses collectively hold
17,182,163 of our shares, representing 4.45% of our issued and outstanding shares, which are
not included in the table above. Mrs. María Nelly Sada de Yarte is a sister of Mr. Adrián Sada
González, Mr. Federico Sada Gonzalez and Ms. Alejandra Sada González  87




---



##### Table of Contents



(4)
    
    Reported as a group with his wife, Mrs. Esther Cueva de Sada, and his son Mr. Adrián Sada
Cueva. In addition to the shares set forth below, Mr. Adrián Sada González may be deemed to be
a beneficial owner of the 39,777,907 shares held by our Stock Option Trust, as a member of the
Technical Committee of the Stock Option Trust who shares the right to vote and the right to
sell the shares held by the Stock Option Trust with the other member of the Technical
Committee.(5)
    
    Reported as a group with his wife, Mrs. Liliana Melo de Sada, his sons Messrs. Federico Sada
Melo and Mauricio Sada Melo, and his daughter, Ms. Liliana Sada Melo. Shares subject to dispute
     88




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##### Table of Contents



RELATED PARTY TRANSACTIONS
 Arrangements with Respect to Real Estate
  Goods Sold
   Sale of Real Estate
  Purchase of Supermarket Coupons
  Compensation
   89




---



##### Table of Contents



Item 8. Financial Information
 Consolidated Financial Statements
  Export Sales
  % of
    
    
    
    
    
    
    % of
    
    
    Corporate
    
    
    % of
    
    
    
    
    
    
    % ofGlass
    
    
    Consolidated
    
    
    Flat
    
    
    Consolidated
    
    
    and other(1)
    
    
    Consolidated
    
    
    
    
    
    
    ConsolidatedContainers
    
    
    Net Sales
    
    
    Glass
    
    
    Net Sales
    
    
    eliminations
    
    
    Net Sales
    
    
    Consolidated
    
    
    Net Sales(Ps. millions)
    
    
    
    
    
    (Ps. millions)
    
    
    
    
    
    (Ps. millions)
    
    
    
    
    
    (Ps. millions)2008Domestic sales
    
    Ps.
    9,028
    
    
    
    58
    %
    
    Ps.
    3,461
    
    
    
    26
    %
    
    Ps.
    342
    
    
    
    100
    %
    
    Ps.
    12,831
    
    
    
    44
    %Export sales
    
    
    4,179
    
    
    
    27
    %
    
    
    2,368
    
    
    
    18
    %
    
    
    
    
    
    
    
    
    
    
    6,547
    
    
    
    23
    %Foreign subsidiaries
    
    
    2,277
    
    
    
    15
    %
    
    
    7,358
    
    
    
    56
    %
    
    
    
    
    
    
    
    
    
    
    9,635
    
    
    
    33
    %Total net sales
    
    Ps.
    15,484
    
    
    
    100
    %
    
    Ps.
    13,187
    
    
    
    100
    %
    
    Ps.
    342
    
    
    
    100
    %
    
    Ps.
    29,013
    
    
    
    100
    %2007Domestic sales
    
    Ps.
    8,371
    
    
    
    57
    %
    
    Ps.
    3,974
    
    
    
    29
    %
    
    Ps.
    361
    
    
    
    100
    %
    
    Ps.
    12,706
    
    
    
    44
    %Export sales
    
    
    4,028
    
    
    
    28
    %
    
    
    1,946
    
    
    
    14
    %
    
    
    
    
    
    
    
    
    
    
    5,974
    
    
    
    21
    %Foreign subsidiaries
    
    
    2,240
    
    
    
    15
    %
    
    
    7,671
    
    
    
    57
    %
    
    
    
    
    
    
    
    
    
    
    9,911
    
    
    
    35
    %Total net sales
    
    Ps.
    14,639
    
    
    
    100
    %
    
    Ps.
    13,591
    
    
    
    100
    %
    
    Ps.
    361
    
    
    
    100
    %
    
    Ps.
    28,591
    
    
    
    100
    %2006Domestic sales
    
    Ps.
    8,145
    
    
    
    58
    %
    
    Ps.
    3,296
    
    
    
    25
    %
    
    Ps.
    433
    
    
    
    100
    %
    
    Ps.
    11,875
    
    
    
    42
    %Export sales
    
    
    3,921
    
    
    
    28
    %
    
    
    2,463
    
    
    
    18
    %
    
    
    
    
    
    
    
    
    
    
    6,384
    
    
    
    23
    %Foreign subsidiaries
    
    
    1,915
    
    
    
    14
    %
    
    
    7,702
    
    
    
    57
    %
    
    
    
    
    
    
    
    
    
    
    9,617
    
    
    
    35
    %Total net sales
    
    Ps.
    13,982
    
    
    
    100
    %
    
    Ps.
    13,461
    
    
    
    100
    %
    
    Ps.
    433
    
    
    
    100
    %
    
    Ps.
    27,876
    
    
    
    100
    %
 (1)
    
    Other is comprised by our metal flatware business, which we sold in October 2006, and
which we previously included in our Glassware reportable segment. Legal Proceedings
     90




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##### Table of Contents



91




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##### Table of Contents



Dividend Policy
  Significant Changes
   92




---



##### Table of Contents



Item 9. The Offer and Listing
  
 LISTING DETAILS
    BMV
    
    
    NYSEPesos per Share(1)(2)
    
    
    U.S. dollars per ADS(2)(3)Year
    
    High
    
    
    Low
    
    
    High
    
    
    Low2004
    
    Ps.
    14.66
    
    
    Ps.
    9.75
    
    
    $
    4.02
    
    
    $
    2.472005
    
    
    14.58
    
    
    
    7.33
    
    
    
    4.08
    
    
    
    2.072006
    
    
    20.30
    
    
    
    8.35
    
    
    
    5.55
    
    
    
    2.192007
    
    
    30.99
    
    
    
    19.06
    
    
    
    8.53
    
    
    
    5.162008
    
    
    24.00
    
    
    
    4.50
    
    
    
    6.58
    
    
    
    1.10
 
 (1)
    
    Source: Infosel.(2)
    
    Not adjusted for dividends.(3)
    
    Each of our ADSs indirectly represents three of our shares.  BMV
    
    
    NYSEPesos per Share(1)(2)
    
    
    U.S. dollars per ADS(2)(3)Year
    
    High
    
    
    Low
    
    
    High
    
    
    Low2006First Quarter
    
    Ps.
    14.55
    
    
    Ps.
    9.90
    
    
    $
    4.06
    
    
    $
    2.71Second Quarter
    
    
    11.32
    
    
    
    8.35
    
    
    
    3.10
    
    
    
    2.19Third Quarter
    
    
    13.62
    
    
    
    9.33
    
    
    
    3.70
    
    
    
    2.51Fourth Quarter
    
    
    20.30
    
    
    
    12.38
    
    
    
    5.55
    
    
    
    3.322007First Quarter
    
    Ps.
    24.68
    
    
    Ps.
    19.06
    
    
    $
    6.72
    
    
    $
    5.16Second Quarter
    
    
    29.58
    
    
    
    24.47
    
    
    
    8.30
    
    
    
    6.63Third Quarter
    
    
    30.99
    
    
    
    24.84
    
    
    
    8.53
    
    
    
    6.63Fourth Quarter
    
    
    28.61
    
    
    
    19.10
    
    
    
    7.88
    
    
    
    5.252008First Quarter
    
    Ps.
    24.00
    
    
    Ps.
    16.90
    
    
    $
    6.58
    
    
    $
    4.70Second Quarter
    
    
    20.01
    
    
    
    17.33
    
    
    
    5.78
    
    
    
    5.04Third Quarter
    
    
    17.20
    
    
    
    11.82
    
    
    
    4.93
    
    
    
    3.21Fourth Quarter
    
    
    12.09
    
    
    
    4.50
    
    
    
    3.28
    
    
    
    1.102009First Quarter
    
    Ps.
    8.30
    
    
    Ps.
    3.80
    
    
    $
    1.85
    
    
    $
    0.70
  93




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##### Table of Contents



(1)
    
    Source: Infosel.(2)
    
    Not adjusted for dividends.(3)
    
    Each of our ADSs indirectly represents three of our shares.  BMV
    
    
    NYSEPesos per Share(1)(2)
    
    
    U.S. dollars per ADS(2)(3)Month
    
    High
    
    
    Low
    
    
    High
    
    
    LowDecember 2008
    
    Ps.
    8.89
    
    
    Ps.
    7.33
    
    
    $
    1.97
    
    
    $
    1.58January 2009
    
    Ps.
    8.30
    
    
    Ps.
    4.60
    
    
    $
    1.85
    
    
    $
    0.89February
    
    
    5.00
    
    
    
    4.15
    
    
    
    1.00
    
    
    
    0.80March
    
    
    4.45
    
    
    
    3.80
    
    
    
    0.95
    
    
    
    0.70April
    
    
    6.27
    
    
    
    4.50
    
    
    
    1.41
    
    
    
    0.91May
    
    
    8.12
    
    
    
    6.15
    
    
    
    1.92
    
    
    
    1.37June (through June 26, 2009)
    
    
    7.28
    
    
    
    5.47
    
    
    
    1.68
    
    
    
    1.25
 
 (1)
    
    Source: Infosel.(2)
    
    Not adjusted for dividends.(3)
    
    Each of our ADSs indirectly represents three of our shares.  94




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MARKETS
 Trading on the Mexican Stock Exchange
  Boletín Diario de Precios y
Cotizaciones
 Trading on the New York Stock Exchange
      95




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Item 10. Additional Information.
  
 MEXICAN CORPORATE LAW AND BY-LAWS
  General Information and Corporate Purpose
 sociedad anónima Registro Público de la
Propiedad y del Comercio de Monterrey
  obligaciones títulos valor masa reportos fideicomiso por aval derechos reales derechos personales
 Directors and Shareholders Conflict of Interest
   96




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Related Party Transactions and Certain Other Transactions
     Directors Compensation
  Capital Structure
 sociedad anónima bursátil de capital variable
    97




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Share Registration and Transfer
  Limitation on Acquiring Shares
  de facto or de jure,
      98




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Voting Rights; Preferences and Restrictions
   Dividends
  Código de Comercio
  Liquidation
   99




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Employees Mandatory Share in the Companys Profits
  Capital Reduction
   corredor titulado
 corredor titulado
   sociedad anónima bursátil derecho de retiro
 Purchase by us of our Shares
   100




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Purchase Obligation
    Capital Increase; Preemptive Rights
 Libro de Variaciones de Capital, .
 Periódico Oficial del Estado de
Nuevo León
  Appraisal Rights
   101




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Modification of Shareholders Rights
  Shareholders Meetings and Resolutions
    102




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Periódico Oficial del Estado de
Nuevo León
   Asset Acquisitions and Divestitures
   103




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Description of CPOs
 Registro Público del Comercio de la
Ciudad de México, D.F. Registro Público
del Comercio de la Ciudad de México, D.F. Ley General de Títulos y Operaciones de Credito
  Dirección General de Inversiones Extranjeras de la Comisión Nacional de
Inversiones Extranjeras Registro Nacional de
Inversiones Extranjeras
 Ley de Inversión
Extranjera
 Deposit and Withdrawal of our Shares
    104




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Dividends, Other Distributions and Preemptive and Other Rights
    Secretaría de Salud.
 Changes Affecting our Shares
   105




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Voting of our Shares
  Administration of the CPO Trust
 Comisión Nacional
de Inversiones Extranjeras Asociación Mexicana de Casas de Bolsa
  Diario Oficial de la Federación
     106




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Enforcement of Rights of CPO Holders
  Status of CPO Holders
  Termination of the CPO Trust
   Limitations Affecting ADSs Holders
    107




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MATERIAL CONTRACTS
 Indebtedness
  Off-Balance Sheet Arrangements
  Derivatives
  
 EXCHANGE CONTROLS
 .
   108




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MATERIAL TAX CONSEQUENCES
  Mexican Federal Income Taxation
    Our ADSs, CPOs and Shares
 Taxation of Cash Distributions
  Taxation of Sale or Other Disposition
  Registro Nacional de Valores
  109




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United States Federal Income Taxation
         110




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Our ADSs, CPOs and Shares
 Taxation of Cash Distributions and Distributions of Stock
      111




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Taxation of Sale or Other Disposition
    Passive Foreign Investment Company Considerations
  Deposits, Withdrawals and Pre-Releases
   112




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United States Backup Withholding and Information Reporting
  Tax Treaties
     113




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WHERE YOU CAN FIND MORE INFORMATION
  1.
    
    annual reports on Form 20-F;2.
    
    certain other reports or information that we make public under Mexican law, file
with the CNBV and the Mexican Stock Exchange or distribute to our shareholders; and3.
    
    other information.
     
  AVAILABLE INFORMATION
   114




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Item 11. Quantitative and Qualitative Disclosures About Market Risk
 Quantitative and Qualitative Disclosures About Market Risk
       
    
    Risk tolerance
    
    Market risks to which we are exposed
    
    Types of DFIs to use
    
    Time frames for the strategy
    
    Circumstances in which we must change our hedging strategy
    
    Operating budgets and projections
   115




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##### Table of Contents



Debt Subject to Market Risk
  FairExpected Maturity Date(1)
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    Thereafter
    
    
    Total
    
    
    Value(million, except for percentages)Fixed-Rate Debt:Dollar-denominated(2)
    
    Ps.
    16,949
    
    
    Ps.
    12
    
    
    Ps.
    12
    
    
    Ps.
    12
    
    
    Ps.
    13
    
    
    Ps.
    39
    
    
    Ps.
    17,307
    
    
    Ps.
    5,560Weighted-average coupon
    
    
    9.46
    %Euro-denominated(3)
    
    
    222
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    224
    
    
    
    224Weighted-average interest rate
    
    
    5.48Peso-denominated
    
    
    308
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    308
    
    
    
    308Weighted-average interest rate
    
    
    11.24
    %Floating-Rate Debt:Dollar-denominated(2)
    
    Ps.
    634
    
    
    Ps.
    788
    
    
    Ps.
    396
    
    
    Ps.
    4
    
    
    Ps.
    1
    
    
    Ps.
    
    
    
    Ps.
    1,823
    
    
    Ps.
    1,823Weighted-average interest rate
    
    LIBOR plus 3.88%Euro-denominated(3)
    
    Ps.
    226
    
    
    Ps.
    21
    
    
    Ps.
    20
    
    
    Ps.
    16
    
    
    Ps.
    14
    
    
    Ps.
    5
    
    
    Ps.
    302
    
    
    Ps.
    302Weighted-average interest rate
    
    Euribor plus 0.99%Peso-denominated
    
    Ps.
    150
    
    
    
    
    
    
    Ps.
    400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Ps.
    550
    
    
    Ps.
    550Weighted-average interest rate
    
    CETES plus 3.25%TIIE plus 2.50%
 
 (1)
    
    The above table was not separated for interest rate and exchange rate risk because
the same debt was exposed to both risks. In our financial statements, $1,207 million ($1,216
million  $9 million of discount) were reclassified from long-term to short-term since we are
not in full compliance under our Senior Notes indentures.(2)
    
    The principal amount of our dollar-denominated debt was translated to pesos at
Ps.13.8325 per U.S. dollar, the Free Exchange Rate as of December 31, 2008.(3)
    
    The principal amount of our euro-denominated debt was translated at Ps. 19.2534 per
euro, the exchange rate as of December 31, 2008. Natural Gas Price Risk
   116




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Fair ValueNotional Amount
    
    
    
    
    
    
    AssetNatural Gas Contracts
    
    (MMBTUs)
    
    
    Contract Terms
    
    Period
    
    (Liability)Trigger
    
    
    1,950,000
    
    
    9.60 [Cap at 9.90 Trig 7.55]
    
    Aug 08  Aug 09
    
    
    (91
    )Swap
    
    
    2,400,000
    
    
    at 9.65
    
    Jan 09  Dec 09
    
    
    (116
    )Swap
    
    
    2,700,000
    
    
    at 9.38
    
    Apr 09  Dec 09
    
    
    (117
    )Swap
    
    
    420,000
    
    
    at 8.86
    
    Jan 09  Mar 09
    
    
    18Swap
    
    
    1,750,000
    
    
    at  9.12
    
    Apr 09  Oct 09
    
    
    (74
    )Swap
    
    
    1,800,000
    
    
    at 8.35
    
    Jan 09  Dec 09
    
    
    (55
    )Swap
    
    
    2,040,000
    
    
    at 7.70
    
    Jan 11  Dec 11
    
    
    (11
    )Swap
    
    
    1,200,000
    
    
    at 7.66
    
    Jan 11  Dec 11
    
    
    (6
    )Swap
    
    
    1,170,000
    
    
    at 6.05
    
    Jan 09  Mar 09
    
    
    (4
    )Swap
    
    
    120,000
    
    
    at 6.05
    
    Apr 09  Aug 09
    
    
    (2
    )Swap
    
    
    1,080,000
    
    
    at 6.05
    
    Sep 09  Oct 09
    
    
    3Swap
    
    
    500,000
    
    
    at 6.05
    
    Nov 09  Dec 09
    
    
    6Swap
    
    
    1,200,00
    
    
    at 7.18
    
    Jan 10  Dec 10
    
    
    (1
    )Swap
    
    
    2,400,000
    
    
    at 7.19
    
    Jan 10  Dec 10
    
    
    (2
    )Swap
    
    
    2,400,000
    
    
    at 7.16
    
    Jan 10  Dec 10
    
    
    (1
    )Swap
    
    
    600,000
    
    
    at 7.19
    
    Jan 10  Dec 10
    
    
    (1
    )Total Natural Gas
Contracts
    
    
    
    
    
    
    
    
    
    
    (454
    )
  117




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Interest Rate Risk and Foreign Currency Exchange Rate Risk
     118




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Item 12. Description of Securities Other than Equity Securities
  
 Item 13. Defaults, Dividend Arrearages and Delinquencies
  Company
    
    Bank
    
    Guarantee
    
    Type of Default
    
    AmountVitro
    
    2017 Senior Notes
    
    Substantially all of our subsidiaries
    
    Interest payment default
    
    $32 millionVitro
    
    2012 Senior Notes
    
    Substantially all of our subsidiaries
    
    Interest payment default
    
    $13 millionVitro
    
    2013 Senior Notes
    
    Substantially all of our subsidiaries
    
    Interest payment default
    
    $13 millionVena
    
    Bladex
    
    Covisa
    
    Cross-default
    
    $30 millionVitro
    
    Banorte
    
    Covisa
    
    Cross-default
    
    $23 millionVitro America. LLC; VVP Finance Corp; Super Sky, Inc.
    
    Bank of America
    
    VVP Holdings, LLC; VVP Autoglass, Inc. and Super Sky International Inc.
    
    Cross-default
    
    $28 millionVitro
    
    RBS
    
    Covisa, Viméxico, Vitro Automotriz, S.A. de C.V. Vidrio y Cristal and Vena.
    
    Principal payment default
    
    $15 millionVitro
    
    Cebures 03
    
    None
    
    Principal payment default
    
    $11 millionVitemco
    
    Citibank
    
    Viméxico
    
    Principal payment default
    
    $3 million
 Covenant Compliance
  
 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
  
 Item 15. Controls and Procedures
    119




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3⁄4
    3⁄4
    120




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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of
Vitro, S.A.B. de C.V.
Garza Garcia, N.L., Mexico
        121




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Galaz, Yamazaki, Ruiz Urquiza, S.C.Member of Deloitte Touche Tohmatsu/s/ Jorge Alberto VillarrealC.P.C. Jorge Alberto VillarrealMonterrey, N.L., MexicoJune 30, 2009
   
 Item 16. Reserved
 
 Item 16A. Audit Committee Financial Expert
  Código de Mejores Prácticas Corporativas
 
 Item 16B. Code of Ethics
   122




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Item 16C. Principal Accountant Fees and Services
  For the year ended December 31,2007
    
    
    2008(Ps. Millions)Audit Fees
    
    Ps.
    42.1
    
    
    
    81
    %
    
    Ps.
    49.5
    
    
    
    90.6
    %Audit-Related Fees
    
    
    7.9
    
    
    
    15
    %
    
    
    2.6
    
    
    
    4.7
    %Tax Fees
    
    
    2.1
    
    
    
    4
    %
    
    
    2.2
    
    
    
    4
    %Other Fees
    
    
    0.2
    
    
    
    0
    %
    
    
    0.4
    
    
    
    0.7
    %Total
    
    Ps.
    52.3
    
    
    
    100
    %
    
    Ps.
    54.6
    
    
    
    100
    %
 Audit Fees.
 Audit-Related Fees.
 Tax Fees.
 Other Fees. seguro social
 Audit Committee Pre-Approval Policies and Procedures
 de minimis
 
 Item 16D. Exemption from the Listing Standards for Audit Committees
  
 Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
   123




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Item 16F. Not Applicable
 Item 16G. Corporate Governance Differences From NYSE Practices
 DIFFERENCES IN CORPORATE GOVERNANCE PRACTICES
   NYSE Standards
    
    Our Corporate Governance PracticesDirector Independence.Majority
of board of directors must be
independent. §303A.01
    
    Director Independence.Pursuant to the
Mexican Law of the Securities Market,
our shareholders are required to appoint
a Board of Directors in which at least
25% of its members must be independent
as defined under the Mexican Law of the
Securities Market. However, Vitro has a
Board of Directors composed of thirteen
members, out of whom six are
independent, this is, 46% are considered
independent directors. The Ordinary
Shareholders Meeting is required to make
a determination as to the independence
of our directors and the CNBV has a term
of 30 days to challenge such
determination. The definition of
independence under Mexican law differs
from the NYSE standards. Under Article
26 of the Mexican Law of the Securities
Market, a director is not independent if
such director is:(i) Key Executive Directors, an employee
or the subsidiaries of the Company (one
year cooling off period);(ii) a person who has a significant
influence or authority over the Company,
the Companys affiliates or the
corporate group to which the Company
belongs;(iii) a shareholder who is part of a
group of persons who has control
over the Company.(iv) an important client, supplier,
debtor or creditor (or a partner,
director or employee thereof). A client
and supplier is considered important
where its sales to or purchases from the
company represents more than 10% of the
clients or suppliers total sales or
purchases. A debtor or creditor is
considered important whenever its loan
or credit from to the company represents
more than 15% of the debtors or
creditors total assets;(v) an employee of a non-profit entity
that receives contributions from the
company that represent more than 15% of
the total contributions received;(vi) a CEO or other high ranking officer
of another company in which the issuers
CEO or other high ranking officer is a
member of the Board of Directors; or(vii) a family member related to any
of the persons mentioned above in (i)
through (iv).
  124




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NYSE Standards
    
    Our Corporate Governance PracticesFamily member includes a persons
relative of up to four degrees of
consanguinity, affinity or civil, or a
persons spouse or partner, in the case
of (i) and (iv) above.Additionally, our Board of Directors
approved to make stricter the
classification criteria resolving that a
director is not independent if such
director is:(i) An employee of any foundation,
university or non profit entity that
receives material donations from the
Company.(ii) Chief Executive Officer or Key
Executive Director of any entity in
which board of directors participate the
CEO or any Key Ejecutive Director of the
Company.Executive Sessions.
Non-management directors must
meet regularly in executive
sessions without management.
Independent directors should
meet alone in an executive
session at least once a year.
Also, §303A.03requires a process
for interested parties to
communicate their concerns to
non-management directors.
    
    Executive Sessions.Our non-management
directors have not held executive
sessions without management in the past,
and under our bylaws and applicable
Mexican law, they are not required to do
so.Nominating/Corporate Governance
Committee.Nominating/corporate
governance committee of entirely
independent directors is
required. The committee must
have a written charter
specifying the purpose, duties
and evaluation procedures of the
committee. §303A.04
    
    Nominating Committee.We do not have a
nominating committee or corporate
governance committee. We are not
required to have a nominating/corporate
governance committee, and it is not
expressly recommended by the Mexican Law
of the Securities Market. However the
charter of the Corporate Practices
Committee provides that this Committee
shall supervise the composition of the
Board and ensure compliance with the
maximum number of members and with the
minimum number of independent directors,
as provided by Mexican law.Compensation Committee.
Compensation committee of
independent directors is
required, which must evaluate
and approve executive officer
compensation. The committee must
have a charter specifying the
purpose, duties and evaluation
procedures of the committee.
§303A.05
    
    Compensation Committee.The relevant
compensation matters are brought to the
attention of the Corporate Practices
Committee, such as the (i) appointment
and removal of the CEO and his or her
total compensation, as well as the total
compensation of the Chairman of the
Board of Directors; (ii) approval of the
policies for the appointment and total
compensation of the other Key Executive
Directors and (iii) approval of the
maximum percentage of wages and salary
increases per year.Our committee does not produce a report
on executive compensation. However the
charter of the Corporate Practices
Committee specifies its duties in this
regard.
  125




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NYSE Standards
    
    Our Corporate Governance PracticesAudit Committee.Audit committee
satisfying the independence and
other requirements of Rule 10A-3
under the Exchange Act and the
more stringent requirements
under the NYSE standards is
required. §§303A.06, 303A.07.
The audit committee must be
composed of a minimum of three
independent directors, one of
whom must have accounting or
related financial management
expertise. The committee must
have written charter specifying
the purpose, duties and
evaluation procedures of the
committee. Additionally, a
listed company must have an
internal audit function to
assess risk management processes
and the companys system of
internal control.
    
    Audit Committee.We have an audit
committee of three members. Each member
of the audit committee is independent,
as independence is defined under the
Mexican Law of the Securities Market,
and also meets the independence
requirements of Rule 10A-3 under the
U.S. Securities Exchange Act of 1934, as
amended. Our audit committee operates
primarily pursuant to a written charter
adopted by our Board of Directors.Equity Compensation Plans.
Equity compensation plans
require shareholder approval,
subject to limited exemptions.
§§303A.08 , 312.03 & 312.04
    
    Equity Compensation Plans.Shareholder
approval is not expressly required under
Mexican law or our bylaws for the
adoption and amendment of an
equity-compensation plan. However, the
Mexican Law of the Securities Market
requires shareholder approval under
certain circumstances.Shareholder Approval for
Issuance of Securities.
Shareholder approval is
required, subject to limited
exceptions, for issuance of
common stock, or of any
securities convertible into or
exercisable for common stock
(even if not listed on the
NYSE), (1) to a director,
officer or substantial security
holder of the company (each, a
Related Party), (2) to a
subsidiary, affiliate or other
closely-related person of a
Related Party, (3) to a company
or entity in which a Related
Party has a substantial
interest, if the number of
shares of common stock to be
issued, or if the number of
shares of common stock into
which the securities may be
convertible or exercisable
exceeds one percent of the
number of shares of common stock
or one percent of the voting
power outstanding before such
issuance, (4) that have voting
power equal to at least 20% of
the outstanding common stock
voting power before such
issuance, (5) that will increase
the number of outstanding shares
of common stock by at least 20%
of the number of outstanding
shares before such issuance or
(6) that will result in a change
of control of the issuer.
§§312.03(b)-(e) & 312.04
    
    Shareholder Approval for Issuance of
Securities.Mexican law and our bylaws
require us to obtain shareholder
approval of the issuance of equity
securities.Code of Business Conduct and
Ethics.Corporate governance
guidelines and a code of
business conduct and ethics are
required, with prompt disclosure
of any waiver for directors or
executive officers. The
guidelines and code must be
disclosed and publicly available
and the code must contain
compliance standards and
procedures that will facilitate
the effective operation of the
code. §§303 A.09 & 303A.10
    
    Code of Business Conduct and Ethics.We
have adopted a code of ethics, which has
been accepted by all of our directors
and executive officers and other
personnel. Our Corporate Practices
Committee monitors the applicability of
our code of ethics, and may propose
amendments to the same, according to its
charter. A copy of our code of ethics is
available on our web site: www.vitro.com.
  126




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NYSE Standards
    
    Our Corporate Governance PracticesSolicitation of Proxies.
Solicitation of proxies and
provision for proxy materials is
required for all meetings of
shareholders. Copies of such
proxy solicitations are to be
provided to NYSE. §§402.01 &
402.04-.06
    
    Solicitation of Proxies.Pursuant to the
provisions of the Mexican Law of the
Securities Market, beginning on the
date when the notice to the shareholders
meeting is published, we immediately and
free of any charge, make available to
the shareholders the documents and
information related to each item of the
meeting agenda.Likewise, pursuant to the Mexican Law of
the Securities Market, in order for the
shareholders to be represented in the
shareholders meetings, we elaborate and
make available to them power of attorney
forms that contain at least: The name
of the Company, the items of the agenda
and some blank spaces to be filled in by
the shareholders to instruct their
representatives how to exercise such
power of attorney.Website Requirements.The
company must maintain a website
that includes printable versions
of board committee charters,
corporate governance guidelines
and the code of business conduct
and ethics. Additionally, a
foreign private issuer must
include on its website English
language disclosure of
significant differences between
its corporate governance
practices and the NYSE
standards. §§303A.11 & 303A.14
    
    Website Requirements. Pursuant to the
applicable Mexican Law, we are not
required to maintain printable versions
of any document at our website nor
information of significant differences
between our corporate practices and NYSE
standards. Additionally, we are not
required to have information available
other than in Spanish. Under Mexican
Law, we are required to maintain an
updated website in Spanish that includes
our current bylaws, our annual and
quarterly reports and compliance report
with the corporate governance code
(código de mejores prácticas
corporativas), material corporate
restructuring and information
about relevant events. Additionally, our
website contains Spanish printable
versions of the charters of the
Corporate Practices Committee, the Audit
Committee and the Finance and Planning
Committee as well as of the compliance
report with the corporate governance
code and of the code of ethics. We also
have available at our website the
English version of the significant
differences between our corporate
governance practices and the NYSE
standards.
 
 Item 17. Financial Statements
  
 Item 18. Financial Statements
   
    
    Report of Independent Registered Public Accounting Firm for the years ended
December 31, 2008, 2007 and 2006
    
    Consolidated Balance Sheets as of December 31, 2008, 2007 and 2006
    
    Consolidated Statements of Operations for the years ended December 31, 2008,
2007 and 2006
    
    Consolidated Statements of Changes in Shareholders Equity for the years ended
December 31, 2008, 2007 and 2006
    
    Consolidated Statements of Cash Flows for the year ended December 31, 2008.
    
    Consolidated Statements of Changes in Financial Position for the years ended
December 31, 2007 and 2006.
    
    Notes to the Consolidated Financial Statements
  127




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Item 19. Exhibits
  Exhibit No.
    
    Description
    
    Page1.01
    
    
    Amended and restated by-laws (estatutos
sociales) of Vitro, S.A.B. de C.V., together
with an English translation
    
    c2.01
    
    
    Trust Agreement dated November 28, 1990 between
the Common Shares Trustee, as grantor, and the
CPO Trustee (the CPO Trust Agreement),
together with an English translation
    
    i2.02
    
    
    Public Deed dated November 29, 1990 (the
Public Deed), together with an English
translation
    
    i2.03
    
    
    Common Shares Trust Agreement
    
    i2.04
    
    
    CPO Trust Agreement and Public Deed
    
    i2.05
    
    
    Form of Certificado Bursátil
    
    g2.06
    
    
    Indenture dated as of October 22, 2003 (2013
Indenture) between Vitro, S.A. de C.V. and
Wachovia Bank (including exhibits); including
Form of 11.75% Senior Note due 2013
    
    f2.07
    
    
    Form of First Supplemental Indenture dated as
of October 23, 2006 to the 2013 Indenture
between Vitro, S.A. de C.V. and U.S. Bank
National Association as successor trustee to
Wachovia Bank, National Association
    
    a2.08
    
    
    First Supplemental Indenture to the 2013
Indenture dated as of February 1, 2007 among
Vitro, S.A.B. de C.V., the Guarantors party
thereto and U.S. Bank National Association as
successor trustee to Wachovia Bank, National
Association
    
    c2.09
    
    
    Second Supplemental Indenture to the 2013
Indenture dated as of April 27, 2007 among
Vitro, S.A.B. de C.V., the New Guarantors party
thereto, the Existing Guarantors party thereto
and U.S. Bank National Association as successor
trustee to Wachovia Bank, National Association
    
    c2.10
    
    
    Third Supplemental Indenture to the 2013
Indenture dated as of January 16, 2008 between
Vitro, S.A.B. de C.V., the New Guarantors party
thereto, the Existing Guarantors party thereto
and U.S. Bank National Association as successor
trustee to Wachovia Bank, National Association
    
    b2.11
    
    
    Fourth Supplemental Indenture to the 2013
Indenture dated as of May 15, 2008 between
Vitro, S.A.B. de C.V., the New Guarantors party
thereto, the Existing Guarantors party thereto
and U.S. Bank National Association as successor
trustee to Wachovia Bank, National Association
    
    b2.12
    
    
    Trust Agreement between Banco Invex, S.A.,
Institucion de Banca Multiple, Invex Grupo
Financiero, as issuer and trustee,
Distribuidora Nacional de Vidrio, S.A. de C.V.
Vitro Flotado Cubiertas, S.A. de C.V., Vitro
Automotriz, S.A. de C.V., and Vitro Vidrio y
Cristal, S.A. de C.V., dated August 3, 2005, in
connection with the issuance of the 6.46%
Preferred Notes
    
    d
  128




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##### Table of Contents



Exhibit No.
    
    Description
    
    Page2.13
    
    
    Purchase Agreement between Banco Invex, S.A.,
Institucion de Banca Multiple, Invex Grupo
Financiero, as issuer, Distribuidora Nacional
de Vidrio, S.A. de C.V., Vitro Flotado
Cubiertas, S.A. de C.V., Vitro Automotriz, S.A.
de C.V., Vitro Vidrio y Cristal, S.A. de C.V.,
and Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A. Rabobank
International, as purchaser, dated August 22,
2005, in connection to the sale of 6.46%
Preferred Notes  Summary of the document in
English attached
    
    d2.14
    
    
    Indenture dated as of February 1, 2007 between
Vitro, S.A.B. de C.V., the Guarantors party
thereto and The Bank of New York as Trustee
(2012 Indenture)
    
    c2.15
    
    
    Form of 8.625% Senior Note due 2012
    
    c2.16
    
    
    First Supplemental Indenture to the 2012
Indenture dated as of April 27, 2007 among
Vitro, S.A.B. de C.V. the New Guarantors party
thereto, the Existing Guarantors party thereto
and the Bank of New York
    
    c2.17
    
    
    Second Supplemental Indenture to the 2012
Indenture dated as of January 16, 2008 among
Vitro, S.A.B. de C.V., the New Guarantors party
thereto, the Existing Guarantors party thereto
and the Bank of New York
    
    b2.18
    
    
    Third Supplemental Indenture to the 2012
Indenture dated as of May 15, 2008 among Vitro,
S.A.B. de C.V., the New Guarantors party
thereto, the Existing Guarantors party thereto
and the Bank of New York
    
    b2.19
    
    
    Indenture dated as of February 1, 2007 between
Vitro, S.A.B. de C.V., the Guarantors party
thereto and The Bank of New York as Trustee
(2017 Indenture)
    
    c2.2
    
    
    Form of 9.125% Senior Note due 2017
    
    c2.21
    
    
    First Supplemental Indenture to the 2017
Indenture dated as of April 27, 2007 among
Vitro, S.A.B. de C.V. the New Guarantors party
thereto, the Existing Guarantors party thereto
and the Bank of New York
    
    c2.22
    
    
    Second Supplemental Indenture to the 2017
Indenture dated as of January 16, 2008 among
Vitro, S.A.B. de C.V., the New Guarantors party
thereto, the Existing Guarantors party thereto
and the Bank of New York
    
    b2.23
    
    
    Third Supplemental Indenture to the 2017
Indenture dated as of May 15, 2008 among Vitro,
S.A.B. de C.V., the New Guarantors party
thereto, the Existing Guarantors party thereto
and the Bank of New York
    
    b4.01
    
    
    Trust Agreement dated as of March 23, 2005
among Compañía Vidriera, S.A. de C.V.,
Industria del Álcali, S.A. de C.V.,
Comercializadora Álcali, S. de R.L. de C.V.,
ABN AMRO Bank (México), S.A., Institución de
Banca Múltiple, División Fiduciaria and Banco
Invex, S.A., Institución de Banca Múltiple,
Invex Grupo Financiero; Assignment of Rights
dated as of March 23, 2005 among Compañía
Vidriera, S.A. de C.V., Industria del Álcali,
S.A. de C.V., Comercializadora Álcali, S. de
R.L. de C.V. and ABN AMRO Bank (México), S.A.
Institución de Banca Múltiple, Division
Fiduciana; CertificadosSubordinadosissued by
ABN AMRO Bank (México), S.A., Institución de
Banca Múltiple, Division Fiduciaria, together
with English summary.
    
    e4.02
    
    
    Guaranty dated as of March 31, 2005 among
Vitro, S.A.B. de C.V. and of the holders of the
CertificadosSubordinados
    
    e
  129




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##### Table of Contents



Exhibit No.
    
    Description
    
    Page4.03
    
    
    First amendment dated March 31, 2009 to the
Trust Agreement dated as of March 23, 2005
among Compañía Vidriera, S.A. de C.V, Industria
del Alcali, S.A. de C.V. Bank of America, S.A.,
Institución de Banca Múltiple, Grupo Financiero
Bank of America, División Fiduciaria and
Coöperatieve Centrale
Raiffeisen-Boerenleenbank, B.A.
    
    +4.04
    
    
    Letter of extension between Pilkington plc and
Vitro Vidrio y Cristal, S.A. de C.V., dated
April 24, 2006
    
    e4.05
    
    
    Stock Purchase Agreement of Vidrios Panameños
S.A. between the Sellers listed therein and
Empresas Comegua, S.A., dated April 4, 2006.
    
    d4.06
    
    
    Partnership Interest Purchase agreement dated
January 16, 2009 among Francisco Javier Prado
Ovalle, Isaac Prado Ovalle, Recaredo Prado
Ovalle, Invergar Participaciones Inmobiliarias,
S.L., Isaac Prado Bodelón y Concepción Ovalle
Vallinas as Seller and Vimexico, S.A. de C.V.
as Purchaser
    
    +4.07
    
    
    Partnership Interest Purchase agreement dated
January 30, 2009 among Francisco Javier Prado
Ovalle, Isaac Prado Ovalle, Recaredo Prado
Ovalle, Invergar Participaciones Inmobiliarias,
S.L., Isaac Prado Bodelón y Concepción Ovalle
Vallinas as Seller and Vimexico, S.A. de C.V.
as Purchaser
    
    +4.08
    
    
    Trust Agreement dated November 3, 2008 among
Vitro Envases Norteamerica, S.A. de C.V.
Compañia Vidriera, S.A. de C.V., Vitro
Corporativo, S.A. de C.V., Vidriera Toluca,
S.A. de C.V., Vitro, S.A.B. de C.V. and
Nacional Financiera, S.N.C., División
Fiduciaria.
    
    +8.1
    
    
    List of subsidiaries of Vitro, S.A.B. de C.V.
    
    +12.1
    
    
    Certification of the Chief Executive Officer of
Vitro, S.A.B. de C.V. pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
    
    +12.2
    
    
    Certification of the Chief Financial and
Administrative Officer of Vitro, S.A.B. de C.V.
pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
    
    +13.1
    
    
    Certification of the Chief Executive Officer,
Chief Financial Officer and Chief
Administrative Officer of Vitro, S.A.B. de C.V.
pursuant to 18 U.S.C. §1350, as adopted
pursuant to Section 906 of the Sarbanes Oxley
Act of 2002.
    
    +
 +
    
    Filed herewith.a
    
    Filed as an exhibit to the Registration
Statement of Vitro, S.A.B. de C.V. on Form F-4
(File No. 333-135546) and incorporated herein
by reference thereto.b
    
    Filed as an exhibit to Vitro, S.A.B. de C.V.s
annual report on Form 20-F for the year ended
December 31, 2006 and incorporated herein by
reference thereto.c
    
    Filed as an exhibit to Vitro, S.A.B. de C.V.s
annual report on Form 20-F for the year ended
December 31, 2006 and incorporated herein by
reference thereto.  130




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##### Table of Contents



d
    
    Filed as an exhibit to Vitro, S.A.B. de C.V.s
annual report on Form 20-F for the year ended
December 31, 2005 and incorporated herein by
reference thereto.e
    
    Filed as an exhibit to Vitro, S.A.B. de C.V.s
annual report on Form 20-F for the year ended
December 31, 2004 and incorporated herein by
reference thereto.f
    
    Filed as an exhibit to Vitro, S.A.B. de C.V.s
annual report on Form 20-F for the year ended
December 31, 2003 and incorporated herein by
reference thereto.g
    
    Filed as an exhibit to Vitro, S.A.B. de C.V.s
annual report for the year ended December 31,
2002 and incorporated herein by reference
thereto.h
    
    Filed as an exhibit to the Registration
Statement of Vicap, S.A. de C.V. on Form F-4
(File no. 333-9498) and incorporated herein by
reference thereto.i
    
    Filed as an exhibit to the Registration
Statement of Vitro, S.A. de C.V. on Form F-1
(File no. 33-43660) and incorporated herein by
reference thereto.  131




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##### Table of Contents



SIGNATURES
   VITRO, S.A.B. DE C.V.,By:
    /s/ Hugo Alejandro Lara GarcíaName:
    Hugo Alejandro Lara GarcíaTitle:
    Chief Executive OfficerBy:
    /s/ Claudio Luis Del Valle CabelloName:
    Claudio Luis Del Valle CabelloTitle:
    Chief Financial and Administrative OfficerVIMÉXICO, S.A. DE C.V.,By:
    /s/ Claudio Luis Del Valle CabelloName:
    Claudio Luis Del Valle CabelloTitle:
    Chief Financial andAdministrative Officer  132




---



##### 



Vitro, S.A.B. de C.V. and Subsidiaries  Report of Independent Registered Accounting Firm and
Consolidated Financial Statements 2006, 2007 and 2008
 Content
 PageReport of Independent Registered Public Accounting Firm
    
    
    F-1 - F-2Consolidated balance sheets
    
    
    F-3 - F-4Consolidated statements of operations
    
    
    F-5Consolidated statements of changes in financial position
    
    
    F-6Consolidated statement of cash flows
    
    
    F-7 - F-8Consolidated statements of changes in stockholders equity
    
    
    F-9Notes to consolidated financial statements
    
    
    F-10




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 To the Board of Directors and Stockholders of
Vitro, S.A.B. de C.V.
Garza Garcia, N.L., Mexico
          F-1




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##### Table of Contents



Internal ControlIntegrated Framework
 
 
  F-2




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##### Table of Contents



(Millions of Mexican pesos)
 Millions ofUS dollars(ConvenienceTranslation)December 31,
    
    
    December 31,2007
    
    
    2008
    
    
    2008ASSETSCash and cash equivalents
    
    Ps.
    1,638
    
    
    Ps.
    1,428
    
    
    US$
    103Trade receivables, net
    
    
    1,629
    
    
    
    1,492
    
    
    
    108Retained undivided interests in securitized receivables
    
    
    968
    
    
    
    1,213
    
    
    
    88Derivative financial instruments
    
    
    425Taxes receivable
    
    
    559
    
    
    
    589
    
    
    
    42Other receivables
    
    
    1,797
    
    
    
    1,255
    
    
    
    91Inventories, net
    
    
    4,120
    
    
    
    4,178
    
    
    
    302Current assets
    
    
    11,136
    
    
    
    10,155
    
    
    
    734Investments in associated companies
    
    
    
    
    
    
    996
    
    
    
    72Land and buildings, net
    
    
    8,426
    
    
    
    8,051
    
    
    
    582Machinery and equipment, net
    
    
    7,812
    
    
    
    7,890
    
    
    
    570Construction in progress
    
    
    1,603
    
    
    
    1,332
    
    
    
    96Goodwill
    
    
    873
    
    
    
    771
    
    
    
    56Intangible employee retirement obligation asset
    
    
    338Deferred taxes
    
    
    1,030
    
    
    
    3,418
    
    
    
    247Other assets
    
    
    969
    
    
    
    1,335
    
    
    
    97Long-term assets
    
    
    21,051
    
    
    
    23,793
    
    
    
    1,720Total assets
    
    Ps.
    32,187
    
    
    Ps.
    33,948
    
    
    US$
    2,454
  Hugo A. Lara García
    
    Claudio L. Del Valle C.Chief Executive Officer
    
    Chief Financial and Administrative Officer
  F-3




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##### Table of Contents



(Millions of Mexican pesos)
 Millions ofUS dollars(ConvenienceTranslation)December 31,
    
    
    December 31,2007
    
    
    2008
    
    
    2008LIABILITIESShort-term borrowings
    
    Ps.
    398
    
    
    Ps.
    1,601
    
    
    US$
    116Current maturities of long-term debt
    
    
    545
    
    
    
    16,887
    
    
    
    1,221Trade payables
    
    
    2,462
    
    
    
    2,356
    
    
    
    170Accrued expenses
    
    
    1,441
    
    
    
    1,317
    
    
    
    95Derivative financial instruments
    
    
    767
    
    
    
    3,777
    
    
    
    273Other current liabilities
    
    
    1,527
    
    
    
    2,410
    
    
    
    174Current liabilities
    
    
    7,140
    
    
    
    28,348
    
    
    
    2,049Long-term debt
    
    
    13,975
    
    
    
    1,755
    
    
    
    127Employee retirement obligations
    
    
    1,245
    
    
    
    461
    
    
    
    33Deferred taxes
    
    
    236
    
    
    
    11
    
    
    
    1Other long-term liabilities
    
    
    205
    
    
    
    265
    
    
    
    19Long-term liabilities
    
    
    15,661
    
    
    
    2,492
    
    
    
    180Total liabilities
    
    
    22,801
    
    
    
    30,840
    
    
    
    2,229Commitments and contingencies (note 12)STOCKHOLDERS EQUITYCapital stock: no par value, 386,857,143 shares issued and
outstanding in 2007 and 2008
    
    
    387
    
    
    
    387
    
    
    
    28Restatement of capital stock
    
    
    7,245
    
    
    
    7,245
    
    
    
    524Restated capital stock
    
    
    7,632
    
    
    
    7,632
    
    
    
    552Treasury stock (45,816,783 shares in 2007 and 40,204,310 in 2008)
    
    
    (622
    )
    
    
    (547
    )
    
    
    (39
    )Additional paid-in capital
    
    
    2,437
    
    
    
    1,761
    
    
    
    127Shortfall in restatement of capital
    
    
    (21,154
    )Cumulative initial effect of deferred taxes
    
    
    (1,810
    )Minimum labor liability adjustment
    
    
    (326
    )Retained earnings reserved for reacquisition of Vitro shares
    
    
    2,000Translation effects of foreign subsidiaries
    
    
    
    
    
    
    402
    
    
    
    29Retained earnings (accumulated deficit)
    
    
    19,269
    
    
    
    (7,544
    )
    
    
    (546
    )Total majority interest
    
    
    7,426
    
    
    
    1,704
    
    
    
    123Minority interest in consolidated subsidiaries
    
    
    1,960
    
    
    
    1,404
    
    
    
    102Total stockholders equity
    
    
    9,386
    
    
    
    3,108
    
    
    
    225Total liabilities and stockholders equity
    
    Ps.
    32,187
    
    
    Ps.
    33,948
    
    
    US$
    2,454
   F-4




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##### Table of Contents



(Millions of Mexican pesos, except per share amounts)
 Millions ofUS dollars(ConvenienceTranslation)Year ended December 31,
    
    
    December 31,2006
    
    
    2007
    
    
    2008
    
    
    2008Net sales
    
    Ps.
    27,876
    
    
    Ps.
    28,591
    
    
    Ps.
    29,013
    
    
    US$
    2,097Cost of sales
    
    
    20,230
    
    
    
    20,187
    
    
    
    21,279
    
    
    
    1,538Gross profit
    
    
    7,646
    
    
    
    8,404
    
    
    
    7,734
    
    
    
    559Selling, general and administrative expenses
    
    
    5,529
    
    
    
    5,700
    
    
    
    6,024
    
    
    
    435Operating income
    
    
    2,117
    
    
    
    2,704
    
    
    
    1,710
    
    
    
    124Total comprehensive financing result
    
    
    2,276
    
    
    
    1,660
    
    
    
    9,077
    
    
    
    656Operating income (loss) after financing cost
    
    
    (159
    )
    
    
    1,044
    
    
    
    (7,367
    )
    
    
    (532
    )Other expenses (income), net
    
    
    (229
    )
    
    
    869
    
    
    
    495
    
    
    
    36Equity in earnings of associated companies and
unconsolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    0Income (loss) from continuing operations before taxes
    
    
    70
    
    
    
    175
    
    
    
    (7,857
    )
    
    
    (568
    )Income tax expense (benefit)
    
    
    228
    
    
    
    44
    
    
    
    (2,175
    )
    
    
    (157
    )Net income (loss) from continuing operations
    
    
    (158
    )
    
    
    131
    
    
    
    (5,682
    )
    
    
    (411
    )Gain on sale of discontinued operations
    
    
    480Loss from discontinued operations
    
    
    (31
    )Net income (loss) for the year
    
    Ps.
    291
    
    
    Ps.
    131
    
    
    Ps.
    (5,682
    )
    
    US$
    (411
    )Net minority (loss) income
    
    Ps.
    (110
    )
    
    Ps.
    144
    
    
    Ps.
    24
    
    
    US$
    2Net majority income (loss)
    
    
    401
    
    
    
    (13
    )
    
    
    (5,706
    )
    
    
    (413
    )Ps.
    291
    
    
    Ps.
    131
    
    
    Ps.
    (5,682
    )
    
    US$
    (411
    )Earnings per common share (based on weighted average
shares outstanding of 289,636,496 for 2006, 341,042,193 for 2007 and 342,834,251 for 2008):Income (loss) from continuing operations
    
    Ps.
    (0.54
    )
    
    Ps.
    0.38
    
    
    Ps.
    (16.57
    )
    
    US$
    (1.20
    )Gain on sale of discontinued operations
    
    
    1.66Loss from discontinued operations
    
    
    (0.11
    )Minority (income) loss
    
    
    0.38
    
    
    
    (0.42
    )
    
    
    0.07
    
    
    
    0.00Net majority income (loss)
    
    Ps.
    1.39
    
    
    Ps.
    (0.04
    )
    
    Ps.
    (16.64
    )
    
    US$
    (1.20
    )
   F-5




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##### Table of Contents



(Millions of Mexican pesos)
 Year ended December 31,2006
    
    
    2007OPERATING ACTIVITIES:Net (loss) income from continuing operations
    
    Ps.
    (158
    )
    
    Ps.
    131Add (deduct) non-cash items:Depreciation and amortization
    
    
    1,795
    
    
    
    1,414Provision for employee retirement obligations
    
    
    419
    
    
    
    261Early extinguishment of employee retirement obligations
    
    
    8
    
    
    
    97Amortization of debt issuance costs
    
    
    198
    
    
    
    170(Gain) loss from sale of subsidiaries and associated companies
    
    
    (68
    )
    
    
    11Impairment of long-lived assets
    
    
    393
    
    
    
    122(Gain) loss from sale of long-lived assets
    
    
    (795
    )
    
    
    47Mark-to market of derivative financial instruments
    
    
    (109
    )
    
    
    216Deferred taxes and workers profit sharing
    
    
    49
    
    
    
    (351
    )1,732
    
    
    
    2,118(Increase) in trade receivables
    
    
    (14
    )
    
    
    (207
    )Decrease (increase) in inventories
    
    
    223
    
    
    
    (308
    )Increase in trade payables
    
    
    173
    
    
    
    243Change in other current assets and liabilities
    
    
    (443
    )
    
    
    429Employee retirement obligations
    
    
    (589
    )
    
    
    (472
    )Net loss from discontinued operations
    
    
    (31
    )Discontinued operations
    
    
    30Net resources generated by operating activities
    
    
    1,081
    
    
    
    1,803FINANCING ACTIVITIES:Proceeds from short-term bank loans
    
    
    4,893
    
    
    
    2,650Proceeds from long-term bank loans
    
    
    1,481
    
    
    
    14,289Amortization in real terms of bank loans
    
    
    (564
    )
    
    
    (545
    )Payment of short-term bank loans
    
    
    (3,472
    )
    
    
    (4,864
    )Payment of long-term bank loans
    
    
    (5,472
    )
    
    
    (9,459
    )Debt issuance costs
    
    
    (23
    )
    
    
    (293
    )Issuance of capital stock
    
    
    578Dividends paid to stockholders of Vitro, S.A.B. de C.V. (1)
    
    
    (95
    )
    
    
    (136
    )Dividends paid to minority interest
    
    
    (66
    )
    
    
    (79
    )Sale (purchase) of treasury stock
    
    
    69
    
    
    
    (1
    )Other financing activities
    
    
    75
    
    
    
    487Discontinued operations
    
    
    (20
    )Net resources (used in) generated by financing activities
    
    
    (2,616
    )
    
    
    2,049INVESTING ACTIVITIES:Investments in land, buildings, machinery and equipment
    
    
    (1,252
    )
    
    
    (2,695
    )Proceeds from sale of land, buildings, machinery and equipment
    
    
    1,693
    
    
    
    72Restricted cash
    
    
    419
    
    
    
    (331
    )Investment in subsidiaries
    
    
    (218
    )
    
    
    (181
    )Proceeds from sale of subsidiaries and associated companies
    
    
    1,214
    
    
    
    37Capital distribution to minority interest
    
    
    (109
    )Other long-term assets
    
    
    (359
    )
    
    
    (36
    )Deferred charges
    
    
    (92
    )
    
    
    (302
    )Discontinued operations
    
    
    21Net resources generated by (used in) investing activities
    
    
    1,317
    
    
    
    (3,436
    )Net (decrease) increase in cash and cash equivalents
    
    
    (218
    )
    
    
    416Balance at beginning of year
    
    
    1,440
    
    
    
    1,222Balance at end of year
    
    Ps.
    1,222
    
    
    Ps.
    1,638
 (1)
    
    This dividend is recognized for accounting purposes as a capital reimbursement.   F-6




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##### Table of Contents



(Millions of Mexican pesos)
 Millions ofYear ended
    
    
    US dollarsDecember 31,
    
    
    (Convenience2008
    
    
    Translation)OPERATING ACTIVITIES:Loss before income taxes
    
    Ps.
    (7,857
    )
    
    US$
    (568
    )Items related to investing activities:Depreciation and amortization
    
    
    1,469
    
    
    
    106Gain from sale of long-lived assets
    
    
    (3
    )Impairment of long-lived assets
    
    
    196
    
    
    
    14Foreign exchange loss
    
    
    79
    
    
    
    6Interest income
    
    
    (58
    )
    
    
    (4
    )Equity in
earnings of associated companies and unconsolidated subsidiaries
    
    
    (5
    )ITEMS RELATED TO FINANCING ACTIVITIES:Amortization of debt issuance costs
    
    
    55
    
    
    
    4Derivative financial instruments
    
    
    3,766
    
    
    
    272Foreign exchange loss
    
    
    3,535
    
    
    
    256Interest expense
    
    
    2,092
    
    
    
    151Trade receivables
    
    
    (23
    )
    
    
    (2
    )Inventories
    
    
    (19
    )
    
    
    (1
    )Trade payables
    
    
    (317
    )
    
    
    (23
    )Other current assets and liabilities
    
    
    (222
    )
    
    
    (16
    )Employee retirement obligations
    
    
    88
    
    
    
    6Income taxes paid
    
    
    (211
    )
    
    
    (15
    )Net cash provided by operating activities
    
    
    2,565
    
    
    
    186INVESTING ACTIVITIES:Investments in machinery and equipment
    
    
    (1,798
    )
    
    
    (130
    )Proceeds from sale of machinery and equipment
    
    
    20
    
    
    
    1Investment in subsidiaries, net of cash acquired
    
    
    (63
    )
    
    
    (4
    )Other assets
    
    
    332
    
    
    
    24Deferred charges
    
    
    (262
    )
    
    
    (19
    )Interest received
    
    
    60
    
    
    
    4Net cash used in investing activities
    
    
    (1,711
    )
    
    
    (124
    )Excess cash to apply to financing activities
    
    
    854
    
    
    
    62
  F-7




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##### Table of Contents



Millions ofYear ended
    
    
    US dollarsDecember 31,
    
    
    (Convenience2008
    
    
    Translation)FINANCING ACTIVITIES:Proceeds from short-term bank loans
    
    Ps.
    1,155
    
    
    US$
    83Interest paid
    
    
    (2,044
    )
    
    
    (148
    )Dividends paid to stockholders of Vitro, S.A.B. de C.V. 1
    
    
    (143
    )
    
    
    (10
    )Dividends paid to minority interests
    
    
    (131
    )
    
    
    (9
    )Issuance of capital stock to minority interest
    
    
    22
    
    
    
    2Proceeds from long-term bank loans
    
    
    1,976
    
    
    
    143Payments of long-term bank loans
    
    
    (1,020
    )
    
    
    (74
    )Sale of treasury stock
    
    
    75
    
    
    
    5Debt issuance costs
    
    
    (63
    )
    
    
    (4
    )Derivative financial instruments
    
    
    (1,138
    )
    
    
    (82
    )Other financing activities
    
    
    (36
    )
    
    
    (3
    )Net cash used in financing activities
    
    
    (1,347
    )
    
    
    (97
    )Net decrease in cash and cash equivalents
    
    
    (493
    )
    
    
    (35
    )Adjustment to cash flows due to exchange rate fluctuations
    
    
    74
    
    
    
    5Deconsolidation of subsidiary
    
    
    (105
    )
    
    
    (7
    )Cash and cash equivalents at the beginning of year
(includes restricted cash of 
Ps. 388)
    
    
    2,026
    
    
    
    146Cash and cash equivalents at the end of year
(includes restricted cash of Ps. 74)
    
    Ps.
    1,502
    
    
    US$
    109
 1
    
    This dividend is recognized for accounting purposes as a capital reimbursement.   F-8




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##### Table of Contents



(Millions of Mexican pesos)
 Treasurystock and
    
    
    Shortfall
    
    
    
    
    
    
    Translation
    
    
    RetainedRestated
    
    
    additional
    
    
    in
    
    
    
    
    
    
    effect of
    
    
    earningsCapital
    
    
    paid-in
    
    
    restatement
    
    
    Other
    
    
    foreign
    
    
    (accumulated
    
    
    Minority
    
    
    Stockholdersstock
    
    
    capital
    
    
    of capital
    
    

reserves(1)
    
    
    subsidiaries
    
    
    deficit)
    
    
    interest
    
    
    equityBalance at January 1, 2006
    
    Ps.
    7,566
    
    
    Ps.
    479
    
    
    Ps.
    (20,858
    )
    
    Ps.
    (2,261
    )
    
    
    
    
    
    Ps.
    21,112
    
    
    Ps.
    3,198
    
    
    Ps.
    9,236Dividends (Ps. 0.32 per share)
(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (95
    )
    
    
    
    
    
    
    (95
    )Decrease in minority interest
    
    
    
    
    
    
    69
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (609
    )
    
    
    (540
    )Dilution of minority interest
    
    
    
    
    
    
    687
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (687
    )Sale of treasury stock
    
    
    
    
    
    
    69
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69Issuance of capital stock
    
    
    66
    
    
    
    512
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    578Comprehensive income
    
    
    
    
    
    
    
    
    
    
    (232
    )
    
    
    (41
    )
    
    
    
    
    
    
    401
    
    
    
    (10
    )
    
    
    118Balance at December 31, 2006
    
    
    7,632
    
    
    
    1,816
    
    
    
    (21,090
    )
    
    
    (2,302
    )
    
    
    
    
    
    
    21,418
    
    
    
    1,892
    
    
    
    9,366Dividends (Ps. 0.37 per share)
(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (136
    )
    
    
    
    
    
    
    (136
    )Decrease in minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (57
    )
    
    
    (57
    )Purchase of treasury stock
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    (64
    )
    
    
    166
    
    
    
    
    
    
    
    (13
    )
    
    
    125
    
    
    
    214Balance at December 31, 2007
    
    
    7,632
    
    
    
    1,815
    
    
    
    (21,154
    )
    
    
    (2,136
    )
    
    
    
    
    
    
    21,269
    
    
    
    1,960
    
    
    
    9,386Reclassification for adoption
of new Mexican Financial
Reporting Standards
    
    
    
    
    
    
    
    
    
    
    21,154
    
    
    
    2,136
    
    
    
    
    
    
    
    (22,964
    )
    
    
    
    
    
    
    326Dividends (Ps. 0.40 per share)
(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (143
    )
    
    
    
    
    
    
    (143
    )Decrease in minority interest
    
    
    
    
    
    
    (676
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (815
    )
    
    
    (1,491
    )Purchase of treasury stock
    
    
    
    
    
    
    75
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Ps.
    402
    
    
    
    (5,706
    )
    
    
    259
    
    
    
    (5,045
    )Balance at December 31, 2008
    
    Ps.
    7,632
    
    
    Ps.
    1,214
    
    
    Ps.
    0
    
    
    Ps.
    0
    
    
    Ps.
    402
    
    
    Ps.
    (7,544
    )
    
    Ps.
    1,404
    
    
    Ps.
    3,108
 (1)
    
    Includes the initial cumulative effect of deferred tax and the additional minimum
liability related to employee retirement obligations.(2)
    
    This dividend was recognized for accounting purposes as a capital reimbursement.   F-9




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##### Table of Contents



(Millions of Mexican pesos, except per share amounts)
 1.
    
    Activities of the CompanyVitro, S.A.B. de C.V. (Vitro) is a Mexican holding company, and together with its subsidiaries
serves multiple product markets, including construction and automotive glass; food and beverage,
wine, liquor, cosmetics and pharmaceutical glass containers. Vitros subsidiaries also produce
raw materials and equipment and capital goods for industrial use which are vertically integrated
into the Glass Containers business unit.
 2.
    
    Basis of presentation and principles of consolidation
 a)
    
    Basis of presentationThe accompanying consolidated financial statements of Vitro and its subsidiaries (the
Company) are prepared on the basis of Mexican Financial Reporting Standards (NIFs or MFRS).The financial statements and notes as of December 31, 2008 and for the year then ended,
include balances and transactions denominated in Mexican pesos of different purchasing
power, while those as of December 31, 2007 and for the years ended December 31, 2006 and
2007 are presented in Mexican pesos of purchasing power of December 31, 2007; consequently,
they are not comparable.Additionally, solely for the convenience of users, the consolidated financial statements as
of and for the year ended December 31, 2008, have been translated into United States of
America (US) dollars at the rate of Ps. 13.8325 per dollar, the rate of exchange
determined by the Banco de México (Mexicos Central Bank) as of December 31, 2008. Such
arithmetical translation should not be construed as a representation that the peso amounts
shown could be converted into US dollars at such rate or at any other rate.In the financial statements and these notes, references to pesos or Ps. correspond to
Mexican pesos, and references to dollars or US$ correspond to dollar of United States of
America (the United States).b)
    
    Consolidated subsidiariesThose companies in which Vitro either, directly or indirectly, controls are included in the
consolidated financial statements. For those companies in which Vitro has joint control,
the proportionate consolidation method is used. This method consists of consolidating on a
proportionate basis the assets, liabilities, stockholders equity and revenues and expenses
(see note 20 f). All significant intercompany balances and transactions have been
eliminated in consolidation.
  F-10




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##### Table of Contents



The investment in associated companies is valued under the equity method (see note
20h).
At December 31, 2008, the main subsidiaries the Company consolidates in each
reportable segment are:
 FLAT GLASS
    
    GLASS CONTAINERSViméxico S.A. de C.V.
    
    Vitro Envases Norteamérica, S.A. de(91.8%)
    
    C.V. (100%)
    
    CORPORATEVitro Vidrio y Cristal, S.A. de C.V.
    
    Compañía Vidriera, S.A. de C.V.
    
    Vitro Corporativo, S.A. de C.V.- Productos
de Valor Agregado en Cristal, S.A de C.V. (55%)(1)
    
    Vidriera Monterrey, S.A. de C.V.
    
    Aerovitro, S.A. de C.V.Vidriera Guadalajara, S.A. de C.V.Vitro Automotriz, S.A. de C.V.
    
    Vidriera Los Reyes, S.A. de C.V.Vidrio Plano de México, S.A. de C.V.
    
    Vidriera Querétaro, S.A. de C.V.Vitro Flex, S.A. de C.V.
    
    Vidriera Toluca, S.A. de C.V.Vidrio y Cristal del Noroeste, S.A. de C.V. (2)
    
    Vitro Packaging, Inc.Cristales Automotrices, S.A. de C.V. (51%)
    
    Empresas Comegua S.A. (49.7%) (4)Vitro Flotado Cubiertas, S.A. de C.V.
    
    Vidrio Lux, S.A.Vitro America, Inc.
    
    Industria del Álcali, S.A. de C.V.Vitro Colombia, S.A.
    
    Fabricación de Máquinas, S.A. de C.V.Vitro Cristalglass, S.L. (3)- Vitro Chaves Industria de Vidro, S.A. (60%)
 (1)
    
    In August 2007, Vitro Vidrio y Cristal, S.A. de C.V. (Vitro VyC), a subsidiary
of Viméxico, acquired 55% of the outstanding shares of Productos de Valor Agregado en
Cristal, S.A. de C.V. (PVA) (see note 20 e).(2)
    
    In July 2007, Viméxico acquired the remaining 50% of the outstanding shares
of Vitro AFG, S.A. de C.V. (Vitro AFG) from AFG Industries Inc. (AFG Industries), in
order to assume control and increase its ownership to 100%, subsequently changing its
legal name to Vidrio y Cristal del Noroeste, S.A. de C.V. (see note 20 f).(3)
    
    In July 2008, Viméxico was notified by its joint venture partner of its right
to exercise the put option related to the sale of its 40% interest in Vitro
Cristalglass. The option was officially exercised in August 2008 and beginning in
September 2008, Vitro Cristalglass is 100% consolidated (see note 20g).(4)
    
    In November 2008, the Company announced that together with its two partners,
decided to modify the corporate by-laws of Empresas Comegua, S.A. (Comegua) regarding
the control of its operations. As a result, beginning on December 2008, the Company now
accounts for its 49.7% participation in Comegua under the equity method (see note 20
h).  F-11




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##### Table of Contents



c)
    
    Translation of financial Statements from foreign subsidiariesTo consolidate financial statements of foreign subsidiaries, the accounting policies of
the foreign entity are converted to MFRS using the currency in which transactions are
recorded. The financial statements are subsequently translated to Mexican pesos
considering the following methodologies:In 2008, foreign operations whose functional currency is the same as the currency in which
transactions are recorded translate their financial statements using the following
exchange rates: 1) the closing exchange rate in effect at the balance sheet day for assets
and liabilities; 2) historical exchange rates for stockholders equity, revenues, costs
and expenses. Through 2007, the financial statements of foreign subsidiaries that
operated independently of the Company recognized the effects of inflation of the country
in which they operate and were then translated to Mexican pesos using the closing exchange
rate in effect at the balance sheet date. In both 2008 and 2007, translation effects are
recorded in stockholders equity.In 2008, foreign operations with a functional currency different from the local currency
translate their financial statements from the currency in which transactions are recorded
to the functional currency, using the following exchange rates: 1) the closing exchange
rate in effect at the balance sheet date for monetary assets and liabilities; 2)
historical exchange rates for non-monetary assets and liabilities and stockholders
equity; and 3) the rate upon accrual in the statement of income for revenues, costs and
expenses, except those arising from non-monetary items that are translated using the
historical exchange rate for the related non-monetary item. Translation effects are
recorded under comprehensive financing (cost) income. Subsequently, to translate the
financial statements from the functional currency to Mexican pesos, the following exchange
rates are used: 1) the closing exchange rate in effect at the balance sheet date for
assets and liabilities and 2) historical exchange rates for stockholders equity,
revenues, costs and expenses. Translation effects are recorded in stockholders equity.
Through 2007, the financial statements of foreign subsidiaries that operated independently
of the Company recognized the effects of inflation of the country in which they operated
and were then translated using the closing exchange rate in effect at the balance sheet
date, and the translation effects were recorded in stockholders equity.Recording and functional currencies of foreign subsidiaries are as follows:
 Company
    
    Recording Currency
    
    Functional CurrencyCompanies in United States
    
    US dollar
    
    US dollarCompanies in Europe
    
    Euro
    
    EuroCompanies in Central and South
America
    
    Local
    
    US dollar
 d)
    
    Comprehensive income (loss).-Represents changes in stockholders equity during
the year, for concepts other than distributions and activity in contributed common stock,
and is comprised of the net income (loss) of the year, plus other comprehensive income
(loss) items of the same period, which are presented directly in stockholders equity
without affecting the consolidated statements of income.Other comprehensive income (loss) items consist of the translation effects of foreign
subsidiaries and, until 2007, the shortfall in restatement of capital and the additional
minimum labor liability adjustment.
  F-12




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##### Table of Contents



e)
    
    Classification of costs and expenses.-Costs and expenses presented in the consolidated
statements of operations were classified according to their function which allows for the
analysis of the Companys gross margin.f)
    
    Income from operations- The Company continues to present operating income in the
statements of operations as it is an important financial indicator within the industry and
helps to evaluate the Companys performance. Operating income includes ordinary income and
cost of sales as well as operating expenses. Such presentation is comparable with what was
utilized for the years ended December 31, 2006 and 2007.
 3.
    
    Summary of significant accounting policiesThe accompanying consolidated financial statements have been prepared in conformity with MFRS,
which require that management make certain estimates and use certain assumptions that affect the
amounts reported in the financial statements and their related disclosures; however, actual
results may differ from such estimates. The Companys management, upon applying professional
judgment, considers that estimates made and assumptions used were adequate under the
circumstances. The significant accounting policies of the Company are as follows:
 a)
    
    Changes in accounting policies:Beginning January 1, 2008, the Company adopted the following new NIFs disclosed below,
consequently, the 2008 consolidated financial statements are not comparable with those of
2006 and 2007:
 
    
    NIF B-2, Statement of
Cash Flows(NIF B-2) - Supersedes Bulletin B-12, Statement of
Changes in Financial Position, which replaces the statement of changes in financial
position. NIF B-2 permits the presentation of such statement using either the direct
or the indirect method; the Company elected the indirect method. The statement of cash
flows is presented in nominal pesos. According to NIF B-2, this standard should be
recognized prospectively; consequently, the Company presents a statement of cash flows
for 2008 and statements of changes in financial position for 2006 and 2007.
    
    NIF B-10, Effects of
Inflation(NIF B-10) - Considers two economic environments: a)
an inflationary environment, where cumulative inflation over a three-year period is 26%
or more, in which case, the effects of inflation need to be recognized, and b)
non-inflationary environment, where inflation is less than 26% in the same period, in
which case, the effects of inflation may not be recognized in the financial statements.
Also, NIF B-10 eliminates the replacement cost and specific index valuation methods and
requires that the gain (loss) from monetary position in equity and the cumulative gain
(loss) from holding non-monetary assets be reclassified to retained earnings,
except for the gain (loss) from holding non-monetary assets that is identified with
inventories or fixed assets that have not been realized as of the effective date of this
standard. Such amounts should be maintained in stockholders equity and realized within
current earnings of the period in which such assets are depreciated or sold. The Company
determined it was impractical to identify the gain (loss) from monetary position in
equity and the cumulative gain (loss) from holding non-monetary assets relating to
unrealized assets as of January 1, 2008; therefore, on that date, the Company
reclassified the entire balance of excess (shortfall) in restatement of capital
stockholders equity of Ps. 21,154 to retained earnings. NIF B-10 establishes that this
accounting change be recognized prospectively.
  F-13




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##### Table of Contents



Since cumulative inflation over the three preceding years is 11.56%, the environment in
which the Company operates is no longer inflationary, and the Company discontinued
recognition of the effects of inflation in its financial statements beginning January 1,
2008. However, assets, liabilities and stockholders equity at December 31, 2008 and
2007 include restatement effects recognized through December 31, 2007.
    
    NIF B-15, Foreign
Currency Translation(NIF B-15) -Eliminates the classification of
foreign operations as integrated foreign operations and autonomous foreign entities and
instead establishes the concepts of recording currency, functional currency and
reporting currency. NIF B-15 establishes the procedures to translate the financial
information of a foreign operation: i) from the recording currency to the functional
currency; and, ii) from the functional currency to the reporting currency. NIF B-15
also allows an entity to present its financial statements in a reporting currency that
is different from its functional currency (See note 2 c).
    
    NIF D-3, Employee
Benefits(NIF D-3)- Incorporates current and deferred statutory
employee profit sharing (PTU) as part of its provisions and establishes that deferred
PTU must be determined using the asset and liability method established in NIF D-4,
Income Taxes, instead of only considering temporary differences that arise in the
reconciliation between the accounting result and income for PTU purposes.NIF D-3 removes the recognition of the additional minimum liability, which resulted in the
elimination of Ps. 796, of which Ps. 338 was related to the intangible labor obligation
asset and Ps. 458 was related to the additional minimum labor obligation in stockholders
equity. Additionally, the beginning balance of Ps. 42 of unrecognized actuarial gains and
losses from termination benefits was recorded against results of operations.NIF D-3 also incorporates the career salary concept in the actuarial calculation and
limits the amortization period of the following items to the lesser of five years or the
employees remaining labor life:
 
    
    The beginning balance of the transition liability for termination and retirement benefits.
    
    The beginning balance of prior service costs and plan modifications.
    
    The beginning balance of actuarial gains and losses from retirement benefits.
  F-14




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##### Table of Contents




    
    NIF D-4, Income Taxes(NIF D-4) -Eliminated the permanent difference concept;
clarified and incorporated certain definitions, and requires that the balance of the
initial cumulative effect of deferred income taxes of Ps. 1,810 be reclassified to
retained earnings.
 b)
    
    Recognition of the effects of inflation.-As mentioned in a) above, beginning January
1, 2008, the Company discontinued the recognition of the effects of inflation. Until
December 31, 2007, the Company recognized effects of inflation by adjusting its financial
statements in terms of pesos with the purchasing power of the date the balance sheets was
presented. Therefore, financial statements for the year ended 2006, which are presented for
comparative purposes, have been adjusted in terms of the purchasing power of 2007 and the
amounts differ from those originally presented.Through December 31, 2007, Vitros Mexican subsidiaries used the Indice Nacional de Precios
al Consumidor (Mexican National Consumer Price Index, or NCPI), published by Banco de Mexico
to restate the financial statements. For Vitros foreign subsidiaries the Consumer Price
Index - All Urban Consumers - All Items, Unadjusted (CPI) published by the US Labor
Department was used to restate the financial statements, and the restated financial
statements were translated into Mexican pesos using the applicable exchange rate at the end
of the last period presented, except in the case of the Companys subsidiaries located in
Spain for which it applied the Price Consumption Index (PCI), published by the National
Institute of Statistics of Spain before translation into Mexican pesos using the exchange
rate of the Euro of the last period presented.Through December 31, 2007, such recognition results mainly in inflationary gains or losses
on non-monetary and monetary items that are presented in the financial statements under the
two following captions:
 
    
    Shortfall in restatement of capital.-This item, which is an element of
stockholders equity, represents the accumulated effect of holding nonmonetary assets
and the effect of the initial monetary position gain or loss. The cumulative effect of
holding nonmonetary assets represents the difference between the specific values of
nonmonetary assets in excess of or below the increase attributable to general
inflation.
    
    Monetary position result.-Monetary position result reflects the result of holding
monetary assets and liabilities during periods of inflation. Values stated in current
monetary units decrease in purchasing power over time. This means that losses are
incurred by holding monetary assets, whereas gains are realized by maintaining monetary
liabilities. The net effect is presented in the statements of operations as part of the
total comprehensive financing result. For foreign subsidiaries the result from monetary
position is calculated using the CPI, except in the case of the Companys subsidiaries
located in Spain for which it applies the PCI.Inflation rates in Mexico for the years ended December 31, 2006, 2007 and 2008 were
4.05%, 3.76% and 6.53%, respectively.
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c)
    
    Cash and cash equivalents.-Consist mainly of bank deposits in checking accounts and
readily available investments of highly liquid short-term investments. They are valued at
the lower of acquisition cost
plus accrued yields or estimated net realizable value and are recognized in results of
operations as they accrue.d)
    
    Investments in securities.-According to its intent, from the date of acquisition, the
Company classifies its investments in securities instruments in any of the following
categories: (1) trading, when the Company intends to trade debt and equity instruments in
the short-term, before their maturity, if any. These investments are stated at fair value;
any fluctuations in the value of these investments are recognized in current earnings; (2)
held-to-maturity, when the Company intends to and is financially capable of holding
financial instruments until their maturity. These investments are recognized and maintained
at amortized cost; and (3) available-for-sale, investments that include those that are
classified neither as trading nor held-to-maturity. These investments are stated at fair
value; any unrealized gains and losses resulting from valuation, net of income tax, are
recorded as a component of other comprehensive income within stockholders equity and
reclassified to current earnings upon their sale or maturity. Through December 31, 2007,
the monetary position resulting from the effects of inflation on available-for-sale
investments is recorded as a component of other comprehensive income. Fair value is
determined using prices quoted in recognized markets. If such instruments are not traded,
fair value is determined by applying recognized technical valuation models.
 Investments in securities classified as held-to-maturity and available-for-sale are subject
to impairment tests. If there is evidence that the reduction in fair value is other than
temporary, the impairment is recognized in current earnings.Financial liabilities derived from the issuance of debt instruments are recorded at the
value of the obligations they represent. Any expenses, premiums and discounts related to the
issuance of debt financial instruments are amortized over the life of the instruments.e)
    
    Derivative financial instruments.-The Company states all derivatives at fair value in
the balance sheet, regardless of the purpose for holding them. The recognition of the
changes in the fair value of derivative instruments that are designated as a hedge for
accounting purposes depends on if they are fair value hedges or cash flow hedges.When derivatives are entered into to hedge risks, and such derivatives meet all hedging
requirements, their designation is documented describing the transactions objective,
characteristics, accounting treatment and how the ineffectiveness of the instrument will be
measured.Changes in the fair value of derivative instruments designated as hedges for accounting
purposes are recognized as follows: (1) for fair value hedges, changes in both the
derivative instrument and the hedged item are recognized in current earnings; (2) for cash
flow hedges, changes in the derivative instrument are temporarily recognized as a component
of other comprehensive income and then reclassified to current earnings when affected by the
hedged item. Any ineffective portion of the change in fair value is immediately recognized
in current earnings, within total comprehensive financing result.
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The Company uses interest rate swaps, foreign currency forward contracts and different
natural gas derivative instruments to manage its exposure to these market risks. Such
transactions are reviewed and approved by an internal risk management committee in
accordance with the risk policy established by management.Derivative financial instruments have not been designated as hedges for accounting purposes.
Changes in fair value of such derivative instruments are recognized in current earnings as a
component of total comprehensive financing result.The Company reviews all contracts entered into to identify embedded derivatives that should
be segregated from the host contract for purposes of valuation and recognition. When an
embedded derivative is identified and the host contract has not been stated at fair value
and adequate elements for its valuation exist, the embedded derivative is segregated from
the host contract, stated at fair value and classified as trading or designated as a
financial instrument for hedging. Initial valuation and changes in the fair value of the
embedded derivatives at the closing of each period are recognized in current earnings.f)
    
    Inventories and cost of sales.-Beginning in 2008, inventories are stated at the
average purchase price or at the average production price, without exceeding net realizable
value. Cost of sales is determined by applying such average amounts when the inventories
are utilized or sold at the time of the sale. Through December 31, 2007, inventories were
stated at the lower of replacement cost using the latest purchase method without exceeding
net realizable value. Cost of sales was previously restated using replacement cost or the
latest production cost at the time of the sale.g)
    
    Land, buildings, machinery and equipment.-Expenditures for land, buildings, machinery
and equipment, including renewals and improvements that extend useful lives, are
capitalized and beginning on January 1, 2008, are recorded at acquisition cost. Balances
arising from acquisitions made through December 31, 2007 were restated for the effects of
inflation by applying factors derived from the NCPI through that date. The initial balance
to apply the NCPI was the net replacement value of the Companys long-lived asset as of
December 31, 1996. For machinery and equipment purchased in a foreign country, the
restatement was based on the inflation index mentioned above and the exchange rate at the
end of each period.Beginning on January 1, 2007, the carrying value of qualifying assets includes the
capitalization of total comprehensive financing result (CFR).Depreciation is calculated using the straight-line method based on the remaining estimated
useful lives of the related assets. Depreciation begins in the month in which the asset is
placed in service. The estimated useful lives of the assets are as follows:
 YearsBuildings
    
    
    20 to 50Machinery and equipment
    
    
    3 to 30
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Maintenance and repair expenses are recorded as costs and expenses in the period incurred.h)
    
    Impairment of long-lived assets in use.The Company reviews the carrying amounts of
long-lived assets in use when an impairment indicator suggests that such amounts might not
be recoverable, considering the greater of the present value of future net cash flows or
the net sales price upon disposal. Impairment is recorded when the carrying amounts exceed
the greater of the amounts mentioned above. The impairment indicators considered for these
purposes are, among others, the operating losses or negative cash flows in the period if
they are combined with a history or projection of losses, depreciation and amortization
charged to results, which in percentage terms in relation to revenues are substantially
higher than that of previous years, obsolescence, reduction in the demand for the products
manufactured, competition and other legal and economic factors.i)
    
    Provisions.-Provisions are recognized for current obligations that result from a past
event, that are probable to result in the use of economic resources, and can be reasonably
estimated.j)
    
    Goodwill.-Goodwill represents the excess of cost over fair value of subsidiaries as of
the date of acquisition and at least once a year is subject to impairment tests. Through
December 31, 2007 it was restated using the NCPI.k)
    
    Employee retirement obligations.-Seniority premiums, pension plans and severance
payments are recognized as costs over the expected service period of employees and are
calculated by independent actuaries using the projected unit credit method, using nominal
interest rates in 2008 and real (inflation-adjusted) interest rates in 2007 and 2006.l)
    
    Share-based payment plans.-The Company has equity incentive plans that permit the
Company to grant stock options and nonvested shares (equity awards) to certain employees
and directors of the Company. The Company recognizes the fair value of equity awards
computed at the awards grant date over the period in which the requisite service is
rendered.m)
    
    Foreign currency balances and transactions.-Foreign currency transactions are recorded
at the applicable exchange rate in effect at the transaction date. Monetary assets and
liabilities denominated in foreign currency are translated into Mexican pesos at the
applicable exchange rate in effect at the balance sheet date. Exchange fluctuations are
recorded as a component of net comprehensive financing cost in the consolidated statements
of operations.n)
    
    Revenue recognition.-Revenues and related costs are recognized in the period in which
risks and rewards of ownership of the inventories are transferred to customers, which
generally coincides with the shipment of products to customers in satisfaction of orders.o)
    
    Statutory employee profit sharing (PTU).-Statutory employee profit sharing is recorded
in the results of the year in which it is incurred and presented under other income and
expenses in the accompanying consolidated statements of income. Beginning in 2008 deferred
PTU is derived from temporary differences that resulted from comparing the accounting and
tax basis of assets and liabilities and, through 2007, resulted from comparing the
accounting result and income for PTU purposes. Deferred PTU is recognized only when it can be reasonably assumed that such difference will generate
a liability or benefit, and there is no indication that circumstances will change in such a
way that the liabilities will not be paid or benefits will not be realized.
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p)
    
    Income taxes.-Income taxes, which calculated as the higher of regular income tax (ISR)
or the Business Flat Tax (IETU) are recorded in the results of the year they are incurred.
To recognize deferred income taxes, based on its financial projections, the Company
determines whether it expects to incur ISR or IETU and accordingly recognizes deferred
taxes based on the tax it expects to pay. Deferred taxes are calculated by applying the
corresponding tax rate to the applicable temporary differences resulting from comparing the
accounting and tax bases of assets and liabilities and including, if any, future benefits
from tax loss carryforwards and certain tax credits. Deferred tax assets are recorded only
when there is a high probability of recovery.Tax on assets (IMPAC), prevailing until 2007, that were expected to be recoverable are
recorded as an advance payment of ISR and presented in the balance sheet increasing the
deferred ISR asset.q)
    
    Earnings (loss) per share.-Basic earnings (loss) per common share are calculated by
dividing consolidated net income (loss) of majority stockholders by the weighted average
number of shares and equivalent common shares outstanding during the year. Diluted earnings
per share are determined by adjusting consolidated net income and common shares on the
assumption that the entitys commitments to issue or exchange its own shares would be
realized. Diluted earnings per share is not presented for periods in which the effect of
including common stock equivalents is anti-dilutive or periods in which the Company records
a net loss from continuing operations as was the case in 2006 and 2008. In 2007 diluted
earnings per share was not presented as it is the same as basic earnings per share.r)
    
    Foreign subsidiaries as economic hedges.-The Companys management designated some of
its foreign subsidiaries as economic hedges. The resulting exchange rate fluctuation is
presented in the shortfall in restatement of capital within stockholders equity to the
extent the net investment in the foreign subsidiary covers the debt. Through December 31,
2007, the result from monetary position is measured using inflation factors from the
designated subsidiarys country of origin. The effect related to this change on the results
of operations for 2006, 2007 and 2008 was a (loss) gain of Ps. (13), Ps. 16 and Ps. 601,
respectively.
 4.
    
    Discontinued operationsOn June 16, 2006, the Company completed the sale of its 51% equity ownership interest in
Vitrocrisa Holding, S. de R.L. de C.V. and subsidiaries, Crisa Libbey S.A. de C.V. and Crisa
Industrial, LLC, (together Vitrocrisa) to Libbey, Inc. (Libbey), the owner of the other 49%
equity interest, recognizing a gain on the sale of Ps. 480. The Company received proceeds of
approximately US$ 119 million from this divestiture, comprised of US$ 80 million in cash from
the sale of its equity interest, approximately US$ 28 million from the payment of intercompany
receivables and US$ 11 million from the repayment of intercompany debt. As a part of this
transaction, all of the liabilities of Vitrocrisa were assumed by
Libbey, including bank debt of US$ 62 million as of May 31, 2006, except for labor liabilities of approximately US$ 27
million. Vitrocrisa, which was previously presented as one of the Companys reportable segments,
is presented as a discontinued operation as its disposition represented the termination of a
significant activity of the Company.
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The following discloses Vitrocrisas condensed statement of operations:
 Period fromJanuary 1, toCondensed statement of operations:
    
    June 16, 2006Net sales
    
    Ps.
    1,033Cost of sales
    
    
    861Gross profit
    
    
    172Selling, general and administrative expenses
    
    
    129Operating income
    
    
    43Total comprehensive financing result
    
    
    102Other income, net
    
    
    (5
    )Income tax benefit
    
    
    (23
    )Net loss
    
    Ps.
    (31
    )
 5.
    
    Trade receivables
 a)
    
    As of December 31, 2008, the Company recognized Ps. 74 as restricted cash, which includes
cash deposited in a trust for debt and interest payments. This restricted cash is presented
in other receivables.b)
    
    Trade receivables and the balance of retained undivided interests in securitized
receivables, include an allowance for doubtful accounts and other discounts of Ps. 301 and
Ps. 412 at December 31, 2007 and 2008, respectively.c)
    
    Securitization of trade receivables:Securitization of Vitro Envases Norteamérica, S.A. de C.V. (VENA) trade receivables.- On
March 31, 2005, Compañía Vidriera, S.A. de C.V., Industria del Álcali, S.A. de C.V. and
Comercializadora Álcali, S. de R.L. de C.V., all subsidiaries of VENA, closed a five-year
non-recourse revolving accounts receivable facility, through which such companies obtained
approximately Ps. 550 (nominal amount) and US$ 19 million. The VENA subsidiaries entered
into an agreement to sell all of their trade accounts receivable, on a revolving basis, to
a trust (the Trust, a qualifying special purpose entity) that was formed prior to the
execution of this agreement for the sole purpose of buying and selling accounts receivable
and is designed to be bankruptcy remote. The Ps. 550 (nominal amount) was obtained through
the issuance of certified preferred securities (certificados bursátiles preferentes) that
trade on the Mexican Stock Exchange (BMV) issued by the Trust, and US$ 19 million in
subordinated notes issued in United States of America, which are guaranteed by the Company.
The interest payments and eventual principal reimbursement on the certificados bursátiles
preferentes and the subordinated notes are payable from the collection of the receivables originated by the VENA
subsidiaries and sold to the Trust. At December 31, 2007 and 2008 the gross receivables
sold to the Trust totaled Ps. 1,075 and Ps. 1,327, respectively, and are reflected as a
reduction of trade accounts receivable. The estimated fair value of the retained undivided
interests in securitized receivables at December 31, 2007 and 2008 was Ps. 312 and Ps. 492,
respectively. The Company has completed a sensitivity analysis on the estimated fair value
of the retained undivided interests with the objective of measuring the change in value
associated with changes in individual key variables. A 10% increase in expected credit
losses and allowance, to 2.38%, would decrease the year-end valuation by approximately Ps.
8, and a 20% increase in expected credit losses and allowances, to 2.60%, would decrease
the year-end valuation by approximately Ps. 16. Similarly, 10% or 20% adverse fluctuations
in either average receivable collection times or expected short-term commercial paper rates
would not significantly affect the recorded fair value of the retained undivided interests.
This sensitivity analysis is hypothetical and should be used with caution.
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Proceeds received by the Company from the revolving securitizations aggregated to Ps. 9,159
and Ps. 9,835 for the years ended December 31, 2007 and 2008, and are included in cash
flows from operating activities. Delinquencies on securitized receivables, representing
amounts over 60 days past due, totaled Ps. 8 and Ps. 62 as of December 31, 2007 and 2008,
respectively. The servicing of the trade receivables is provided by a third party.Securitization of Viméxico (formerly Vitro Plan)trade receivables.- On August 22, 2005,
Viméxico, the holding company of our flat glass segment, closed a private issuance of
promissory notes in the United States for US$ 21.5 million, at an interest rate of 6.5%.
Viméxico entered into an agreement to sell all of its trade accounts receivable, on a
revolving basis, to a trust (the Trust, a qualifying special purpose entity) that was
formed prior to the execution of this agreement for the sole purpose of buying and selling
accounts receivable and is designed to be bankruptcy remote. The interest payments and
eventual principal reimbursement will be provided from the collection of the receivables
originated by four subsidiaries of Viméxico and sold to the Trust, which are: Distribuidora
Nacional de Vidrio, S.A. de C.V., Vitro Flotado Cubiertas, S.A. de C.V., Vitro Automotriz,
S.A. de C.V. and Vitro Vidrio y Cristal, S.A. de C.V. At December 31, 2007 and 2008, the
gross receivables sold to the Trust totaled Ps. 580 and Ps. 577, respectively, and are
reflected as a reduction of trade accounts receivable. The estimated fair value of the
retained undivided interests in securitized receivables at December 31, 2007 and 2008 was
Ps. 346 and Ps. 261, respectively. The Company has completed a sensitivity analysis on the
estimated fair value of the retained undivided interests with the objective of measuring
the change in value associated with changes in individual key variables. A 10% increase in
expected credit losses and allowance, to 3.23%, would decrease the year-end valuation by
approximately Ps. 13, and 20% increase in expected credit losses and allowances, to 3.53%,
would decrease the year-end valuation by approximately Ps. 26. Similarly, 10% or 20%
adverse fluctuations in either average receivable collection times or expected short-term
commercial paper rates would not significantly affect the recorded fair value of the
retained undivided interests. This sensitivity analysis is hypothetical and should be used
with caution.Proceeds received by the Company from the revolving securitizations aggregated to Ps. 2,856
and US$ 152 million, and Ps. 2,592 and US$ 152 million for the years ended December 31,
2007 and 2008, respectively, and are included in cash flows from operating activities.
Delinquencies on securitized receivables, representing amounts over 60 days past due, totaled Ps. 16 and US$ 0.5
million, and Ps. 67 and US$ 3 million at December 31, 2007 and 2008, respectively. Viméxico
continues to service the securitized receivables, receiving compensation approximately
equal to its cost of such servicing plus a reasonable profit margin; accordingly, no
servicing assets or liabilities are recorded. For the years ended December 31, 2007 and
2008, the Company received servicing fees totaling Ps. 11 and Ps. 12, respectively.
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Vitro America, Inc. (Vitro America)closed in 2004 a contract for selling all its accounts
receivable, on a revolving basis, to VVP Funding, a wholly-owned subsidiary of Vitro
America. VVP Funding is a special-purpose entity that was formed prior to the execution of
this agreement for the sole purpose of buying and selling accounts receivable and is
designed to be bankruptcy remote. Vitro America and VVP Funding entered an agreement with
an unrelated major financial institution whereby VVP Funding sells, on a revolving basis
and subject to the maintenance of certain financial and receivables-based ratios, an
undivided percentage ownership in all eligible accounts receivable, as defined, for
consideration composed of cash up to a maximum account of US$ 40 million and retained
undivided interests in securitized receivables. The transfer of undivided ownership
interests from VVP Funding to the unrelated major financial institution for cash
consideration is accounted for as a sale of receivables. On April 2007, the new agreement
was signed and amended to increase the maximum selling amount from US$ 40 million to US$ 50
million. The agreement expires in April 2009 but is subject to annual renewal approval by
the financial institution. As of December 31, 2007 and 2008, the gross receivables sold
totaled approximately US$ 76 million and US$ 74 million, respectively and are reflected as
a reduction of trade accounts receivable. The estimated fair value of the retained
undivided interests in securitized receivables at December 31, 2007 and 2008 was US$ 29
million and US$ 34 million, respectively, and was determined based on expected credit
losses and allowance of 3%, expected average receivable collection time of 52 days, and
expected short-term commercial paper rates of 2.3% per annum. The Company has completed a
sensitivity analysis on the estimated fair value of the retained undivided interests with
the objective of measuring the change in value associated with changes in individual key
variables. A 10% increase in expected credit losses and allowance, to 3.3%, would decrease
the year-end valuation by approximately US$0.3 million, and 20% increase in expected credit
losses and allowances, to 3.6%, would decrease the year-end valuation by approximately
US$0.5 million. Similarly, 10% or 20% adverse fluctuations in either average receivable
collection times or expected short-term commercial paper rates would not significantly
affect the recorded fair value of the retained undivided interests. This sensitivity
analysis is hypothetical and should be used with caution.Proceeds received by the Company from the revolving securitizations aggregated to US$ 498
million and US$ 463 million for the years ended December 31, 2007 and 2008, respectively,
and are included in cash flows from operating activities. Securitization fees totaled US$ 3
million and US$ 2 million for the years ended December 31, 2007 and 2008, respectively, and
are included in general and administrative expenses. Delinquencies on securitized
receivables, representing amounts over 60 days past due, totaled US$ 12 million and US$ 15
million at December 31, 2007 and 2008, respectively with credit losses totaling US$ 2
million and US$ 3 million for the years then ended, respectively. Vitro America continues
to service the securitized receivables, receiving compensation that is approximately equal
to its cost of such servicing plus a reasonable profit margin; accordingly, no
servicing assets or liabilities are recorded. For the years ended December 31, 2007 and
2008, the Company received servicing fees totaling US$ 0.6 million each year. This
contract was terminated in January 2009.
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6.
    
    InventoriesInventories are summarized as follows:
 December 31,2007
    
    
    2008Semi-finished and finished products
    
    Ps.
    2,643
    
    
    Ps.
    2,788Raw materials
    
    
    641
    
    
    
    682Packaging materials
    
    
    49
    
    
    
    863,333
    
    
    
    3,556Spare parts
    
    
    304
    
    
    
    296Refractory
    
    
    55
    
    
    
    85Merchandise in transit
    
    
    358
    
    
    
    200Other
    
    
    70
    
    
    
    41Ps.
    4,120
    
    
    Ps.
    4,178
 7.
    
    Land, buildings, machinery and equipment
 a)
    
    Land, buildings, machinery and equipment are summarized as follows:
 December 31,2007
    
    
    2008Land
    
    Ps.
    3,645
    
    
    Ps.
    3,278Buildings
    
    
    10,585
    
    
    
    10,801Less: Accumulated depreciation
    
    
    5,804
    
    
    
    6,028Ps.
    8,426
    
    
    Ps.
    8,051Machinery and equipment
    
    Ps.
    25,403
    
    
    Ps.
    24,734Less: Accumulated depreciation
    
    
    17,591
    
    
    
    16,844Ps.
    7,812
    
    
    Ps.
    7,890
 b)
    
    In 2007 and 2008, the Company capitalized CFR of Ps. 10 and Ps. 474 respectively,
directly attributable to the acquisition of qualifying assets.c)
    
    Sale of real estate.-In December 2006, Vitro sold real estate located in Mexico City
for US$ 100 million, 80% payable on the date of sale and the remainder payable on the
delivery date of the property. Vitro has also guaranteed up to US$ 80 million in favor of
the purchaser payable in the event that the property is not delivered to the purchaser
prior to December 2009. As of the issuance date of these consolidated financial
statements, the Company has fulfilled all the requirements demanded under the contract and
expects to receive payment for the remaining 20% during the first semester of 2009.
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d)
    
    Sale of corporate building.-In November 2006, the Company sold one of the buildings
located at its corporate headquarters in Garza Garcia, N.L., Mexico, for Ps. 128.e)
    
    Fixed assets contributed to a trust.-The Company, through one of its subsidiaries,
contributed non-productive real estate assets with a book value of Ps. 1,875 as of
December 31, 2008 to a trust created for the sole purpose to sell such assets, if
necessary, in order to generate the necessary resources to pay off the principal from a
US$ 100 million line of credit obtained from a financial institution. As of December 31,
2008, the proceeds drawn against the loan were US$ 85 million.
 8.
    
    Derivative financial instrumentsDerivative financial instruments have not been designated as hedges because they do not meet
all of the requirements according to MFRS and are therefore classified as trading for
accounting purposes.The main risks to which the Company is exposed and the reason derivative financial instruments
were entered in 2008 with the sole purpose of mitigating such risks were: natural gas prices,
interest rates, foreign exchange currency fluctuations between the peso/US dollar and
peso/euro.The Company maintains a short position within each of the risks mentioned above, which were
mainly related to the following transactions: natural gas purchases, 2012 and 2017 Senior Notes
denominated in US dollars and the agreement to purchase the remaining interest in Cristalglass,
among others. As of December 31, 2008, the Company only held open derivative contracts to
mitigate the risk of changes in natural gas prices.At December 31, 2008, subject to what is expressed in the last paragraph of this note, the
Companys derivative financial instruments had the following positions: Derivative financial instruments held for trading purposes
 Fair ValueNotional
    
    
    
    
    
    
    AssetOpen derivative financial instruments
    
    MMBTUs*
    
    
    Period
    
    
    (Liability)Natural gas swaps and options with Pemex
    
    
    23,220,000
    **
    
    
    2009 - 2011**
    
    
    Ps.
    
    (433)Embedded derivatives identified in
supply contracts
    
    
    
    
    
    
    
    
    
    
    
    (21)Total derivative financial instruments
    
    
    
    
    
    
    
    
    
    Ps.
    
    (454)
 *
    
    Million British Thermal Units.**
    
    As of December 31, 2008, the Company has hedges for approximately 70% of its estimated
natural gas consumption for 2009 at an average price of approximately US$ 7.90 per MMBTU, 25%
at an average price of approximately US$ 6.80 per MMBTU for 2010 and 15% at an average price
of approximately US$ 7.32 per MMBTU for 2011.  F-24




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The Company performed a sensitivity analysis to determine its exposure to market risks for
derivative financial instruments held as of December 31, 2008. For the generation of possible
stress scenarios, the Company considered 2008 closing prices. The stress analysis was performed
applying valuation models fully accepted for these types of instruments, and considering
changes in the underlying value that imply variances of 10% and 20% of the reference price. The
additional variances affecting the valuation model such as interest rate and maturity dates,
for purposes of the analysis, were deemed constant. Before an adverse change of 10% and 20% in
the reference price, the fair value of the position of the Companys derivative financial
instruments would be affected by US$15 million and US$30 million, respectively. The following table discloses the unwound derivative financial instruments, subject to what
is discussed in the last paragraph of this note:
 Value ofunwoundpositionsSummary of unwound derivative financial instruments
    
    (Liability)Natural gas contracts
    
    Ps.
    (2,992
    )Foreign exchange options
    
    
    (1,648
    )Interest rate options
    
    
    140Total unwound derivative financial
instruments
    
    Ps.
    (4,500
    )Cash deposited as collateral
    
    
    1,177Total unwound derivative financial
instruments , net
    
    Ps.
    (3,323
    )
 In the fourth quarter of 2008 the Companys management decided to unwind a majority of its open
derivative positions that had been adversely affected due to high volatility experienced in the
financial markets, which resulted in a significant devaluation between the peso/US dollar and
peso/euro parity, as well as a significant reduction in energy prices.As of December 31, 2008, subject to what is mentioned in the last paragraph of this note,
certain positions have been unwound whose fair value is approximately US$ 325 million and have
not been paid. The cash deposited with the third parties as collateral related to these
positions is approximately US$ 85 million (not including interest) and for accounting purposes
in accordance with MFRS, is presented net of the derivative financial instruments liability as
a right of offset exists.During January and February 2009, six out of seven banks that are counterparties with whom the
Company and some of its subsidiaries entered into derivative financial instruments (the
Counterparties) have filed law suits in the Supreme Court of the State of New York demanding
the payment of the unwound positions. The Company has been notified of such demands and has
reached stay agreements with the Counterparties, agreeing on a continuance of the deadline for
the filing of its initial response and its defense to such demands, until April 24, 2009. The
Company has reached a stay agreement for the same period with the
Counterparties who have not
filed any claims until this date.The Company is still evaluating, assisted by its external advisors, the response to the claims
made by the Counterparties, the validity, amount and legality of the derivative financial
instruments described above, notwithstanding that such instruments are subject to the
applicable laws and exemptions, in Mexico and abroad, therefore, the amount stated herein are
claims made by the Counterparties that in no manner or under no concept should be considered as
an express or implied acknowledgement of the same by the Company, and neither should be
considered as a renunciation of the Company to any right, which has on purposely reserved and
continues to do so, included the right to adjust or eliminate, depending on the circumstances,
in such case, these amounts.
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9.
    
    Short-term borrowingsAt December 31, 2008, the short-term borrowings denominated in pesos totaled Ps. 308, and at
December 31 2007 and 2008 the foreign currency denominated in US dollars totaled Ps. 188 and
Ps. 875, respectively, and denominated in euros totaled Ps. 210 and Ps. 418, respectively.
During 2008, the Companys weighted average interest rate for short-term borrowings denominated
in pesos, US dollars and euros was 11.96%, 9.12% and 5.31%, respectively.10.
    
    Long-term debt
 a)
    
    Long-term debt consists of the following:
 December 31,
    
    
    December 31,2007
    
    
    2008I. Foreign Subsidiaries (payable in US dollars):Secured debt, floating interest rate based on LIBOR
plus a spread of 3.15%, principal payable in several
installments through 2009.
    
    Ps.
    52Unsecured debt, floating interest rate based on LIBOR
plus a spread between 1.25% and 1.75%, principal
payable in several installments through 2017.
    
    
    544Unsecured debt, floating interest rate based on
Fixed Term Deposits (DTF) plus a spread of 6%,
principal payable in several installments through 2013.
    
    
    8
    
    
    Ps.
    13Capital lease with fixed interest rate ranging between
6% and 7.67%, maturing in several installments through
2012.
    
    
    
    
    
    
    12II. Foreign Subsidiaries (payable in euros):Secured debt, floating interest rate based on EURIBOR
plus a spread ranging from 0.80% to 1.25%, principal
payable in several installments through 2008.
    
    
    2Unsecured debt, floating interest rate based on EURIBOR
plus a spread ranging from 0.625% to 2.5%, principal
payable in several installments through 2011.
    
    
    66EURIBOR plus a margin ranging from 1.10% to 1.25%,
with different maturity dates up to 2014.
    
    
    
    
    
    
    57Unsecured debt, floating interest rate based on
capital leases and on EURIBOR, plus a margin ranging
from 0.625% to 1.25% with different maturity dates up
to 2014.
    
    
    
    
    
    
    40Fixed interest rate capital leases ranging from 0.84%
to 3.84%, with different maturity dates up to 2010.
    
    
    
    
    
    
    11
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##### Table of Contents



December 31,
    
    
    December 31,2007
    
    
    2008III.Vitro and Mexican Subsidiaries (payable in US dollars):10.75% Senior secured guaranteed notes due in 2008.
    
    
    32611.75% Guaranteed senior unsecured notes due in 2013.
    
    
    2,434
    
    
    
    2,976
    *8.625% Guaranteed senior unsecured notes due in 2012.
    
    
    3,222
    
    
    
    4,120
    *9.125% Guaranteed senior unsecured notes due in 2017.
    
    
    7,506
    
    
    
    9,593
    *Secured debt with fixed interest rate of 7.86%
maturing in several installments through 2011. (see
note 7e)
    
    
    
    
    
    
    1,178Capital lease with fixed interest rate of 0.7494%,
maturing in several installments through 2016.
    
    
    78
    
    
    
    92IV. Vitro and Mexican Subsidiaries (payable in Mexican pesos):Unsecured medium-term notes, floating interest
rate based on 182-day Mexican treasury bonds (CETES)
plus a spread of 3.25%, principal payable in 2008 and
2009.
    
    
    282
    
    
    
    150Unsecured medium-term notes, floating interest based
on TIIE plus a spread of 2.50%, and maturing in 2011.
    
    
    
    
    
    
    400Ps.
    14,520
    
    
    Ps.
    18,642Less current maturities
    
    
    545
    
    
    
    198Less reclassification of long-term debt
    
    
    
    
    
    
    16,689
    *Ps.
    13,975
    
    
    Ps.
    1,755
 *
    
    As of December 31, 2008, the Company was in default under the indentures governing
the Senior Notes due 2012, 2013 and 2017 for US$ 300 million, US$ 216 million and US$ 700
million, respectively; therefore, Ps. 16,689 were reclassified as short-term. As a result,
other contracts of approximately US$ 81 million with maturity in 2009, entered into
default. As of December 31, 2008, the interest rates of EURIBOR, CETES, TIIE, LIBOR and DTF were
2.89%, 8.11%, 8.68%, 1.42% and 9.26%, respectively.The schedule of contractual principal payments of long-term debt as of December 31, 2008 is
as follows:
 Year ending December 31,2010
    
    Ps.
    8232011
    
    
    8272012
    
    
    322013
    
    
    292014 and thereafter
    
    
    44Ps.
    1,755
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##### Table of Contents



Certain of the Companys long-term debt agreements contain limitations including the
restriction of payments to repurchase shares, limitation on dividends, limitation on leans and
certain financial covenants that if the Company does not meet at a consolidation levels, its
ability to incur additional debt is restricted.As of December 31, 2008, the Company was restricted from incurring certain amounts of debt,
depending on the type of instrument being contracted. The capacity of refinancing is unlimited
as long as certain characteristics stipulated within the contracts are fulfilled. Additionally,
due to the fixed assets transaction mentioned in note 7 e), the Company, in order to comply
with its debt contracts, is obligated to carry out capital expenditures of Ps. 1,875 within a
period of time no longer than 1 year.The Company is continuing discussions with the Counterparties, its bondholders and its
creditors to achieve an organized financial restructuring to improve its financial position.
The Company maintains its normal operations as it seeks to achieve a restructuring of its
indebtedness. In addition, the Company has adopted cost reduction initiatives throughout its
entire organization, while optimizing production capacity according to its actual level of
operation. Also, the Company has significantly reduced its capital expenditures estimates for
2009 and for further years.Vitro debt issuance.-On February 1, 2007, Vitro S.A.B. de C.V. successfully closed an
offering, of US$ 1.0 billion of senior guaranteed notes (the Notes) principally to refinance
existing third-party debt at the Vitro holding company level, substantially all of the
third-party debt at its subsidiary VENA and certain third-party debt at some of Viméxicos
subsidiaries.The Notes were issued in two tranches: US$ 700 million of senior guaranteed notes due February
1, 2017, callable after year 2012, at a coupon of 9.125% and US$ 300 million of senior
unsecured notes due February 1, 2012, non-callable for the notes life, at a coupon of 8.625%.
The Notes pay interest semiannually and are guaranteed by VENA and its wholly-owned
subsidiaries and by Viméxico and its wholly-owned subsidiaries.
 11.
    
    Employee retirement obligations
 a)
    
    The Company has a defined benefit pension plan that covers all its personnel, which consists
of a lump sum payment or a monthly pension calculated based on the aggregate of a basic
pension, an additional seniority pension and an additional pension for equal or less earnings
than the ceiling used for the Mexican Social Security Institute.
 The retirement ages for old age are:
 
    
    Normal. - Personnel that are 65 years old with 20 or more years of service.
    
    Advanced. - Personnel that are 60 years old with a minimum of 20 or more years of
service, reducing the pension by a percentage point each year before reaching 65 years
of age.
    
    Early. - Personnel that are 50 years old with 10 or more years of service, reducing
the pension by a percentage according to the age at the moment of retirement.
    
    Aggregate of 100. - With the approval of the Technical Committee, personnel whose
aggregate age and years of service is 100.
    
    Deferred. - Personnel who do not accept retirement upon becoming 65 years old lose
all the rights to receive a pension from the plan.
  F-28




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##### Table of Contents



This plan also provides seniority premium benefits, which consist of a lump sum payment of 12
days wage for each year worked, calculated using the most recent salary, not to exceed twice
the legal minimum wage established by law, as well as severance payments, which consists of a
three month and twenty days wage payment for each year served. The related liability and
annual cost of such benefits are calculated by an independent actuary on the basis of
formulas defined in the plans using the projected unit credit method.
 b)
    
    The present values of these obligations and the rates used for the calculations are:
 December 31,2007
    
    
    2008Vested benefit obligation
    
    Ps.
    2,653
    
    
    Ps.
    2,514Nonvested benefit obligations
    
    
    666
    
    
    
    486Defined benefit obligation
    
    
    3,319
    
    
    
    3,000Plan assets at fair value
    
    
    (1,548
    )
    
    
    (684
    )Unfunded status
    
    
    1,771
    
    
    
    2,316Unrecognized items:Prior service costs and plan amendments
    
    
    (242
    )
    
    
    (222
    )Unrecognized transition obligation
    
    
    (181
    )
    
    
    (138
    )Unrecognized actuarial gains and losses
    
    
    (899
    )
    
    
    (1,495
    )Projected net liability
    
    Ps.
    449
    
    
    Ps.
    461Additional minimum liability
    
    Ps.
    796
    
    
    Ps.
    0
 As a result of adopting NIF D-3, the additional minimum liability was eliminated, which
resulted in the elimination of Ps. 796, of which Ps. 338 was related to the intangible labor
obligation asset and Ps. 458 was related to the additional minimum labor obligation in
stockholders equity.At December 31, 2007, and 2008 the plan assets presented above, include 47.5 and 53.2 million
Vitro shares, respectively.Assumptions:
 December 31,2007Real inflation
    
    
    2008adjusted rate
    
    
    Nominal rateDiscount rate
    
    
    5.00
    %
    
    
    10.25
    %Expected rate of return on plan assets
    
    
    7.00
    %
    
    
    12.25
    %Rate of compensation increase
    
    
    0.00
    %
    
    
    3.50
    %
  F-29




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##### Table of Contents



c)
    
    Net periodic cost consists of:
 December 31,2006
    
    
    2007
    
    
    2008Service cost
    
    Ps.
    73
    
    
    Ps.
    96
    
    
    Ps.
    143Interest cost
    
    
    143
    
    
    
    149
    
    
    
    268Amortization of unrecognized prior service costs
    
    
    111
    
    
    
    56
    
    
    
    72Actuarial gains and losses
    
    
    149
    
    
    
    48
    
    
    
    177Effect of reduction and early liquidation
    
    
    
    
    
    
    97Expected yield on plan assets
    
    
    (49
    )
    
    
    (88
    )
    
    
    (166
    )Net periodic cost
    
    Ps.
    427
    
    
    Ps.
    358
    
    
    Ps.
    494
 Certain unrecognized items as of December 31, 2007 are being amortized to results of operations
within a maximum period of 5 years or the employees remaining service life, if less. Through
December 31, 2007, these items were amortized to results of operations based on the employees
average remaining labor life. Starting 2008, unrecognized items incurred from January 1, 2008
are amortized to results of operations based on the employees average remaining service lives,
which is between 10 and 16 years. This change represented a charge to current earnings of Ps.
42.d)
    
    Changes in present value of the defined benefit obligation:
 2007
    
    
    2008Present value of the defined benefit
obligation as of January 1
    
    Ps.
    3,095
    
    
    Ps.
    3,319Service costs
    
    
    96
    
    
    
    143Interest costs
    
    
    149
    
    
    
    268Actual benefits paid
    
    
    (351
    )
    
    
    (526
    )Actuarial loss (gain) on the obligation
    
    
    330
    
    
    
    (112
    )Deconsolidation of Comegua
    
    
    
    
    
    
    (92
    )Present value of the defined benefit
obligation as of December 31
    
    Ps.
    3,319
    
    
    Ps.
    3,000
 e)
    
    Changes in fair value of plan assets:
 2007
    
    
    2008Fair value of plan assets as of January 1
    
    Ps.
    1,290
    
    
    Ps.
    1,548Expected return
    
    
    88
    
    
    
    166Actuarial losses and gains
    
    
    170
    
    
    
    (912
    )Contributions made by the Company
    
    
    256
    
    
    
    140Benefits paid
    
    
    (256
    )
    
    
    (258
    )Fair value of plan assets as of December 31
    
    Ps.
    1,548
    
    
    Ps.
    684
  F-30




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##### Table of Contents



Classification of plan assets as of December 31, 2008:
 Expected Yield
    
    
    Actual YieldCapital instruments (Vitro A shares)
    
    
    9.00
    %
    
    
    (63.00
    %)Other
    
    
    3.25
    %
    
    
    6.37
    %
 The rate of return on the plan assets is determined using a composition of 66% of Vitros
 shares and 34% in investments in securities.
 12.
    
    Commitments and contingencies
 a)
    
    In October 2000, several subsidiaries of Vitro, which have facilities throughout
Monterrey, Mexico and the Mexico City area, entered into a 15-year energy purchase
agreement for approximately 90 Megawatts of electricity and 1.3 million tons of steam per
year with Tractebel Energía de Monterrey, S. de R.L. de C.V.b)
    
    The Company has several non-cancelable operating lease agreements for the rent of
warehouses and equipment. Rental expense for the years ended December 31, 2006, 2007 and
2008 was Ps. 527, Ps. 541 and Ps. 646, respectively.Future minimum lease payments under these agreements are as follows:
 2009
    
    Ps.
    3182010
    
    
    3032011
    
    
    2472012
    
    
    1842013
    
    
    1582014 and thereafter
    
    
    191
 c)
    
    The Companys assets are not subject to any pending legal proceedings, nor is the
Company subject to any contingent liabilities, other than as described in the following
notes d) and e) and legal proceedings and contingent liabilities arising in the ordinary
course of business and against which the Company is adequately insured or indemnified or
which the Company believes are not material in the aggregate.d)
    
    As part of the disposal of Anchor Glass Containers Corporation (Anchor) in August
1996, in a transaction approved by the U.S. Bankruptcy Court, the Company entered into a
term sheet which contemplated an agreement pursuant to which the Company would provide to
the Pension Benefit Guaranty Corporation (PBGC), a United States governmental agency that
guarantees pensions, a limited guaranty of Anchors unfunded pension liability. No
payments would be made under such a guaranty unless the PBGC terminated any of the covered
pension plans, and the guaranty would be payable only to the extent the PBGC could not
otherwise recover the unfunded liabilities from the entity that purchased Anchors assets
New Anchor. The amount of the guaranty was originally limited to US$ 70 million. Under the
guaranty, payments would not begin until August 1, 2002, and would then generally be
payable in equal semi-annual installments over the following 10 years. Payments would not
bear interest. The amount and the term of the guaranty would be proportionately reduced if
the pension plans were terminated after January 31, 2002. Beginning February 2002, the
guaranty would be reduced by US$ 7 million semiannually until August 1, 2006, when the
guaranty would expire if the plans did not terminate.
  F-31




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##### Table of Contents



On April 15, 2002, New Anchor filed a pre-negotiated plan of reorganization under Chapter 11
of the U.S. Bankruptcy Code. On August 8, 2002, an amended plan of reorganization was
confirmed, pursuant to which the plan resulting from the merger of the covered pension plans
was terminated, and the obligations thereunder were assumed by the PBGC in exchange for
cash, securities and a commitment of reorganized New Anchor to make certain future payments.On June 20, 2003, the PBGC wrote to the Company, asserting that the plan had been terminated
effective as of July 31, 2002, with an estimated unfunded liability of US$ 219 million. The
PBGC stated that the value of the recovery from New Anchor and reorganized New Anchor
amounts to no more than US$ 122.25 million; it alleged that the recovery that it secured in
the bankruptcy was insufficient and that an underfunding in excess of the Companys limited
guaranty had occurred. Accordingly, to such letter, the PBGC demanded payments pursuant to
the term sheet of US$ 7 million on or before August 1, 2003 and of US$ 3.5 million
semiannually through August 1, 2011. The Company intends to contest this liability. There
are various issues concerning such demand and certain defenses that may be asserted by the
Company. Management is currently evaluating these issues and defenses. At this point, it is
not possible to reasonably estimate the amounts that will ultimately be payable in response
to such demand. When management is able to reasonably estimate those amounts, the Company
will establish an appropriate accounting reserve. As of this date, the Company has not
established any reserves in connection with such potential liability.e)
    
    On December 2006, Viméxico (formerly Vitro Plan) concluded at an extraordinary
shareholders meeting to approve the merger of Vitro Plan into Viméxico, which was a
creditor of Vitro Plan. As a result of the merger, all assets, rights, liabilities and
obligations of Vitro Plan were absorbed by Viméxico. Prior to the merger, Vitro Plan was a
direct 65%-owned subsidiary of Vitro and Pilkington Group LTD (Pilkington) owned the
remaining 35%. As a result of the merger, Viméxico became a 91.8%-owned subsidiary of
Vitro and Pilkington the owner of the remaining 8.2%.Although the merger became entirely effective once all the respective authorizations were
obtained and having prepared all the respective acts, publications and registrations,
Pilkington, who voted against such approval, began a legal procedure in January 2007
against the merger. In February 2008 in first instance, in June 2008 in second instance,
and finally in February 2009, the protection requested by Pilkington was denied. The
Company was notified that the opposing action exercised by Pilkington was declared
unprecedented in a final and unappealable sentence with respect to the resolutions approved
by the majority at the extraordinary general stockholders meeting in December 2006. Thus,
the foregoing resolutions were confirmed as valid and mandatory for all stockholders,
including those dissenting.However, in the first week of December 2007, the Company was notified of a new complaint
filed by Pilkington, claiming the annulment of such extraordinary general stockholders
meeting. Note that this goes against the claims sustained in the first trial and was filed
after Pilkington specifically desisted from this action after the first trial. Accordingly,
Vitro also expects to obtain a favorable resolution therefrom.
  F-32




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##### Table of Contents



f)
    
    On June 23, 2008, the Company initiated litigation against Banamex, S.A., Institución
de Banca Múltiple, a subsidiary of Grupo Financiero Banamex, S.A. and Citigroup,
requesting the court to declare null and void the acquisition and ownership of any of
Vitros common shares due to a violation of its by-laws.According to the Companys by-laws, no foreign individual or legal entity or Mexican
company without a foreign exclusion clause may own or acquire Vitro shares. Such by-laws
also specify that in the event this restriction is violated, the holding or acquisition
shall be null, and the Company shall not recognize the acquirer as an owner, nor can the
latter exercise corporate or economic rights inherent to the shares.A cautionary measure has been announced to date to freeze the approximate 53.6 million
 shares that are subject to this procedure while the trial is resolved in a final sentence,
and the Securities Depository Institute (Indeval) has been requested to comply with such
measure.
 13.
    
    Foreign currency operations
 a)
    
    At December 31, 2008, the foreign currency denominated assets and liabilities of the
Companys Mexican subsidiaries consist of the following:
 Millions ofUS dollars
    
    
    Mexican pesosMonetary assets
    
    US$
    129
    
    
    Ps.
    1,784Inventories
    
    
    20
    
    
    
    278Fixed assets
    
    
    230
    
    
    
    3,178Monetary liabilities
    
    
    1,771
    
    
    
    24,501
 b)
    
    Foreign currency operations of the Companys Mexican subsidiaries for the year ended
December 31, 2008, consisted of the following:
 Millions ofUS dollars
    
    
    Mexican pesosExports
    
    US$
    600
    
    
    Ps.
    6,547Imports
    
    
    298
    
    
    
    3,321Interest expense, net
    
    
    140
    
    
    
    1,591
  F-33




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##### Table of Contents



c)
    
    The condensed financial information of the principal foreign subsidiaries of the
Company at December 31, 2008, consisted of the following:
 Central andUnited States
    
    
    South America
    
    
    EuropeNet sales
    
    Ps.
    8,844
    
    
    Ps.
    2,740
    
    
    Ps.
    2,103Operating income
    
    
    120
    
    
    
    206
    
    
    
    79Total assets
    
    
    3,524
    
    
    
    709
    
    
    
    3,776Total liabilities
    
    
    1,148
    
    
    
    164
    
    
    
    1,195Capital expenditures
    
    
    66
    
    
    
    260
    
    
    
    89
 d)
    
    The exchange rates of the Mexican peso against the US dollar and the Euro, used for
purposes of the Companys consolidated financial statements at the following dates were:
 US dollar
    
    
    EuroDecember 31, 2006
    
    Ps.
    10.8116
    
    
    Ps.
    14.2680December 31, 2007
    
    
    10.8662
    
    
    
    15.9526December 31, 2008
    
    
    13.8325
    
    
    
    19.2534
 On March 30, 2009, the exchange rate was Ps. 14.3855 per US dollar and Ps. 19.1226 per
Euro.
 14.
    
    Stockholders equity
 a)
    
    The capital stock of the Company consists of 386,857,143, ordinary, nominative, fully
paid common shares, without par value, at December 31, 2007 and 2008.b)
    
    On September 27, 2006, at an ordinary shareholders meeting, the Companys
shareholders approved an increase of Ps. 550 (nominal) in the variable portion of the
Companys capital stock. This capital increase was completed on October 31, 2006, through
the issuance of 62,857,143 new shares at a price of Ps. 8.75 per share. The offering was
made primarily to current shareholders and holders of the Companys ADRs.c)
    
    The Company maintains an Employee Stock Option Plan established in March 1998 (the
Plan). The Plan specifies the amount of shares, time and initial exercise price, which is
equal to the average closing price on the BMV of the common shares on the 20 days prior
to the grant date, except for options issued during 2000, 2001 and 2002, which were Ps.
11.00, Ps. 8.27 and Ps. 7.53, respectively. The vesting period of the options is five
years and the life of such options is 10 years.
  F-34




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##### Table of Contents



The following table summarizes the activity relating to the Plan:
 Total1998
    
    
    1999
    
    
    2000
    
    
    2001
    
    
    1998*
    
    
    2002
    
    
    outstandingOptions granted
during the year
    
    
    2,813,300
    
    
    
    2,893,000
    
    
    
    4,851,900
    
    
    
    3,204,800
    
    
    
    940,950
    
    
    
    3,941,950Options cancelled
or exercised at
December 31, 2008
    
    
    2,813,300
    
    
    
    1,059,500
    
    
    
    3,986,950
    
    
    
    2,827,950
    
    
    
    478,050
    
    
    
    3,208,150Options outstanding at
December 31, 2008
    
    
    0
    
    
    
    1,833,500
    
    
    
    864,950
    
    
    
    376,850
    
    
    
    462,900
    
    
    
    733,800
    
    
    
    4,272,000Initial exercise price
    
    
    
    
    
    Ps.
    14.88
    
    
    Ps.
    11.00
    
    
    Ps.
    8.27
    
    
    Ps.
    13.00
    
    
    Ps.
    7.53Exercise price at
December 31, 2008
    
    
    
    
    
    Ps.
    33.86
    
    
    Ps.
    11.00
    
    
    Ps.
    8.27
    
    
    Ps.
    13.00
    
    
    Ps.
    7.53
 *
    
    During the year ended 2001, the Company modified the price of the 940,940 options
granted in 1998 and its maturity date to 2011. The closing price of the Companys shares on the BMV on December 31, 2008 was Ps. 8.00.
 The estimated fair value of the options was made on the grant date using the Black-Scholes
option-pricing model.
 d)
    
    Retained earnings include the statutory legal reserve. Mexican General Corporate Law
requires that at least 5% of net income of the year be transferred to the legal reserve
until the reserve equals 20% of capital stock at par value (historical pesos). The legal
reserve may be capitalized but may not be distributed unless the entity is dissolved. The
legal reserve must be replenished if it is reduced for any reason. At December 31, 2007and
2008, the legal reserve, in historical pesos, was Ps. 72.
 e)
    
    At December 31, 2007 and 2008, the Company held 45,816,783 and 40,204,310,
respectively, of treasury shares and included 17,464,614 and 11,739,741 shares held by
the Stock Option Trust (see note 14 c) at December 31, 2007 and 2008, respectively.
 f)
    
    Stockholders equity, except restated paid-in capital and tax retained earnings, will
be subject to income tax at the rate in effect when a dividend is distributed. Any tax
paid on such distribution may be credited against annual and estimated income taxes of the
year in which the tax on dividends is paid and the following two fiscal years. At
December 31, 2008, the majority interest stockholders equity tax account, corresponding
to the contributed capital account and the net tax income account was Ps. 2,427 and Ps.
2,432, respectively.
 g)
    
    Dividends declared and paid:
 Dividend AmountStockholders meeting date
    
    Nominal Value
    
    
    Restated Value
    
    
    Payment DateApril 27, 2006
    
    Ps.
    89
    
    
    Ps.
    95
    *
    
    May 2006March 28, 2007
    
    
    133
    
    
    
    136
    *
    
    April 2007April 17, 2008
    
    
    143
    
    
    
    143
    
    
    May 2008
 *
    
    Amounts are restated for inflationary effect until December 31, 2007.  F-35




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##### Table of Contents



h)
    
    Minority interest in consolidated subsidiaries consists of the following:
 December 31,2007
    
    
    2008Capital stock
    
    Ps.
    479
    
    
    Ps.
    457Paid-in capital
    
    
    
    
    
    
    616Shortfall in restatement of capital
    
    
    (183
    )Translation effects of foreign subsidiaries
    
    
    
    
    
    
    235Retained earnings
    
    
    1,664
    
    
    
    96Ps.
    1,960
    
    
    Ps.
    1,404
 i)
    
    Majority stockholders equity consists of the following:
 December 31, 2008Nominal
    
    
    
    
    
    
    RestatedValue
    
    
    Restatement*
    
    
    ValueCapital stock
    
    Ps.
    387
    
    
    Ps.
    7,245
    
    
    Ps.
    7,632Treasury stock
    
    
    (223
    )
    
    
    (324
    )
    
    
    (547
    )Paid-in capital
    
    
    471
    
    
    
    1,290
    
    
    
    1,761Translation effects of foreign subsidiaries
    
    
    402
    
    
    
    
    
    
    
    402(Accumulated deficit) retained earnings
    
    
    (10,108
    )
    
    
    2,564
    
    
    
    (7,544
    )Ps.
    (9,071
    )
    
    Ps.
    10,775
    
    
    Ps.
    1,704
 *
    
    Amounts are restated for inflationary effect until December 31, 2007. 15.
    
    Total comprehensive financing result
 The following represents a summary of the Companys total comprehensive financing result for
the periods presented:
 Year ended December 31,2006
    
    
    2007
    
    
    2008Interest expense on debt denominated in US dollars
    
    Ps.
    1,634
    
    
    Ps.
    1,660
    
    
    Ps.
    1,639Interest expense on debt denominated in pesos
    
    
    117
    
    
    
    34
    
    
    
    52Interest expense on debt denominated in UDIs
    
    
    63Restatement of UDIs
    
    
    20Interest income
    
    
    (134
    )
    
    
    (175
    )
    
    
    (58
    )Derivative financial instruments
    
    
    337
    
    
    
    201
    
    
    
    3,766Exchange loss
    
    
    224
    
    
    
    94
    
    
    
    3,222Gain from monetary position
    
    
    (440
    )
    
    
    (471
    )Other financing expenses, net
    
    
    455
    
    
    
    317
    
    
    
    456Ps.
    2,276
    
    
    Ps.
    1,660
    
    
    Ps.
    9,077
  F-36




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##### Table of Contents



16.
    
    Other expenses (income), net
 The following represents a summary of the Companys other expenses (income), net for the periods
presented:
 Year ended December 31,2006
    
    
    2007
    
    
    2008Restructuring charges
    
    Ps.
    61
    
    
    Ps.
    7
    
    
    Ps.
    185Impairment of long-lived assets
    
    
    393
    
    
    
    122
    
    
    
    196(Gain) loss from sale of long-lived assets
    
    
    (795
    )
    
    
    47
    
    
    
    (3
    )(Gain) loss from sale of subsidiaries
    
    
    (68
    )
    
    
    11Early extinguishment of employee retirement
obligations
    
    
    8
    
    
    
    97
    
    
    
    69Fees and costs for extinguishment of debt
    
    
    
    
    
    
    488Statutory employee profit sharing
    
    
    55
    
    
    
    54
    
    
    
    10Other
    
    
    117
    
    
    
    43
    
    
    
    38Ps.
    (229
    )
    
    Ps.
    869
    
    
    Ps.
    495
 17.
    
    Tax loss carryforwards
 At December 31, 2008, tax loss carryforwards consist of the following:
 Tax loss carryforwardsMajority
    
    
    MinorityExpiration Year
    
    interest
    
    
    interest2010
    
    Ps.
    51
    
    
    Ps.
    42011
    
    
    120
    
    
    
    12012
    
    
    234
    
    
    
    22013
    
    
    762014
    
    
    2952015
    
    
    22016
    
    
    2
    
    
    
    12017
    
    
    12018
    
    
    3,138
    
    
    
    90Ps.
    3,919
    
    
    Ps.
    98
  F-37




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##### Table of Contents



18.
    
    Income and asset taxes
 a)
    
    In accordance with the Mexican tax law, in 2008 the Company was subject to ISR and
IETU, and in 2007 and 2006, to ISR and IMPAC. The Company is subject to ISR, and through
2007, to IMPAC on a consolidated basis in proportion to Vitros voting interest in its
subsidiaries. As of 2006, the tax rate was 29% and beginning in 2007 and subsequently is
28%.
 In 2007, IMPAC was calculated by applying 1.25% to the value of the assets of the year,
without deducting any debt amounts. Through 2006, IMPAC was calculated by applying 1.8% on
the net average of the majority of restated assets less certain liabilities, including
liabilities payable to banks and foreign entities. IMPAC was payable only to the extent
that it exceeded ISR payable for the same period.
 On October 1, 2007, the IETU was enacted and went into effect on January 1, 2008. IETU
applies to the sale of goods, the provision of independent services and the granting of use
or enjoyment of goods, according to the terms of the IETU law, less certain authorized
deductions. The IETU payable is calculated by subtracting certain tax credits from the tax
determined. Revenues, as well as deductions and certain tax credits, are determined based
on cash flows generated beginning January 1, 2008. The IETU law establishes that the IETU
rate will be 16.5% in 2008, 17.0% in 2009, and 17.5% in 2010 and subsequently. In addition,
as opposed to ISR which allows for fiscal consolidation, companies that expect to incur
IETU must file individual returns.
 Based on its financial projections, the Company estimates that it will pay only ISR.
Therefore, the enactment of IETU did not have any effects in its financial information
because it only recognizes deferred ISR.
 The foreign subsidiaries calculate their ISR based on the individual results of each
subsidiary pursuant to the specific tax regimes in each country.
 b)
    
    The income and asset tax expense (benefit) included in the Companys results are:
 Year ended December 31,2006
    
    
    2007
    
    
    2008Income tax:Current
    
    Ps.
    179
    
    
    Ps.
    395
    
    
    Ps.
    123Deferred
    
    
    (208
    )
    
    
    (145
    )
    
    
    (2,298
    )(29
    )
    
    
    250
    
    
    
    (2,175
    )Asset tax
    
    
    257
    
    
    
    (206
    )Ps.
    228
    
    
    Ps.
    44
    
    
    Ps.
    (2,175
    )
  F-38




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##### Table of Contents



c)
    
    Net deferred tax assets presented in the consolidated balance sheets consist of the
following:
 December 31,2007
    
    
    2008Allowance for doubtful accounts
    
    Ps.
    66
    
    
    Ps.
    42Reserve for employee retirement obligations
    
    
    364
    
    
    
    231Tax loss carryforwards
    
    
    229
    
    
    
    1,201Intangible asset
    
    
    499
    
    
    
    667Fixed assets
    
    
    (617
    )
    
    
    (18
    )Derivative financial instruments
    
    
    192
    
    
    
    1,441Inventories
    
    
    43
    
    
    
    35Other
    
    
    270
    
    
    
    407Total
    
    
    1,046
    
    
    
    4,006Valuation allowance
    
    
    (252
    )
    
    
    (599
    )Ps.
    794
    
    
    Ps.
    3,407Balance:Deferred tax assets
    
    Ps.
    1,030
    
    
    Ps.
    3,418Deferred tax liabilities
    
    
    (236
    )
    
    
    (11
    )Ps.
    794
    
    
    Ps.
    3,407
 d)
    
    Following is a reconciliation between the Companys effective income tax rate and the
statutory rate:
 Year ended December 31,2006
    
    
    2007
    
    
    2008Effective income tax rate
    
    
    326
    %
    
    
    25
    %
    
    
    28
    %Asset tax presented as income tax
    
    
    (303
    )
    
    
    120Intangible asset
    
    
    
    
    
    
    (28
    )
    
    
    (2
    )Sale of subsidiaries
    
    
    462
    
    
    
    8Difference between tax and
accounting basis for monetary gain
    
    
    (23
    )
    
    
    (2
    )
    
    
    4Foreign subsidiaries
    
    
    25
    
    
    
    (5
    )
    
    
    (3
    )Effect of reduction in statutory rate on
deferred ISR
    
    
    (141
    )Valuation allowance
    
    
    (198
    )
    
    
    (15
    )
    
    
    4Nondeductible expenses
    
    
    (22
    )
    
    
    (10
    )Other
    
    
    (97
    )
    
    
    (65
    )
    
    
    (3
    )Statutory income tax rate
    
    
    29
    %
    
    
    28
    %
    
    
    28
    %
  F-39




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##### Table of Contents



e)
    
    The deferred income tax effect, reduced by the movements in stockholders equity for
insufficiency in restated stockholders equity, the equity effect of the additional labor
liability as well as the exchange loss capitalized in the translation effect of foreign
subsidiaries is presented as follows:
 Year ended December 31,2006
    
    
    2007
    
    
    2008Shortfall in restatement of capital
    
    Ps.
    26
    
    
    Ps.
    119Minimum labor liability
    
    
    19
    
    
    
    (126
    )Translation effects of foreign subsidiaries
    
    
    
    
    
    
    
    
    
    Ps.
    234Ps.
    45
    
    
    Ps.
    (7
    )
    
    Ps.
    234
 19.
    
    Related party transactions
  a)
    
    Arrangements with Respect to Real Estate.-On certain occasions, until October 2008,
the Company used real estate owned by relatives of certain directors and senior managers to
meet with customers, suppliers or for other business purposes. The Company paid an annual
fee for the right to use these properties for a specified number of days per year.
Additionally, it had agreed to pay maintenance and operating costs. In 2006, 2007 and 2008,
the aggregate amounts paid as annual fees were approximately Ps. 10, Ps. 10, and Ps. 8,
respectively.b)
    
    Goods Sold.-The Company sells flat glass products and glass containers to certain
companies whose shareholders are directors and senior managers. In 2006, 2007 and 2008, the
aggregate amount of these sales was Ps. 58, Ps. 69 and Ps. 71, respectively.Comegua, an associated company, sells glass containers to Cervecería Centroamericana and to
Cervecería de Costa Rica, its partners in such company. In 2006, 2007 and 2008, the aggregate
amount of these sales was US$ 11 million, US$ 9 million and US$ 20 million, respectively.c)
    
    Purchase of supermarket coupons.-The Company purchases supermarket coupons for its
employees at a supermarket store in which one member of its board of directors is a
shareholder. In 2008, the amount of these purchases was Ps. 80.d)
    
    Sale of Real Estate.-In 2007, a member of the Companys Board of Directors, purchased
an unused parcel of real estate from one of its subsidiaries. The price of the real estate
was US$ 5.4 million. The Company received several offers for the property and such member
of the Board made the highest offer. The transaction was approved by the Companys Audit
Committee in accordance with its charter at the time.e)
    
    Compensation.-For the years ended December 31, 2006, 2007 and 2008, the aggregate
compensation the Company paid to its directors and senior managers was approximately Ps.
199, Ps. 182 and Ps. 183, respectively. This amount includes fees, salaries, the use of
certain assets and services, and variable compensation.
 
  F-40




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##### Table of Contents



20.
    
    Business dispositions and acquisitions
 a)
    
    Sale of Química M, S.A. de C.V. (Química M).-In March 2006, the Company sold its
51% interest in Química M, to Solutia Inc. for US$ 20 million in cash.b)
    
    Acquisition of Vidrios Panameños, S. A. (VIPASA).-In April 2006, the Company
announced that in a joint effort with its Central American partners and through its
subsidiary Comegua, now an associated company, it had completed the acquisition of VIPASA,
a glass container company located in Panama for a purchase price of US$ 21 million.c)
    
    Sale of Vitrocrisa.-As disclosed in note 4, in June 2006 the Company completed the
sale of its 51% interest in Vitrocrisa to Libbey, recognizing a gain on the sale of Ps.
480.d)
    
    Visteon Corporations retirement from Vitro Flex, S.A. de C.V. (Vitro Flex).- In
September 2006, Viméxico (formerly Vitro Plan), Vitros flat glass division, and Visteon
Inc. (Visteon) ended their joint venture agreement in Vitro Flex through a reimbursement
and cancellation of Visteons capital investment. The amount paid for the 38% stake in
Vitro Flex was US$ 9.4 million. The difference between the transaction value and the book
value resulted in a credit of Ps. 69, recorded in majority stockholders equity. Vitro
Flex together with Vitro Automotriz (VAU), now directly manages their relationship with
all Vitros automotive costumers.e)
    
    Acquisition of 55% of the shares of PVA.-In August 2007, Vitro VyC acquired 55% of
the outstanding shares of PVA, a company dedicated to the installation of value added
crystal products for Ps. 110. As a result of the preliminary purchase price allocation,
the Company recorded goodwill of Ps. 85 in 2007. During the first half of 2008, pursuant
to the guidelines in NIF B-7 Business Acquisitions, the items comprising such goodwill
were analyzed further and Ps. 61 was reclassified as an intangible asset.f)
    
    Acquisition of 50% of the shares of Vidrio y Cristal del Noroeste, S.A. de C.V.
(formerly Vitro AFG).-In July 2007, Viméxico exercised its option to acquire the remaining
50% of the outstanding shares of Vitro AFG from its joint venture partner AFG Industries, a
subsidiary of Asahi Glass Co. Limited (a Japanese company) for a purchase price of US$ 6
million. In accordance with Bulletin B-7, the Company recognized an impairment charge of
Ps. 91 related to the termination of the joint venture with AFG Industries.With the closing of this transaction, Viméxico terminated the joint venture and became the
wholly-owner of this entity, located in Mexicali, Baja California, Mexico, whose primary
operations include the manufacturing, processing and distribution of flat glass, thereby
increasing Vitros available production capacity by 78,000 tons on an annual basis.g)
    
    Purchase of 40% of Vitro Cristalglass.-In July 2008, Viméxico was notified by its
joint venture partner of its right to exercise the put option related to the sale of its
40% interest in Vitro Cristalglass. The option was officially exercised in August 2008 and
beginning in September 2008, Vitro Cristalglass is 100%
consolidated. The purchase price agreed upon was 27.4 million euros (approximately Ps.
527). The difference between the purchase price and the book value resulted in a charge of $
60, recorded in majority stockholders equity (see note 23 b).
  F-41




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##### Table of Contents



h)
    
    Deconsolidation of Comegua.-In November 2008, the Company announced that together with
its two Central American partners, decided to modify the corporate by-laws of Comegua
regarding the control of its operations. As a result, beginning on that date, the Company
now accounts for its 49.7% participation in Comegua under the equity method.Comeguas relevant data is as follows:
 December 31, 2007
    
    
    December 31, 2008Condensed Consolidated Balance Sheets:Assets:Cash and cash equivalents
    
    Ps.
    147
    
    
    Ps.
    74Trade receivables
    
    
    569
    
    
    
    775Inventories
    
    
    400
    
    
    
    505Current assets
    
    
    1,116
    
    
    
    1,354Fixed assets and other long-term assets
    
    
    1,749
    
    
    
    2,366Total assets
    
    Ps.
    2,865
    
    
    Ps.
    3,720Liabilities:Trade payables
    
    Ps.
    335
    
    
    Ps.
    474Short-term borrowings
    
    
    205
    
    
    
    389Current liabilities
    
    
    540
    
    
    
    863Long-term debt and other liabilities
    
    
    787
    
    
    
    851Total liabilities
    
    Ps.
    1,327
    
    
    Ps.
    1,714
 Period fromJanuary 1 toYear ended December 31,
    
    
    November 30,
    
    
    December2006
    
    
    2007
    
    
    2008
    
    
    2008Condensed Consolidated
Income Statements:Net sales
    
    Ps.
    2,297
    
    
    Ps.
    2,127
    
    
    Ps.
    2,159
    
    
    Ps.
    233Cost of sales
    
    
    1,600
    
    
    
    1,546
    
    
    
    1,584
    
    
    
    163Gross profit
    
    
    697
    
    
    
    581
    
    
    
    575
    
    
    
    70Selling, general and
administrative expenses
    
    
    514
    
    
    
    437
    
    
    
    449
    
    
    
    50Operating income
    
    
    183
    
    
    
    144
    
    
    
    126
    
    
    
    20Total comprehensive
financing result
    
    
    31
    
    
    
    30
    
    
    
    56
    
    
    
    8Other expenses (income), net
    
    
    129
    
    
    
    51
    
    
    
    17
    
    
    
    (2
    )Income tax expense
    
    
    5
    
    
    
    24
    
    
    
    23
    
    
    
    4Net income
    
    Ps.
    18
    
    
    Ps.
    39
    
    
    Ps.
    30
    
    
    Ps.
    10
  F-42




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##### Table of Contents



21.
    
    Business segment data
    Segment
    
    Principal productsGlass Containers
    
    Glass containers, sodium carbonate and bicarbonate, capital goods,
precision components and molds for glass industry.Flat Glass
    
    Flat glass for the construction and automotive industries.
  Glass
    
    
    Flat
    
    
    Corporate &Containers
    
    
    Glass
    
    
    Eliminations
    
    
    ConsolidatedDecember 31, 2006:Net sales
    
    Ps.
    14,068
    
    
    Ps.
    13,462
    
    
    Ps.
    433
    
    
    Ps.
    27,963Intersegment sales
    
    
    86
    
    
    
    1
    
    
    
    
    
    
    
    87Consolidated net sales
    
    
    13,982
    
    
    
    13,461
    
    
    
    433
    
    
    
    27,876Operating income
    
    
    1,853
    
    
    
    418
    
    
    
    (154
    )
    
    
    2,117Total assets
    
    
    13,937
    
    
    
    11,401
    
    
    
    3,357
    
    
    
    28,695Capital expenditures
    
    
    894
    
    
    
    338
    
    
    
    20
    
    
    
    1,252Depreciation and amortization
    
    
    1,160
    
    
    
    595
    
    
    
    40
    
    
    
    1,795Goodwill
    
    
    3
    
    
    
    785
    
    
    
    
    
    
    
    788Impairment
    
    
    55
    
    
    
    334
    
    
    
    4
    
    
    
    393
  F-43




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##### Table of Contents



Glass
    
    
    Flat
    
    
    Corporate &Containers
    
    
    Glass
    
    
    Eliminations
    
    
    ConsolidatedDecember 31, 2007:Net sales
    
    Ps.
    14,676
    
    
    Ps.
    13,605
    
    
    Ps.
    361
    
    
    Ps.
    28,642Intersegment sales
    
    
    37
    
    
    
    14
    
    
    
    
    
    
    
    51Consolidated net sales
    
    
    14,639
    
    
    
    13,591
    
    
    
    361
    
    
    
    28,591Operating income
    
    
    2,054
    
    
    
    782
    
    
    
    (132
    )
    
    
    2,704Total assets
    
    
    17,040
    
    
    
    12,835
    
    
    
    2,312
    
    
    
    32,187Capital expenditures
    
    
    2,328
    
    
    
    324
    
    
    
    43
    
    
    
    2,695Depreciation and amortization
    
    
    870
    
    
    
    480
    
    
    
    64
    
    
    
    1,414Goodwill
    
    
    3
    
    
    
    870
    
    
    
    
    
    
    
    873Impairment
    
    
    31
    
    
    
    91
    
    
    
    
    
    
    
    122December 31, 2008:Net sales
    
    Ps.
    15,524
    
    
    Ps.
    13,230
    
    
    Ps.
    342
    
    
    Ps.
    29,096Intersegment sales
    
    
    40
    
    
    
    43
    
    
    
    
    
    
    
    83Consolidated net sales
    
    
    15,484
    
    
    
    13,187
    
    
    
    342
    
    
    
    29,013Operating income
    
    
    1,661
    
    
    
    186
    
    
    
    (137
    )
    
    
    1,710Total assets
    
    
    18,093
    
    
    
    14,352
    
    
    
    693
    
    
    
    33,948Capital expenditures
    
    
    1,538
    
    
    
    255
    
    
    
    5
    
    
    
    1,798Depreciation and amortization
    
    
    897
    
    
    
    484
    
    
    
    88
    
    
    
    1,469Goodwill
    
    
    
    
    
    
    771
    
    
    
    
    
    
    
    771Impairment
    
    
    
    
    
    
    196
    
    
    
    
    
    
    
    196
  Year ended December 31,2006

    
    2007
    
    
    2008US$
    556

    US$
    601
    
    
    US$
    600
  Year ended December 31,2006
    
    
    2007
    
    
    2008Net sales (1) to customers in:Mexico
    
    Ps.
    11,875
    
    
    Ps.
    12,707
    
    
    Ps.
    12,831All foreign countries, mainly the
United States, Canada and Europe
    
    
    16,001
    
    
    
    15,884
    
    
    
    16,182Consolidated
    
    Ps.
    27,876
    
    
    Ps.
    28,591
    
    
    Ps.
    29,013
 (1)
    
    Net sales are attributed to countries based on the location of the
customer.   F-44




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##### Table of Contents



December 31,2006
    
    
    2007
    
    
    2008Land and buildings, machinery
and equipment:Mexico
    
    Ps.
    13,842
    
    
    Ps.
    14,960
    
    
    Ps.
    15,816All foreign countries, mainly the
United States, Europe,
Central and South America
    
    
    2,481
    
    
    
    2,881
    
    
    
    1,457Consolidated
    
    Ps.
    16,323
    
    
    Ps.
    17,841
    
    
    Ps.
    17,273
 22.
    
    New accounting principles
 a)
    
    As part of its efforts to converge Mexican standards converge with international standards,
in 2008, the Mexican Board for Research and Development of Financial Information Standards
(CINIF) issued the following NIFs and Interpretations of Financial Reporting Standards (INIF),
which become effective for fiscal years beginning on January 1, 2009:
 
    
    NIF B-7, Business Acquisitions
    
    NIF B-8, Consolidated or Combined Financial Statements
    
    NIF C-7, Investment in Associated Companies and other Permanent Investments
    
    NIF C-8, Intangible Assets
    
    NIF D-8, Share-based Payments
    
    INIF 16, Transfer of Primary Financial Instruments for Trading to Another
Classification(early adoption as of October 1, 2008 is permitted)
  Business Acquisitions
 Consolidated or Combined Financial Statements
 Investments in Associated Companies and other Permanent Investments
  F-45




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##### Table of Contents



Intangible Assets
 Share-based Payments
 Transfer of Primary Financial Instruments for Trading to Another Classification
  b)
    
    International financial reporting standards
  23.
    
    Subsequent Events
 a)
    
    Breach of interest and capital payments
    F-46




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##### Table of Contents



b)
    
    Purchase payment negotiation for 40% of Vitro Cristalglass
  24.
    
    Authorization of financial statements issuance
  
 
   F-47




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##### Table of Contents



25.
    
    Differences between MFRS and U.S. generally accepted accounting principlesThe Companys consolidated financial statements are prepared in accordance with MFRS which differ
in certain significant respects from accounting principles generally accepted in the United
States of America (U.S. GAAP). Prior to 2008, the MFRS consolidated financial statements include
the effects of inflation as provided for under Bulletin B-10, Recognition of the Effects of
Inflation in Financial Information, whereas financial statements prepared under U.S. GAAP are
presented on a historical cost basis. The application of Bulletin B-10 represented a
comprehensive measure of the effects of price level changes in the inflationary Mexican economy
and, as such, was considered a more meaningful presentation than historical cost-based financial
reporting for both Mexican and U.S. accounting purposes.Beginning on January 1, 2008 as disclosed in note 3a), in accordance with new NIF B-10, Effects
of Inflation, the Company discontinued the recognition of inflation in its financial statements
under MFRS as the cumulative inflation for the preceding three years was less than 26%. This
resulted in the elimination of certain reconciling items between MFRS and U.S. GAAP in 2008.
Notwithstanding the prior comments, the following reconciliation to U.S. GAAP for the years ended
December 31, 2007 and 2006 does not include the reversal of the adjustments required under
Bulletin B-10, as permitted by the rules and regulations of the Securities and Exchange
Commission (the SEC).The other differences between MFRS and U.S. GAAP and the effect on consolidated net income (loss)
and consolidated stockholders equity are presented below:
 2008(US$millions)Year ended December 31,
    
    
    (Convenience2006
    
    
    2007
    
    
    2008
    
    
    Translation)(Ps. millions)Reconciliation of Net Income (Loss):Net income (loss) of majority interest as reported under MFRS
    
    Ps.
    401
    
    
    Ps.
    (13
    )
    
    Ps.
    (5,706
    )
    
    US$
    (413
    )U.S. GAAP adjustments:Effect of the adjustments below on minority interest (see a)
    
    
    26
    
    
    
    17
    
    
    
    39
    
    
    
    3Deferred income taxes (see b)
    
    
    54
    
    
    
    55
    
    
    
    (707
    )
    
    
    (51
    )Negative goodwill and reduction in depreciation expense (see c)
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    Deferred workers profit sharing (see d)
    
    
    (51
    )
    
    
    
    
    
    
    
    
    
    
    Monetary position result on deferred income taxes and deferred
workers profit sharing (see e)
    
    
    44
    
    
    
    31
    
    
    
    
    
    
    
    Capitalization of interest (see f)
    
    
    72
    
    
    
    16
    
    
    
    (358
    )
    
    
    (26
    )Amortization of capitalized interest (see f)
    
    
    (36
    )
    
    
    (36
    )
    
    
    (39
    )
    
    
    (3
    )Goodwill (see g)
    
    
    
    
    
    
    
    
    
    
    (43
    )
    
    
    (3
    )Effect of applying Bulletin B-10 (see h)
    
    
    (187
    )
    
    
    (36
    )
    
    
    (3
    )
    
    
    Effect of applying Bulletin B-15 (see i)
    
    
    34
    
    
    
    
    
    
    
    
    
    
    
    Effect of SFAS No. 158 (see m)
    
    
    
    
    
    
    
    
    
    
    23
    
    
    
    2Fair value of financial instruments (see j)
    
    
    
    
    
    
    
    
    
    
    75
    
    
    
    5Discontinued operations (see k)
    
    
    (57
    )
    
    
    26
    
    
    
    
    
    
    
    Employee retirement obligations (see m)
    
    
    31
    
    
    
    (15
    )
    
    
    36
    
    
    
    3Purchase of Visteons capital investment (see n)
    
    
    1
    
    
    
    5
    
    
    
    5
    
    
    
    Sale of real estate (see p)
    
    
    (815
    )
    
    
    429
    
    
    
    386
    
    
    
    28Impairment of long-lived assets (see q)
    
    
    379
    
    
    
    (10
    )
    
    
    (45
    )
    
    
    (3
    )Total U.S. GAAP adjustments
    
    
    (475
    )
    
    
    482
    
    
    
    (631
    )
    
    
    (45
    )Net (loss) income under U.S. GAAP
    
    Ps.
    (74
    )
    
    Ps.
    469
    
    
    Ps.
    (6,337
    )
    
    US$
    (458
    )
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##### Table of Contents



2008(US$millions)Year ended December 31,
    
    
    (Convenience2007
    
    
    2008
    
    
    Translation)(Ps. millions)Reconciliation of Stockholders Equity (Deficit):Total stockholders equity reported under MFRS
    
    Ps.
    9,386
    
    
    Ps.
    3,108
    
    
    US$
    225Less minority interest included as stockholders equity under
MFRS (see a)
    
    
    (1,960
    )
    
    
    (1,404
    )
    
    
    (102
    )Majority stockholders equity under MFRS
    
    
    7,426
    
    
    
    1,704
    
    
    
    123U.S. GAAP adjustments:Effect of the adjustments below on minority interest (see a)
    
    
    (24
    )
    
    
    25
    
    
    
    2Deferred income taxes (see b)
    
    
    (673
    )
    
    
    (1,234
    )
    
    
    (89
    )Capitalization of interest (see f)
    
    
    374
    
    
    
    16
    
    
    
    1Accumulated amortization for capitalized interest (see f)
    
    
    (185
    )
    
    
    (224
    )
    
    
    (16
    )Goodwill (see g)
    
    
    124
    
    
    
    81
    
    
    
    6Effect of applying Bulletin B-10 (see h)
    
    
    3
    
    
    
    
    
    
    
    Fair value of financial instruments (see r-4)
    
    
    
    
    
    
    75
    
    
    
    5Effect of SFAS No. 158 (see m)
    
    
    (895
    )
    
    
    (1,749
    )
    
    
    (126
    )Employee retirement obligations (see m)
    
    
    (100
    )
    
    
    (64
    )
    
    
    (5
    )Purchase of Visteons capital investment (see n)
    
    
    (67
    )
    
    
    (62
    )
    
    
    (4
    )Purchase of remaining 40% interest in Vitro Cristalglass (see o)
    
    
    
    
    
    
    60
    
    
    
    4Sale of real estate (see p)
    
    
    (386
    )
    
    
    
    
    
    
    Impairment of long-lived assets (see q)
    
    
    253
    
    
    
    208
    
    
    
    15Total U.S. GAAP adjustments
    
    
    (1,576
    )
    
    
    (2,868
    )
    
    
    (207
    )Total stockholders equity (deficit) under U.S. GAAP
    
    Ps.
    5,850
    
    
    Ps.
    (1,164
    )
    
    US$
    (84
    )
 a)
    
    Minority interestUnder MFRS, minority interest in consolidated subsidiaries is presented as a separate
component within the stockholders equity section in the consolidated balance sheet. For
U.S. GAAP purposes, minority interest is not included in stockholders equity and is
presented below total liabilities and above the stockholders equity section in the
consolidated balance sheet.As discussed in insert r(12) below, SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements  an amendment of ARB No. 51, will be effective for the
Company beginning January 1, 2009. SFAS No. 160 modifies the presentation of minority
interest in the balance sheet (to be included within stockholders equity) and statement
of income similar to that of MFRS, for which reason the Company anticipates that this
difference will no longer be applicable beginning January 1, 2009.
  F-49




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b)
    
    Deferred income taxesUnder MFRS as required by Bulletin D-4, Accounting for Income Tax, Tax on Assets and
Employee Statutory Profit Sharing, income taxes are charged to results as they are
incurred and the Company recognizes deferred income tax assets and liabilities for the
future consequences of temporary differences between the financial statement carrying
amounts of assets and liabilities and their
respective income tax bases, measured using enacted rates. The effects of changes in the
statutory rates are accounted for in the period that includes the enactment date.
Deferred income tax assets are also recognized for the estimated future effects of tax
loss carryforwards and asset tax credit carryforwards. Deferred tax assets are recognized
only when it is highly probable that sufficient future taxable income will be generated to
recover such deferred tax assets.Under U.S. GAAP, as required by SFAS No. 109, Accounting for Income Taxes, the Company
recognizes deferred income tax assets and liabilities for the future consequences of
temporary differences between the financial statement carrying amounts of assets and
liabilities and their respective income tax bases, measured using enacted rates. The
effects of changes in the statutory rates are accounted for in the period that includes
the enactment date. Deferred income tax assets are also recognized for the estimated
future effects of tax loss carryforwards and asset tax credit carryforwards.The ultimate realization of deferred tax assets is dependent upon the generation of future
taxable income during the periods in which those temporary differences become deductible.
Management considers the scheduled reversal of deferred tax liabilities, projected future
taxable income, and tax planning strategies in making this assessment. Based upon the
level of historical taxable income, projections of future taxable income over the periods
in which the deferred tax assets are deductible and tax planning strategies that would be
taken to prevent an operating loss or tax credit carryforward from expiring unused,
management believes it is more likely than not that the Company will realize the benefits
of these deductible differences, net of the existing valuation allowance at December 31,
2008.For U.S. GAAP purposes the Company recognizes deferred taxes each period for the changes
in the taxable portions of its distributable stockholders equity. The Companys policy is
to compare the deferred tax balance that would be required if all of the stockholders
equity were distributed. This amount is compared to the total deferred tax balance
recorded prior to this adjustment. The difference between the amount recorded and the
amount calculated from the stockholders equity taxable accounts is recorded as an
adjustment to deferred taxes as of the balance sheet date.Through December 31, 2007, for U.S. GAAP purposes the Company recognized a deferred tax
asset for the temporary difference that exists between the book basis and the tax basis of
its foreign subsidiaries that legally own Vitros intellectual property at the applicable
tax rate in the foreign jurisdiction based on the expected reversal date. In January 2008,
the intellectual property was sold to Vitros Mexican subsidiaries.
  F-50




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U.S. GAAP differences to the extent taxable are reflected in the U.S. GAAP deferred tax
balances. The significant components of deferred tax assets and liabilities, which differ
for U.S. GAAP from deferred tax assets and liabilities calculated under MFRS, are
presented as follows:
 As of December 31,2007
    
    
    2008Deferred Tax Assets and Liabilities:Employee retirement obligations
    
    Ps.
    370
    
    
    Ps.
    508Derivative instruments
    
    
    
    
    
    
    (21
    )Sale of real estate
    
    
    108
    
    
    
    Purchase of Visteon capital investment
    
    
    19
    
    
    
    17Buildings, machinery and equipment
    
    
    (72
    )
    
    
    Stockholders equity
    
    
    (776
    )
    
    
    (1,738
    )Intellectual property
    
    
    (269
    )
    
    
    Other
    
    
    (53
    )
    
    
    Net deferred tax liability
    
    Ps.
    (673
    )
    
    Ps.
    (1,234
    )
 It is the Companys policy to classify interest and penalties related to income tax
related matters within income tax expense and other expenses, respectively. The
Companys significant operations are all located in Mexico, the United States of America,
Panama, Guatemala, Costa Rica and Spain. The tax laws in these jurisdictions permit the
respective tax authorities to examine previously filed tax returns for the following
years:
 Mexico
    
    U.S.
    
    Spain
    
    Guatemala
    
    Costa Rica2004-2008
    
    2004-2008
    
    2005-2008
    
    2005-2008
    
    2006-2008
 c)
    
    Negative goodwill and reduction in depreciation expenseThrough December 31, 2004, for purposes of MFRS, the Company recorded as a component of
the consolidated statements of operations the amortization of the excess of the adjusted
book value over cost of certain acquisitions (negative goodwill). The period of
amortization for negative goodwill was 18 months.Under U.S. GAAP, SFAS No. 141, Business Combinations, requires that any negative
goodwill (excess of fair value over cost) first be allocated to reduce long-lived assets
acquired and if any negative goodwill remains that amount is recognized as an
extraordinary gain.Effective January 1, 2005, Bulletin B-7, conforms to the accounting established by U.S.
GAAP as it relates to the accounting for negative goodwill.d)
    
    Deferred workers profit sharingThrough December 31, 2007, in accordance with MFRS the Company determined the provision
for deferred workers profit sharing by applying the partial accrual method of Bulletin
D-4 applicable to temporary differences between the financial and adjusted tax income that
are expected to reverse within a defined period. For U.S. GAAP purposes the Company
accrues for workers profit sharing based on a liability approach similar to accounting
for income taxes under SFAS No. 109.As discussed in note 3a), NIF D-3, Employee Benefits, became effective beginning January
1, 2008, and requires companies to calculate deferred PTU using a balance sheet
methodology similar to that required by U.S. GAAP.
  F-51




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e)
    
    Monetary position result on deferred income taxes and deferred workers profit
sharingThe monetary position result is determined by (i) applying the annual inflation factor to
the net monetary position of the U.S. GAAP adjustments at the beginning of the period,
plus (ii) the monetary position effect of such adjustments during the period, determined
in accordance with the weighted average inflation factor.As discussed in the introduction to this note as well as in note 3a), beginning January 1,
2008 with the issuance of NIF B-10, the Companys MFRS financial statements no longer
include inflationary effects, for which reason, this reconciling item is no longer
applicable.f)
    
    Capitalization of interestUnder MFRS beginning January 1, 2007, the Company adopted NIF D-6, Capitalization of
Comprehensive Financing Result, accordingly the capitalization of the comprehensive
financing result (interest expense, foreign exchange results and monetary position result)
generated by borrowings obtained to finance investment directly attributable to the
acquisition of qualifying assets is mandatory. Prior to the adoption of NIF D-6, the
Company did not capitalize the comprehensive financing result as it was optional.In accordance with SFAS No. 34, Capitalization of Interest Cost, if the comprehensive
financing result is incurred during the construction of qualifying assets, capitalization
is required as part of the cost of such assets. Accordingly, until December 31, 2006 a
reconciling item for the capitalization of a portion of the comprehensive financing result
was included in the U.S. GAAP reconciliation of the majority net income and majority
stockholders equity. The amortization expense and related accumulated amortization of
such items generates a difference compared to MFRS.Beginning on January 1, 2007, and through December 31, 2007, a reconciling item was
generated related to the foreign exchange results and monetary position result, which are
capitalized under MFRS and not for U.S. GAAP. In 2008, a reconciling item was generated
for borrowings denominated in US dollars, related to the foreign exchange results, which
is capitalized under MFRS and not for U.S. GAAP.g)
    
    GoodwillAs mentioned in note 3 j), under MFRS, until December 31, 2004 goodwill represented the
excess of cost over book value of subsidiaries as of the date of acquisition and was
restated using the NCPI and amortized using the straight-line method over 20 years.
Beginning on January 1, 2005, goodwill represents the excess of cost over fair value of
subsidiaries as of the date of acquisition. Through December 31, 2007, goodwill was
restated using the NCPI.In accordance with SFAS No. 142, Goodwill and Other Intangibles Assets, beginning in
2002 goodwill and indefinite-lived assets are also no longer subject to amortization, but
rather are subject at least once a year to impairment tests.As of December 31, 2007, the difference between MFRS and U.S. GAAP as it relates to this
item was due to the accumulated amortization of goodwill recorded under MFRS that had been
reversed in the reconciliation of stockholders equity for purposes of U.S. GAAP. In 2008,
as disclosed below, the Company recognized a goodwill impairment charge under U.S. GAAP
and as a result the
majority of this difference has been eliminated in the current year with a charge to the
U.S. GAAP statement of operations.
  F-52




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In 2008, the Company recorded an impairment of goodwill in its U.S. reporting unit. The
impairment recorded in accordance with MFRS was less than what was recorded in accordance
with U.S. GAAP as such goodwill had previously been amortized as discussed in the first
paragraph of this item. As a result, an adjustment to the reconciliation of net income
(loss) has been included in order to properly reflect the impairment loss recorded for
purposes of U.S. GAAP.The changes in the carrying amount of goodwill for the years ended December 31, 2007 and
2008 are as follows:
 Balance as of December 31, 2006
    
    Ps.
    846Acquisition (1)
    
    
    85Changes for effects of inflation and exchange rates
    
    
    63Balance as of December 31, 2007
    
    
    994Acquisition (2)
    
    
    60Impairment
    
    
    (239
    )Changes for effects of exchange rates
    
    
    159Reclassification to intangible assets(1)
    
    
    (61
    )Balance as of December 31, 2008
    
    Ps.
    913
 (1)
    
    The Company recorded goodwill of Ps. 85 related in its preliminary purchase
price allocation for the acquisition of 55% of the shares of Productos de Valor
Agregado en Cristal, S.A. de C.V (see note 20 e). During 2008, Ps. 61 was
reclassified as an intangible asset when the purchase price allocation was finalized.(2)
    
    The Company recorded goodwill of Ps. 60 related to the acquisition of 40%
of the shares of Vitro Cristalglass, S.L. (see note 25 o). h)
    
    Effect of applying Bulletin B-10As discussed in note 3 g), through December 31, 2007 under MFRS Bulletin B-10 allows the
restatement of the value of machinery and equipment purchased in a foreign country using
the consumer price index of the country of origin and the period-end exchange rate. For
U.S. GAAP purposes, such restatement is based on the NCPI.As discussed in the introduction to this note as well as note 3a), beginning January 1,
2008 with the issuance of NIF B-10, the Companys MFRS financial statements no longer
include inflationary effects, for which reason, this reconciling item is no longer
applicable. Further, even during inflationary periods, the alternate methodology described
above has been eliminated by NIF B-10.i)
    
    Effect of applying Bulletin B-15Through December 31, 2007, the Company applied the provisions of Bulletin B-15, Foreign
Currency Transactions and Translation of Financial Statements of Foreign Operations. The
Company believes that the application of the methodology of Bulletin B-15 to translate the
current year amounts for foreign operations does not result in a difference between MFRS
and U.S. GAAP that must be reconciled in order to comply with the rules and regulations of
the SEC. However, there are two methods allowed under Bulletin B-15 to restate prior year
amounts for foreign subsidiaries. Vitro uses the method that reconsolidates prior year
balances by restating foreign subsidiaries using the current inflation rate in the foreign
country and translating into pesos using the year-end exchange rate. We believe that this
methodology of Bulletin B-15 used to restate prior
years balances for comparative purposes does not conform to the requirements of SEC Rule
3-20e of Regulation S-X, which requires all amounts in financial statements to be
presented in the same reporting currency. Accordingly, in filings with the SEC, we are
including an adjustment for the difference in methodologies of restating prior year
balances. This amount of Ps. 34 in 2006, in the reconciliation of net income, represent
the differences between (i) the balance if all amounts were adjusted by applying the NCPI,
and (ii) the balance used in the primary financial statements to comply with Bulletin
B-15. This adjustment is no longer applicable in 2008 as a result of adopting NIF B-10.
  F-53




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j)
    
    Derivative financial instrumentsThe Company determined that the accounting for derivative financial instruments is the same
for MFRS and U.S. GAAP as they relate to their consolidated financial statements as of and
for the years ended December 31, 2006 and 2007. In 2008 the Company adopted the provisions
of SFAS No. 157, which impacted the fair value of its derivative financial instruments as
disclosed in note 25 (r)3 and is reflected as a difference in the accompanying
reconciliation to U.S. GAAP.k)
    
    Discontinued operationsMFRS as defined by Bulletin C-15, Impairment of Long-lived Assets and their Disposal,
requires the asset group being disposed of to be presented as a discontinued operation
only if its operations are individually significant to the consolidated operations.
Bulletin C-15 defines the discontinuance of an operation as the process of final
interruption of a significant business activity of an entity and establishes that the
discontinuation of an operation implies the final interruption of a significant activity
of the entity that leads to the sale, abandonment, exchange or return to stockholders of
long-lived assets originally intended for use, in addition to other assets and liabilities
related to the operation. Therefore, the analysis of the significance of the disposed
business is performed without considering the eventual gain or loss on sale or aggregating
each business being disposed with other businesses sold, and instead considers only the
significance of the business activity of the relevant business being sold.U.S. GAAP as defined by SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, requires that an entity report as discontinued operations those
components of its business that have been classified as held for sale. A component of an
entity is defined as comprising operations and cash flows that can be clearly
distinguished, operationally and for financial reporting purposes, from the rest of the
business. Individually insignificant disposals of a component of an entity should be
aggregated for purposes of assessing materiality for all periods presented. Therefore,
individually insignificant dispositions should be aggregated and reported as discontinued
operations under SFAS No. 144 beginning in the period the impact of the dispositions is
material to the financial statements of any period presented. This evaluation should also
include the effect of the gain or loss on sale of the component.As a result of the differences identified above between U.S. GAAP and MFRS, the following
component of the Companys business was presented as a discontinued operation for U.S.
GAAP purposes and not under MFRS due to its low level of significance.On March 2, 2006, the Company sold its 51% interest in Química M, to Solutia Inc. for US$
20 million in cash, recognizing a gain on sale of Ps. 101 under MFRS and Ps. 100 under
U.S. GAAP. Solutia is now the sole owner of this Mexican operation, which was formed in
1995. Química M was previously included in our Flat Glass reportable segment.
  F-54




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Basis difference between U.S. GAAP and MFRS The basis of the assets and liabilities
under U.S. GAAP of the entities disposed of by the Company at the time of their sale
differed from the basis of such assets and liabilities under MFRS; accordingly, the gain
recorded on disposal of such entities under U.S. GAAP differs from that under MFRS.Disclosures of discontinued operations The following table discloses the condensed
statements of operations of the Companys discontinued operations (includes Vitrocrisa,
which is considered to be a discontinued operation under both MFRS and U.S. GAAP) for
purposes of U.S. GAAP:
 For the year ended December 31, 2006Vitrocrisa
    
    
    Química M
    
    
    TotalCondensed Statement of Operations:Sales
    
    Ps.
    1,033
    
    
    Ps.
    82
    
    
    Ps.
    1,115Cost of sales
    
    
    861
    
    
    
    75
    
    
    
    936General, administrative and selling expenses
    
    
    130
    
    
    
    5
    
    
    
    135Operating income
    
    
    42
    
    
    
    2
    
    
    
    44Total financing cost and other expenses
    
    
    (96
    )
    
    
    (2
    )
    
    
    (98
    )Loss before income taxes
    
    
    (54
    )
    
    
    
    
    
    
    (54
    )Income tax benefit (expense)
    
    
    23
    
    
    
    (1
    )
    
    
    22Net loss
    
    Ps.
    (31
    )
    
    Ps.
    (1
    )
    
    Ps.
    (32
    )
 l)
    
    Deconsolidation of ComeguaFor MFRS purposes prior to November 2008, based on: (a) the Companys control over the CEO
whose function is to govern the operating decisions and financial policies of Comegua; (b)
the Companys sole right to propose the CEO for designation by the Board of Directors of
Comegua; and (c) the Companys sole right to remove the CEO, the Company concluded that it
controlled Comegua as defined by Bulletin B-8, Consolidated and Combined Financial
Statements and Valuation of Permanent Investments in Shares and therefore, Comegua should
be consolidated in accordance with MFRS. As disclosed in note 20 h), in November 2008,
the Company announced that together with its two Central American partners, decided to
modify the corporate by-laws of Comegua regarding the control of its operations. As a
result, beginning on that date, the Company now accounts for its 49.7% participation in
Comegua under the equity method.For U.S. GAAP purposes, the Company has determined that the control it retained over the
management of the annual budget of Comegua was not unilateral and was not sufficient to
meet all of the technical requirements for consolidation. The Companys position is based
on the guidance provided by EITF 96-16, Investors Accounting for an Investee When the
Investor Has a Majority of the Voting Interest but the Minority Shareholder or
Shareholders Have Certain Approval or Veto Rights. Under EITF 96-16, such approval and
veto rights held by the minority shareholders of Comegua, including the approval of annual
budget, qualify as substantive participating rights and therefore do not allow the Company
to consolidate Comegua in its financial statements for U.S. GAAP purposes. Therefore, the
Companys investment in Comegua is recorded by applying the equity method in the Companys
U.S. GAAP consolidated financial statements. (See insert r(2)). Beginning in November
2008 this GAAP difference has been eliminated as discussed above.
  F-55




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m)
    
    Employee retirement obligationsThe Company maintains defined benefit pension plans for all of its subsidiaries and
provides for seniority premiums and severance payments (severance indemnities) for all of
its Mexican
subsidiaries. For its MFRS consolidated financial statements, the Company applies Bulletin
D-3. Prior to 2006, the accounting treatment for pensions and seniority premiums set forth
in this Bulletin is substantially the same as those set forth in SFAS No. 87, Employers
Accounting for Pensions. The Company records the pension cost determined by actuarial
computations, as described in notes 3 k) and 11. Significant assumptions (weighted-average
rates) used in determining net periodic pension cost and the Companys related pension
obligations for 2007 and 2008 are also described in note 11.Severance indemnities  Under MFRS, effective 2005 revised Bulletin D-3 requires the
recognition of a severance indemnity liability calculated based on actuarial computations.
Similar recognition criteria under U.S. GAAP are established in SFAS No. 112, Employers
Accounting for Postemployment Benefits, which requires that a liability for certain
termination benefits provided under an ongoing benefit arrangement such as these
statutorily mandated severance indemnities, be recognized when the likelihood of future
settlement is probable and the liability can be reasonably estimated. MFRS allows for the
Company to amortize the transition obligation related to the adoption of revised Bulletin
D-3 over the expected service life of the employees. However, U.S. GAAP required the
Company to recognize such effect upon initial adoption, which results in a difference in
the amount recorded under the two accounting principles. The tables below reflect the
requirements under U.S. GAAP, which applies SFAS No. 112 standard for all years presented.The Company adopted SFAS No. 158, Employers Accounting for Defined Benefit Pension and
Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R),
in its December 31, 2006 consolidated financial statements. This statement requires
companies to (1) fully recognize, as an asset or liability, the over funded or under
funded status of defined pension and other postretirement benefit plans; (2) recognize
changes in the funded status through other comprehensive income in the year in which the
changes occur; and (3) provide enhanced disclosures. There is no impact on results of
operations or cash flows. Retrospective application of this standard is not permitted.A reconciliation of the Companys employee retirement obligations from MFRS to U.S. GAAP
is shown in the following table:
 2007
    
    
    2008Employee retirement obligations under MFRS
    
    Ps.
    1,245
    
    
    Ps.
    461Effect of SFAS No 158 adjustment
    
    
    1,220
    
    
    
    1,749Effect of retirement obligations
    
    
    100
    
    
    
    64Additional minimum liability adjustment under MFRS (1)
    
    
    (796
    )
    
    
    Comeguas employee retirement obligations (see l)
    
    
    (83
    )
    
    
    Employee retirement obligations under U.S. GAAP
    
    Ps.
    1,686
    
    
    Ps.
    2,274
 (1)
    
    Includes Ps. 448 recognized in stockholders equity, net of the deferred
income tax of Ps. 123 as of December 31, 2007.  F-56




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For purposes of determining the cost of its pension plans, seniority premiums and severance
indemnities under U.S. GAAP, the Company applies SFAS No. 87, as amended by SFAS No. 158,
and SFAS No. 112. The Company uses a December 31 measurement date for its pension plans,
seniority premiums and severance indemnities. The additional pension disclosures required
by SFAS No. 132(R), Employers Disclosures about Pensions and Other Postretirement
Benefits, as amended by SFAS No. 158, which are applicable to the Company, are presented
below:
 2007
    
    
    2008Change in benefit obligation:Benefit obligation at beginning of year
    
    Ps.
    2,694
    
    
    Ps.
    3,235Service cost
    
    
    74
    
    
    
    78Interest cost
    
    
    150
    
    
    
    249Amendments
    
    
    378
    
    
    
    Actuarial (losses) gains
    
    
    208
    
    
    
    (170
    )Benefits paid
    
    
    (351
    )
    
    
    (434
    )Settlements
    
    
    82
    
    
    
    Benefit obligation at end of year
    
    
    3,235
    
    
    
    2,958Changes in plan assets:Fair value of plan assets at beginning of year
    
    
    1,290
    
    
    
    1,549Contribution of cash and securities
    
    
    328
    
    
    
    140Return (loss) on plan assets
    
    
    184
    
    
    
    (747
    )Benefits paid
    
    
    (253
    )
    
    
    (258
    )Fair value of plan assets at end of year(1)
    
    
    1,549
    
    
    
    684Employee retirement obligationsunfunded status
    
    Ps.
    1,686
    
    
    Ps.
    2,274
 (1)
    
    Includes approximately Ps. 426 and Ps. 1,139 as of December 31,
2008 and 2007, respectively of Vitro common stock (53,197,549 and 47,472,678
shares).  Year ended December 31,2006
    
    
    2007
    
    
    2008Service cost
    
    Ps.
    71
    
    
    Ps.
    74
    
    
    Ps.
    78Interest cost
    
    
    143
    
    
    
    150
    
    
    
    249Return on plan assets
    
    
    (49
    )
    
    
    (88
    )
    
    
    (151
    )Net amortization and deferral
    
    
    243
    
    
    
    86
    
    
    
    78Settlement cost
    
    
    
    
    
    
    117
    
    
    
    7Net periodic pension cost
    
    Ps.
    408
    
    
    Ps.
    339
    
    
    Ps.
    261
  2007
    
    
    2008Unrecognized items included in AOCI:Transition obligation
    
    Ps.
    142
    
    
    Ps.
    115Prior service cost
    
    
    181
    
    
    
    180Net actuarial losses
    
    
    897
    
    
    
    1,454Unrecognized items
    
    Ps.
    1,220
    
    
    Ps.
    1,749Unrecognized items included in AOCI,
net of tax of Ps. 342 and Ps. 473
respectively
    
    Ps.
    878
    
    
    Ps.
    1,276
  F-57




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##### Table of Contents



Transition
    
    
    Prior service
    
    
    Net actuarialobligation
    
    
    cost
    
    
    gain
    
    
    TotalBalance as of December 31, 2006
    
    Ps.
    160
    
    
    Ps.
    174
    
    
    Ps.
    529
    
    
    Ps.
    863Amounts arising during the period
    
    
    6
    
    
    
    23
    
    
    
    516
    
    
    
    545Curtailment / Settlement effect
    
    
    
    
    
    
    (2
    )
    
    
    (100
    )
    
    
    (102
    )Amounts recognized as components
of net periodic cost
    
    
    (24
    )
    
    
    (14
    )
    
    
    (48
    )
    
    
    (86
    )Balance as of December 31, 2007
    
    
    142
    
    
    
    181
    
    
    
    897
    
    
    
    1,220Amounts arising during the period
    
    
    
    
    
    
    16
    
    
    
    596
    
    
    
    612Curtailment / Settlement effect
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    (5
    )Amounts recognized as components
of net periodic cost
    
    
    (22
    )
    
    
    (17
    )
    
    
    (39
    )
    
    
    (78
    )Balance as of December 31, 2008
    
    Ps.
    115
    
    
    Ps.
    180
    
    
    Ps.
    1,454
    
    
    Ps.
    1,749
  Transition obligation
    
    Ps.
    16Prior service cost
    
    
    17Net actuarial gain
    
    
    80
  2007
    
    
    2008Fixed Rate:Federal Government instruments
    
    
    25
    %
    
    
    34
    %Variable Rate:Equity securities traded on the Mexican Stock Exchange
    
    
    75
    %
    
    
    66
    %100
    %
    
    
    100
    %
   Seniority
    
    
    SeveranceYear ended December 31,
    
    Pension
    
    
    Premium
    
    
    Indemnities2009
    
    Ps.
    289
    
    
    Ps.
    9
    
    
    Ps.
    372010
    
    
    363
    
    
    
    9
    
    
    
    332011
    
    
    254
    
    
    
    9
    
    
    
    292012
    
    
    258
    
    
    
    9
    
    
    
    262013
    
    
    258
    
    
    
    9
    
    
    
    232014  2018
    
    
    1,261
    
    
    
    45
    
    
    
    80
  F-58




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As discussed in note 3 a), NIF D-3, Employee Benefits, became effective January 1, 2008. NIF
D-3 eliminates the recognition of the additional liability because its determination does not
incorporate a salary increase, incorporates the career salary concept, and the amortization
period of most unrecognized items (those not related to retirement benefits) is reduced to
five years, with the option to fully amortize them against current earnings of 2008 under
other income and expense. The Company chose to amortize such items over a period of five
years. Additionally, the beginning balance of actuarial gains and losses from termination
benefits was recorded against results of 2008 for purposes of MFRS, in other income and
expense. For U.S. GAAP purposes unamortized items are recognized over the estimated service
period of the Companys employees.n)
    
    Purchase of Visteons capital investmentIn connection with the termination of the joint venture agreement between Viméxico and Visteon
discussed in note 20 d), under MFRS as established in Bulletin B-7, Business Acquisitions
the Company recognized the difference between the price paid and the book value of Ps. 70 as a
credit in the majority stockholders equity. Under U.S. GAAP, in accordance with SFAS No.
141, Business Combinations the excess of fair value over cost of Ps. 90 was allocated as a
pro rata reduction of the acquired assets.o)
    
    Purchase of remaining 40% interest in Vitro CristalglassIn connection with Vimexicos purchase of the additional 40% interest in Vitro Cristalglass
discussed in note 20 g), under Mexican standard NIF Bulletin B-7, Business Acquisitions,
this is considered to be a transaction between shareholders that does not impact the net
assets of the Company, and the payment in excess of the book value of the shares acquired is
recorded in stockholders equity as a reduction of additional paid-in capital. Under U.S.
GAAP, SFAS No. 141, Business Combinations, purchases of minority interest represent a step
acquisition that must be accounted for under the purchase method, whereby the purchase price
is allocated to the proportionate fair value of assets and liabilities acquired. The
difference between the fair value and the price paid for the 40% of Vitro Cristalglass equity
is presented as part of investment in Vitro Cristalglass shares in the consolidated balance
sheet under U.S. GAAP. The Company recognized Ps. 60 goodwill as part of the preliminary
purchase price allocation.p)
    
    Sale of real estateIn December 14, 2006, Vitro sold real estate located in Mexico City used by COVISA for US$100
million, 80% payable on the date of sale and the remainder payable on the delivery date of the
property. In connection with the sale of the property, the Company agreed to deliver the real
estate within 24 months following the sale, free and clear of all buildings and fixtures, as
well as any environmental claims, recording reserves of Ps. 56 for the estimated asset
retirement costs and prepaid rent of Ps. 62 for the estimated fair value of the rental expense
over the 24 months. Under U.S. GAAP, in accordance with SFAS No. 66, Accounting for Sales of
Real Estate, SFAS No. 13, Leases and SFAS No. 98, Accounting for Leases as a result of
the Companys level of continuing involvement the gain on the sale of the land has been
deferred and is being recognized in earnings during the two years over which the Company
continues to utilize the property. In 2008, Vitro delivered the real estate in compliance with
the terms of the agreement.The depreciation estimates of the fixed assets that were disposed of as a result of the real
estate sale have been adjusted to reflect the use of the assets over their shortened useful
lives. Such change in estimate is being accounted for prospectively. For purposes of MFRS,
the Company wrote off the net book value of the fixed assets against the gain on sale.
  F-59




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For U.S. GAAP purposes, a difference resulted due to the depreciation expense related to the
fixed assets that were written off under MFRS. This difference was eliminated upon the sale of
the real estate in 2008 per U.S. GAAP.q)
    
    Impairment of long-lived assetsFor U.S. GAAP purposes, in accordance with SFAS No. 144, long-lived assets are reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. The carrying amount of an asset is not recoverable when the
estimated future undiscounted cash flows expected to result from the use of the asset are less
than the carrying value of the asset. Impairment is recorded when the carrying amount of the
asset exceeds its fair value. Impairment charges and asset write-downs are presented in
selling, general and administrative expenses in operating income in our U.S. GAAP consolidated
financial statements.For MFRS purposes, in accordance with Bulletin C-15, the Company reviews the carrying amounts
of long-lived assets in use when an impairment indicator suggests that such amounts might not
be recoverable, considering the greater of the present value of future net cash flows or the
net sales price upon disposal. Impairment is recorded when the carrying amount of the asset
exceeds the greater of the amounts mentioned above. Impairment charges and asset write-downs
are presented in other expenses in our MFRS consolidated financial statements.In 2005 and 2006, for MFRS purposes, while performing its annual impairment test using its
best estimates based on reasonable and supportable assumptions and projections, the Company
recorded an impairment charge of Ps. 111 and Ps. 334, respectively within its Flat Glass
reportable segment as the carrying amount of the long-lived assets exceeded the present value
of their future discounted cash flows. For U.S. GAAP purposes no impairment charge was
recorded as the assets were considered to be recoverable given that the estimated undiscounted
cash flows expected to result from the use of the assets were greater than the carrying value
of the asset.In 2005 for U.S. GAAP purposes, based on fair value appraisals received, the Company recorded
an impairment charge of Ps. 195 for land and buildings located at its corporate offices
classified as available for sale in accordance with SFAS No. 144. This charge is recorded in
operating income for U.S. GAAP purposes. Under MFRS, the assets did not meet the definition
of held for sale as required by Bulletin C-15 as such assets were still in use by the Company
at the time. The discounted cash flow model utilized by the Company did not result in an
impairment charge for MFRS purposes. Additionally during 2006, Vitro sold one of its
buildings located at its corporate headquarters recognizing a loss on sale of Ps. 138 under
MFRS and Ps. 93 under U.S. GAAP.As a result of the transactions described above, differences result between MFRS and U.S.
GAAP due to the depreciation expense on fixed assets being recorded each year.Impairment charges are recorded in operating income for U.S. GAAP purposes and in other income
and expenses under MFRS.
  F-60




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##### Table of Contents



r)
    
    Other differences and supplemental U.S. GAAP disclosures
 1.
    
    Reclassifications:(a)
    
    Gain or loss on sale of assets - The gain or loss on sale of assets that do not
meet the definition of a component of a business as described in SFAS No. 144 are
included in operating income in the
Companys U.S. GAAP consolidated financial statements. Gains or losses on sales of assets
not presented as discontinued operations under MFRS are included in other expenses in the
Companys consolidated MFRS financial statements (see note 16).(b)
    
    Classification of workers profit sharing - Under MFRS, statutory employee profit
sharing is presented under other income and expenses. In the Companys U.S. GAAP
statements of operations, workers profit sharing expense is classified as an operating
expense.(c)
    
    Restructuring charges - During 2007 and 2008, the Company restructured certain
operating units and its corporate and administrative functions. For MFRS purposes the
corresponding costs met the definition of a restructuring charge and were included in
other expenses in the Companys consolidated financial statements, but for U.S. GAAP
purposes the Company applied SFAS No. 112. These costs are included in general and
administrative expenses in the accompanying U.S. GAAP consolidated statements of
operations.2.
    
    Equity method investments -Through July 27, 2007, the Company accounted for its
50% joint venture investments in Vitro AFG under the equity method for US GAAP purposes
and under proportionate consolidation method for MFRS. Subsequent to acquiring the
remaining 50% of the outstanding shares and assuming complete control over its
operations, the Company began to consolidate its wholly-owned subsidiary (see note 20 f)
for both MFRS and U.S. GAAP.Summary information of AFG is as follows:
 AFG
    
    2006Current assets
    
    Ps.
    42Total assets
    
    
    884Current liabilities
    
    
    402Total liabilities
    
    
    434Stockholders equity
    
    
    450
 AFG
    
    2006
    
    
    2007*Net sales
    
    Ps.
    224
    
    
    Ps.
    368Net income (loss)
    
    
    14
    
    
    
    (134
    )Cash flow information:Operating activities
    
    
    2
    
    
    
    (6
    )Financing activities
    
    
    
    
    
    
    Investing activities
    
    
    
    
    
    
    
 *
    
    For the period from January 1 through July 2007.  F-61




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##### Table of Contents



3.
    
    Fair value of financial
instruments -SFAS No. 107, Disclosures about Fair Value
of Financial Instruments, requires disclosure of the estimated fair values of certain
financial instruments. The carrying amounts and estimated fair values of the Companys
significant financial instruments not previously disclosed in these financial statements
were as follows:
 December 31, 2007
    
    
    December 31, 2008Carrying
    
    
    
    
    
    
    Carrying
    
    
    FairAmount
    
    
    Fair Value
    
    
    Amount
    
    
    ValueLiabilities:Short-term borrowings
    
    Ps.
    398
    
    
    Ps.
    398
    
    
    Ps.
    1,601
    
    
    Ps.
    1,601Long-term debt(1)
    
    
    14,520
    
    
    
    13,948
    
    
    
    18,642
    
    
    
    7,075
 (1)
    
    Includes current portion of long-term debt.          F-62




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Valuation Techniques.
    F-63




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##### Table of Contents



Fair Value Measurements at Reporting Date UsingQuoted PricesIn Active
    
    
    SignificantMarkets for
    
    
    Other
    
    
    SignificantIdentical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    InputsDescription
    
    12/31/08
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Derivatives
    
    Ps.
    379
    
    
    Ps.
    
    
    
    Ps.
    379
    
    
    Ps.
    Retained
undivided
interests
in securitized
receivables
    
    
    1,213
    
    
    
    
    
    
    
    
    
    
    
    1,213Total
    
    Ps.
    1,592
    
    
    Ps.
    
    
    
    Ps.
    379
    
    
    Ps.
    1,213
 The definition of fair value under U.S. GAAP, which is based on an exit price notion,
differs from the definition established by MFRS, which is based on a settlement price
notion. Therefore, the Company has included a reconciling item in U.S. GAAP
reconciliation as a result of adopting this new accounting pronouncement.
 4.
    
    Earnings per share in accordance with U.S. GAAP- Earnings per share in accordance
with U.S. GAAP is based on the provisions of SFAS No. 128, Earnings Per Share. The
methodologies required by MFRS and U.S. GAAP as it relates to the calculation and
presentation of the Companys basic and diluted earnings per share differs only in the
net income (loss) utilized for purposes of the calculation.Income (loss) per common share computed in accordance with U.S. GAAP is presented below:
 Year ended December 31,2006
    
    
    2007
    
    
    2008Basic and diluted (loss) income per share from
continuing operations
    
    Ps.
    (1.92
    )
    
    Ps.
    1.37
    
    
    Ps.
    (1.85
    )Discontinued operations
    
    
    1.66Basic and diluted (loss) income per common share
    
    Ps.
    (0.26
    )
    
    Ps.
    1.37
    
    
    Ps.
    (1.85
    )
 5.
    
    Comprehensive income- Under U.S. GAAP, SFAS No. 130, Reporting Comprehensive
Income, establishes standards for reporting and display of comprehensive income and its
components. Vitros items of other comprehensive income are: loss from holding
nonmonetary assets, unrealized gain (loss) on long-term investments, the currency
translation adjustment and the amortization of unrecognized items related to its labor
obligations.See note 25 s), for consolidated financial statements presented on a U.S. GAAP basis,
which reflect the provisions of SFAS No. 130, Reporting Comprehensive Income.6.
    
    Share-based Payment- In 2006 the Company adopted and currently applies SFAS No.
123(R), Share-Based Payment, in accounting for its share-based payment awards. The
Companys employee stock option plan was adopted in 1998. The disclosures required under
U.S. GAAP as they relate to this plan are included in note 14 c).
  F-64




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7.
    
    Restrictions that limit the payment of dividends by the registrant- The Company
derives substantially all of its operating income from advances, fees, interest and
dividends paid to the Company by its subsidiaries. Accordingly, in paying the principal
of, premium, if any, interest on, and additional amounts, if any, with respect to the
Companys indebtedness, the Company relies on income from advances, fees, interest and
dividends from its subsidiaries, as well as income from the disposition of one or more
of its subsidiaries, interests therein or assets thereof. Therefore, the Companys
subsidiaries ability to pay such dividends or make such distributions are subject to (i)
such subsidiaries having net income and the requisite amount of paid-in capital under
Mexican law, (ii) such subsidiaries shareholders (including the Companys joint venture
partners) having approved the payment of such dividends at the annual general ordinary
shareholders meeting and (iii) applicable laws and, in certain circumstances,
restrictions contained in joint venture and debt agreements. At December 31, 2008, 2007
and 2006, the net assets of the Companys subsidiaries were not restricted.8.
    
    Concentration of credit risk -The Company sells products to customers primarily in
Mexico, the U.S. and Europe, although no single customer accounted for more than 8% of
consolidated net sales in 2008, 2007 and 2006, the Company has customers that are
significant to its business units and to its consolidated financial statements taken as a
whole. The Companys three largest customers accounted for approximately 15% of its
consolidated net sales in 2008, 2007 and 2006. The Company conducts periodic evaluations
of its customers financial condition and generally does not require collateral. The
Company does not believe that significant risk of loss from a concentration of credit
risk exists given the large number of customers that comprise its customer base and their
geographical dispersion. The Company also believes that its potential credit risk is
adequately covered by the allowance for doubtful accounts.9.
    
    Irrevocable Standby Letters of Credit -As of December 31, 2007 and 2008 VVP
Holdings Corp. (one of the Companys U.S. subsidiaries), had outstanding irrevocable
standby letters of credit issued, for insurance purposes, totaling US$13 million.10.
    
    Vicap Notes -11 3/8% Vicap Notes registered under the U.S. Securities Act of 1933
were issued by Vicap (now known as SOFIVSA and in 2008 SOFIVSA merged with COVISA), the
Companys 100% owned finance subsidiary, and fully and unconditionally guaranteed by
Vitro. There are no restrictions on the ability of Vitro to obtain funds from COVISA by
dividend or loan. The Vicap Notes were repaid prior to their maturity date in March
2007.11.
    
    Statement of Changes in Financial Position -Under MFRS, prior to 2008, Company
presented a consolidated statement of changes in financial position in accordance with
Bulletin B-12, Statement of Changes in Financial Position, which identifies the
generation and application of resources by the differences between beginning and ending
balance sheet items presented in constant Mexican pesos. Bulletin B-12 also requires that
monetary and foreign exchange gains and losses be treated as cash items for the
determination of resources generated by operating activities.In accordance with U.S. GAAP, the Company follows SFAS No. 95, Statement of Cash Flows,
which is presented in historical Mexican pesos, without the effects of inflation.As mentioned in note 3 a), NIF B-2, is effective January 1, 2008. NIF B-2 requires that
the statement show a companys cash inflows and outflows during the period and
establishes general rules for the presentation, structure and preparation of a cash flow
statement and replaces the statement of changes in financial position on a prospective basis. Differences continue to exist
compared to U.S. GAAP in the presentation for items such as interest received and paid.
  F-65




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12.
    
    Recently Issued Accounting Standards
     F-66




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F-67




---



##### Table of Contents



F-68




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##### Table of Contents



In January 2009, the Mexican Banking and Securities Commission published amendments to the
Mexican Securities Law, making it compulsory for public entities to prepare and present
their financial statements using International Financial Reporting Standards (IFRS)
beginning 2012 (early adoption is permitted). Management is currently assessing the impact
that this potential change would have on the Companys consolidated financial statements,
and will continue to monitor the development of the potential implementation of IFRS.s)
    
    Comparative consolidated financial statements  U.S. GAAP
  F-69




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##### Table of Contents



CONSOLIDATED BALANCE SHEETS
U.S. GAAP BASIS
 December 31,2007
    
    
    2008AssetsCash and cash equivalents
    
    Ps.
    1,491
    
    
    Ps.
    1,428Trade receivables, net
    
    
    1,293
    
    
    
    1,492Retained undivided interests in securitized receivables
    
    
    968
    
    
    
    1,213Other receivables
    
    
    2,589
    
    
    
    1,804Inventories
    
    
    3,720
    
    
    
    4,178Land and buildings held for sale
    
    
    
    
    
    
    40Deferred income taxes
    
    
    634
    
    
    
    1,713Current assets
    
    
    10,695
    
    
    
    11,868Investment in unconsolidated and associated companies
    
    
    764
    
    
    
    996Land and buildings, net
    
    
    7,884
    
    
    
    8,181Machinery and equipment, net
    
    
    7,179
    
    
    
    7,693Construction in progress
    
    
    1,539
    
    
    
    1,332Goodwill
    
    
    994
    
    
    
    913Deferred income taxes
    
    
    
    
    
    
    471Other assets
    
    
    930
    
    
    
    1,335Total assets
    
    Ps.
    29,985
    
    
    Ps.
    32,789LiabilitiesShort-term borrowings
    
    Ps.
    253
    
    
    Ps.
    1,601Current maturities of long-term debt
    
    
    485
    
    
    
    16,887Trade payables
    
    
    2,339
    
    
    
    2,355Derivative financial instruments
    
    
    
    
    
    
    3,709Sundry creditors
    
    
    2,209
    
    
    
    2,399Accrued expenses
    
    
    1,346
    
    
    
    1,317Current portion of unrealized gain on sale of real estate
    
    
    484
    
    
    
    Current liabilities
    
    
    7,116
    
    
    
    28,268Long-term debt
    
    
    13,439
    
    
    
    1,755Employee retirement obligations
    
    
    1,686
    
    
    
    2,274Deferred income taxes
    
    
    477
    
    
    
    11Other long-term liabilities
    
    
    205
    
    
    
    265Long-term liabilities
    
    
    15,807
    
    
    
    4,305Total liabilities
    
    
    22,923
    
    
    
    32,573Minority interest in consolidated subsidiaries
    
    
    1,212
    
    
    
    1,380Stockholders EquityTotal stockholders equity (deficit)
    
    
    5,850
    
    
    
    (1,164
    )Total liabilities, minority interest in consolidated
subsidiaries and stockholders equity
    
    Ps.
    29,985
    
    
    Ps.
    32,789
  F-70




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##### Table of Contents



CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. GAAP BASIS
 Year ended December 31,2006
    
    
    2007
    
    
    2008Net sales
    
    Ps.
    25,655
    
    
    Ps.
    26,159
    
    
    Ps.
    26,854Cost of sales
    
    
    18,875
    
    
    
    18,429
    
    
    
    19,736Gross profit
    
    
    6,780
    
    
    
    7,730
    
    
    
    7,118Selling, general and administrative expenses, net
    
    
    5,344
    
    
    
    5,206
    
    
    
    5,664Operating income
    
    
    1,436
    
    
    
    2,524
    
    
    
    1,454Interest expense
    
    
    2,150
    
    
    
    1,935
    
    
    
    2,103Derivative instruments
    
    
    337
    
    
    
    203
    
    
    
    3,691Interest income
    
    
    (133
    )
    
    
    (169
    )
    
    
    (63
    )Exchange loss, net
    
    
    214
    
    
    
    83
    
    
    
    3,580Gain from monetary position
    
    
    (536
    )
    
    
    (504
    )
    
    
    Total financing cost
    
    
    2,032
    
    
    
    1,548
    
    
    
    9,311Operating (loss) income after financing cost
    
    
    (596
    )
    
    
    976
    
    
    
    (7,857
    )Other income (expenses), net
    
    
    52
    
    
    
    (491
    )
    
    
    21(Loss) income from continuing operations before taxes
    
    
    (544
    )
    
    
    485
    
    
    
    (7,836
    )Income and asset tax expense (benefit)
    
    
    175
    
    
    
    (74
    )
    
    
    (1,489
    )Minority interest
    
    
    150
    
    
    
    (107
    )
    
    
    (31
    )Share in earnings of unconsolidated associated companies
    
    
    15
    
    
    
    17
    
    
    
    21Net (loss) income from continuing operations
    
    
    (554
    )
    
    
    469
    
    
    
    (6,337
    )Discontinued operations including a gain on disposal
of discontinued operations of Ps. 513 in 2006, net of
taxes of Ps. (86)
    
    
    480
    
    
    
    
    
    
    
    Net (loss) income
    
    Ps.
    (74
    )
    
    Ps.
    469
    
    
    Ps.
    (6,337
    )
  F-71




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##### Table of Contents



CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
U.S. GAAP BASIS
 2006
    
    
    2007
    
    
    2008Stockholders equity at the beginning of the year
    
    Ps.
    4,913
    
    
    Ps.
    5,710
    
    
    Ps.
    5,850Comprehensive income (loss):Net (loss) income
    
    
    (74
    )
    
    
    469
    
    
    
    (6,337
    )Other comprehensive income (loss):Employee retirement obligations
    
    
    
    
    
    
    (282
    )
    
    
    (588
    )Gain from holding nonmonetary assets
    
    
    (126
    )
    
    
    (141
    )
    
    
    Cumulative translation adjustment
    
    
    1
    
    
    
    11
    
    
    
    402Deferred income taxes
    
    
    (67
    )
    
    
    259
    
    
    
    193Effect of applying Bulletin B-10
    
    
    (34
    )
    
    
    32
    
    
    
    Other comprehensive (loss) income
    
    
    (226
    )
    
    
    (121
    )
    
    
    7Comprehensive (loss)
    
    
    (300
    )
    
    
    348
    
    
    
    (6,330
    )Bulletin B-15 adjustments
    
    
    (45
    )
    
    
    (72
    )
    
    
    SFAS No. 158 Adjustment
    
    
    (131
    )
    
    
    
    
    
    
    Dividends declared and paid
    
    
    (95
    )
    
    
    (136
    )
    
    
    (143
    )Sale of treasury stock
    
    
    70
    
    
    
    
    
    
    
    75Issuance of capital stock
    
    
    577
    
    
    
    
    
    
    
    Dilution of minority interest
    
    
    721
    
    
    
    
    
    
    
    (616
    )Stockholders equity (deficit) at the end of the year
    
    Ps.
    5,710
    
    
    Ps.
    5,850
    
    
    Ps.
    (1,164
    )
  F-72




---



##### Table of Contents



CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. GAAP BASIS*
 Year ended December 31,2006
    
    
    2007
    
    
    2008Operating Activities:(Loss) income from continuing operations
    
    Ps.
    (554
    )
    
    Ps.
    469
    
    
    Ps.
    (6,337
    )Effect of constant pesos and monetary gain
    
    
    (453
    )
    
    
    (532
    )
    
    
    (Loss) income from continuing operations in nominal pesos
    
    
    (1,007
    )
    
    
    (63
    )
    
    
    (6,337
    )Add (deduct) non-cash items:Minority interest
    
    
    (145
    )
    
    
    108
    
    
    
    (31
    )Depreciation and amortization
    
    
    1,718
    
    
    
    1,400
    
    
    
    1,500Provision for employee retirement obligations and other
long-term liabilities
    
    
    377
    
    
    
    344
    
    
    
    437Impairment
    
    
    
    
    
    
    
    
    
    
    239Amortization of debt issuance costs
    
    
    188
    
    
    
    166
    
    
    
    55Share in earnings of unconsolidated associated companies
    
    
    (13
    )
    
    
    (17
    )
    
    
    (21
    )Dividends received from unconsolidated associated companies
    
    
    12
    
    
    
    28
    
    
    
    Derivative financial instruments
    
    
    (107
    )
    
    
    208
    
    
    
    3,691Gain from sale of subsidiaries
    
    
    34
    
    
    
    12
    
    
    
    Loss (gain) from sale of fixed assets
    
    
    48
    
    
    
    (371
    )
    
    
    (488
    )Deferred income tax and workers profit sharing
    
    
    71
    
    
    
    (404
    )
    
    
    (1,806
    )Exchange (gain) loss
    
    
    197
    
    
    
    145
    
    
    
    3,972Changes in operating assets and liabilitiesIncrease (decrease) in trade payables
    
    
    213
    
    
    
    278
    
    
    
    (291
    )Decrease (increase) in trade receivables
    
    
    26
    
    
    
    (181
    )
    
    
    (12
    )(Increase) decrease in inventories
    
    
    320
    
    
    
    (265
    )
    
    
    (17
    )Changes in other current assets and liabilities
    
    
    (471
    )
    
    
    467
    
    
    
    (42
    )Employee retirement obligations
    
    
    (557
    )
    
    
    (472
    )
    
    
    (425
    )Net loss from discontinued operations
    
    
    (30
    )
    
    
    
    
    
    
    Operating assets and liabilities from discontinued operations
    
    
    29
    
    
    
    
    
    
    
    Derivative financial instruments
    
    
    
    
    
    
    
    
    
    
    (1,138
    )Net cash provided by (used in) operating activities
    
    
    903
    
    
    
    1,383
    
    
    
    (714
    )Investing Activities:Sale of land, buildings, machinery and equipment
    
    
    1,342
    
    
    
    71
    
    
    
    20Investment in land, buildings, machinery and equipment
    
    
    (1,009
    )
    
    
    (2,146
    )
    
    
    (1,550
    )Sale of subsidiaries and associated companies
    
    
    1,049
    
    
    
    38
    
    
    
    Investment in subsidiaries
    
    
    
    
    
    
    (177
    )
    
    
    (63
    )Restricted cash
    
    
    385
    
    
    
    (327
    )
    
    
    314Discontinued operations
    
    
    20
    
    
    
    
    
    
    
    Capital distribution to minority interest
    
    
    (21
    )
    
    
    (21
    )
    
    
    Deferred charges and other long-term assets
    
    
    (86
    )
    
    
    (316
    )
    
    
    70Net cash provided by (used in) investing activities
    
    
    1,680
    
    
    
    (2,878
    )
    
    
    (1,209
    )
  F-73




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##### Table of Contents



Year ended December 31,2006
    
    
    2007
    
    
    2008Financing Activities:Proceeds from short-term borrowings
    
    
    4,603
    
    
    
    2,413
    
    
    
    1,072Proceeds from long-term debt
    
    
    840
    
    
    
    13,581
    
    
    
    2,018Payment of short-term borrowings
    
    
    (3,191
    )
    
    
    (4,644
    )
    
    
    Payment of long-term debt
    
    
    (5,419
    )
    
    
    (9,201
    )
    
    
    (1,020
    )Debt issuance costs
    
    
    (23
    )
    
    
    (285
    )
    
    
    (63
    )Issuance of capital stock
    
    
    556
    
    
    
    
    
    
    
    Sale (purchase) of treasury stock
    
    
    67
    
    
    
    (1
    )
    
    
    75Dividends paid to stockholders of Vitro
    
    
    (92
    )
    
    
    (133
    )
    
    
    (143
    )Dividends paid to minority interests
    
    
    (20
    )
    
    
    (47
    )
    
    
    (109
    )Other financing activities
    
    
    
    
    
    
    279
    
    
    
    (36
    )Discontinued operations
    
    
    (19
    )
    
    
    
    
    
    
    Net cash (used in) provided by financing activities
    
    
    (2,698
    )
    
    
    1,962
    
    
    
    1,794Net (decrease) increase in cash and cash equivalents
    
    
    (115
    )
    
    
    467
    
    
    
    (129
    )Exchange rate effect on cash and cash equivalents
    
    
    26
    
    
    
    (18
    )
    
    
    66Balance at beginning of year
    
    
    1,131
    
    
    
    1,042
    
    
    
    1,491Balance at end of year
    
    Ps.
    1,042
    
    
    Ps.
    1,491
    
    
    Ps.
    1,428Net cash provided by operating activities reflects net cash
payments of interest and income taxes as follows:Interest
    
    Ps.
    1,694
    
    
    Ps.
    1,369
    
    
    Ps.
    1,993Income taxes
    
    
    20
    
    
    
    441
    
    
    
    185
 *
    
    This consolidated statement of cash flows on the basis of nominal pesos is presented to
fulfill disclosure requirements of the International Practices Task Force of the American
Institute of Certified Public Accountants.
  F-74




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##### Table of Contents



Schedule II  Valuation and Qualifying Accounts  MFRS
  Balance at the
    
    
    
    
    
    
    
    
    
    
    Changes forbeginning of
    
    
    
    
    
    
    
    
    
    
    effects of
    
    
    Balance at the endyear
    
    
    Additions
    
    
    Deductions
    
    
    inflation
    
    
    of the yearYear ended December 31, 2008Allowance for doubtful accounts
    
    Ps.
    262
    
    
    Ps.
    113
    
    
    Ps.
    7
    
    
    
    
    
    
    Ps.
    368Deferred tax valuation allowance
    
    
    286
    
    
    
    313
    
    
    
    
    
    
    
    
    
    
    
    599Ps.
    548
    
    
    Ps.
    426
    
    
    Ps.
    7
    
    
    
    
    
    
    Ps.
    967Year ended December 31, 2007Allowance for doubtful accounts
    
    Ps.
    213
    
    
    Ps.
    115
    
    
    Ps.
    59
    
    
    Ps.
    (7
    )
    
    Ps.
    262Deferred tax valuation allowance
    
    
    269
    
    
    
    159
    
    
    
    132
    
    
    
    (10
    )
    
    
    286Ps.
    482
    
    
    Ps.
    274
    
    
    Ps.
    191
    
    
    Ps.
    (17
    )
    
    Ps.
    548Year ended December 31, 2006Allowance for doubtful accounts
    
    Ps.
    203
    
    
    Ps.
    72
    
    
    Ps.
    55
    
    
    Ps.
    (7
    )
    
    Ps.
    213Deferred tax valuation allowance
    
    
    628
    
    
    
    192
    
    
    
    526
    
    
    
    (25
    )
    
    
    269Ps.
    831
    
    
    Ps.
    264
    
    
    Ps.
    581
    
    
    Ps.
    (32
    )
    
    Ps.
    482
  F-75




---



##### Table of Contents



26.
    
    Guarantor and non-guarantor financial information
     
    
    Vitro (the parent company issuer),
 
    
    Vitros combined wholly-owned guarantors,
 
    
    Consolidated information for Viméxico and its subsidiaries (Viméxico and its
wholly-owned guarantor and non-guarantor subsidiaries  the guarantor and non-guarantor
financial information for Viméxico and its subsidiaries is included in note 23 of
Viméxicos consolidated financial statements),
 
    
    Vitros combined non-guarantors (combined amounts of Vitros non-guarantor subsidiaries
not already included in the consolidated Viméxico column), and
   F-76




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##### Table of Contents



a)
  
  Supplemental condensed consolidating balance sheets presented in accordance with MFRS: Combined
    
    
    Consolidated
    
    
    Combined
    
    
    AdjustmentsWholly-Owned
    
    
    Viméxico and
    
    
    Non-
    
    
    and
    
    
    VitroAs of December 31, 2007
    
    Vitro
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash, trade receivables and other
current assets
    
    Ps.
    6,227
    
    
    Ps.
    5,962
    
    
    Ps.
    1,302
    
    
    Ps.
    921
    
    
    Ps.
    (8,364
    )
    
    Ps.
    6,048Retained undivided interests in
securitized
receivables
    
    
    
    
    
    
    312
    
    
    
    656
    
    
    
    
    
    
    
    
    
    
    
    968Inventories, net
    
    
    
    
    
    
    1,824
    
    
    
    2,000
    
    
    
    296
    
    
    
    
    
    
    
    4,120Current assets
    
    
    6,227
    
    
    
    8,098
    
    
    
    3,958
    
    
    
    1,217
    
    
    
    (8,364
    )
    
    
    11,136Property, plant and equipment, net
    
    
    2,198
    
    
    
    8,183
    
    
    
    5,777
    
    
    
    1,866
    
    
    
    (183
    )
    
    
    17,841Deferred taxes
    
    
    
    
    
    
    636
    
    
    
    570
    
    
    
    5
    
    
    
    (181
    )
    
    
    1,030Other assets
    
    
    20,807
    
    
    
    2,662
    
    
    
    1,363
    
    
    
    117
    
    
    
    (22,769
    )
    
    
    2,180Long-term assets
    
    
    23,005
    
    
    
    11,481
    
    
    
    7,710
    
    
    
    1,988
    
    
    
    (23,133
    )
    
    
    21,051Total assets
    
    Ps.
    29,232
    
    
    Ps.
    19,579
    
    
    Ps.
    11,668
    
    
    Ps.
    3,205
    
    
    Ps.
    (31,497
    )
    
    Ps.
    32,187Short-term borrowings
    
    Ps.
    131
    
    
    Ps.
    326
    
    
    Ps.
    281
    
    
    Ps.
    205
    
    
    Ps.
    
    
    
    Ps.
    943Accrued expenses and other
current liabilities
    
    
    7,851
    
    
    
    6,016
    
    
    
    4,605
    
    
    
    917
    
    
    
    (13,192
    )
    
    
    6,197Current liabilities
    
    
    7,982
    
    
    
    6,342
    
    
    
    4,886
    
    
    
    1,122
    
    
    
    (13,192
    )
    
    
    7,140Long-term liabilities
    
    
    13,824
    
    
    
    9,138
    
    
    
    735
    
    
    
    818
    
    
    
    (8,854
    )
    
    
    15,661Total liabilities
    
    
    21,806
    
    
    
    15,480
    
    
    
    5,621
    
    
    
    1,940
    
    
    
    (22,046
    )
    
    
    22,801Total majority interest
    
    
    7,426
    
    
    
    4,099
    
    
    
    4,453
    
    
    
    1,265
    
    
    
    (9,817
    )
    
    
    7,426Minority interest in consolidated
subsidiaries
    
    
    
    
    
    
    
    
    
    
    1,594
    
    
    
    
    
    
    
    366
    
    
    
    1,960Total stockholders equity
    
    
    7,426
    
    
    
    4,099
    
    
    
    6,047
    
    
    
    1,265
    
    
    
    (9,451
    )
    
    
    9,386Total liabilities and
stockholders equity
    
    Ps.
    29,232
    
    
    Ps.
    19,579
    
    
    Ps.
    11,668
    
    
    Ps.
    3,205
    
    
    Ps.
    (31,497
    )
    
    Ps.
    32,187
  F-77




---



##### Table of Contents



Combined
    
    
    Consolidated
    
    
    Combined
    
    
    AdjustmentsWholly-Owned
    
    
    Viméxico and
    
    
    Non-
    
    
    and
    
    
    VitroAs of December 31, 2008
    
    Vitro
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash, trade receivables and other
current assets
    
    Ps.
    7,204
    
    
    Ps.
    4,000
    
    
    Ps.
    2,451
    
    
    Ps.
    587
    
    
    Ps.
    (9,478
    )
    
    Ps.
    4,764Retained undivided interests in
securitized receivables
    
    
    
    
    
    
    487
    
    
    
    726
    
    
    
    
    
    
    
    
    
    
    
    1,213Inventories, net
    
    
    
    
    
    
    1,991
    
    
    
    2,199
    
    
    
    4
    
    
    
    (16
    )
    
    
    4,178Current assets
    
    
    7,204
    
    
    
    6,478
    
    
    
    5,376
    
    
    
    591
    
    
    
    (9,494
    )
    
    
    10,155Property, plant and equipment, net
    
    
    1,377
    
    
    
    8,738
    
    
    
    5,813
    
    
    
    1,843
    
    
    
    (498
    )
    
    
    17,273Deferred taxes
    
    
    202
    
    
    
    1,959
    
    
    
    1,318
    
    
    
    13
    
    
    
    (74
    )
    
    
    3,418Other assets
    
    
    17,772
    
    
    
    5,167
    
    
    
    1,444
    
    
    
    72
    
    
    
    (21,353
    )
    
    
    3,102Long-term assets
    
    
    19,351
    
    
    
    15,864
    
    
    
    8,575
    
    
    
    1,928
    
    
    
    (21,925
    )
    
    
    23,793Total assets
    
    Ps.
    26,555
    
    
    Ps.
    22,342
    
    
    Ps.
    13,951
    
    
    Ps.
    2,519
    
    
    Ps.
    (31,419
    )
    
    Ps.
    33,948Short-term borrowings
    
    Ps.
    17,354
    
    
    Ps.
    415
    
    
    Ps.
    719
    
    
    Ps.
    
    
    
    Ps.
    
    
    
    Ps.
    18,488Derivative financial instruments
    
    
    
    
    
    
    4,031
    
    
    
    986
    
    
    
    
    
    
    
    (1,240
    )
    
    
    3,777Accrued expenses and other
current liabilities
    
    
    6,760
    
    
    
    5,109
    
    
    
    6,049
    
    
    
    1,284
    
    
    
    (13,119
    )
    
    
    6,083Current liabilities
    
    
    24,114
    
    
    
    9,555
    
    
    
    7,754
    
    
    
    1,284
    
    
    
    (14,359
    )
    
    
    28,348Long-term liabilities
    
    
    737
    
    
    
    9,041
    
    
    
    803
    
    
    
    1,187
    
    
    
    (9,276
    )
    
    
    2,492Total liabilities
    
    
    24,851
    
    
    
    18,596
    
    
    
    8,557
    
    
    
    2,471
    
    
    
    (23,635
    )
    
    
    30,840Total majority interest
    
    
    1,704
    
    
    
    3,746
    
    
    
    1,377
    
    
    
    48
    
    
    
    (5,171
    )
    
    
    1,704Minority interest in consolidated
subsidiaries
    
    
    
    
    
    
    
    
    
    
    4,017
    
    
    
    
    
    
    
    (2,613
    )
    
    
    1,404Total stockholders equity
    
    
    1,704
    
    
    
    3,746
    
    
    
    5,394
    
    
    
    48
    
    
    
    (7,784
    )
    
    
    3,108Total liabilities and stockholders equity
    
    Ps.
    26,555
    
    
    Ps.
    22,342
    
    
    Ps.
    13,951
    
    
    Ps.
    2,519
    
    
    Ps.
    (31,419
    )
    
    Ps.
    33,948
  F-78




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##### Table of Contents



b)
  
  Supplemental condensed consolidating statements of operations presented in accordance with
MFRS: Combined
    
    
    Consolidated
    
    
    Combined
    
    
    AdjustmentsWholly-Owned
    
    
    Viméxico and
    
    
    Non-
    
    
    And
    
    
    VitroFor the year ended December 31, 2006
    
    Vitro
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales and equity in earnings of
subsidiaries
    
    Ps.
    566
    
    
    Ps.
    12,923
    
    
    Ps.
    13,462
    
    
    Ps.
    2,255
    
    
    Ps.
    (1,330
    )
    
    Ps.
    27,876Cost of sales
    
    
    
    
    
    
    8,979
    
    
    
    9,959
    
    
    
    1,313
    
    
    
    (21
    )
    
    
    20,230Selling, general and administrative expenses
    
    
    87
    
    
    
    2,315
    
    
    
    3,085
    
    
    
    871
    
    
    
    (829
    )
    
    
    5,529Total financing cost
    
    
    374
    
    
    
    1,242
    
    
    
    631
    
    
    
    49
    
    
    
    (20
    )
    
    
    2,276Other expenses (income), net
    
    
    3
    
    
    
    13
    
    
    
    450
    
    
    
    114
    
    
    
    (809
    )
    
    
    (229
    )Income tax expense (benefit)
    
    
    150
    
    
    
    212
    
    
    
    (77
    )
    
    
    46
    
    
    
    (103
    )
    
    
    228Net (loss) income from continuing operations
    
    
    (48
    )
    
    
    162
    
    
    
    (586
    )
    
    
    (138
    )
    
    
    452
    
    
    
    (158
    )Income (loss) from discontinued operations
    
    
    449
    
    
    
    
    
    
    
    
    
    
    
    (31
    )
    
    
    31
    
    
    
    449Net income (loss) for the year
    
    
    401
    
    
    
    162
    
    
    
    (586
    )
    
    
    (169
    )
    
    
    483
    
    
    
    291Net minority income (loss)
    
    
    
    
    
    
    
    
    
    
    188
    
    
    
    
    
    
    
    (298
    )
    
    
    (110
    )Net majority income (loss)
    
    Ps.
    401
    
    
    Ps.
    162
    
    
    Ps.
    (774
    )
    
    Ps.
    (169
    )
    
    Ps.
    781
    
    
    Ps.
    401
 Combined
    
    
    Consolidated
    
    
    Combined
    
    
    AdjustmentsWholly-Owned
    
    
    Viméxico and
    
    
    Non-
    
    
    And
    
    
    VitroFor the year ended December 31, 2007
    
    Vitro
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales and equity in earnings of subsidiaries
    
    Ps.
    775
    
    
    Ps.
    13,487
    
    
    Ps.
    13,605
    
    
    Ps.
    2,511
    
    
    Ps.
    (1,787
    )
    
    Ps.
    28,591Cost of sales
    
    
    
    
    
    
    9,255
    
    
    
    9,578
    
    
    
    1,556
    
    
    
    (202
    )
    
    
    20,187Selling, general and administrative expenses
    
    
    100
    
    
    
    2,360
    
    
    
    3,245
    
    
    
    859
    
    
    
    (864
    )
    
    
    5,700Total financing cost
    
    
    803
    
    
    
    797
    
    
    
    443
    
    
    
    66
    
    
    
    (449
    )
    
    
    1,660Other (income) expenses, net
    
    
    (2
    )
    
    
    544
    
    
    
    91
    
    
    
    56
    
    
    
    180
    
    
    
    869Income tax (benefit) expense
    
    
    (113
    )
    
    
    360
    
    
    
    152
    
    
    
    36
    
    
    
    (391
    )
    
    
    44Net (loss) income for the year
    
    
    (13
    )
    
    
    171
    
    
    
    96
    
    
    
    (62
    )
    
    
    (61
    )
    
    
    131Net minority income (loss)
    
    
    
    
    
    
    
    
    
    
    182
    
    
    
    
    
    
    
    (38
    )
    
    
    144Net majority (loss) income
    
    Ps.
    (13
    )
    
    Ps.
    171
    
    
    Ps.
    (86
    )
    
    Ps.
    (62
    )
    
    Ps.
    (23
    )
    
    Ps.
    (13
    )
  F-79




---



##### Table of Contents



Combined
    
    
    Consolidated
    
    
    Combined
    
    
    AdjustmentsWholly-Owned
    
    
    Viméxico and
    
    
    Non-
    
    
    And
    
    
    VitroFor the year ended December 31, 2008
    
    Vitro
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales and equity in earnings of
subsidiaries
    
    Ps.
    (628
    )
    
    Ps.
    14,752
    
    
    Ps.
    13,230
    
    
    Ps.
    2,537
    
    
    Ps.
    (878
    )
    
    Ps.
    29,013Cost of sales
    
    
    
    
    
    
    10,633
    
    
    
    9,703
    
    
    
    1,573
    
    
    
    (630
    )
    
    
    21,279Selling, general and administrative
expenses
    
    
    161
    
    
    
    2,175
    
    
    
    3,341
    
    
    
    918
    
    
    
    (571
    )
    
    
    6,024Total financing cost
    
    
    5,294
    
    
    
    5,616
    
    
    
    1,398
    
    
    
    189
    
    
    
    (3,420
    )
    
    
    9,077Other (income) expenses, net
    
    
    25
    
    
    
    (257
    )
    
    
    141
    
    
    
    4
    
    
    
    577
    
    
    
    490Income tax (benefit) expense
    
    
    (402
    )
    
    
    (847
    )
    
    
    (735
    )
    
    
    10
    
    
    
    (201
    )
    
    
    (2,175
    )Net (loss) income for the year
    
    
    (5,706
    )
    
    
    (2,568
    )
    
    
    (618
    )
    
    
    (157
    )
    
    
    3,367
    
    
    
    (5,682
    )Net minority income (loss)
    
    
    
    
    
    
    
    
    
    
    206
    
    
    
    
    
    
    
    182
    
    
    
    24Net majority (loss) income
    
    Ps.
    (5,706
    )
    
    Ps.
    (2,568
    )
    
    Ps.
    (824
    )
    
    Ps.
    (157
    )
    
    Ps.
    3,549
    
    
    Ps.
    (5,706
    )
  F-80




---



##### Table of Contents



c)
  
  Supplemental condensed consolidating statements of changes in financial position presented in
accordance with MFRS: Combined
    
    
    Consolidated
    
    
    Combined
    
    
    AdjustmentsWholly-Owned
    
    
    Viméxico and
    
    
    Non-
    
    
    and
    
    
    VitroFor the year ended December 31, 2006
    
    Vitro
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedOperating Activities:Net income (loss) from continuing
operations
    
    Ps.
    (48
    )
    
    Ps.
    162
    
    
    Ps.
    (586
    )
    
    Ps.
    (138
    )
    
    Ps.
    452
    
    
    Ps.
    (158
    )Depreciation and amortization
    
    
    11
    
    
    
    1,049
    
    
    
    598
    
    
    
    137
    
    
    
    
    
    
    
    1,795Provision for employee retirement
obligations
    
    
    
    
    
    
    286
    
    
    
    138
    
    
    
    3
    
    
    
    
    
    
    
    427Amortization of debt issuance costs
    
    
    77
    
    
    
    84
    
    
    
    37
    
    
    
    
    
    
    
    
    
    
    
    198Write-off and loss from sale of assets
    
    
    (882
    )
    
    
    (56
    )
    
    
    465
    
    
    
    58
    
    
    
    13
    
    
    
    (402
    )Other non-cash charges
    
    
    (833
    )
    
    
    (1,408
    )
    
    
    (384
    )
    
    
    3
    
    
    
    2,494
    
    
    
    (128
    )(Increase) decrease in inventories
    
    
    
    
    
    
    (165
    )
    
    
    451
    
    
    
    (73
    )
    
    
    10
    
    
    
    223Changes in other current assets and
liabilities
    
    
    2,284
    
    
    
    (393
    )
    
    
    (815
    )
    
    
    (77
    )
    
    
    (1,284
    )
    
    
    (285
    )Employee retirement obligations
    
    
    
    
    
    
    (406
    )
    
    
    (188
    )
    
    
    (2
    )
    
    
    7
    
    
    
    (589
    )Net resources generated by (used in)
operating activities
    
    
    609
    
    
    
    (847
    )
    
    
    (284
    )
    
    
    (89
    )
    
    
    1,692
    
    
    
    1,081Financing Activities:Banks loans, net
    
    
    (1,506
    )
    
    
    358
    
    
    
    (2,214
    )
    
    
    202
    
    
    
    26
    
    
    
    (3,134
    )Issuance of capital stock
    
    
    578
    
    
    
    
    
    
    
    1,526
    
    
    
    
    
    
    
    (1,526
    )
    
    
    578Other financing activities
    
    
    (26
    )
    
    
    5
    
    
    
    469
    
    
    
    438
    
    
    
    (946
    )
    
    
    (60
    )Net resources (used in) generated by
financing activities
    
    
    (954
    )
    
    
    363
    
    
    
    (219
    )
    
    
    640
    
    
    
    (2,446
    )
    
    
    (2,616
    )Investing Activities:Investments in land, buildings, machinery
And equipment
    
    
    (507
    )
    
    
    (848
    )
    
    
    (330
    )
    
    
    (116
    )
    
    
    549
    
    
    
    (1,252
    )Proceeds from sale of land, machinery
And equipment
    
    
    1,404
    
    
    
    504
    
    
    
    339
    
    
    
    53
    
    
    
    (607
    )
    
    
    1,693Restricted cash
    
    
    
    
    
    
    35
    
    
    
    281
    
    
    
    103
    
    
    
    
    
    
    
    419Investments in subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (218
    )
    
    
    
    
    
    
    (218
    )Proceeds from sale of subsidiaries
And associated companies
    
    
    681
    
    
    
    65
    
    
    
    177
    
    
    
    
    
    
    
    291
    
    
    
    1,214Other investing activities
    
    
    (562
    )
    
    
    (5
    )
    
    
    (117
    )
    
    
    (376
    )
    
    
    521
    
    
    
    (539
    )Net resources generated by (used in)
investing activities
    
    
    1,016
    
    
    
    (249
    )
    
    
    350
    
    
    
    (554
    )
    
    
    754
    
    
    
    1,317Net increase (decrease) in cash and
cash equivalents
    
    
    671
    
    
    
    (733
    )
    
    
    (153
    )
    
    
    (3
    )
    
    
    
    
    
    
    (218
    )Balance at beginning of year
    
    
    2
    
    
    
    968
    
    
    
    323
    
    
    
    147
    
    
    
    
    
    
    
    1,440Balance at end of year
    
    Ps.
    673
    
    
    Ps.
    235
    
    
    Ps.
    170
    
    
    Ps.
    144
    
    
    Ps.
    
    
    
    Ps.
    1,222
  F-81




---



##### Table of Contents



Combined
    
    
    Consolidated
    
    
    Combined
    
    
    AdjustmentsWholly-Owned
    
    
    Viméxico and
    
    
    Non-
    
    
    And
    
    
    VitroFor the year ended December 31, 2007
    
    Vitro
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedOperating Activities:Net (loss) income
    
    Ps.
    (13
    )
    
    Ps.
    171
    
    
    Ps.
    96
    
    
    Ps.
    (62
    )
    
    Ps.
    (61
    )
    
    Ps.
    131Depreciation and amortization
    
    
    15
    
    
    
    771
    
    
    
    480
    
    
    
    148
    
    
    
    
    
    
    
    1,414Provision for employee retirement obligations
    
    
    
    
    
    
    176
    
    
    
    57
    
    
    
    28
    
    
    
    
    
    
    
    261Amortization of debt issuance costs
    
    
    24
    
    
    
    142
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    170Impairment of long-lived assets
    
    
    
    
    
    
    
    
    
    
    91
    
    
    
    31
    
    
    
    
    
    
    
    122Loss (gain) from sale of long-lived assets
    
    
    
    
    
    
    (89
    )
    
    
    (55
    )
    
    
    
    
    
    
    191
    
    
    
    47Derivative financial instruments
    
    
    87
    
    
    
    100
    
    
    
    29
    
    
    
    
    
    
    
    
    
    
    
    216Deferred taxes
    
    
    (113
    )
    
    
    (183
    )
    
    
    (104
    )
    
    
    3
    
    
    
    47
    
    
    
    (351
    )Other non-cash charges
    
    
    296
    
    
    
    22
    
    
    
    20
    
    
    
    
    
    
    
    (230
    )
    
    
    108(Increase) decrease in trade receivables
    
    
    
    
    
    
    171
    
    
    
    (194
    )
    
    
    (39
    )
    
    
    (145
    )
    
    
    (207
    )(Increase) decrease in inventories
    
    
    
    
    
    
    (334
    )
    
    
    (19
    )
    
    
    42
    
    
    
    3
    
    
    
    (308
    )Increase (decrease) in trade payables
    
    
    
    
    
    
    
    
    
    
    223
    
    
    
    55
    
    
    
    (35
    )
    
    
    243Changes in other current assets and liabilities
    
    
    741
    
    
    
    (462
    )
    
    
    105
    
    
    
    (32
    )
    
    
    77
    
    
    
    429Employee retirement obligations
    
    
    
    
    
    
    (351
    )
    
    
    (101
    )
    
    
    (20
    )
    
    
    
    
    
    
    (472
    )Net resources generated by (used in)
operating activities
    
    
    1,037
    
    
    
    134
    
    
    
    632
    
    
    
    154
    
    
    
    (154
    )
    
    
    1,803Financing Activities:Banks loans, net
    
    
    9,959
    
    
    
    (7,839
    )
    
    
    (270
    )
    
    
    243
    
    
    
    (22
    )
    
    
    2,071Debt issuance cost
    
    
    (76
    )
    
    
    (208
    )
    
    
    (9
    )
    
    
    
    
    
    
    
    
    
    
    (293
    )Dividends paid
    
    
    (136
    )
    
    
    
    
    
    
    (51
    )
    
    
    (101
    )
    
    
    73
    
    
    
    (215
    )Other financing activities
    
    
    (10,266
    )
    
    
    7,939
    
    
    
    261
    
    
    
    134
    
    
    
    2,418
    
    
    
    486Net resources (used in) generated by
financing activities
    
    
    (519
    )
    
    
    (108
    )
    
    
    (69
    )
    
    
    276
    
    
    
    2,469
    
    
    
    2,049Investing Activities:Investments in land, buildings, machinery
and equipment
    
    
    (306
    )
    
    
    (1,919
    )
    
    
    (324
    )
    
    
    (445
    )
    
    
    299
    
    
    
    (2,695
    )Proceeds from sale of land, machinery
and
equipment
    
    
    
    
    
    
    239
    
    
    
    131
    
    
    
    1
    
    
    
    (299
    )
    
    
    72Restricted cash
    
    
    
    
    
    
    (322
    )
    
    
    (9
    )
    
    
    
    
    
    
    
    
    
    
    (331
    )Investments in subsidiaries
    
    
    (144
    )
    
    
    
    
    
    
    (181
    )
    
    
    
    
    
    
    144
    
    
    
    (181
    )Proceeds from sale of subsidiaries and
associated companies
    
    
    12
    
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37Other long-term assets
    
    
    
    
    
    
    
    
    
    
    49
    
    
    
    
    
    
    
    (85
    )
    
    
    (36
    )Deferred charges
    
    
    
    
    
    
    (80
    )
    
    
    (206
    )
    
    
    (16
    )
    
    
    
    
    
    
    (302
    )Other investing activities
    
    
    
    
    
    
    2,336
    
    
    
    
    
    
    
    38
    
    
    
    (2,374
    )
    
    
    Net resources (used in) generated by
investing activities
    
    
    (438
    )
    
    
    279
    
    
    
    (540
    )
    
    
    (422
    )
    
    
    (2,315
    )
    
    
    (3,436
    )Net increase in cash and cash equivalents
    
    
    80
    
    
    
    305
    
    
    
    23
    
    
    
    8
    
    
    
    
    
    
    
    416Balance at beginning of year
    
    
    673
    
    
    
    235
    
    
    
    170
    
    
    
    144
    
    
    
    
    
    
    
    1,222Balance at end of year
    
    Ps.
    753
    
    
    Ps.
    540
    
    
    Ps.
    193
    
    
    Ps.
    152
    
    
    Ps.
    
    
    
    Ps.
    1,638
  F-82




---



##### Table of Contents



d)
  
  Supplemental condensed consolidating statement of cash flows presented in accordance with
MFRS: Combined
    
    
    Consolidated
    
    
    Combined
    
    
    AdjustmentsWholly-Owned
    
    
    Viméxico and
    
    
    Non-
    
    
    And
    
    
    VitroFor the year ended December 31, 2008
    
    Vitro
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedOPERATING ACTIVITIES:Loss (income) before income taxes
    
    Ps.
    (6,108
    )
    
    Ps.
    (3,415
    )
    
    Ps.
    (1,353
    )
    
    Ps.
    (147
    )
    
    Ps.
    3,166
    
    
    Ps.
    (7,857
    )Items related to investing and financing
activities:Depreciation and amortization
    
    
    97
    
    
    
    749
    
    
    
    488
    
    
    
    149
    
    
    
    (14
    )
    
    
    1,469Other from operating activities
    
    
    1,716
    
    
    
    (230
    )
    
    
    (92
    )
    
    
    
    
    
    
    (1,402
    )
    
    
    (8
    )Impairment of long-lived assets
    
    
    
    
    
    
    
    
    
    
    196
    
    
    
    
    
    
    
    
    
    
    
    196Derivative financial instruments
    
    
    (21
    )
    
    
    3,254
    
    
    
    617
    
    
    
    
    
    
    
    (84
    )
    
    
    3,766Foreign exchange loss
    
    
    3,697
    
    
    
    1,210
    
    
    
    167
    
    
    
    (6
    )
    
    
    (1,453
    )
    
    
    3,614Interest expense
    
    
    1,646
    
    
    
    992
    
    
    
    610
    
    
    
    148
    
    
    
    (1,307
    )
    
    
    2,089Trade receivables
    
    
    
    
    
    
    354
    
    
    
    (372
    )
    
    
    7
    
    
    
    (306
    )
    
    
    (317
    )Other current assets and liabilities
    
    
    (302
    )
    
    
    426
    
    
    
    354
    
    
    
    (325
    )
    
    
    (330
    )
    
    
    (176
    )Income tax paid
    
    
    (127
    )
    
    
    (213
    )
    
    
    10
    
    
    
    (28
    )
    
    
    146
    
    
    
    (211
    )Net cash provided by operating activities
    
    
    598
    
    
    
    3,127
    
    
    
    625
    
    
    
    (202
    )
    
    
    (1,584
    )
    
    
    2,565INVESTING ACTIVITIESInvestments in machinery and equipment
    
    
    (44
    )
    
    
    (280
    )
    
    
    (136
    )
    
    
    (1,356
    )
    
    
    38
    
    
    
    (1,778
    )Other assets
    
    
    
    
    
    
    241
    
    
    
    (13
    )
    
    
    15
    
    
    
    89
    
    
    
    332Deferred charges
    
    
    (6
    )
    
    
    (137
    )
    
    
    (119
    )
    
    
    (38
    )
    
    
    38
    
    
    
    (262
    )Others from investing activities
    
    
    1,510
    
    
    
    305
    
    
    
    (657
    )
    
    
    (5
    )
    
    
    (1,155
    )
    
    
    (3
    )Net cash used in investing activities
    
    
    .         1,460
    
    
    
    129
    
    
    
    (925
    )
    
    
    (1,384
    )
    
    
    (990
    )
    
    
    (1,711
    )Excess cash to apply to financing activities
    
    
    2,058
    
    
    
    3,256
    
    
    
    (300
    )
    
    
    (1,586
    )
    
    
    (2,574
    )
    
    
    854FINANCING ACTIVITIES:Proceeds from short-term bank loans
    
    
    457
    
    
    
    312
    
    
    
    315
    
    
    
    71
    
    
    
    
    
    
    
    1,155Interest paid
    
    
    (1,447
    )
    
    
    (1,048
    )
    
    
    (645
    )
    
    
    (127
    )
    
    
    1,223
    
    
    
    (2,044
    )Proceeds from long-term bank loans
    
    
    400
    
    
    
    433
    
    
    
    88
    
    
    
    1,055
    
    
    
    
    
    
    
    1,976Payments of long-term bank loans
    
    
    (299
    )
    
    
    (644
    )
    
    
    (77
    )
    
    
    
    
    
    
    
    
    
    
    (1,020
    )Derivative financial instruments
    
    
    187
    
    
    
    (681
    )
    
    
    156
    
    
    
    
    
    
    
    (800
    )
    
    
    (1,138
    )Other financing activities
    
    
    (1,187
    )
    
    
    (2,491
    )
    
    
    584
    
    
    
    665
    
    
    
    2,153
    
    
    
    (276
    )Net cash provided by financing
activities
    
    
    (1,889
    )
    
    
    (4,119
    )
    
    
    421
    
    
    
    1,664
    
    
    
    2,576
    
    
    
    (1,347
    )Net decrease in cash and cash
equivalents
    
    
    169
    
    
    
    (863
    )
    
    
    121
    
    
    
    78
    
    
    
    2
    
    
    
    (493
    )Adjustment to cash flows due to
exchange rate fluctuations
    
    
    
    
    
    
    115
    
    
    
    (41
    )
    
    
    
    
    
    
    
    
    
    
    74Desconsolidation of subsidiary
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (105
    )
    
    
    
    
    
    
    (105
    )Cash and cash equivalents at the
beginning of year
(includes restricted cash of Ps. 388)
    
    
    753
    
    
    
    911
    
    
    
    211
    
    
    
    151
    
    
    
    
    
    
    
    2,026Cash and cash equivalents at the end of
year
(includes restricted cash of Ps. 74)
    
    Ps.
    922
    
    
    Ps.
    163
    
    
    Ps.
    291
    
    
    Ps.
    124
    
    
    Ps.
    2
    
    
    Ps.
    1,502
  F-83




---



##### Table of Contents



e)
  
  Supplemental condensed consolidating financial information reconciled from MFRS to U.S. GAAP:   CombinedWholly-
    
    
    Consolidated
    
    
    Combined
    
    
    AdjustmentsOwned
    
    
    Viméxico and
    
    
    Non-
    
    
    and
    
    
    VitroFor the year ended December 31, 2006
    
    Vitro
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet income (loss) of majority interest as
reported under MFRS
    
    Ps.
    401
    
    
    Ps.
    162
    
    
    Ps.
    (774
    )
    
    Ps.
    (169
    )
    
    Ps.
    781
    
    
    Ps.
    401U.S. GAAP adjustments:Effect of the adjustments below on
minority interest (see note 25 a)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26
    
    
    
    26Deferred income taxes (see note 25 b)
    
    
    233
    
    
    
    (137
    )
    
    
    (182
    )
    
    
    
    
    
    
    140
    
    
    
    54Negative goodwill and reduction in
depreciation expense (see note 25 c)
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30Deferred workers profit sharing (see
note 25 d)
    
    
    
    
    
    
    (36
    )
    
    
    (15
    )
    
    
    
    
    
    
    
    
    
    
    (51
    )Monetary position result on deferred
income taxes and deferred workers profit
sharing (see note 25 e)
    
    
    (2
    )
    
    
    33
    
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    44Capitalization of interest (see note 25 f)
    
    
    
    
    
    
    63
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    72Amortization of capitalized interest (see
note 25 f)
    
    
    
    
    
    
    (28
    )
    
    
    (8
    )
    
    
    
    
    
    
    
    
    
    
    (36
    )Effect of applying Bulletin B-10 (see
note 25 h)
    
    
    
    
    
    
    (119
    )
    
    
    (68
    )
    
    
    
    
    
    
    
    
    
    
    (187
    )Effect of applying Bulletin B-15 (see
note 25 i)
    
    
    1
    
    
    
    17
    
    
    
    4
    
    
    
    
    
    
    
    12
    
    
    
    34Discontinued operations (see note 25 k)
    
    
    (57
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (57
    )Employee retirement obligations (see note
25 m)
    
    
    
    
    
    
    20
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    31Purchase of
Visteons capital investment
(see note 25 n)
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1Sale of real estate (see 25 p)
    
    
    (815
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (815
    )Impairment of longlived assets (See note
25 q)
    
    
    
    
    
    
    
    
    
    
    379
    
    
    
    
    
    
    
    
    
    
    
    379Investment in subsidiaries
    
    
    135
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (135
    )
    
    
    Total U.S. GAAP adjustments
    
    
    (475
    )
    
    
    (187
    )
    
    
    144
    
    
    
    
    
    
    
    43
    
    
    
    (475
    )Net (loss) income under U.S. GAAP
    
    Ps.
    (74
    )
    
    Ps.
    (25
    )
    
    Ps.
    (630
    )
    
    Ps.
    (169
    )
    
    Ps.
    824
    
    
    Ps.
    (74
    )
  F-84




---



##### Table of Contents



Combined
    
    
    Consolidated
    
    
    Combined
    
    
    AdjustmentsWholly-Owned
    
    
    Viméxico and
    
    
    Non-
    
    
    and
    
    
    VitroFor the year ended December 31, 2007
    
    Vitro
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet income (loss) of majority interest as reported under MFRS
    
    Ps.
    (13
    )
    
    Ps.
    171
    
    
    Ps.
    (86
    )
    
    Ps.
    (62
    )
    
    Ps.
    (23
    )
    
    Ps.
    (13
    )U.S. GAAP adjustments:Effect of the adjustments below on minority interest(see note 25 a)
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    14
    
    
    
    17Deferred income taxes (see note 25 b)
    
    
    (120
    )
    
    
    110
    
    
    
    (37
    )
    
    
    
    
    
    
    102
    
    
    
    55Monetary position result on deferred income
taxes and deferred workers profit sharing
(see note 25 e)
    
    
    (10
    )
    
    
    24
    
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    31Capitalization of interest (see note 25 f)
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16Amortization of capitalized interest (see note 25 f)
    
    
    
    
    
    
    (32
    )
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    (36
    )Effect of applying Bulletin B-10 (see note 25 h)
    
    
    
    
    
    
    (15
    )
    
    
    (21
    )
    
    
    
    
    
    
    
    
    
    
    (36
    )Discontinued operations (see note 25 k)
    
    
    26
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26Employee retirement obligations (see note 25 m)
    
    
    
    
    
    
    (8
    )
    
    
    (7
    )
    
    
    
    
    
    
    
    
    
    
    (15
    )Purchase of Visteons capital investment
(see note 25 n)
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    5Sale of real state (see note 25 p)
    
    
    429
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    429Impairment of longlived assets (see note 25 q)
    
    
    
    
    
    
    
    
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    (10
    )Investment in subsidiaries
    
    
    157
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (157
    )
    
    
    Total U.S. GAAP adjustments
    
    
    482
    
    
    
    95
    
    
    
    (54
    )
    
    
    
    
    
    
    (41
    )
    
    
    482Net income (loss) under U.S. GAAP
    
    Ps.
    469
    
    
    Ps.
    266
    
    
    Ps.
    (140
    )
    
    Ps.
    (62
    )
    
    Ps
    (64
    )
    
    Ps.
    469
  F-85




---



##### Table of Contents



Combined
    
    
    Consolidated
    
    
    Combined
    
    
    AdjustmentsWholly-Owned
    
    
    Viméxico and
    
    
    Non-
    
    
    and
    
    
    VitroFor the year ended December 31, 2008
    
    Vitro
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet (loss) income of majority interest as
reported under MFRS
    
    Ps.
    (5,706
    )
    
    Ps.
    (2,568
    )
    
    Ps.
    (824
    )
    
    Ps.
    (157
    )
    
    Ps.
    3,549
    
    
    Ps.
    (5,706
    )U.S. GAAP adjustments:Effect of the adjustments below on
minority interest(see note 25 a)
    
    
    
    
    
    
    (9
    )
    
    
    48
    
    
    
    
    
    
    
    
    
    
    
    39Deferred income taxes (see note 25 b)
    
    
    108
    
    
    
    (870
    )
    
    
    55
    
    
    
    
    
    
    
    
    
    
    
    (707
    )Negative goodwill and reduction in
depreciation expense (see e)
    
    
    
    
    
    
    
    
    
    
    (43
    )
    
    
    
    
    
    
    
    
    
    
    (43
    )Capitalization of interest (see note 25 f)
    
    
    
    
    
    
    (358
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (358
    )Amortization of capitalized interest (see
note 25 f)
    
    
    
    
    
    
    (34
    )
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    (39
    )Effect of applying Bulletin B-10 (see
note 25 h)
    
    
    
    
    
    
    (21
    )
    
    
    18
    
    
    
    
    
    
    
    
    
    
    
    (3
    )Effect of SFAS No. 158 (see m)
    
    
    
    
    
    
    23
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23Derivative financial instruments (see j)
    
    
    
    
    
    
    58
    
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    75Employee retirement obligations (see
note 25 m)
    
    
    
    
    
    
    25
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    36Purchase of Visteons capital investment
(see note 25 n)
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    5Sale of real estate (see note 25 p)
    
    
    386
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    386Impairment of longlived assets (see note
25 q)
    
    
    
    
    
    
    
    
    
    
    (45
    )
    
    
    
    
    
    
    
    
    
    
    (45
    )Total U.S. GAAP adjustments
    
    
    494
    
    
    
    (1,186
    )
    
    
    61
    
    
    
    
    
    
    
    
    
    
    
    (631
    )Net income (loss) under U.S. GAAP
    
    Ps.
    (5,212
    )
    
    Ps.
    (3,754
    )
    
    Ps.
    (763
    )
    
    Ps.
    (157
    )
    
    Ps.
    3,549
    
    
    Ps.
    (6,337
    )
  F-86




---



##### Table of Contents



CombinedWholly-
    
    
    Consolidated
    
    
    Combined
    
    
    AdjustmentsOwned
    
    
    Viméxico and
    
    
    Non-
    
    
    and
    
    
    VitroAs of December 31, 2007
    
    Vitro
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedTotal stockholders equity reported under MFRS
    
    Ps.
    7,426
    
    
    Ps.
    4,099
    
    
    Ps.
    6,047
    
    
    Ps.
    1,265
    
    
    Ps.
    (9,451
    )
    
    Ps.
    9,386Less minority interest included as
stockholders equity under MFRS (see note 25
a)
    
    
    
    
    
    
    
    
    
    
    (1,594
    )
    
    
    
    
    
    
    (366
    )
    
    
    (1,960
    )Majority stockholders equity under MFRS
    
    
    7,426
    
    
    
    4,099
    
    
    
    4,453
    
    
    
    1,265
    
    
    
    (9,817
    )
    
    
    7,426U.S. GAAP adjustments:Effect of the adjustments below on minority
interest
(see note 25 a)
    
    
    
    
    
    
    
    
    
    
    (49
    )
    
    
    
    
    
    
    25
    
    
    
    (24
    )Deferred income taxes (see note 25 b)
    
    
    146
    
    
    
    (524
    )
    
    
    (541
    )
    
    
    6
    
    
    
    240
    
    
    
    (673
    )Capitalization of interest (see note 25 f)
    
    
    
    
    
    
    332
    
    
    
    42
    
    
    
    
    
    
    
    
    
    
    
    374Accumulated amortization of capitalized
interest
(see note 25 f)
    
    
    
    
    
    
    (163
    )
    
    
    (22
    )
    
    
    
    
    
    
    
    
    
    
    (185
    )Goodwill (see note 25 g)
    
    
    
    
    
    
    
    
    
    
    124
    
    
    
    
    
    
    
    
    
    
    
    124Effect of applying Bulletin B-10 (see note 25 h)
    
    
    
    
    
    
    21
    
    
    
    (18
    )
    
    
    
    
    
    
    
    
    
    
    3Effect of SFAS No. 158 (see note 25 m)
    
    
    
    
    
    
    (711
    )
    
    
    (163
    )
    
    
    (21
    )
    
    
    
    
    
    
    (895
    )Employee retirement obligations (see note
25 m)
    
    
    
    
    
    
    (61
    )
    
    
    (38
    )
    
    
    (1
    )
    
    
    
    
    
    
    (100
    )Purchase of Visteons capital investment
(see note 25n)
    
    
    
    
    
    
    
    
    
    
    (67
    )
    
    
    
    
    
    
    
    
    
    
    (67
    )Sale of real state (see note 25 p)
    
    
    (386
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (386
    )Impairment of long-lived assets (see note
25 q)
    
    
    ( 149
    )
    
    
    12
    
    
    
    390
    
    
    
    
    
    
    
    
    
    
    
    253Investment in subsidiaries
    
    
    (1,187
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,187
    
    
    
    Total U.S. GAAP adjustments
    
    
    (1,576
    )
    
    
    (1,094
    )
    
    
    (342
    )
    
    
    (16
    )
    
    
    1,452
    
    
    
    (1,576
    )Total stockholders equity under U.S. GAAP
    
    Ps.
    5,850
    
    
    Ps.
    3,005
    
    
    Ps.
    4,111
    
    
    Ps.
    1,249
    
    
    Ps.
    (8,365
    )
    
    Ps.
    5,850
  F-87




---



##### Table of Contents



CombinedWholly-
    
    
    Consolidated
    
    
    Combined
    
    
    AdjustmentsOwned
    
    
    Viméxico and
    
    
    Non-
    
    
    and
    
    
    VitroAs of December 31, 2008
    
    Vitro
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedTotal stockholders equity reported under
MFRS
    
    Ps.
    1,704
    
    
    Ps.
    3,746
    
    
    Ps.
    5,394
    
    
    Ps.
    48
    
    
    Ps.
    (7,784
    )
    
    Ps.
    3,108Less minority interest included as
stockholders equity under MFRS (see
note 25 a)
    
    
    
    
    
    
    
    
    
    
    (4,017
    )
    
    
    
    
    
    
    2,613
    
    
    
    (1,404
    )Majority stockholders equity under MFRS
    
    
    1,704
    
    
    
    3,746
    
    
    
    1,377
    
    
    
    48
    
    
    
    (5,171
    )
    
    
    1,704U.S. GAAP adjustments:Effect of the adjustments below on
minority interest
(see note 25 a)
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    22
    
    
    
    25Deferred income taxes (see note 25 b)
    
    
    38
    
    
    
    (872
    )
    
    
    (415
    )
    
    
    15
    
    
    
    
    
    
    
    (1,234
    )Capitalization of interest (see note 25 f)
    
    
    
    
    
    
    (26
    )
    
    
    42
    
    
    
    
    
    
    
    
    
    
    
    16Goodwill (see note 25 g)
    
    
    
    
    
    
    
    
    
    
    81
    
    
    
    
    
    
    
    
    
    
    
    81Accumulated amortization of capitalized
interest
(see note 25 f)
    
    
    
    
    
    
    (197
    )
    
    
    (27
    )
    
    
    
    
    
    
    
    
    
    
    (224
    )Effect of SFAS No. 158 (see note 25 m)
    
    
    
    
    
    
    (1,280
    )
    
    
    (414
    )
    
    
    (55
    )
    
    
    
    
    
    
    (1,749
    )Derivative financial instruments (see j)
    
    
    
    
    
    
    58
    
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    75Employee retirement obligations (see note
25 m)
    
    
    
    
    
    
    (36
    )
    
    
    (27
    )
    
    
    (1
    )
    
    
    
    
    
    
    (64
    )Purchase of Visteons capital investment
(see note 25n)
    
    
    
    
    
    
    
    
    
    
    (62
    )
    
    
    
    
    
    
    
    
    
    
    (62
    )Purchase of remaining 40% interest in Vitro
Cristalglass (see note 25 o)
    
    
    
    
    
    
    
    
    
    
    60
    
    
    
    
    
    
    
    
    
    
    
    60Impairment of long-lived assets (see note
25 p)
    
    
    (149
    )
    
    
    12
    
    
    
    345
    
    
    
    
    
    
    
    
    
    
    
    208Total U.S. GAAP adjustments
    
    
    (111
    )
    
    
    (2,341
    )
    
    
    (397
    )
    
    
    (41
    )
    
    
    22
    
    
    
    (2,868
    )Total stockholders equity (equity) under
U.S. GAAP
    
    Ps.
    1,593
    
    
    Ps.
    1,405
    
    
    Ps.
    980
    
    
    Ps.
    7
    
    
    Ps.
    (5,149
    )
    
    Ps.
    (1,164
    )
  F-88




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##### Table of Contents



f)
  
  Supplemental U.S. GAAP Cash Flow Information   CombinedWholly-
    
    
    Consolidated
    
    
    Combined
    
    
    AdjustmentsOwned
    
    
    Viméxico and
    
    
    Non-
    
    
    and
    
    
    VitroAs of December 31, 2006
    
    Vitro
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet cash provided by (used
in) operating activities
    
    Ps.
    427
    
    
    Ps.
    (657
    )
    
    Ps.
    (293
    )
    
    Ps.
    (72
    )
    
    Ps.
    1,498
    
    
    Ps.
    903Net cash (used in) provided
by financing activities
    
    
    (1,049
    )
    
    
    181
    
    
    
    (142
    )
    
    
    770
    
    
    
    (2,458
    )
    
    
    (2,698
    )Net cash provided by (used
in) investing activities
    
    
    1,270
    
    
    
    (181
    )
    
    
    308
    
    
    
    (695
    )
    
    
    978
    
    
    
    1,680
  Combined
    
    
    ConsolidatedWholly-
    
    
    Viméxico
    
    
    Combined
    
    
    AdjustmentsOwned
    
    
    and
    
    
    Non-
    
    
    and
    
    
    VitroAs of December 31, 2006
    
    Vitro
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedInterest paid
    
    Ps.
    549
    
    
    Ps.
    863
    
    
    Ps.
    658
    
    
    Ps.
    723
    
    
    Ps.
    (1,099
    )
    
    Ps.
    1,694Income taxes paid
    
    
    (1,847
    )
    
    
    1,675
    
    
    
    151
    
    
    
    29
    
    
    
    12
    
    
    
    20
 CombinedWholly-
    
    
    Consolidated
    
    
    Combined
    
    
    AdjustmentsOwned
    
    
    Viméxico and
    
    
    Non-
    
    
    and
    
    
    VitroAs of December 31, 2007
    
    Vitro
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet cash provided by
(used in) operating
activities
    
    Ps.
    547
    
    
    Ps.
    629
    
    
    Ps.
    549
    
    
    Ps.
    (30
    )
    
    Ps.
    (312
    )
    
    Ps.
    1,383Net cash (used in)
provided by financing
activities
    
    
    (4
    )
    
    
    (879
    )
    
    
    (7
    )
    
    
    141
    
    
    
    2,711
    
    
    
    1,962Net cash (used in)
provided by investing
activities
    
    
    (438
    )
    
    
    582
    
    
    
    (505
    )
    
    
    (116
    )
    
    
    (2,401
    )
    
    
    (2,878
    )
  F-89




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##### Table of Contents



Combined
    
    
    ConsolidatedWholly-
    
    
    Viméxico
    
    
    Combined
    
    
    AdjustmentsOwned
    
    
    and
    
    
    Non-
    
    
    and
    
    
    VitroAs of December 31, 2007
    
    Vitro
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedInterest paid
    
    Ps.
    914
    
    
    Ps.
    1,492
    
    
    Ps.
    373
    
    
    Ps.
    88
    
    
    Ps.
    (1,498
    )
    
    Ps.
    1,369Income taxes paid
    
    
    (581
    )
    
    
    834
    
    
    
    204
    
    
    
    10
    
    
    
    (26
    )
    
    
    441
 Combined
    
    
    ConsolidatedWholly-
    
    
    Viméxico
    
    
    Combined
    
    
    AdjustmentsOwned
    
    
    and
    
    
    Non-
    
    
    and
    
    
    VitroAs of December 31, 2008
    
    Vitro
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet cash provided by
(used in) operating
activities
    
    Ps.
    (662
    )
    
    Ps.
    1,673
    
    
    Ps.
    187
    
    
    Ps.
    (491
    )
    
    Ps.
    (1,421
    )
    
    
    (714
    )Net cash (used in)
provided by financing
activities
    
    
    (629
    )
    
    
    (2,389
    )
    
    
    909
    
    
    
    1,750
    
    
    
    2,153
    
    
    
    1,794Net cash (used in)
provided by investing
activities
    
    
    1,460
    
    
    
    168
    
    
    
    (977
    )
    
    
    (1,130
    )
    
    
    (730
    )
    
    
    (1,209
    )
  Combined
    
    
    ConsolidatedWholly-
    
    
    Viméxico
    
    
    Combined
    
    
    AdjustmentsOwned
    
    
    and
    
    
    Non-
    
    
    and
    
    
    VitroAs of December 31, 2008
    
    Vitro
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedInterest paid
    
    Ps.
    1,447
    
    
    Ps.
    1,048
    
    
    Ps.
    645
    
    
    Ps.
    127
    
    
    Ps.
    (1,274
    )
    
    Ps.
    1,993Income taxes paid
    
    
    127
    
    
    
    213
    
    
    
    10
    
    
    
    2
    
    
    
    (167
    )
    
    
    185
  F-90




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##### Table of Contents



Viméxico, S.A. de C.V. and Subsidiaries
 Report of Independent Registered Public Accounting Firm and
Consolidated Financial Statements for 2006, 2007 and 2008
 Table
of contents
 PageReport of Independent Registered Public Accounting Firm
    
    
    F-92 - F-93Consolidated Balance Sheets
    
    
    F-94Consolidated Statements of Operations
    
    
    F-95Consolidated Statements of Changes in Stockholders Equity
    
    
    F-96Consolidated Statements of Changes in Financial Position
    
    
    F-97Consolidated Statement of Cash Flows
    
    
    F-98Notes to Consolidated Financial Statements
    
    
    F-99
  F-91




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 To the Board of Directors and Stockholders of
Vimexico, S.A. de C.V.
Garza Garcia, N.L., Mexico
         F-92




---



##### Table of Contents



F-93




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##### Table of Contents



Viméxico, S.A. de C.V. and Subsidiaries
 
 Consolidated Balance Sheets
 As of December 31, 2007 and 2008
 (Millions of Mexican pesos)
 2007
    
    
    2008AssetsCash and cash equivalents
    
    Ps.
    193
    
    
    Ps.
    271Trade receivable, net
    
    
    670
    
    
    
    755Retained undivided interests in securitized receivables
    
    
    656
    
    
    
    726Taxes receivable
    
    
    8
    
    
    
    203Other receivable
    
    
    431
    
    
    
    1,222Inventories
    
    
    2,000
    
    
    
    2,199Current assets
    
    
    3,958
    
    
    
    5,376Land and buildings, net
    
    
    2,658
    
    
    
    2,598Machinery and equipment, net
    
    
    2,943
    
    
    
    2,843Construction in progress
    
    
    176
    
    
    
    372Goodwill, net
    
    
    861
    
    
    
    771Employee retirement obligation asset
    
    
    
    
    
    
    66Deferred taxes
    
    
    570
    
    
    
    1,318Other assets
    
    
    502
    
    
    
    607Long-term assets
    
    
    7,710
    
    
    
    8,575Total assets
    
    Ps.
    11,668
    
    
    Ps.
    13,951LiabilitiesShort-term borrowings
    
    Ps.
    254
    
    
    Ps.
    671Current maturities of long-term debt
    
    
    27
    
    
    
    48Trade payables
    
    
    1,221
    
    
    
    1,028Accrued expenses
    
    
    391
    
    
    
    321Derivative financial instruments
    
    
    70
    
    
    
    986Accounts and notes payables to affiliates
    
    
    2,285
    
    
    
    2,789Other current liabilities
    
    
    638
    
    
    
    1,911Current liabilities
    
    
    4,886
    
    
    
    7,754Long-term debt
    
    
    127
    
    
    
    177Long-term notes payables to Vitro
    
    
    294
    
    
    
    374Employee retirement obligations
    
    
    39Deferred taxes
    
    
    76Other long-term liabilities
    
    
    199
    
    
    
    252Long-term liabilities
    
    
    735
    
    
    
    803Total liabilities
    
    
    5,621
    
    
    
    8,557Commitments and contingencies (note 11)Stockholders equityCapital stock
    
    
    4,721
    
    
    
    4,721Additional paid-in capital
    
    
    
    
    
    
    (1,885
    )Shortfall in restatement of capital
    
    
    (2,537
    )Cumulative initial effect of deferred taxes
    
    
    (1,644
    )Minimum labor liability adjustment
    
    
    (29
    )Translation effects of foreign subsidiaries
    
    
    
    
    
    
    (396
    )Retained earnings (accumulated déficit)
    
    
    3,942
    
    
    
    (1,063
    )Total majority interest
    
    
    4,453
    
    
    
    1,377Minority interest in consolidated subsidiaries
    
    
    1,594
    
    
    
    4,017Total stockholders equity
    
    
    6,047
    
    
    
    5,394Total liabilities and stockholders equity
    
    Ps.
    11,668
    
    
    Ps.
    13,951
   F-94




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##### Table of Contents



Viméxico, S.A. de C.V. and Subsidiaries
 
 Consolidated Statements of Operations
 For the years ended December 31, 2006, 2007 and 2008
 (Millions of Mexican pesos)
 2006
    
    
    2007
    
    
    2008Net sales
    
    Ps.
    13,462
    
    
    Ps.
    13,605
    
    
    Ps.
    13,230Cost of sales
    
    
    9,959
    
    
    
    9,578
    
    
    
    9,703Gross profit
    
    
    3,503
    
    
    
    4,027
    
    
    
    3,527Selling, general and administrative expenses
    
    
    3,085
    
    
    
    3,245
    
    
    
    3,341Operating income
    
    
    418
    
    
    
    782
    
    
    
    186Comprehensive financing result:Financing expenses, net
    
    
    724
    
    
    
    472
    
    
    
    610Exchange loss, net
    
    
    (28
    )
    
    
    (86
    )
    
    
    (171
    )Derivative financial instruments (loss) gain
    
    
    (28
    )
    
    
    3
    
    
    
    (617
    )Gain from monetary position
    
    
    149
    
    
    
    112631
    
    
    
    443
    
    
    
    1,398Operating income (loss) after financing cost
    
    
    (213
    )
    
    
    339
    
    
    
    (1,212
    )Other expenses, net
    
    
    450
    
    
    
    91
    
    
    
    141Income (loss) before taxes
    
    
    (663
    )
    
    
    248
    
    
    
    (1,353
    )Income taxes (benefit) expense
    
    
    (77
    )
    
    
    152
    
    
    
    (735
    )Net income (loss) for the year
    
    Ps.
    (586
    )
    
    Ps.
    96
    
    
    Ps.
    (618
    )Net minority income
    
    Ps.
    188
    
    
    Ps.
    182
    
    
    Ps.
    206Net majority loss
    
    
    (774
    )
    
    
    (86
    )
    
    
    (824
    )Consolidated net (loss) income
    
    Ps.
    (586
    )
    
    Ps.
    96
    
    
    Ps.
    (618
    )
   F-95




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##### Table of Contents



Viméxico, S.A. de C.V. and Subsidiaries
 
 Consolidated Statements of Changes in Stockholders Equity
 For the years ended December 31, 2006, 2007 and 2008
 (Millions of Mexican pesos)
 RetainedShortfall
    
    
    
    
    
    
    Translation effect
    
    
    earningsCapital
    
    
    Additional
    
    
    in restatement
    
    
    Other reserves
    
    
    of foreign
    
    
    (accumulated
    
    
    Minority
    
    
    Stockholdersstock
    
    

paid-in capital
    
    
    of capital
    
    
    (1)
    
    
    subsidiaries
    
    
    deficit)
    
    
    interest
    
    
    equityBalance at January 1, 2006
    
    Ps.
    3,195
    
    
    
    
    
    
    Ps.
    (2,547
    )
    
    Ps.
    (1,740
    )
    
    
    
    
    
    Ps.
    4,802
    
    
    Ps.
    1,587
    
    
    Ps.
    5,297Increase of capital
    
    
    1,526
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,526Dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (54
    )
    
    
    (54
    )Decrease in minority interest
    
    
    
    
    
    
    
    
    
    
    69
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (325
    )
    
    
    (256
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    (15
    )
    
    
    
    
    
    
    
    
    
    
    (774
    )
    
    
    230
    
    
    
    (559
    )Balance at December 31, 2006
    
    
    4,721
    
    
    
    
    
    
    
    (2,493
    )
    
    
    (1,740
    )
    
    
    
    
    
    
    4,028
    
    
    
    1,438
    
    
    
    5,954Dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (51
    )
    
    
    (51
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    (44
    )
    
    
    67
    
    
    
    
    
    
    
    (86
    )
    
    
    207
    
    
    
    144Balance at December 31, 2007
    
    
    4,721
    
    
    
    
    
    
    
    (2,537
    )
    
    
    (1,673
    )
    
    
    
    
    
    
    3,942
    
    
    
    1,594
    
    
    
    6,047Reclassification for
adoption of new Mexican
Financial Reporting
Standards
    
    
    
    
    
    
    
    
    
    
    2,537
    
    
    
    1,673
    
    
    
    
    
    
    
    (4,181
    )
    
    
    
    
    
    
    29Dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (108
    )
    
    
    (108
    )Capital distribution
    
    
    
    
    
    Ps.
    (1,825
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,825Decrease in minority interest
    
    
    
    
    
    
    (60
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (375
    )
    
    
    (435
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Ps.
    (396
    )
    
    
    (824
    )
    
    
    1,081
    
    
    
    (139
    )Balance at December 31, 2008
    
    Ps.
    4,721
    
    
    Ps.
    (1,885
    )
    
    Ps.
    
    
    
    Ps.
    
    
    
    Ps.
    (396
    )
    
    Ps.
    (1,063
    )
    
    Ps.
    4,017
    
    
    Ps.
    5,394
 (1)
    
    Includes the initial cumulative effect of deferred tax and the additional minimum liability
related to employee retirement obligations.   F-96




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##### Table of Contents



Viméxico, S.A. de C.V. and Subsidiaries
 
 Consolidated Statements of Changes in Financial Position
 For the years ended December 31, 2006 and 2007
 (Millions of Mexican pesos)
 2006
    
    
    2007Operating activities:Net (loss) income
    
    Ps.
    (586
    )
    
    Ps.
    96Add (deduct) non-cash items:Depreciation and amortization
    
    
    598
    
    
    
    480Provision for employee retirement obligations
    
    
    138
    
    
    
    57Early extinguishment of employee retirement obligations
    
    
    1
    
    
    
    20Amortization of debt issuance costs
    
    
    37
    
    
    
    4Income from sale of subsidiaries and associated companies
    
    
    (100
    )Impairment of long-lived assets
    
    
    334
    
    
    
    91Loss (gain) from sale of long-lived assets
    
    
    131
    
    
    
    (55
    )Mark-to market of derivative financial instruments
    
    
    (28
    )
    
    
    29Deferred taxes and workers profit sharing
    
    
    (257
    )
    
    
    (104
    )268
    
    
    
    618Decrease (increase) in trade receivables
    
    
    148
    
    
    
    (194
    )(Increase) decrease in inventories
    
    
    451
    
    
    
    (19
    )Increase in trade payables
    
    
    1
    
    
    
    223(Increase) decrease in retained undivided interests in securitized receivables
    
    
    (19
    )
    
    
    37Change in other current assets and liabilities, net
    
    
    (945
    )
    
    
    68Employee retirement obligations
    
    
    (188
    )
    
    
    (101
    )Net resources (used in) generated by operating activities
    
    
    (284
    )
    
    
    632Financing activities:Notes payables affiliated
    
    
    448
    
    
    
    317Proceeds from short- term bank loans
    
    
    1,317
    
    
    
    557Proceeds from long- term bank loans
    
    
    47
    
    
    
    145Amortization in real terms of bank loans
    
    
    (64
    )
    
    
    (24
    )Payment of short-term bank loans
    
    
    (1,837
    )
    
    
    (564
    )Payment of long-term bank loans
    
    
    (1,677
    )
    
    
    (384
    )Debt issuance costs
    
    
    (2
    )
    
    
    (9
    )Increase of capital stock
    
    
    1,526Dividends paid to minority interest
    
    
    (54
    )
    
    
    (51
    )Other financing activities
    
    
    77
    
    
    
    (56
    )Net resources used in financing activities
    
    
    (219
    )
    
    
    (69
    )Investing activities:Investments in land, buildings, machinery and equipment
    
    
    (330
    )
    
    
    (324
    )Proceeds from sale of land, buildings, machinery and equipment
    
    
    339
    
    
    
    131Restricted cash
    
    
    281
    
    
    
    (9
    )Investment in subsidiaries
    
    
    
    
    
    
    (181
    )Proceeds from sale of subsidiaries and associated companies
    
    
    177Capital distribution to minority interest
    
    
    (109
    )Accounts receivables long-term
    
    
    96
    
    
    
    53Other long-term assets
    
    
    (2
    )
    
    
    (4
    )Deferred charges
    
    
    (102
    )
    
    
    (206
    )Net resources generated by (used in) investing activities
    
    
    350
    
    
    
    (540
    )Net (decrease) increase in cash and cash equivalents
    
    
    (153
    )
    
    
    23Balance at beginning of year
    
    
    323
    
    
    
    170Balance at end of year
    
    Ps.
    170
    
    
    Ps.
    193
   F-97




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##### Table of Contents



Viméxico, S.A. de C.V. and Subsidiaries
 
 Consolidated Statement of Cash Flows
 For the year ended December 31, 2008
 (Millions of Mexican pesos)
 2008OPERATING ACTIVITIES:Loss before income taxes
    
    Ps.
    (1,353
    )Items related to investing activities:Depreciation and amortization
    
    
    488Gain from sale of long-lived assets
    
    
    (92
    )Impairment of long-lived assets
    
    
    196Foreign exchange loss
    
    
    (7
    )Interest income
    
    
    (50
    )Items related to financing activities:Derivative financial instruments
    
    
    617Foreign exchange loss
    
    
    174Interest expense
    
    
    660Variation in:Trade receivables
    
    
    40Inventories
    
    
    44Trade payables
    
    
    (372
    )Other current assets and liabilities
    
    
    273Employee retirement obligations
    
    
    (3
    )Income taxes received
    
    
    10Net cash provided by operating activities
    
    
    625INVESTING ACTIVITIESInvestments in machinery and equipment
    
    
    (286
    )Proceeds from sale of machinery and equipment
    
    
    150Investment in subsidiaries
    
    
    (43
    )Other assets
    
    
    7Deferred charges
    
    
    (119
    )Interest received
    
    
    49Trade receivables to affiliates
    
    
    (663
    )Capital distribution to minority interest
    
    
    (20
    )Net cash used in investing activities
    
    
    (925
    )To obtain cash from financing activities
    
    
    (300
    )FINANCING ACTIVITIES:Proceeds from short-term bank loans
    
    
    315Interest paid
    
    
    (645
    )Dividends paid to minority interest
    
    
    (108
    )Proceeds from long-term bank loans
    
    
    88Payments of long-term bank loans
    
    
    (77
    )Notes payables to affiliates
    
    
    529Derivative financial instruments
    
    
    156Other financing activities
    
    
    163Net cash provided by financing activities
    
    
    421Net increase in cash and cash equivalents
    
    
    121Adjustment to cash flows due to exchange rate fluctuations
    
    
    (41
    )Cash and cash equivalents at the beginning of year

(includes restricted cash of Ps. 18)
    
    
    211Cash and cash equivalents at the end of year

(includes restricted cash of Ps. 20)
    
    Ps.
    291
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Viméxico, S.A. de C.V. and Subsidiaries
 
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2006, 2007 and 2008
 (Millions of Mexican pesos)
 1.
    
    Activities of the company
   2.
    
    Basis of presentation and of consolidation
 a.
    
    Basis of presentation The accompanying consolidated financial statements of
Viméxico and its subsidiaries (the Company) are prepared on the basis of Mexican
Financial Reporting Standards (MFRS, individually referred to as Normas de Información
Financieraor NIFs).
    b.
    
    Consolidated subsidiaries Those companies in which Viméxico either, directly or
indirectly, controls are included in the consolidated financial statements. For those
companies in which Viméxico has joint control, the proportionate consolidation method is
used. This method consists of consolidating on a proportionate basis the assets,
liabilities, stockholders equity and revenues and expenses (see note 17 d). All
significant intercompany balances and transactions have been eliminated in
consolidation.
  F-99




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##### Table of Contents



% interest incapital stock2008Vidrio Plano de México, S.A. de C.V.
    
    
    100Vidrio Plano, S.A. de C.V.
    
    
    100Cristales Inastillables de México, S.A. de C.V.
    
    
    100Vitro Flex, S.A. de C.V.
    
    
    100Cristales Centroamericanos, S.A.
    
    
    100V.V.P. Holdings Corporation
    
    
    100Cristales Automotrices, S.A. de C.V.
    
    
    51Distribuidor Vidriero Lan, S.A. de C.V.
    
    
    100Vitro Automotriz, S.A. de C.V.
    
    
    100Vitro Vidrio y Cristal, S.A. de C.V.
    
    
    100Productos de Valor Agregado en Cristal, S.A. de C.V. (1)
    
    
    55Vitro Flotado Cubiertas, S.A. de C.V.
    
    
    100Vidrio Plano de Mexicali, S.A. de C.V.
    
    
    100Vidrio y Cristal del Noroeste, S.A. de C.V. (2)
    
    
    100Tecnológica Vitro Vidrio y Cristal, Ltd
    
    
    100IP Vitro Vidrio y Cristal, Ltd
    
    
    100VVP Europa Holdings BV
    
    
    100Vitro Cristalglass, S.L. (3)
    
    
    100Vitro Chaves Industria de Vidrio, S.A.
    
    
    60Vitro America, Inc.
    
    
    100Vitro Colombia, S.A.
    
    
    100
 (1)
    
    In August 2007, Vitro Vidrio y Cristal, S.A. de C.V. (Vitro VyC), a
subsidiary of Viméxico, acquired 55% of the outstanding shares of Productos de
Valor Agregado en Cristal, S.A. de C.V. (PVA) (see note 17 c).(2)
    
    In July 2007, the Company acquired the remaining 50% of the
outstanding shares of Vitro AFG, S.A. de C.V. (Vitro AFG) from AFG Industries Inc.
(AFG Industries), in order to assume control and increase its ownership to 100%,
subsequently changing its legal name to Vidrio y Cristal del Noroeste, S.A. de
C.V. (see note 17 d).(3)
    
    In August 2008, the purchase 40% of shares of Vitro Cristalglass was
considered legally perfected so that from September 2008 was 100% consolidated
(see note 17 e). c.
    
    Translation of financial statements from foreign subsidiaries To consolidate
financial statements of foreign subsidiaries, the accounting policies of the foreign
entity are converted to MFRS using the currency in which transactions are recorded. The
financial statements are subsequently translated to Mexican pesos considering the
following methodologies:
   F-100




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Company
    
    Recording currency
    
    Functional currencyCompanies in United States
    
    US dollar
    
    US dollarCompanies in Europe
    
    Euro
    
    Euro
 d.
    
    Comprehensive income (loss) Represents changes in stockholders equity during
the year, for concepts other than distributions and activity in contributed common
stock, and is comprised of the net income (loss) of the year, plus other comprehensive
income (loss) items of the same period, which are presented directly in stockholders
equity without affecting the consolidated statements of income. Other comprehensive
income (loss) items consist of the translation effects of foreign subsidiaries and,
until 2007, the shortfall in restatement of capital and the additional minimum labor
liability adjustment.
 e.
    
    Classification of costs and expenses Costs and expenses presented in the
consolidated statements of operations were classified according to their function which
allows for the analysis of the Companys gross margin.
 f.
    
    Income from operations The Company continues to present operating income in the
consolidated statements of operations as it is an important financial indicator within
the industry and helps to evaluate the Companys performance. Operating income includes
ordinary income and cost of sales as well as operating expenses. Such presentation is
comparable with what was utilized for the years ended December 31, 2006 and 2007.
 3.
    
    Significant accounting policies
  a.
    
    Changes in accounting policies
  
    
    NIF B-2, Statement of Cash Flows (NIF B-2) Supersedes Bulletin B-12, Statement
of Changes in Financial Position, which replaces the statement of changes in
financial position. NIF B-2 permits the presentation of such statement using
either the direct or the indirect method; the Company elected the indirect method.
The statement of cash flows is presented in nominal pesos. According to NIF B-2,
this standard should be recognized prospectively; consequently, the Company
presents a statement of cash flows for 2008 and statements of changes in financial
position for 2006 and 2007.
  F-101




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
    
    NIF B-10, Effects of inflation (NIF B-10) Considers two economic environments:
a) an inflationary environment, where cumulative inflation over a three-year period
is 26% or more, in which case, the effects of inflation need to be recognized, and
b) non-inflationary environment, where inflation is less than 26% in the same
period, in which case, the effects of inflation may not be recognized in the
financial statements. Also, NIF B-10 eliminates the replacement cost and specific
index valuation methods and requires that the gain (loss) from monetary position in
equity and the cumulative gain (loss) from holding non-monetary assets be
reclassified to retained earnings, except for the gain (loss) from holding
non-monetary assets that is identified with inventories or fixed assets that have
not been realized as of the effective date of this standard. Such amounts should be
maintained in stockholders equity and realized within current earnings of the
period in which such assets are depreciated or sold. The Company determined it was
impractical to identify the gain (loss) from monetary position in equity and the
cumulative gain (loss) from holding non-monetary assets relating to unrealized
assets as of January 1, 2008; therefore, on that date, the Company reclassified the
entire balance of excess (shortfall) in restatement of capital stockholders equity
of Ps. 2,537. NIF B-10 establishes that this accounting change be recognized
prospectively.
  
    
    NIF B-15, Foreign Currency Translation (NIF B-15) Eliminates the
classification of foreign operations as integrated foreign operations and
autonomous foreign entities and instead establishes the concepts of recording
currency, functional currency and reporting currency. NIF B-15 establishes the
procedures to translate the financial information of a foreign operation: i) from
the recording currency to the functional currency; and, ii) from the functional
currency to the reporting currency. NIF B-15 also allows an entity to present its
financial statements in a reporting currency that is different from its functional
currency (See note 2 c).
 
    
    NIF D-3, Employee Benefits (NIF D-3) Incorporates current and deferred
statutory employee profit sharing (PTU) as part of its provisions and establishes
that deferred PTU must be determined using the asset and liability method
established in NIF D-4, Income Taxes, instead of only considering temporary
differences that arise in the reconciliation between the accounting result and
income for PTU purposes.
   
    
    The beginning balance of the transition liability for termination and
retirement benefits.
 
    
    The beginning balance of prior service costs and plan modifications.
 
    
    The beginning balance of actuarial gains and losses from retirement
benefits.
 
    
    NIF D-4, Income Taxes (NIF D-4) Eliminated the permanent difference concept;
clarified and incorporated certain definitions, and requires that the balance of
the initial cumulative effect of deferred income taxes of Ps. (1,644) be
reclassified to retained earnings.
  F-102




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b.
    
    Recognition of the effects of inflation As mentioned in a) above, beginning
January 1, 2008, the Company discontinued the recognition of the effects of inflation.
Until December 31, 2007, the Company recognized effects of inflation by adjusting its
consolidated financial statements in terms of pesos with the purchasing power of the
date the balance sheets was presented. Therefore, consolidated financial statements for
the year ended 2006, which are presented for comparative purposes, have been adjusted in
terms of the purchasing power of 2007 and the amounts differ from those originally
presented.
   
    
    Shortfall in restatement of capital This item, which is an element of
stockholders equity, represents the accumulated effect of holding nonmonetary
assets and the effect of the initial monetary position gain or loss. The
cumulative effect of holding nonmonetary assets represents the difference between
the specific values of nonmonetary assets in excess of or below the increase
attributable to general inflation.
 
    
    Monetary position result Monetary position result reflects the result of
holding monetary assets and liabilities during periods of inflation. Values
stated in current monetary units decrease in purchasing power over time. This
means that losses are incurred by holding monetary assets, whereas gains are
realized by maintaining monetary liabilities. The net effect is presented in the
statements of operations as part of the total comprehensive financing result. For
foreign subsidiaries the result from monetary position is calculated using the
CPI, except in the case of the Companys subsidiaries located in Spain for which
it applies the PCI.
  c.
    
    Cash and cash equivalentsConsist mainly of bank deposits in checking accounts
and readily available investments of highly liquid short-term investments. They are
valued at the lower of acquisition cost plus accrued yields or estimated net realizable
value and are recognized in results of operations as they accrue.
  F-103




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d.
    
    Investments in securitiesAccording to its intent, from the date of
acquisition, the Company classifies its investments in securities instruments in any of
the following
categories: (1) trading, when the Company intends to trade debt and equity instruments
in the short-term, before their maturity, if any. These investments are stated at fair
value; any fluctuations in the value of these investments are recognized in current
earnings; (2) held-to-maturity, when the Company intends to and is financially capable
of holding financial instruments until their maturity. These investments are recognized
and maintained at amortized cost; and (3) available-for-sale, investments that include
those that are classified neither as trading nor held-to-maturity. These investments are
stated at fair value; any unrealized gains and losses resulting from valuation, net of
income tax, are recorded as a component of other comprehensive income within
stockholders equity and reclassified to current earnings upon their sale or maturity.
Through December 31, 2007, the monetary position resulting from the effects of inflation
on available-for-sale investments is recorded as a component of other comprehensive
income. Fair value is determined using prices quoted in recognized markets. If such
instruments are not traded, fair value is determined by applying recognized technical
valuation models.
   e.
    
    Derivative financial instruments The Company states all derivatives at fair
value in the balance sheet, regardless of the purpose for holding them. The recognition
of the changes in the fair value of derivative instruments that are designated as a
hedge for accounting purposes depends on if they are fair value hedges or cash flow
hedges.
       F-104




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f.
    
    Inventories and cost of salesBeginning in 2008, inventories are stated at the
average purchase price or at the average production price, without exceeding net
realizable value. Cost of sales is determined by applying such average amounts when the
inventories are utilized or sold at the time of the sale. Through December 31, 2007,
inventories were stated at the lower of replacement cost using the latest purchase
method without exceeding net realizable value. Cost of sales was previously restated
using replacement cost or the latest production cost at the time of the sale.
 g.
    
    Land, buildings, machinery and equipment Expenditures for land, buildings,
machinery and equipment, including renewals and improvements that extend useful lives,
are capitalized and beginning on January 1, 2008, are recorded at acquisition cost.
Balances arising from acquisitions made through December 31, 2007 were restated for the
effects of inflation by applying factors derived from the NCPI through that date. The
initial balance to apply the NCPI was the net replacement value of the Companys
long-lived asset as of December 31, 1996. For machinery and equipment purchased in a
foreign country, the restatement was based on the inflation index mentioned above and
the exchange rate at the end of each period.
   YearsBuildings
    
    20 to 50Machinery and equipment
    
    3 to 30
  h.
    
    Impairment of long-lived assets in use The Company reviews the carrying amounts
of long-lived assets in use when an impairment indicator suggests that such amounts
might not be recoverable, considering the greater of the present value of future net
cash flows or the net sales price upon disposal. Impairment is recorded when the
carrying amounts exceed the greater of the amounts mentioned above. The impairment
indicators considered for these purposes are, among others, the operating losses or
negative cash flows in the period if they are combined with a history or projection of
losses, depreciation and amortization charged to results, which in percentage terms in
relation to revenues are substantially higher than that of previous years, obsolescence,
reduction in the demand for the products manufactured, competition and other legal and
economic factors.
 i.
    
    ProvisionsProvisions are recognized for current obligations that result from a
past event, that are probable to result in the use of economic resources, and can be
reasonably estimated.
 j.
    
    GoodwillGoodwill represents the excess of cost over fair value of subsidiaries
as of the date of acquisition and at least once a year is subject to impairment tests.
Through December 31, 2007 it was restated using the NCPI.
 k.
    
    Employee retirement obligationsSeniority premiums, pension plans and severance
payments are recognized as costs over the expected service period of employees and
are calculated by independent actuaries using the projected unit credit method, using
nominal interest rates in 2008 and real (inflation-adjusted) interest rate in 2007.
  F-105




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##### Table of Contents



l.
    
    Foreign currency balances and transactionsForeign currency transactions are
recorded at the applicable exchange rate in effect at the transaction date. Monetary
assets and liabilities denominated in foreign currency are translated into Mexican pesos
at the applicable exchange rate in effect at the consolidated balance sheet date.
Exchange fluctuations are recorded as a component of net comprehensive financing cost in
the consolidated statements of operations.
 m.
    
    Revenue recognitionRevenues and related costs are recognized in the period in
which risks and rewards of ownership of the inventories are transferred to customers,
which generally coincide with the shipment of products to customers in satisfaction of
orders.
 n.
    
    Statutory employee profit sharing (PTU)Statutory employee profit sharing is
recorded in the results of the year in which it is incurred and presented under other
income and expenses in the accompanying consolidated statements of income. Beginning in
2008 deferred PTU is derived from temporary differences that resulted from comparing the
accounting and tax basis of assets and liabilities and, through 2007, resulted from
comparing the accounting result and income for PTU purposes. Deferred PTU is recognized
only when it can be reasonably assumed that such difference will generate a liability or
benefit, and there is no indication that circumstances will change in such a way that
the liabilities will not be paid or benefits will not be realized.
 o.
    
    Income taxesIncome taxes, which calculated as the higher of regular income tax
(ISR) or the Business Flat Tax (IETU), are recorded in the results of the year they are
incurred. To recognize deferred income taxes, based on its financial projections, the
Company determines whether it expects to incur ISR or IETU and accordingly recognizes
deferred taxes based on the tax it expects to pay. Deferred taxes are calculated by
applying the corresponding tax rate to the applicable temporary differences resulting
from comparing the accounting and tax bases of assets and liabilities and including, if
any, future benefits from tax loss carryforwards and certain tax credits. Deferred tax
assets are recorded only when there is a high probability of recovery.
  p.
    
    Foreign subsidiaries as economic hedgesThe Companys management designated
some of its foreign subsidiaries as economic hedges. The resulting exchange rate
fluctuation is presented in the shortfall in restatement of capital within stockholders
equity to the extent the net investment in the foreign subsidiary covers the debt.
Through December 31, 2007, the result from monetary position is measured using inflation
factors from the designated subsidiarys country of origin. The effect related to this
change on the results of operations for 2006, 2007 and 2008 was a
(loss) gain of Ps.
(7), Ps. (5) and Ps. 40, respectively.
 4.
    
    Trade receivables
 a.
    
    Trade receivables and the balance of retained undivided interests in securitized
receivables, include an allowance for doubtful accounts and other discounts of Ps. 237
and Ps. 348 as of December 31, 2007 and 2008, respectively.
 b.
    
    Sales of receivables Vitro Cristalglass, S.L. (Vitro Cristalglass) a subsidiary
of the Company, has entered into revolving factoring program agreements to sell trade
accounts receivable with several financial institutions. In accordance with the terms of
some of these agreements, the Company has the obligation to reimburse for uncollected
receivables, in the case of non-payment of customers. As of December 31, 2007 and 2008
the maximum capacity available under these programs was US$ 45 million and US$ 43
million, respectively. As such dates Vitro Cristalglass had sold approximately US$ 16
million, in both years of trade receivables.
  F-106




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c.
    
    As of December 31, 2008, the Company recognized Ps. 20 as restricted cash. The
amount represents the collateral held with Vitro Cristalglass in its loan with Banco
Pastor in Spain. Restricted cash is presented in other receivables (Ps. 10) and other
assets (Ps. 10).
 d.
  
  Securitization of trade receivables: 
    
    Securitization of the Company trade receivables On August 22, 2005, Vitro
Flotado Cubiertas, S.A. de C.V., Vitro Automotriz, S.A. de C.V. and Vitro Vidrio y
Cristal, S.A. de C.V. subsidiaries of Viméxico, the holding company of our flat
glass segment, closed a private issuance of promissory notes in the United States
for US$ 21.5 million, at an interest rate of 6.5%. The subsidiaries of Viméxico
entered into an agreement to sell all of its trade accounts receivable, on a
revolving basis, to a trust (the Trust, a qualifying special purpose entity) that
was formed prior to the execution of this agreement for the sole purpose of buying
and selling accounts receivable and is designed to be bankruptcy remote. The
interest payments and eventual principal reimbursement will be provided from the
collection of the receivables originated by four subsidiaries of Viméxico. As of
December 31, 2007 and 2008, the gross receivables sold to the Trust totaled Ps. 580
and Ps. 577, respectively, and are reflected as a reduction of trade accounts
receivable. The estimated fair value of the retained undivided interests in
securitized receivables as of December 31, 2007 and 2008 was Ps. 346 and Ps. 261,
respectively. The Company has completed a sensitivity analysis on the estimated
fair value of the retained undivided interests with the objective of measuring the
change in value associated with changes in individual key variables. A 10% increase
in expected credit losses and allowance, to 3.23%, would decrease the year-end
valuation by approximately Ps. 13, and 20% increase in expected credit losses and
allowances, to 3.53%, would decrease the year-end valuation by approximately Ps.
26. Similarly, 10% or 20% adverse fluctuations in either average receivable
collection times or expected short-term commercial paper rates would not
significantly affect the recorded fair value of the retained undivided interests.
This sensitivity analysis is hypothetical and should be used with caution.
   F-107




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
    
    Vitro America, Inc. (Vitro America) closed in 2004 a contract for selling all
its accounts receivable, on a revolving basis, to VVP Funding, a wholly-owned
subsidiary of Vitro America. VVP Funding is a special-purpose entity that was
formed prior to the execution of this agreement for the sole purpose of buying and
selling accounts receivable and is designed to be bankruptcy remote. Vitro America
and VVP Funding entered an agreement with an unrelated major financial institution
whereby VVP Funding sells, on a revolving basis and subject to the maintenance of
certain financial and receivables-based ratios, an undivided percentage ownership
in all eligible accounts receivable, as defined, for consideration composed of cash
up to a maximum account of US$ 40 million and retained undivided interests in
securitized receivables. The transfer of undivided ownership interests from VVP
Funding to the unrelated major financial institution for cash consideration is
accounted for as a sale of receivables. On April 2007, the new agreement was signed
and amended to increase the maximum selling amount from US$ 40 million to US$ 50
million. The agreement expires in April 2009 but is subject to annual renewal
approval by the financial institution. As of December 31, 2007 and 2008, the gross
receivables sold totaled approximately US$ 76 million and US$ 74 million,
respectively and are reflected as a reduction of trade accounts receivable. The
estimated fair value of the retained undivided interests in securitized receivables
at December 31, 2007 and 2008 was US$ 29 million and US$ 34 million, respectively,
and was determined based on expected credit losses and allowance of 3%, expected
average receivable collection time of 52 days, and expected short-term commercial
paper rates of 2.3% per annum. The Company has completed a sensitivity analysis on
the estimated fair value of the retained undivided interests with the objective of
measuring the change in value associated with changes in individual key variables.
A 10% increase in expected credit losses and allowance, to 3.3%, would decrease the
year-end valuation by approximately US$0.3 million, and 20% increase in expected
credit losses and allowances, to 3.6%, would decrease the year-end valuation by
approximately US$0.5 million. Similarly, 10% or 20% adverse fluctuations in either
average receivable collection times or expected short-term commercial paper rates
would not significantly affect the recorded fair value of the retained undivided
interests. This sensitivity analysis is hypothetical and should be used with
caution.
   F-108




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5.
    
    Inventories
 2007
    
    
    2008Semi-finished and finished products
    
    Ps.
    1,321
    
    
    Ps.
    1,364Raw materials
    
    
    401
    
    
    
    503Packaging materials
    
    
    9
    
    
    
    201,731
    
    
    
    1,887Spare parts
    
    
    83
    
    
    
    183Merchandise in transit
    
    
    170
    
    
    
    108Refractory and other
    
    
    16
    
    
    
    21Ps.
    2,000
    
    
    Ps.
    2,199
  6.
    
    Land, buildings, machinery and equipment
  2007
    
    
    2008Buildings
    
    Ps.
    4,833
    
    
    Ps.
    4,841Accumulated depreciation
    
    
    (2,608
    )
    
    
    (2,704
    )2,225
    
    
    
    2,137Land
    
    
    433
    
    
    
    461Ps.
    2,658
    
    
    Ps.
    2,598Machinery and equipment
    
    Ps.
    9,487
    
    
    Ps.
    9,167Accumulated depreciation
    
    
    (6,544
    )
    
    
    (6,324
    )Ps.
    2,943
    
    
    Ps.
    2,843
  7.
    
    Derivative financial instruments
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a.
    
    Derivative financial instruments held for trading purposes:
 Notional
    
    
    
    
    
    
    Fair valueOpen derivative financial instruments
    
    MMBTUs*
    
    
    Period
    
    
    (liability)Natural gas swaps and options
contracted through subsidiaries,
and these at the same time with
Pemex
    
    
    5,163
    
    
    
    2009 to 2011
    **
    
    Ps.
    (93
    )Embedded derivatives identified
in supply contracts
    
    
    
    
    
    
    
    
    
    
    (5
    )Ps.
    (98
    )
 *
    
    Million British Thermal Units.**
    
    As of December 31, 2008, the Company has hedges for approximately 70% of its
estimated natural gas consumption for 2009 at an average price of approximately US$ 7.90
per MMBTU, 25% at an average price of approximately US$ 6.80 per MMBTU for 2010 and 15%
at an average price of approximately US$ 7.32 per MMBTU for 2011. b.
    
    The following table discloses the unwound derivative financial instruments,
subject to what is discussed in the last paragraph of this note:
 Fair valueSummary of unwound derivative financial instruments
    
    (liability)Natural gas contracted through subsidiaries
    
    Ps.
    (888
    )
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8.
    
    Long-term debt
 a.
    
    As of December 31, 2008, short-term borrowings denominated in US dollars totaled
Ps. 253 and denominated in euros totaled Ps. 418. During 2008, the Companys weighted
average interest rate for short-term borrowings denominated in US dollars and euros was
11.07%, and 5.31%, respectively.
 b.
    
    Long-term debt consists of the following:
 2007
    
    
    2008Payable in US dollars:Capital lease with fixed interest rate of
10.7494%, maturing in several installments through
2016.
    
    Ps.
    78
    
    
    Ps.
    92Capital lease with interest rate ranging between
6% and 7.67%, maturing in several installments
through 2012.
    
    
    
    
    
    
    12Payable in Euros:EURIBOR plus a marging ranging from 1.10% to1.25%,
with different maturity dates up to 2014.
    
    
    
    
    
    
    57Unsecured debt, floating interest rate based on
EURIBOR plus a spread ranging from 0.625% and
2.5%, principal payable in several installments
through 2011.
    
    
    63Secured debt, floating interest rate based on
EURIBOR plus 8%, principal payable in various
installments through 2008.
    
    
    3Secured debt, floating interest rate based on
EURIBOR plus a spread ranging from 1.25 and 1.10,
principal payable in various installments through
2008.
    
    
    2Capital lease, floating interest rate based on
capital leases and on EURIBOR, plus a margin
ranging from 0.625% and 1.25%, with different
maturity dates up to 2014.
    
    
    
    
    
    
    40Fixed interest rate capital leases ranging from
0.84% to 3.84%, with different maturity dates up
to 2010.
    
    
    
    
    
    
    11Payable in Colombian pesos:Unsecured debt floating interest rate based on
fixed term deposits (DFT) plus a spread of 6%,
principal payable in several installments through
2013.
    
    
    8
    
    
    
    13154
    
    
    
    225Less current maturities
    
    
    27
    
    
    
    48Ps.
    127
    
    
    Ps.
    177
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Year
    
    Amount2010
    
    Ps.
    372011
    
    
    352012
    
    
    322013
    
    
    292014 and thereafter
    
    
    44Ps.
    177
  c.
    
    Debt issuance Vitro  On February 1, 2007, Vitro issued unsubordinated Senior
notes (the Notes) that were guaranteed by VENA, certain of its subsidiaries and Viméxico
and certain of its subsidiaries. The amount of the Notes was US$1,000 million with
maturity in 2012 and 2017. As of December 31, 2008 Vitro was not in compliance with the
Notes and has initiated negotiations with its financial creditors to restructure such
debt. Vitro and its subsidiaries continue normal operations while working to restructure
its debt with the holders of the Notes.
 9.
    
    Long-term notes payables to Vitro
 a.
    
    As of December 31, 2008, long-term notes payables to Vitro were Ps. 374, are
payable in US dollars at a fixed annual interest rate between 9% and 11%.
 b.
    
    The maturity to long-term notes payables is as follows:
 Year
    
    Amount2012
    
    Ps.
    1122017
    
    
    262Ps.
    374
 10.
    
    Employee retirement obligations
 a.
    
    The Company has a defined benefit pension plan that covers all its personnel,
which consists of a lump sum payment or a monthly pension calculated, based on the
aggregate of a basic pension, an additional seniority pension and an additional pension
for equal or less earnings than the ceiling used for the Mexican Social Security
Institute.
  
    
    Normal.  Personnel that are 65 years old with 20 or more years of service.
 
    
    Advanced.  Personnel that are 60 years old with a minimum of 20 or more years
of service, reducing the pension by a percentage point each year before reaching 65
years of age.
 
    
    Early.  Personnel that are 50 years old with 10 or more years of service,
reducing the pension by a percentage according to the age at the moment of
retirement.
 
    
    Aggregate of 100.  With the approval of the Technical Committee, personnel
whose aggregate age and years of service is 100.
 
    
    Deferred.  Personnel who do not accept retirement upon becoming 65 years old
lose all the rights to receive a pension from the plan.
  F-112




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##### Table of Contents



b.
    
    The present values of these obligations and the rates used for the calculations
are:
 2007
    
    
    2008Vested benefit obligation
    
    Ps.
    513
    
    
    Ps.
    513Nonvested benefit obligations
    
    
    160
    
    
    
    142Defined benefit obligation
    
    
    673
    
    
    
    655Plan assets at fair value
    
    
    (517
    )
    
    
    (278
    )Unfunded status
    
    
    156
    
    
    
    377Unrecognized items:Prior service costs and plan amendments
    
    
    (81
    )
    
    
    (77
    )Unrecognized transition obligation
    
    
    (34
    )
    
    
    (24
    )Unrecognized actuarial gains and losses
    
    
    (119
    )
    
    
    (342
    )Projected net asset
    
    $
    (78
    )
    
    $
    (66
    )Additional minimum liability
    
    Ps.
    117
    
    
    Ps.
    
   2007
    
    
    2008Real inflationadjusted rate
    
    
    Nominal rateAssumptions:Discount rate
    
    
    5.00
    %
    
    
    10.25
    %Expected rate of return on plan assets
    
    
    7.00
    %
    
    
    12.25
    %Rate of compensation increase
    
    
    0
    %
    
    
    3.50
    %
 c.
    
    Net periodic cost consist of:
 2006
    
    
    2007
    
    
    2008Service cost
    
    Ps.
    19
    
    
    Ps.
    46
    
    
    Ps.
    70Interest cost
    
    
    33
    
    
    
    31
    
    
    
    55Amortization of unrecognized prior service costs
    
    
    21
    
    
    
    12
    
    
    
    23Actuarial gains and losses
    
    
    82
    
    
    
    16
    
    
    
    35Effect of reduction and early liquidation
    
    
    
    
    
    
    
    
    
    
    (2
    )Expected yield on plan assets
    
    
    (18
    )
    
    
    (29
    )
    
    
    (55
    )Net periodic cost
    
    Ps.
    137
    
    
    Ps.
    76
    
    
    Ps.
    126
   F-113




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##### Table of Contents



d.
    
    Changes in present value of the defined benefit obligation:
 2007
    
    
    2008Present value of the defined benefit obligation as of January 1
    
    Ps.
    648
    
    
    Ps.
    673Service costs
    
    
    46
    
    
    
    70Interest costs
    
    
    31
    
    
    
    55Actual benefits paid
    
    
    (72
    )
    
    
    (85
    )Actuarial loss (gain) on the obligation
    
    
    20
    
    
    
    (58
    )Present value of the defined benefit obligation as of December
31
    
    Ps.
    673
    
    
    Ps.
    655
 e.
    
    Changes in fair value of plan assets:
 2007
    
    
    2008Fair value of plan assets as of January 1
    
    Ps.
    441
    
    
    Ps.
    517Expected return
    
    
    29
    
    
    
    52Actuarial losses and gains
    
    
    47
    
    
    
    (289
    )Contributions made by the Company
    
    
    47
    
    
    
    40Benefits paid
    
    
    (47
    )
    
    
    (42
    )Fair value of plan assets as of December 31
    
    Ps.
    517
    
    
    Ps.
    278
 f.
    
    Classification of plan assets as of December 31, 2008:
 Expected Yield
    
    
    Actual YieldCapital instruments (Vitro A shares)
    
    
    9.00
    %
    
    
    (63.00
    )%Other
    
    
    3.25
    %
    
    
    6.37
    %
  11.
    
    Commitments and contingencies
 a.
    
    In October 2000, several subsidiaries of Viméxico, which have facilities
throughout Monterrey, Mexico and the Mexico City area, entered into a 15-year energy
purchase agreement for approximately 33 megawatts of electricity pear year with
Tractebel Energía de Monterrey, S. de R.L. de C.V.
 b.
    
    The Company has several non-cancelable operating lease agreements for the rent of
warehouses and equipment. Rental expense for the years ended December 31, 2006, 2007 and
2008 was Ps. 297, Ps. 365 and Ps. 364, respectively.
  Year
    
    Amount2009
    
    Ps.
    3532010
    
    
    2882011
    
    
    2362012
    
    
    1882013
    
    
    1592014 and thereafter
    
    
    165
  F-114




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##### Table of Contents



c.
    
    The Companys assets are not subject to any pending legal proceedings, nor is the
Company subject to any contingent liabilities, other than as described in the following
note d), and legal proceedings and contingent liabilities arising in the ordinary course
of business and against which the Company is adequately insured or indemnified or wich
the Company believes are not material in the aggregate.
 d.
    
    On December 2006, Viméxico (formerly Vitro Plan) concluded at an extraordinary
shareholders meeting to approve the merger of Vitro Plan into Viméxico, which was a
creditor of Vitro Plan. As a result of the merger, all assets, rights, liabilities and
obligations of Vitro Plan were absorbed by Viméxico. Prior to the merger, Vitro Plan was
a direct 65%-owned subsidiary of Vitro and Pilkington Group LTD (Pilkington) owned the
remaining 35%. As a result of the merger, Viméxico became a 91.8%-owned subsidiary of
Vitro and Pilkington the owner of the remaining 8.2%.
   12.
    
    Foreign currency operations
  Millions of US
    
    
    Mexicandollars
    
    
    pesosMonetary assets
    
    US$
    151
    
    
    Ps.
    2,090Inventories
    
    
    6
    
    
    
    81Fixed assets
    
    
    74
    
    
    
    1,023Monetary liabilities
    
    
    566
    
    
    
    7,836
  Millions of US
    
    
    Mexicandollars
    
    
    pesosExports
    
    US$
    214
    
    
    Ps.
    2,357Imports
    
    
    81
    
    
    
    909Interest expense, net
    
    
    5
    
    
    
    55
  F-115




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##### Table of Contents



CentralUnited States
    
    
    America
    
    
    EuropeNet sales
    
    Ps.
    5,307
    
    
    Ps.
    440
    
    
    Ps.
    2,103Operating (loss) income
    
    
    (27
    )
    
    
    41
    
    
    
    140Total assets
    
    
    2,051
    
    
    
    497
    
    
    
    3,051Total liabilities
    
    
    1,420
    
    
    
    177
    
    
    
    1,252Capital expenditure
    
    
    66
    
    
    
    9
    
    
    
    89
  US dollar
    
    
    EuroDecember 31, 2006
    
    Ps.
    10.8116
    
    
    Ps.
    14.2680December 31, 2007
    
    
    10.8662
    
    
    
    15.9526December 31, 2008
    
    
    13.8325
    
    
    
    19.2534
  13.
    
    Stockholders equity
 a.
    
    As of December 31, 2007 and 2008, the fixed portion of the Companys capital
stock is represented by 1,503,510,000 series A ordinary, nominative, fully paid and
issued common shares, without par value.
 b.
    
    At the ordinary shareholders meeting held on October 31, 2006, Vitro made a
capital contribution by capitalizing a loan owed to it by the Company and received
1,454,490,000 Series A shares, amounting to Ps.1,454 (nominal) or US$135 million
dollars.
 c.
    
    Retained earnings include the statutory legal reserve. Mexican General Corporate
Law requires that at least 5% of net income of the year be transferred to the legal
reserve until the reserve equals 20% of capital stock at par value (historical pesos).
The legal reserve may be capitalized but many not be distributed unless the entity is
dissolved. The legal reserve must be replenished if it is reduced for any reason. As of
December 31, 2007 and 2008, the legal reserve, in historical pesos was Ps. 25 and Ps.
44, respectively.
 d.
    
    Stockholders equity, except restated paid-in capital and tax retained earnings,
will be subject to income tax at the rate in effect when a dividend is distributed. Any
tax paid on such distribution may be credited against annual and estimated income taxes
of the year in which the tax on dividends is paid and the following two fiscal years.
   F-116




---



##### Table of Contents



2007
    
    
    2008Capital stock
    
    Ps.
    147
    
    
    Ps.
    157Additional paid-in capital
    
    
    
    
    
    
    1,825Shortfall in restatement of capital
    
    
    314Translation effects of foreign subsidiaries
    
    
    
    
    
    
    877Retained earnings
    
    
    951
    
    
    
    952Net income
    
    
    182
    
    
    
    206Ps.
    1,594
    
    
    Ps.
    4,017
 14.
    
    Other expenses, net
 2006
    
    
    2007
    
    
    2008Restructuring charges
    
    Ps.
    13
    
    
    Ps.
    9
    
    
    Ps.
    32Impairment of long-lived assets
    
    
    334
    
    
    
    91
    
    
    
    196Loss (gain) from sale of long-lived assets
    
    
    131
    
    
    
    (55
    )
    
    
    (92
    )Gain from sale of subsidiaries
    
    
    (100
    )Statutory employee profit sharing
    
    
    26
    
    
    
    24
    
    
    
    4Other
    
    
    46
    
    
    
    22
    
    
    
    1Ps.
    450
    
    
    Ps.
    91
    
    
    Ps.
    141
 15.
    
    Tax loss carryforwards
  Expiration Year
    
    Amount2010
    
    Ps.
    422011
    
    
    182012
    
    
    282013
    
    
    102014
    
    
    2432015
    
    
    42016
    
    
    182017
    
    
    432018 and thereafter
    
    
    2,298Ps.
    2,704
 16.
    
    Income and asset taxes
 a.
    
    In 2008 the Company was subject to ISR and IETU, and in 2007 and 2006, to ISR and
IMPAC. As of 2006, the tax rate was 29% and beginning in 2007 and subsequently is 28%.
    F-117




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##### Table of Contents



b.
    
    The income and asset tax expense (benefit) included in the Companys results are:
 2006
    
    
    2007
    
    
    2008Current income tax
    
    Ps.
    172
    
    
    Ps.
    208
    
    
    Ps.
    57Deferred income tax
    
    
    (257
    )
    
    
    (104
    )
    
    
    (782
    )(85
    )
    
    
    104
    
    
    
    (725
    )Asset tax
    
    
    8
    
    
    
    48
    
    
    
    (10
    )Ps.
    (77
    )
    
    Ps.
    152
    
    
    Ps.
    (735
    )
 c.
    
    Net deferred tax assets presented in the consolidated balance sheets consist of
the following:
 2007
    
    
    2008Assets:Allowance for doubtful accounts
    
    Ps.
    25
    
    
    Ps.
    59Reserve for employee retirement obligation
    
    
    53
    
    
    
    96Tax loss carryforwards
    
    
    165
    
    
    
    630Asset tax credit carryforwards
    
    
    1
    
    
    
    1Derivate financial instruments
    
    
    18
    
    
    
    276Intangible asset
    
    
    491
    
    
    
    542Foreign Exchange
    
    
    
    
    
    
    51Other
    
    
    122
    
    
    
    68875
    
    
    
    1,723Valuation allowance
    
    
    (22
    )
    
    
    (88
    )853
    
    
    
    1,635Liabilities:Fixed assets
    
    
    283
    
    
    
    317Net deferred tax asset
    
    Ps.
    570
    
    
    Ps.
    1,318Deferred tax liabilities of foreign subsidiaries
    
    Ps
    76
    
    
    Ps.
    
 d.
    
    Following is a reconciliation between the Companys effective income tax rate and
the statutory rate:
 2006
    
    
    2007
    
    
    2008Statutory income tax rate
    
    
    29
    %
    
    
    28
    %
    
    
    28
    %Asset tax presented as income tax
    
    
    
    
    
    
    21Intangible asset
    
    
    (1
    )
    
    
    17
    
    
    
    7Effect of reduction in statutory rate on deferred ISR
    
    
    (8
    )Foreign subsidiaries
    
    
    (4
    )
    
    
    (17
    )
    
    
    19Investment subsidy
    
    
    
    
    
    
    4Difference between tax and accounting basis for
monetary gain
    
    
    
    
    
    
    
    
    
    
    (8
    )Fiscal updating of fixed assets and charges differed
    
    
    
    
    
    
    
    
    
    
    7Other
    
    
    (4
    )
    
    
    8
    
    
    
    1Effective income tax rate
    
    
    12
    %
    
    
    61
    %
    
    
    54
    %
  F-118




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##### Table of Contents



e.
    
    The deferred income tax effect, reduced by the movements in stockholders equity
for insufficiency in restated stockholders equity, the equity effect of the additional
labor liability as well as the exchange loss capitalized in the translation effect of
foreign subsidiaries is presented as follows:
 2006
    
    
    2007
    
    
    2008Shortfall in restatement of capital
    
    Ps.
    97
    
    
    Ps.
    98Minimum labor liability
    
    
    (5
    )
    
    
    (24
    )Translation effects of foreign subsidiaries
    
    
    
    
    
    
    
    
    
    Ps.
    16Ps.
    92
    
    
    Ps.
    74
    
    
    Ps.
    16
 17.
    
    Business dispositions and acquisitions
 a.
    
    Sale of Química M, S.A. de C.V. (Química M).-In March 2006, the Company sold
its 51% interest in Química M, to Solutia Inc. for US$ 20 million in cash.
 b.
    
    Visteon Corporations retirement from Vitro Flex, S.A. de C.V. (Vitro Flex).  In
September 2006, Viméxico (formerly Vitro Plan), Vitros flat glass division, and Visteon
Inc. (Visteon) ended their joint venture agreement in Vitro Flex through a reimbursement
and cancellation of Visteons capital investment. The amount paid for the 38% stake in
Vitro Flex was US$ 9.4 million. The difference between the transaction value and the
book value resulted in a credit of Ps. 69, recorded in majority stockholders equity.
Vitro Flex together with Vitro Automotriz (VAU), now directly manages their relationship
with all Vitros automotive costumers.
 c.
    
    Acquisition of 55% of the shares of PVA.  In August 2007, Vitro VyC acquired 55%
of the outstanding shares of PVA, a company dedicated to the installation of value added
crystal products for Ps. 110. As a result of the preliminary purchase price allocation,
the Company recorded goodwill of Ps. 85 in 2007. During the first half of 2008, pursuant
to the guidelines in NIF B-7 Business Acquisitions, the items comprising such goodwill
were analyzed further and Ps. 61 was reclassified as an intangible asset.
 d.
    
    Acquisition of 50% of the shares of Vidrio y Cristal del Noroeste, S.A. de C.V.
(formerly Vitro AFG).  In July 2007, Viméxico exercised its option to acquire the
remaining 50% of the outstanding shares of Vitro AFG from its joint venture partner AFG
Industries, a subsidiary of Asahi Glass Co. Limited (a Japanese company) for a purchase
price of US$ 6 million. In accordance with Bulletin B-7, the Company recognized an
impairment charge of Ps.91 related to the termination of the joint venture with AFG
Industries.
  e.
    
    Purchase of 40% of Vitro Cristalglass. In July 2008, Viméxico was notified by
its joint venture partner of its right to exercise the put option related to the sale of
its 40% interest in Vitro Cristalglass, S. L. (Vitro Cristalglass), the option was
officially exercised in August 2008 and beginning in September 2008, Vitro Cristalglass
is 100% consolidated. The purchase price agreed upon was 27.4 million euros
(approximately Ps. 527). The difference between the purchase price and the book value
resulted in a charge of Ps. 60, recorded in majority stockholders equity (see note 20
c).
  F-119




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##### Table of Contents



18.
    
    Transactions and balances with related parties
  2006
    
    
    2007
    
    
    2008Trade receivables
    
    Ps.
    21
    
    
    Ps.
    5
    
    
    Ps.
    9Other receivables
    
    
    126
    
    
    
    191
    
    
    
    873Trade payables
    
    
    10
    
    
    
    33
    
    
    
    6Net sales
    
    
    1
    
    
    
    14
    
    
    
    42Cost of sales
    
    
    139
    
    
    
    95
    
    
    
    121Operating expenses
    
    
    231
    
    
    
    200
    
    
    
    270Interest income
    
    
    46
    
    
    
    
    
    
    
    31Loss (gain) derivative operations
    
    
    28
    
    
    
    (3
    )
    
    
    617Exchange loss (gain)
    
    
    2
    
    
    
    (6
    )
    
    
    74Interest expense
    
    
    454
    
    
    
    325
    
    
    
    394Other (expenses) income, net
    
    
    (26
    )
    
    
    80
    
    
    
    95
 19.
    
    New accounting principles
  
    NIF B-7, Business Acquisitions
 NIF B-8, Consolidated or Combined Financial Statements
 NIF C-7, Investments in Associated Companies and other Permanent Investments
 NIF C-8, Intangible Assets
  F-120




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##### Table of Contents



NIF D-8, Share-based Payments
 INIF 16, Transfer of Primary Financial Instruments for Trading to Another Classification
  20.
    
    Subsequent events
 a.
    
    Breach of interest and capital payments.- In order to maintain the necessary cash
to continue operating, Vitro decided not to pay US$ 44.8 million in interest due on
February 2, 2009 on the Senior Notes maturing in 2012 and 2017, which resulted in
another event of default on such notes mentioned in the note 8 c); the Company is
guaranteeing the debt.
 b.
    
    Maturity of program selling accounts receivable at Vitro America.  The sale of
accounts receivable at Vitro America, maturing in April 2009, was completed early in
February and completing the process of payment in March 2009.
 c.
    
    Purchase payment negotiation for 40% of Vitro Cristalglass.  In January 2009, a
document was signed setting forth that the payments for the established sales price
would be made in 2009 and 2010 and that the purchase of the equity interest in Vitro
Cristalglass would be made through the same company, resulting in a subsequent capital
reduction.
 21.
    
    Authorization of financial statements issuance
  Ing. Roberto Rubio Barnes
    
    Ing. Jorge Mario Guzmán GuzmánChief Office
    
    Chief Financial
   F-121




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##### Table of Contents



22.
    
    Differences between Mexican Financial Reporting Standards and accounting principles
generally accepted in the United States of America
    Year ended December 31,2006
    
    
    2007
    
    
    2008Net majority loss reported under MFRS
    
    Ps.
    (774
    )
    
    Ps.
    (86
    )
    
    Ps.
    (824
    )U.S. GAAP adjustments:Effect of the adjustments below on minority
interest (see a)
    
    
    
    
    
    
    3
    
    
    
    48Deferred income taxes (see b)
    
    
    (182
    )
    
    
    (37
    )
    
    
    55Deferred workers profit sharing (see c)
    
    
    (15
    )
    
    
    
    
    
    
    Monetary position result on deferred income
taxes and deferred workers profit sharing
(see d)
    
    
    13
    
    
    
    17
    
    
    
    Capitalization of interest (see e)
    
    
    9
    
    
    
    
    
    
    
    Amortization of capitalized interest (see e)
    
    
    (8
    )
    
    
    (4
    )
    
    
    (5
    )Goodwill (see f)
    
    
    
    
    
    
    
    
    
    
    (43
    )Effect of applying Bulletin B-10 (see g)
    
    
    (68
    )
    
    
    (21
    )
    
    
    18Effect of applying Bulletin B-15 (see h)
    
    
    4
    
    
    
    
    
    
    
    Derivative financial instruments (see i)
    
    
    
    
    
    
    
    
    
    
    17Employee retirement obligations (see j)
    
    
    11
    
    
    
    (7
    )
    
    
    11Purchase of Visteons capital investment (see k)
    
    
    1
    
    
    
    5
    
    
    
    5Impairment of long-lived assets (see l)
    
    
    379
    
    
    
    (10
    )
    
    
    (45
    )Total U.S. GAAP adjustments
    
    
    144
    
    
    
    (54
    )
    
    
    61Net loss under U.S. GAAP
    
    Ps.
    (630
    )
    
    Ps.
    (140
    )
    
    Ps.
    (763
    )
  F-122




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##### Table of Contents



Year ended December 31,2007
    
    
    2008Total stockholders equity reported under MFRS
    
    Ps.
    6,047
    
    
    Ps.
    5,394Less minority interest included as stockholders equity under
MFRS (See a)
    
    
    (1,594
    )
    
    
    4,017Majority stockholders equity under MFRS
    
    
    4,453
    
    
    
    1,377US GAAP adjustments:Effect of the adjustments below on minority interest (see a)
    
    
    (49
    )
    
    
    3Deferred income taxes (see b)
    
    
    (541
    )
    
    
    (415
    )Capitalization of interest (see e)
    
    
    42
    
    
    
    42Accumulated amortization of capitalized interest (see e)
    
    
    (22
    )
    
    
    (27
    )Goodwill (see f)
    
    
    124
    
    
    
    81Effect of applying Bulletin B-10 (see g)
    
    
    (18
    )
    
    
    Derivative financial instruments (see i)
    
    
    
    
    
    
    17Effect of SFAS No. 158 (see j)
    
    
    (163
    )
    
    
    (414
    )Employee retirement obligations (see j)
    
    
    (38
    )
    
    
    (27
    )Purchase of Visteons capital investment (see k)
    
    
    (67
    )
    
    
    (62
    )Purchase of remaining 40% interest in Vitro Cristalglass (see l)
    
    
    
    
    
    
    60Impairment of long-lived assets (see m)
    
    
    390
    
    
    
    345Total U.S. GAAP adjustments
    
    
    (342
    )
    
    
    (397
    )Total stockholders equity under U.S. GAAP
    
    Ps.
    4,111
    
    
    Ps.
    980
 a)
    
    Minority interest
   b)
    
    Deferred income taxes
   F-123




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##### Table of Contents



Mexico
    
    U.S.
    
    Spain2004-2008
    
    2004-2008
    
    2005-2008
  F-124




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##### Table of Contents



c)
    
    Deferred workers profit sharing
   d)
    
    Monetary position result on deferred income taxes and deferred workers profit
sharing
  NIF B-10,
 e)
    
    Capitalization of interest
     F-125




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##### Table of Contents



f)
    
    Goodwill
     g)
    
    Effect of applying Bulletin B-10
  NIF B-10,
  F-126




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##### Table of Contents



h)
    
    Effect of applying Bulletin B-15
  i)
    
    Derivative financial instruments
  j)
    
    Employee retirement obligations
    F-127




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##### Table of Contents



k)
    
    Purchase of Visteons capital investment
  l)
    
    Purchase of remaining 40% interest in Vitro Cristalglass
   F-128




---



##### Table of Contents



m)
    
    Impairment of long-lived assets
      F-129




---



##### Table of Contents



n)
    
    Reclassifications
    o)
    
    Supplemental U.S. GAAP Cash Flow Information
  Years ended December 31,2006
    
    
    2007
    
    
    2008Net cash provided by (used in) operating activities
    
    Ps.
    (293
    )
    
    Ps.
    549
    
    
    Ps.
    186Net cash provided by (used in) financing activities
    
    
    (142
    )
    
    
    (7
    )
    
    
    909Net cash (used in) provided by investing activities
    
    
    308
    
    
    
    (505
    )
    
    
    (977
    )
  F-130




---



##### Table of Contents



Years ended December 31,2006
    
    
    2007
    
    
    2008Interest paid
    
    Ps.
    658
    
    
    Ps.
    373
    
    
    Ps.
    645Income taxes paid
    
    
    151
    
    
    
    204
    
    
    
    10
 p)
    
    Recently Issued Accounting Standards
    F-131




---



##### Table of Contents



F-132




---



##### Table of Contents



F-133




---



##### Table of Contents



F-134




---



##### Table of Contents



23.
    
    Guarantor and non-guarantor financial information (Information for Viméxico)
     
    
    Viméxico (the holding company),
    
    Viméxicos combined wholly-owned guarantors , and
    
    Viméxicos combined non-guarantors.
   F-135




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##### Table of Contents



a)
    
    Supplemental condensed consolidating balance sheets presented in accordance with MFRS
 CombinedWholly-
    
    
    Combined
    
    
    AdjustmentsOwned
    
    
    Non-
    
    
    and
    
    
    ViméxicoAs of December 31, 2007
    
    Viméxico
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash, trade receivables
and other current assets
    
    Ps.
    1,947
    
    
    Ps.
    2,799
    
    
    Ps.
    1,818
    
    
    Ps.
    (4,606
    )
    
    Ps.
    1,958Inventories, net
    
    
    
    
    
    
    1,529
    
    
    
    471
    
    
    
    
    
    
    
    2,000Current assets
    
    
    1,947
    
    
    
    4,328
    
    
    
    2,289
    
    
    
    (4,606
    )
    
    
    3,958Property plant and
equipment, net
    
    
    
    
    
    
    5,125
    
    
    
    651
    
    
    
    1
    
    
    
    5,777Deferred taxes
    
    
    37
    
    
    
    447
    
    
    
    47
    
    
    
    39
    
    
    
    570Other assets
    
    
    3,637
    
    
    
    1,732
    
    
    
    726
    
    
    
    (4,732
    )
    
    
    1,363Long-term assets
    
    
    3,674
    
    
    
    7,304
    
    
    
    1,424
    
    
    
    (4,692
    )
    
    
    7,710Total assets
    
    Ps.
    5,621
    
    
    Ps.
    11,632
    
    
    Ps.
    3,713
    
    
    Ps.
    (9,298
    )
    
    Ps.
    11,668Short-term borrowings
    
    Ps.
    
    
    
    Ps.
    51
    
    
    Ps.
    230
    
    
    Ps.
    
    
    
    Ps.
    281Current liabilities
    
    
    29
    
    
    
    1,883
    
    
    
    579
    
    
    
    (879
    )
    
    
    1,612Accrued expenses and
other current liabilities
    
    
    1,139
    
    
    
    5,544
    
    
    
    172
    
    
    
    (3,862
    )
    
    
    2,993Current liabilities
    
    
    1,168
    
    
    
    7,478
    
    
    
    981
    
    
    
    (4,741
    )
    
    
    4,886Long-term liabilities
    
    
    
    
    
    
    545
    
    
    
    456
    
    
    
    (266
    )
    
    
    735Total liabilities
    
    
    1,168
    
    
    
    8,023
    
    
    
    1,437
    
    
    
    (5,007
    )
    
    
    5,621Total majority interest
    
    
    4,453
    
    
    
    3,609
    
    
    
    2,276
    
    
    
    (5,885
    )
    
    
    4,453Minority interest in
consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,594
    
    
    
    1,594Total stockholders equity
    
    
    4,453
    
    
    
    3,609
    
    
    
    2,276
    
    
    
    (4,291
    )
    
    
    6,047Total liabilities and
stockholders equity
    
    Ps.
    5,621
    
    
    Ps.
    11,632
    
    
    Ps.
    3,713
    
    
    Ps.
    (9,298
    )
    
    Ps.
    11,668
  F-136




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##### Table of Contents



CombinedWholly-
    
    
    Combined
    
    
    AdjustmentsOwned
    
    
    Non-
    
    
    and
    
    
    ViméxicoAs of December 31, 2008
    
    Viméxico
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash, trade receivables
and other current assets
    
    Ps.
    2,376
    
    
    Ps.
    3,102
    
    
    Ps.
    4,743
    
    
    Ps.
    (7,044
    )
    
    Ps.
    3,177Inventories, net
    
    
    
    
    
    
    1,702
    
    
    
    481
    
    
    
    16
    
    
    
    2,199Current assets
    
    
    2,376
    
    
    
    4,804
    
    
    
    5,224
    
    
    
    (7,028
    )
    
    
    5,376Property plant and
equipment, net
    
    
    
    
    
    
    4,983
    
    
    
    830
    
    
    
    
    
    
    
    5,813Deferred taxes
    
    
    18
    
    
    
    1,244
    
    
    
    53
    
    
    
    3
    
    
    
    1,318Other assets
    
    
    821
    
    
    
    1,221
    
    
    
    852
    
    
    
    (1,450
    )
    
    
    1,444Long-term assets
    
    
    839
    
    
    
    7,448
    
    
    
    1,735
    
    
    
    (1,447
    )
    
    
    8,575Total assets
    
    Ps.
    3,215
    
    
    Ps.
    12,252
    
    
    Ps.
    6,959
    
    
    Ps.
    (8,475
    )
    
    Ps.
    13,951Short-term borrowings ,
current maturities of
long-term debt and
derivative financial
instruments
    
    Ps.
    45
    
    
    Ps.
    2,438
    
    
    Ps.
    840
    
    
    Ps.
    (269
    )
    
    Ps.
    3,054Current liabilities
    
    
    960
    
    
    
    7,171
    
    
    
    
    
    
    
    (5,342
    )
    
    
    2,789Accrued expenses and
other current liabilities
    
    
    833
    
    
    
    1,922
    
    
    
    410
    
    
    
    (1,254
    )
    
    
    1,911Current liabilities
    
    
    1,838
    
    
    
    11,531
    
    
    
    1,250
    
    
    
    (6,865
    )
    
    
    7,754Long-term liabilities
    
    
    
    
    
    
    942
    
    
    
    472
    
    
    
    (611
    )
    
    
    803Total liabilities
    
    
    1,838
    
    
    
    12,473
    
    
    
    1,722
    
    
    
    (7,476
    )
    
    
    8,557Total majority interest
    
    
    1,377
    
    
    
    (221
    )
    
    
    5,237
    
    
    
    (5,016
    )
    
    
    1,377Minority interest in
consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,017
    
    
    
    4,017Total stockholders equity
    
    
    1,377
    
    
    
    (221
    )
    
    
    5,237
    
    
    
    (999
    )
    
    
    5,394Total liabilities and
stockholders equity
    
    Ps.
    3,215
    
    
    Ps.
    12,252
    
    
    Ps.
    6,959
    
    
    Ps.
    (8,475
    )
    
    Ps.
    13,951
  F-137




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##### Table of Contents



b)
    
    Supplemental condensed consolidating statements of operations presented in accordance with
MFRS
 CombinedWholly-
    
    
    Combined
    
    
    AdjustmentsOwned
    
    
    Non-
    
    
    and
    
    
    ViméxicoFor the year ended December 31, 2006
    
    Viméxico
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales and equity in earnings of
subsidiaries
    
    Ps.
    (699
    )
    
    Ps.
    11,208
    
    
    Ps.
    2,788
    
    
    Ps.
    165
    
    
    Ps.
    13,462Cost of sales
    
    
    
    
    
    
    8,453
    
    
    
    1,926
    
    
    
    (420
    )
    
    
    9,959Selling, general and administrative
expenses
    
    
    10
    
    
    
    2,625
    
    
    
    483
    
    
    
    (33
    )
    
    
    3,085Total financing cost
    
    
    121
    
    
    
    575
    
    
    
    54
    
    
    
    (119
    )
    
    
    631Other (income) expenses, net
    
    
    (102
    )
    
    
    524
    
    
    
    28
    
    
    
    
    
    
    
    450Income and asset tax expense (benefit)
    
    
    46
    
    
    
    (176
    )
    
    
    52
    
    
    
    1
    
    
    
    (77
    )Net (loss) income for the year
    
    
    (774
    )
    
    
    (793
    )
    
    
    245
    
    
    
    736
    
    
    
    (586
    )Net minority income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    188
    
    
    
    188Net majority (loss) income
    
    Ps.
    (774
    )
    
    Ps.
    (793
    )
    
    Ps.
    245
    
    
    Ps.
    548
    
    
    Ps.
    (774
    )
 CombinedWholly-
    
    
    Combined
    
    
    AdjustmentsOwned
    
    
    Non-
    
    
    and
    
    
    ViméxicoFor the year ended December 31, 2007
    
    Viméxico
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales and equity in
earnings of subsidiaries
    
    Ps.
    164
    
    
    Ps.
    11,123
    
    
    Ps.
    2,962
    
    
    Ps.
    (644
    )
    
    Ps.
    13,605Cost of sales
    
    
    
    
    
    
    7,957
    
    
    
    1,946
    
    
    
    (325
    )
    
    
    9,578Selling, general and
administrative expenses
    
    
    6
    
    
    
    2,724
    
    
    
    545
    
    
    
    (30
    )
    
    
    3,245Total financing cost
    
    
    187
    
    
    
    431
    
    
    
    91
    
    
    
    (266
    )
    
    
    443Other expenses (income), net
    
    
    1
    
    
    
    74
    
    
    
    17
    
    
    
    (1
    )
    
    
    91Income tax expense (benefit)
    
    
    56
    
    
    
    23
    
    
    
    73
    
    
    
    
    
    
    
    152Net (loss) income for the year
    
    
    (86
    )
    
    
    (86
    )
    
    
    290
    
    
    
    (22
    )
    
    
    96Net minority income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    182
    
    
    
    182Net majority (loss) income
    
    Ps.
    (86
    )
    
    Ps.
    (86
    )
    
    Ps.
    290
    
    
    Ps.
    (204
    )
    
    Ps.
    (86
    )
  F-138




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##### Table of Contents



CombinedWholly-
    
    
    Combined
    
    
    AdjustmentsOwned
    
    
    Non-
    
    
    and
    
    
    ViméxicoFor the year ended December 31, 2008
    
    Viméxico
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales and equity in earnings of
subsidiaries
    
    Ps.
    (574
    )
    
    Ps.
    10,933
    
    
    Ps.
    2,451
    
    
    Ps.
    420
    
    
    Ps.
    13,230Cost of sales
    
    
    
    
    
    
    7,983
    
    
    
    1,833
    
    
    
    (113
    )
    
    
    9,703Selling, general and administrative
expenses
    
    
    9
    
    
    
    2,883
    
    
    
    492
    
    
    
    (43
    )
    
    
    3,341Total financing cost
    
    
    221
    
    
    
    2,463
    
    
    
    (141
    )
    
    
    (1,145
    )
    
    
    1,398Other expenses (income), net
    
    
    
    
    
    
    67
    
    
    
    (700
    )
    
    
    774
    
    
    
    141Income tax expense (benefit)
    
    
    20
    
    
    
    (752
    )
    
    
    (4
    )
    
    
    1
    
    
    
    (735
    )Net (loss) income for the year
    
    
    (824
    )
    
    
    (1,711
    )
    
    
    971
    
    
    
    946
    
    
    
    (618
    )Net minority income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    206
    
    
    
    206Net majority (loss) income
    
    Ps.
    (824
    )
    
    Ps.
    (1,711
    )
    
    Ps.
    971
    
    
    Ps.
    740
    
    
    Ps.
    (824
    )
  F-139




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##### Table of Contents



c)
    
    Supplemental condensed consolidating statements of changes in financial position presented
in accordance with MFRS
 CombinedWholly-
    
    
    Combined
    
    
    AdjustmentsOwned
    
    
    Non-
    
    
    and
    
    
    ViméxicoFor the year ended December 31, 2006
    
    Viméxico
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedOperating Activities:Net (loss) income
    
    Ps.
    (774
    )
    
    Ps.
    (793
    )
    
    Ps.
    254
    
    
    Ps.
    727
    
    
    Ps.
    (586
    )Depreciation and amortization
    
    
    1
    
    
    
    487
    
    
    
    110
    
    
    
    
    
    
    
    598Provision for employee retirement obligations
    
    
    
    
    
    
    80
    
    
    
    58
    
    
    
    
    
    
    
    138Amortization of debt issuance costs
    
    
    34
    
    
    
    4
    
    
    
    (1
    )
    
    
    
    
    
    
    37Write-off and loss from sale of assets
    
    
    
    
    
    
    477
    
    
    
    (12
    )
    
    
    
    
    
    
    465Other non-cash charges
    
    
    822
    
    
    
    (444
    )
    
    
    22
    
    
    
    (784
    )
    
    
    (384
    )Decrease in inventories
    
    
    
    
    
    
    420
    
    
    
    47
    
    
    
    (16
    )
    
    
    451Change in other current assets and liabilities
    
    
    (35
    )
    
    
    (724
    )
    
    
    (227
    )
    
    
    171
    
    
    
    (815
    )Employee retirement obligations
    
    
    
    
    
    
    (101
    )
    
    
    (87
    )
    
    
    
    
    
    
    (188
    )Net resources generated by (used in)
operating activities
    
    
    48
    
    
    
    (594
    )
    
    
    164
    
    
    
    98
    
    
    
    (284
    )Financing Activities:Bank loans, net
    
    
    (1,428
    )
    
    
    (653
    )
    
    
    (133
    )
    
    
    
    
    
    
    (2,214
    )Issuance of capital stock
    
    
    1,526
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,526Other financing activities
    
    
    181
    
    
    
    728
    
    
    
    (159
    )
    
    
    (281
    )
    
    
    469Net resources generated by (used in)
financing activities
    
    
    279
    
    
    
    75
    
    
    
    (292
    )
    
    
    (281
    )
    
    
    (219
    )Investing Activities:Investments in land, buildings, machinery and
equipment
    
    
    
    
    
    
    (265
    )
    
    
    (65
    )
    
    
    
    
    
    
    (330
    )Proceeds from sale of land, machinery and
equipment
    
    
    
    
    
    
    170
    
    
    
    169
    
    
    
    
    
    
    
    339Restricted cash
    
    
    
    
    
    
    279
    
    
    
    2
    
    
    
    
    
    
    
    281Proceeds from sale of subsidiaries and
associated companies
    
    
    219
    
    
    
    
    
    
    
    3
    
    
    
    (45
    )
    
    
    177Other investing activities
    
    
    (546
    )
    
    
    267
    
    
    
    (66
    )
    
    
    228
    
    
    
    (117
    )Net resources (used in) generated by
investing activities
    
    
    (327
    )
    
    
    451
    
    
    
    43
    
    
    
    183
    
    
    
    350Net decrease in cash and cash equivalents
    
    
    
    
    
    
    (68
    )
    
    
    (85
    )
    
    
    
    
    
    
    (153
    )Balance at beginning of year
    
    
    
    
    
    
    191
    
    
    
    132
    
    
    
    
    
    
    
    323Balance at end of year
    
    Ps.
    
    
    
    Ps.
    123
    
    
    Ps.
    47
    
    
    Ps.
    
    
    
    Ps.
    170
  F-140




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##### Table of Contents



CombinedWholly-
    
    
    Combined
    
    
    AdjustmentsOwned
    
    
    Non-
    
    
    and
    
    
    ViméxicoFor the year ended December 31, 2007
    
    Viméxico
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedOperating Activities:Net (loss) income
    
    Ps.
    (86
    )
    
    Ps.
    (86
    )
    
    Ps.
    290
    
    
    Ps.
    (22
    )
    
    Ps.
    96Depreciation and amortization
    
    
    2
    
    
    
    374
    
    
    
    104
    
    
    
    
    
    
    
    480Provision for employee retirement obligations
    
    
    
    
    
    
    45
    
    
    
    12
    
    
    
    
    
    
    
    57Amortization of debt issuance costs
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    4Impairment of long-lived assets
    
    
    
    
    
    
    
    
    
    
    91
    
    
    
    
    
    
    
    91Loss (gain) from sale of long-lived assets
    
    
    
    
    
    
    (55
    )
    
    
    
    
    
    
    
    
    
    
    (55
    )Derivative financial instruments
    
    
    
    
    
    
    27
    
    
    
    9
    
    
    
    (7
    )
    
    
    29Deferred taxes
    
    
    21
    
    
    
    (122
    )
    
    
    (3
    )
    
    
    
    
    
    
    (104
    )Other non-cash activities
    
    
    102
    
    
    
    (106
    )
    
    
    
    
    
    
    24
    
    
    
    20(increase) decrease in trade receivables
    
    
    2
    
    
    
    (80
    )
    
    
    (271
    )
    
    
    155
    
    
    
    (194
    )Decrease in inventories
    
    
    
    
    
    
    138
    
    
    
    (157
    )
    
    
    
    
    
    
    (19
    )(Decrease) increase in trade payables
    
    
    
    
    
    
    96
    
    
    
    186
    
    
    
    (59
    )
    
    
    223Change in other current assets and liabilities
    
    
    12
    
    
    
    235
    
    
    
    (62
    )
    
    
    (80
    )
    
    
    105Employee retirement obligations
    
    
    
    
    
    
    (100
    )
    
    
    (1
    )
    
    
    
    
    
    
    (101
    )Net resources generated by operating
activities
    
    
    53
    
    
    
    370
    
    
    
    198
    
    
    
    11
    
    
    
    632Financing Activities:Bank loans, net
    
    
    
    
    
    
    (331
    )
    
    
    61
    
    
    
    
    
    
    
    (270
    )Debt issuance cost
    
    
    
    
    
    
    (7
    )
    
    
    (2
    )
    
    
    
    
    
    
    (9
    )Dividends paid to minority interest
    
    
    
    
    
    
    
    
    
    
    (67
    )
    
    
    16
    
    
    
    (51
    )Other financing activities
    
    
    (1,265
    )
    
    
    403
    
    
    
    (54
    )
    
    
    1,177
    
    
    
    261Net resources (used in) generated by
financing activities
    
    
    (1,265
    )
    
    
    65
    
    
    
    (62
    )
    
    
    1,193
    
    
    
    (69
    )Investing Activities:Investments in land, buildings, machinery and
equipment
    
    
    
    
    
    
    (216
    )
    
    
    (108
    )
    
    
    
    
    
    
    (324
    )Proceeds from sale of land, machinery and
equipment
    
    
    
    
    
    
    131
    
    
    
    
    
    
    
    
    
    
    
    131Restricted cash
    
    
    
    
    
    
    
    
    
    
    (9
    )
    
    
    
    
    
    
    (9
    )Investment in subsidiaries
    
    
    (67
    )
    
    
    (114
    )
    
    
    
    
    
    
    
    
    
    
    (181
    )Deferred charges
    
    
    
    
    
    
    (175
    )
    
    
    (31
    )
    
    
    
    
    
    
    (206
    )Other investing activities
    
    
    1,279
    
    
    
    (37
    )
    
    
    11
    
    
    
    (1,204
    )
    
    
    49Net resources generated (used in) by
investing activities
    
    
    1,212
    
    
    
    (411
    )
    
    
    (137
    )
    
    
    (1,204
    )
    
    
    (540
    )Net increase (decrease) in cash and cash
equivalents
    
    
    
    
    
    
    24
    
    
    
    (1
    )
    
    
    
    
    
    
    23Balance at beginning of year
    
    
    
    
    
    
    123
    
    
    
    47
    
    
    
    
    
    
    
    170Balance at end of year
    
    Ps.
    
    
    
    Ps.
    147
    
    
    Ps.
    46
    
    
    Ps.
    
    
    
    Ps.
    193
  F-141




---



##### Table of Contents



d)
    
    Supplemental condensed consolidating statements of cash flows presented in accordance with
MFRS
 CombinedWholly-
    
    
    Combined
    
    
    AdjustmentsOwned
    
    
    Non-
    
    
    and
    
    
    ViméxicoFor the year ended December 31, 2008
    
    Viméxico
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedOPERATING ACTIVITIES:Loss (income) before income taxes
    
    Ps.
    (804
    )
    
    Ps.
    (2,462
    )
    
    Ps.
    967
    
    
    Ps.
    946
    
    
    Ps.
    (1,353
    )Items related to investing and financing activities:Depreciation and amortization
    
    
    2
    
    
    
    418
    
    
    
    68
    
    
    
    
    
    
    
    488Gain from sale of long-lived assets
    
    
    
    
    
    
    102
    
    
    
    
    
    
    
    (194
    )
    
    
    (92
    )Impairment of long-lived assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    196
    
    
    
    196Interest income
    
    
    (1
    )
    
    
    (63
    )
    
    
    (124
    )
    
    
    138
    
    
    
    (50
    )Derivative financial instruments
    
    
    
    
    
    
    617
    
    
    
    1
    
    
    
    (1
    )
    
    
    617Foreign exchange loss
    
    
    77
    
    
    
    940
    
    
    
    (616
    )
    
    
    (234
    )
    
    
    167Interest expense
    
    
    145
    
    
    
    842
    
    
    
    75
    
    
    
    (402
    )
    
    
    660Trade receivables
    
    
    
    
    
    
    (43
    )
    
    
    190
    
    
    
    (107
    )
    
    
    40Inventories
    
    
    
    
    
    
    (28
    )
    
    
    72
    
    
    
    
    
    
    
    44Trade payables
    
    
    
    
    
    
    (116
    )
    
    
    (219
    )
    
    
    (37
    )
    
    
    (372
    )Other current assets and liabilities
    
    
    867
    
    
    
    94
    
    
    
    (137
    )
    
    
    (544
    )
    
    
    280Net cash provided by operating activities
    
    
    286
    
    
    
    301
    
    
    
    277
    
    
    
    (239
    )
    
    
    625INVESTING ACTIVITIESInvestments in machinery and equipment
    
    
    
    
    
    
    (61
    )
    
    
    (76
    )
    
    
    1
    
    
    
    (136
    )Investment in subsidiaries
    
    
    60
    
    
    
    
    
    
    
    (43
    )
    
    
    (60
    )
    
    
    (43
    )Deferred charges
    
    
    
    
    
    
    (92
    )
    
    
    (27
    )
    
    
    
    
    
    
    (119
    )Interest received
    
    
    (261
    )
    
    
    116
    
    
    
    126
    
    
    
    68
    
    
    
    49Trade receivables to affiliates
    
    
    (18
    )
    
    
    (496
    )
    
    
    (1,995
    )
    
    
    1,846
    
    
    
    (663
    )Others from investing activities
    
    
    
    
    
    
    (11
    )
    
    
    (1
    )
    
    
    (1
    )
    
    
    (13
    )Net cash used in investing activities
    
    
    (219
    )
    
    
    (544
    )
    
    
    (2,016
    )
    
    
    1,854
    
    
    
    (925
    )To obtain cash from financing activities
    
    
    67
    
    
    
    (243
    )
    
    
    (1,739
    )
    
    
    1,615
    
    
    
    (300
    )FINANCING ACTIVITIES:Proceeds from short-term bank loans
    
    
    
    
    
    
    182
    
    
    
    133
    
    
    
    
    
    
    
    315Interest paid
    
    
    (128
    )
    
    
    (348
    )
    
    
    (69
    )
    
    
    (100
    )
    
    
    (645
    )Dividends paid to minority interest
    
    
    
    
    
    
    (60
    )
    
    
    (113
    )
    
    
    65
    
    
    
    (108
    )Proceeds from long-term bank loans
    
    
    
    
    
    
    41
    
    
    
    47
    
    
    
    
    
    
    
    88Payments of long-term bank loans
    
    
    
    
    
    
    (51
    )
    
    
    (26
    )
    
    
    
    
    
    
    (77
    )Notes payables to affiliates
    
    
    60
    
    
    
    2,090
    
    
    
    6
    
    
    
    (1,627
    )
    
    
    529Derivative financial instruments
    
    
    
    
    
    
    166
    
    
    
    (10
    )
    
    
    
    
    
    
    156Other financing activities
    
    
    
    
    
    
    (1,709
    )
    
    
    1,825
    
    
    
    47
    
    
    
    163Net cash provided by financing activities
    
    
    (68
    )
    
    
    311
    
    
    
    1,793
    
    
    
    (1,615
    )
    
    
    421Net increase in cash and cash equivalents
    
    
    (1
    )
    
    
    68
    
    
    
    54
    
    
    
    
    
    
    
    121Adjustment to cash flows due to exchange rate
fluctuations
    
    
    
    
    
    
    (25
    )
    
    
    (16
    )
    
    
    
    
    
    
    (41
    )Cash and cash equivalents at the beginning of year
(includes restricted cash of Ps. 18)
    
    
    1
    
    
    
    147
    
    
    
    63
    
    
    
    
    
    
    
    211Cash and cash equivalents at the end of year
(includes restricted cash of Ps. 20)
    
    Ps.
    
    
    
    Ps.
    190
    
    
    Ps.
    101
    
    
    Ps.
    
    
    
    Ps.
    291
  F-142




---



##### Table of Contents



e)
    
    Supplemental condensed consolidating financial information reconciled from MFRS to U.S. GAAP:
   CombinedWholly-
    
    
    Combined
    
    
    AdjustmentsOwned
    
    
    Non-
    
    
    and
    
    
    ViméxicoFor the year ended December 31, 2006
    
    Viméxico
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet (loss) income of majority interest
as reported under MFRS
    
    Ps.
    (774
    )
    
    Ps.
    (793
    )
    
    Ps.
    245
    
    
    Ps.
    548
    
    
    Ps.
    (774
    )U.S. GAAP adjustments:Deferred income taxes
    
    
    (119
    )
    
    
    (63
    )
    
    
    
    
    
    
    
    
    
    
    (182
    )Deferred workers profit sharing
    
    
    
    
    
    
    (6
    )
    
    
    (9
    )
    
    
    
    
    
    
    (15
    )Monetary position result on
deferred income taxes and deferred
workers profit sharing
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    13Capitalization of interest
    
    
    
    
    
    
    8
    
    
    
    1
    
    
    
    
    
    
    
    9Amortization of capitalized interest
    
    
    
    
    
    
    (7
    )
    
    
    (1
    )
    
    
    
    
    
    
    (8
    )Effect of applying Bulletin B-10
    
    
    
    
    
    
    (62
    )
    
    
    (6
    )
    
    
    
    
    
    
    (68
    )Effect of applying Bulletin B-15
    
    
    3
    
    
    
    4
    
    
    
    (2
    )
    
    
    (1
    )
    
    
    4Employee retirement obligations
    
    
    
    
    
    
    6
    
    
    
    5
    
    
    
    
    
    
    
    11Purchase of Visteons capital
investment
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Impairment of long-lived assets
    
    
    
    
    
    
    379
    
    
    
    
    
    
    
    
    
    
    
    379Investment in subsidiaries
    
    
    259
    
    
    
    
    
    
    
    
    
    
    
    (259
    )
    
    
    Total U.S. GAAP adjustments
    
    
    144
    
    
    
    272
    
    
    
    (12
    )
    
    
    (260
    )
    
    
    144Net (loss) income under U.S. GAAP
    
    Ps.
    (630
    )
    
    Ps.
    (521
    )
    
    Ps.
    233
    
    
    Ps.
    288
    
    
    Ps.
    (630
    )
  F-143




---



##### Table of Contents



CombinedWholly-
    
    
    Combined
    
    
    AdjustmentsOwned
    
    
    Non-
    
    
    and
    
    
    ViméxicoFor the year ended December 31, 2007
    
    Viméxico
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet (loss) income of majority interest
as reported under MFRS
    
    Ps.
    (86
    )
    
    Ps.
    (86
    )
    
    Ps.
    290
    
    
    Ps.
    (204
    )
    
    Ps.
    (86
    )U.S. GAAP adjustments:Effect of the adjustments below on
minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    3Deferred income taxes
    
    
    (103
    )
    
    
    63
    
    
    
    3
    
    
    
    
    
    
    
    (37
    )Monetary position result on
deferred income taxes and deferred
workers profit sharing
    
    
    5
    
    
    
    14
    
    
    
    (2
    )
    
    
    
    
    
    
    17Amortization of capitalized interest
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    (4
    )Effect of applying Bulletin B-10
    
    
    
    
    
    
    (15
    )
    
    
    (6
    )
    
    
    
    
    
    
    (21
    )Employee retirement obligations
    
    
    
    
    
    
    (4
    )
    
    
    (3
    )
    
    
    
    
    
    
    (7
    )Purchase of Visteons capital
investment
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5Impairment of long-lived assets
    
    
    
    
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    (10
    )Investment in subsidiaries
    
    
    39
    
    
    
    
    
    
    
    
    
    
    
    (39
    )
    
    
    Total U.S. GAAP adjustments
    
    
    (54
    )
    
    
    44
    
    
    
    (8
    )
    
    
    (36
    )
    
    
    (54
    )Net (loss) income under U.S. GAAP
    
    Ps.
    (140
    )
    
    Ps.
    (42
    )
    
    Ps.
    282
    
    
    Ps.
    (240
    )
    
    Ps.
    (140
    )
  F-144




---



##### Table of Contents



CombinedWholly-
    
    
    Combined
    
    
    AdjustmentsOwned
    
    
    Non-
    
    
    and
    
    
    ViméxicoFor the year ended December 31, 2008
    
    Viméxico
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet (loss) income of majority
interest as reported under MFRS
    
    Ps.
    (824
    )
    
    Ps.
    (1,711
    )
    
    Ps.
    971
    
    
    Ps.
    740
    
    
    Ps.
    (824
    )U.S. GAAP adjustments:Effect of the adjustments below on
minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48
    
    
    
    48Deferred income taxes
    
    
    (184
    )
    
    
    238
    
    
    
    1
    
    
    
    
    
    
    
    55Amortization of capitalized interest
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    (5
    )Goodwill
    
    
    
    
    
    
    (5
    )
    
    
    (38
    )
    
    
    
    
    
    
    (43
    )Effect of applying Bulletin B-10
    
    
    
    
    
    
    23
    
    
    
    (5
    )
    
    
    
    
    
    
    18Derivative Financial Instruments
    
    
    
    
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    17Employee retirement obligations
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    11Purchase of Visteons capital
investment
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5Impairment of long-lived assets
    
    
    
    
    
    
    (45
    )
    
    
    
    
    
    
    
    
    
    
    (45
    )Investment in subsidiaries
    
    
    236
    
    
    
    
    
    
    
    
    
    
    
    (236
    )
    
    
    Total U.S. GAAP adjustments
    
    
    57
    
    
    
    234
    
    
    
    (42
    )
    
    
    (188
    )
    
    
    61Net (loss) income under U.S. GAAP
    
    Ps.
    (767
    )
    
    Ps.
    (1,477
    )
    
    Ps.
    929
    
    
    Ps.
    552
    
    
    Ps.
    (763
    )
  F-145




---



##### Table of Contents



CombinedWholly-
    
    
    Combined
    
    
    AdjustmentsOwned
    
    
    Non-
    
    
    and
    
    
    ViméxicoAs of December 31, 2007
    
    Viméxico
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedTotal stockholders equity reported
under MFRS
    
    Ps.
    4,453
    
    
    Ps.
    3,609
    
    
    Ps.
    2,276
    
    
    Ps.
    (4,291
    )
    
    Ps.
    6,047Less minority interest included as
stockholders equity under MFRS
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,594
    )
    
    
    (1,594
    )Majority stockholders equity under MFRS
    
    
    4,453
    
    
    
    3,609
    
    
    
    2,276
    
    
    
    (5,885
    )
    
    
    4,453U.S. GAAP adjustments:Effect of the adjustments below on
minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (49
    )
    
    
    (49
    )Deferred income taxes
    
    
    (259
    )
    
    
    (292
    )
    
    
    10
    
    
    
    
    
    
    
    (541
    )Capitalization of interest
    
    
    
    
    
    
    38
    
    
    
    4
    
    
    
    
    
    
    
    42Accumulated amortization of capitalized
interest
    
    
    
    
    
    
    (20
    )
    
    
    (2
    )
    
    
    
    
    
    
    (22
    )Goodwill
    
    
    
    
    
    
    5
    
    
    
    119
    
    
    
    
    
    
    
    124Effect of applying Bulletin B-10
    
    
    (1
    )
    
    
    (23
    )
    
    
    5
    
    
    
    
    
    
    
    (19
    )Effect of SFAS No. 158
    
    
    
    
    
    
    (130
    )
    
    
    (33
    )
    
    
    
    
    
    
    (163
    )Employee retirement obligations
    
    
    
    
    
    
    (28
    )
    
    
    (10
    )
    
    
    
    
    
    
    (38
    )Purchase of Visteons capital investment
    
    
    (67
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (67
    )Impairment of long-lived assets
    
    
    
    
    
    
    390
    
    
    
    
    
    
    
    
    
    
    
    390Investment in subsidiaries
    
    
    (16
    )
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    Total U.S. GAAP adjustments
    
    
    (342
    )
    
    
    (60
    )
    
    
    93
    
    
    
    (33
    )
    
    
    (342
    )Total stockholders equity under U.S.
GAAP
    
    Ps.
    4,111
    
    
    Ps.
    3,549
    
    
    Ps.
    2,369
    
    
    Ps.
    (5,918
    )
    
    Ps.
    4,111
  F-146




---



##### Table of Contents



CombinedWholly-
    
    
    Combined
    
    
    AdjustmentsOwned
    
    
    Non-
    
    
    and
    
    
    ViméxicoAs of December 31, 2008
    
    Viméxico
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedTotal stockholders equity
reported under MFRS
    
    Ps.
    1,377
    
    
    Ps.
    (221
    )
    
    Ps.
    5,237
    
    
    Ps.
    (999
    )
    
    Ps.
    5,394Less minority interest included
as stockholders equity under
MFRS
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,017
    )
    
    
    (4,017
    )Majority stockholders equity
under MFRS
    
    
    1,377
    
    
    
    (221
    )
    
    
    5,237
    
    
    
    (5,016
    )
    
    
    1,377U.S. GAAP adjustments:Effect of the adjustments below
on minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    3Deferred income taxes
    
    
    (442
    )
    
    
    16
    
    
    
    11
    
    
    
    
    
    
    
    (415
    )Capitalization of interest
    
    
    
    
    
    
    38
    
    
    
    4
    
    
    
    
    
    
    
    42Accumulated amortization of
capitalized interest
    
    
    
    
    
    
    (25
    )
    
    
    (2
    )
    
    
    
    
    
    
    (27
    )Goodwill
    
    
    
    
    
    
    
    
    
    
    81
    
    
    
    
    
    
    
    81Derivative financial Instruments
    
    
    
    
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    17Effect of SFAS No. 158
    
    
    
    
    
    
    (381
    )
    
    
    (33
    )
    
    
    
    
    
    
    (414
    )Employee retirement obligations
    
    
    
    
    
    
    (17
    )
    
    
    (10
    )
    
    
    
    
    
    
    (27
    )Purchase of Visteons capital
investment
    
    
    (62
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (62
    )Purchase of remaining 40%
interest in Vitro Cristalglass
    
    
    
    
    
    
    
    
    
    
    60
    
    
    
    
    
    
    
    60Impairment of long-lived assets
    
    
    
    
    
    
    345
    
    
    
    
    
    
    
    
    
    
    
    345Investment in subsidiaries
    
    
    150
    
    
    
    
    
    
    
    
    
    
    
    (150
    )
    
    
    Total U.S. GAAP adjustments
    
    
    (354
    )
    
    
    (7
    )
    
    
    111
    
    
    
    (147
    )
    
    
    (397
    )Total stockholders equity under
U.S. GAAP
    
    Ps.
    1,023
    
    
    Ps.
    (228
    )
    
    Ps.
    5,348
    
    
    Ps.
    (5,163
    )
    
    Ps.
    980
  F-147




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##### Table of Contents



f)
    
    Supplemental U.S. GAAP Cash Flow Information
   CombinedWholly-
    
    
    Combined
    
    
    AdjustmentsOwned
    
    
    Non-
    
    
    and
    
    
    ViméxicoAs of December 31, 2006
    
    Viméxico
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet cash provided by
(used in) operating
activities
    
    Ps.
    23
    
    
    Ps.
    (562
    )
    
    Ps.
    137
    
    
    Ps.
    109
    
    
    Ps.
    (293
    )Net cash provided by
(used in) financing
activities
    
    
    369
    
    
    
    56
    
    
    
    (183
    )
    
    
    (384
    )
    
    
    (142
    )Net cash (used in)
provided by investing
activities
    
    
    (393
    )
    
    
    448
    
    
    
    (22
    )
    
    
    275
    
    
    
    308
  CombinedWholly-
    
    
    Combined
    
    
    AdjustmentsOwned
    
    
    Non-
    
    
    and
    
    
    ViméxicoAs of December 31, 2006
    
    Viméxico
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedInterest paid
    
    Ps.
    100
    
    
    Ps.
    602
    
    
    Ps.
    72
    
    
    Ps.
    (116
    )
    
    Ps.
    658Income taxes paid
    
    
    (4
    )
    
    
    147
    
    
    
    8
    
    
    
    
    
    
    
    151
 CombinedWholly-
    
    
    Combined
    
    
    AdjustmentsOwned
    
    
    Non-
    
    
    and
    
    
    ViméxicoAs of December 31, 2007
    
    Viméxico
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet cash provided by operating activities
    
    Ps.
    6
    
    
    Ps.
    270
    
    
    Ps.
    229
    
    
    Ps.
    44
    
    
    Ps.
    549Net cash (used in) provided by financing
activities
    
    
    (1,193
    )
    
    
    225
    
    
    
    (47
    )
    
    
    1,008
    
    
    
    (7
    )Net cash provided by (used in)
investing activities
    
    
    1,188
    
    
    
    (470
    )
    
    
    (171
    )
    
    
    (1,052
    )
    
    
    (505
    )
  F-148




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##### Table of Contents



CombinedWholly-
    
    
    Combined
    
    
    AdjustmentsOwned
    
    
    Non-
    
    
    and
    
    
    ViméxicoAs of December 31, 2007
    
    Viméxico
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedInterest paid
    
    Ps.
    244
    
    
    Ps.
    522
    
    
    Ps.
    69
    
    
    Ps.
    (462
    )
    
    Ps.
    373Income taxes paid
    
    
    16
    
    
    
    174
    
    
    
    14
    
    
    
    
    
    
    
    204
 CombinedWholly-
    
    
    Combined
    
    
    AdjustmentsOwned
    
    
    Non-
    
    
    and
    
    
    ViméxicoAs of December 31, 2008
    
    Viméxico
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet cash provided by
(used in) operating
activities
    
    Ps.
    (103
    )
    
    Ps.
    235
    
    
    Ps.
    324
    
    
    Ps.
    (270
    )
    
    Ps.
    186Net cash (used in)
provided by financing
activities
    
    
    60
    
    
    
    492
    
    
    
    1,873
    
    
    
    (1,516
    )
    
    
    909Net cash (used in)
provided by investing
activities
    
    
    42
    
    
    
    (662
    )
    
    
    (2,143
    )
    
    
    1,786
    
    
    
    (977
    )
  CombinedWholly-
    
    
    Combined
    
    
    AdjustmentsOwned
    
    
    Non-
    
    
    and
    
    
    ViméxicoAs of December 31, 2008
    
    Viméxico
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedInterest paid
    
    Ps.
    128
    
    
    Ps.
    349
    
    
    Ps.
    68
    
    
    Ps.
    100
    
    
    Ps.
    645Income taxes paid
    
    
    
    
    
    
    69
    
    
    
    (59
    )
    
    
    
    
    
    
    10
  F-149




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description
    
    Page1.01
    
    
    Amended and restated by-laws (estatutos
sociales) of Vitro, S.A.B. de C.V., together
with an English translation
    
    c2.01
    
    
    Trust Agreement dated November 28, 1990 between
the Common Shares Trustee, as grantor, and the
CPO Trustee (the CPO Trust Agreement),
together with an English translation
    
    i2.02
    
    
    Public Deed dated November 29, 1990 (the
Public Deed), together with an English
translation
    
    i2.03
    
    
    Common Shares Trust Agreement
    
    i2.04
    
    
    CPO Trust Agreement and Public Deed
    
    i2.05
    
    
    Form of Certificado Bursátil
    
    g2.06
    
    
    Indenture dated as of October 22, 2003 (2013
Indenture) between Vitro, S.A. de C.V. and
Wachovia Bank (including exhibits); including
Form of 11.75% Senior Note due 2013
    
    f2.07
    
    
    Form of First Supplemental Indenture dated as
of October 23, 2006 to the 2013 Indenture
between Vitro, S.A. de C.V. and U.S. Bank
National Association as successor trustee to
Wachovia Bank, National Association
    
    a2.08
    
    
    First Supplemental Indenture to the 2013
Indenture dated as of February 1, 2007 among
Vitro, S.A.B. de C.V., the Guarantors party
thereto and U.S. Bank National Association as
successor trustee to Wachovia Bank, National
Association
    
    c2.09
    
    
    Second Supplemental Indenture to the 2013
Indenture dated as of April 27, 2007 among
Vitro, S.A.B. de C.V., the New Guarantors party
thereto, the Existing Guarantors party thereto
and U.S. Bank National Association as successor
trustee to Wachovia Bank, National Association
    
    c2.10
    
    
    Third Supplemental Indenture to the 2013
Indenture dated as of January 16, 2008 between
Vitro, S.A.B. de C.V., the New Guarantors party
thereto, the Existing Guarantors party thereto
and U.S. Bank National Association as successor
trustee to Wachovia Bank, National Association
    
    b2.11
    
    
    Fourth Supplemental Indenture to the 2013
Indenture dated as of May 15, 2008 between
Vitro, S.A.B. de C.V., the New Guarantors party
thereto, the Existing Guarantors party thereto
and U.S. Bank National Association as successor
trustee to Wachovia Bank, National Association
    
    b2.12
    
    
    Trust Agreement between Banco Invex, S.A.,
Institucion de Banca Multiple, Invex Grupo
Financiero, as issuer and trustee,
Distribuidora Nacional de Vidrio, S.A. de C.V.
Vitro Flotado Cubiertas, S.A. de C.V., Vitro
Automotriz, S.A. de C.V., and Vitro Vidrio y
Cristal, S.A. de C.V., dated August 3, 2005, in
connection with the issuance of the 6.46%
Preferred Notes
    
    d




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##### Table of Contents



Exhibit No.
    
    Description
    
    Page2.13
    
    
    Purchase Agreement between Banco Invex, S.A.,
Institucion de Banca Multiple, Invex Grupo
Financiero, as issuer, Distribuidora Nacional
de Vidrio, S.A. de C.V., Vitro Flotado
Cubiertas, S.A. de C.V., Vitro Automotriz, S.A.
de C.V., Vitro Vidrio y Cristal, S.A. de C.V.,
and Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A. Rabobank
International, as purchaser, dated August 22,
2005, in connection to the sale of 6.46%
Preferred Notes  Summary of the document in
English attached
    
    d2.14
    
    
    Indenture dated as of February 1, 2007 between
Vitro, S.A.B. de C.V., the Guarantors party
thereto and The Bank of New York as Trustee
(2012 Indenture)
    
    c2.15
    
    
    Form of 8.625% Senior Note due 2012
    
    c2.16
    
    
    First Supplemental Indenture to the 2012
Indenture dated as of April 27, 2007 among
Vitro, S.A.B. de C.V. the New Guarantors party
thereto, the Existing Guarantors party thereto
and the Bank of New York
    
    c2.17
    
    
    Second Supplemental Indenture to the 2012
Indenture dated as of January 16, 2008 among
Vitro, S.A.B. de C.V., the New Guarantors party
thereto, the Existing Guarantors party thereto
and the Bank of New York
    
    b2.18
    
    
    Third Supplemental Indenture to the 2012
Indenture dated as of May 15, 2008 among Vitro,
S.A.B. de C.V., the New Guarantors party
thereto, the Existing Guarantors party thereto
and the Bank of New York
    
    b2.19
    
    
    Indenture dated as of February 1, 2007 between
Vitro, S.A.B. de C.V., the Guarantors party
thereto and The Bank of New York as Trustee
(2017 Indenture)
    
    c2.2
    
    
    Form of 9.125% Senior Note due 2017
    
    c2.21
    
    
    First Supplemental Indenture to the 2017
Indenture dated as of April 27, 2007 among
Vitro, S.A.B. de C.V. the New Guarantors party
thereto, the Existing Guarantors party thereto
and the Bank of New York
    
    c2.22
    
    
    Second Supplemental Indenture to the 2017
Indenture dated as of January 16, 2008 among
Vitro, S.A.B. de C.V., the New Guarantors party
thereto, the Existing Guarantors party thereto
and the Bank of New York
    
    b2.23
    
    
    Third Supplemental Indenture to the 2017
Indenture dated as of May 15, 2008 among Vitro,
S.A.B. de C.V., the New Guarantors party
thereto, the Existing Guarantors party thereto
and the Bank of New York
    
    b4.01
    
    
    Trust Agreement dated as of March 23, 2005
among Compañía Vidriera, S.A. de C.V.,
Industria del Álcali, S.A. de C.V.,
Comercializadora Álcali, S. de R.L. de C.V.,
ABN AMRO Bank (México), S.A., Institución de
Banca Múltiple, División Fiduciaria and Banco
Invex, S.A., Institución de Banca Múltiple,
Invex Grupo Financiero; Assignment of Rights
dated as of March 23, 2005 among Compañía
Vidriera, S.A. de C.V., Industria del Álcali,
S.A. de C.V., Comercializadora Álcali, S. de
R.L. de C.V. and ABN AMRO Bank (México), S.A.
Institución de Banca Múltiple, Division
Fiduciana; CertificadosSubordinadosissued by
ABN AMRO Bank (México), S.A., Institución de
Banca Múltiple, Division Fiduciaria, together
with English summary.
    
    e4.02
    
    
    Guaranty dated as of March 31, 2005 among
Vitro, S.A.B. de C.V. and of the holders of the
CertificadosSubordinados
    
    e




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##### Table of Contents



Exhibit No.
    
    Description
    
    Page4.03
    
    
    First amendment dated March 31, 2009 to the
Trust Agreement dated as of March 23, 2005
among Compañía Vidriera, S.A. de C.V, Industria
del Alcali, S.A. de C.V. Bank of America, S.A.,
Institución de Banca Múltiple, Grupo Financiero
Bank of America, División Fiduciaria and
Coöperatieve Centrale
Raiffeisen-Boerenleenbank, B.A.
    
    +4.04
    
    
    Letter of extension between Pilkington plc and
Vitro Vidrio y Cristal, S.A. de C.V., dated
April 24, 2006
    
    e4.05
    
    
    Stock Purchase Agreement of Vidrios Panameños
S.A. between the Sellers listed therein and
Empresas Comegua, S.A., dated April 4, 2006.
    
    d4.06
    
    
    Partnership Interest Purchase agreement dated
January 16, 2009 among Francisco Javier Prado
Ovalle, Isaac Prado Ovalle, Recaredo Prado
Ovalle, Invergar Participaciones Inmobiliarias,
S.L., Isaac Prado Bodelón y Concepción Ovalle
Vallinas as Seller and Vimexico, S.A. de C.V.
as Purchaser
    
    +4.07
    
    
    Partnership Interest Purchase agreement dated
January 30, 2009 among Francisco Javier Prado
Ovalle, Isaac Prado Ovalle, Recaredo Prado
Ovalle, Invergar Participaciones Inmobiliarias,
S.L., Isaac Prado Bodelón y Concepción Ovalle
Vallinas as Seller and Vimexico, S.A. de C.V.
as Purchaser
    
    +4.08
    
    
    Trust Agreement dated November 3, 2008 among
Vitro Envases Norteamerica, S.A. de C.V.
Compañia Vidriera, S.A. de C.V., Vitro
Corporativo, S.A. de C.V., Vidriera Toluca,
S.A. de C.V., Vitro, S.A.B. de C.V. and
Nacional Financiera, S.N.C., División
Fiduciaria.
    
    +8.1
    
    
    List of subsidiaries of Vitro, S.A.B. de C.V.
    
    +12.1
    
    
    Certification of the Chief Executive Officer of
Vitro, S.A.B. de C.V. pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
    
    +12.2
    
    
    Certification of the Chief Financial and
Administrative Officer of Vitro, S.A.B. de C.V.
pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
    
    +13.1
    
    
    Certification of the Chief Executive Officer,
Chief Financial Officer and Chief
Administrative Officer of Vitro, S.A.B. de C.V.
pursuant to 18 U.S.C. §1350, as adopted
pursuant to Section 906 of the Sarbanes Oxley
Act of 2002.
    
    +
 +
    
    Filed herewith.a
    
    Filed as an exhibit to the Registration
Statement of Vitro, S.A.B. de C.V. on Form F-4
(File No. 333-135546) and incorporated herein
by reference thereto.b
    
    Filed as an exhibit to Vitro, S.A.B. de C.V.s
annual report on Form 20-F for the year ended
December 31, 2006 and incorporated herein by
reference thereto.c
    
    Filed as an exhibit to Vitro, S.A.B. de C.V.s
annual report on Form 20-F for the year ended
December 31, 2006 and incorporated herein by
reference thereto.




---



##### Table of Contents



d
    
    Filed as an exhibit to Vitro, S.A.B. de C.V.s
annual report on Form 20-F for the year ended
December 31, 2005 and incorporated herein by
reference thereto.e
    
    Filed as an exhibit to Vitro, S.A.B. de C.V.s
annual report on Form 20-F for the year ended
December 31, 2004 and incorporated herein by
reference thereto.f
    
    Filed as an exhibit to Vitro, S.A.B. de C.V.s
annual report on Form 20-F for the year ended
December 31, 2003 and incorporated herein by
reference thereto.g
    
    Filed as an exhibit to Vitro, S.A.B. de C.V.s
annual report for the year ended December 31,
2002 and incorporated herein by reference
thereto.h
    
    Filed as an exhibit to the Registration
Statement of Vicap, S.A. de C.V. on Form F-4
(File no. 333-9498) and incorporated herein by
reference thereto.i
    
    Filed as an exhibit to the Registration
Statement of Vitro, S.A. de C.V. on Form F-1
(File no. 33-43660) and incorporated herein by
reference thereto.